Fuel economy is typically expressed as the average number of miles a vehicle travels per gallon of motor fuel, usually as miles per gallon (mpg). The interest of both consumers and government in fuel economy was galvanized during the mid-1970s in response to escalating fuel prices prompted by the oil embargo of the Organization of Petroleum Exporting Countries. At that time, new cars sold in the United States averaged less than 16 mpg. As gasoline prices jumped by more than 25 percent within months, motorists and policy makers focused their attention on energy conservation for the first time since World War II. During the decade that followed—which included further jumps in gasoline and diesel fuel prices—the average fuel economy of new vehicles grew by more than 50 percent (NRC 1992, 14). During this period some policy makers also began to focus on the role of motor fuel in the atmospheric buildup of carbon dioxide and other greenhouse gases. The buildup threatened climate change and provided further impetus for improvements in fuel economy (TRB 1997).

A number of policies aimed at energy conservation were pursued starting in the mid-1970s. Congress passed the national 55-mph speed limit in 1974. A year later, it instructed the U.S. Environmental Protection Agency (EPA) to require the posting of fuel economy labels (window stickers) on all new vehicles for sale. The U.S. Department of Energy was charged with developing and publicizing an annual fuel economy mileage guide. The federal “gas guzzler” excise tax, which raised the price of automobiles with low fuel economy, was introduced in 1979. Perhaps the most significant program originating from that period was the corporate average fuel economy (CAFE) program.1 For the first time, Congress established fuel economy standards for passenger cars and light trucks. The program, administered by the National Highway Traffic Safety Administration (NHTSA), mandated a sales-weighted average fuel economy for different vehicle categories produced by all automobile manufacturers. Each vehicle’s rating would be determined by EPA’s city


CAFE was enacted as part of the Energy Policy Conservation Act of 1975.

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