Automobiles, light trucks, and aviation are the main modes of passenger transportation in the United States. Private automobiles account for the vast majority of local and medium-distance passenger-trips4 (those under 750 miles), and airlines account for longer trips (BTS, 2006).
The major factors driving vehicles to become more (or less) fuel-efficient are the price of fuel (including taxes), regulations, and consumer preferences for particular vehicle attributes. This section reviews experience with these factors.
Europe has historically had high fuel and vehicle taxes that raise owner and user costs. Moreover, diesel fuel has often been taxed at a rate lower than that for gasoline. High prices have pushed consumers to demand fuel-efficient vehicles, giving a larger market share to diesel engines. The average fuel economy of new lightduty vehicles in Europe today approaches 40 miles per gallon (mpg), 60 percent higher than in the United States.5
Vehicle fuel economy in Japan is similar to that in Europe. In 2006, Japan revised its fuel economy standard to 47 mpg, to be achieved by 2015 (ICCT, 2007b).
In contrast to the trend in Europe, from 1980 until recently, real gasoline prices had been falling in the United States, encouraging consumers to buy larger, heavier, more powerful vehicles and to drive more, rather than to seek greater fuel economy. During periods of high fuel prices (such as those prevailing in mid-2008), U.S. consumers have demonstrated more interest in fuel economy. The average fuel economy of recently sold new vehicles in the United States is about 25 mpg. The U.S. Energy Independence and Security Act of 2007 (EISA; Public