Congress recognized the importance of automobile manufacturers’ influence on energy use when it established fuel economy standards for the industry. At least one prominent study (Hirst, 1976) concluded that this was the single most effective available policy for conserving energy in the transportation sector. It took this government pressure of legislated standards combined with regulations requiring the posting of fuel economy data on new cars, fierce foreign competition, and intense and persistent consumer nonresponse to available U.S. models to prod the U.S. auto industry to produce fuel-efficient models.

Long-Lived Capital Stock

Housing is the best example of long-lived capital stock. Buildings last a long time, and it is often difficult to reinsulate them or to adapt their heating systems for different fuels. It is very costly, for example, to convert from electric resistance heating to more energy-efficient heating systems. Similarly, natural gas is available only where there are lines for it, so conversion from oil to gas is not always possible. The choices available to prospective purchasers and renters in a housing market are limited by the stock of existing housing; with high mortgage rates and construction costs, there is less building and the stock is replaced more slowly. A shortage of new buildings further limits consumers’ ability to choose energy-efficient housing.

The Needs of Changing Households

Some demographic shifts affect both the patterns and the magnitude of energy use. With fewer persons in each household—the trend in the 1970s—per capita energy use generally rises even though smaller households may occupy smaller dwelling units. This is because certain energy expenditures are fixed regardless of household size (Abrahamse and Morrison, 1981). The increasing prevalence of dual-earner families has also changed energy demand. Wives and husbands may need to be in different places at the same time, prompting frequent trips by automobile (Abrahamse and Morrison, 1981). Also, because of the premium they place on their time, two-earner families may be more inclined than their one-earner counterparts to substitute energy for labor in housework through such labor-saving devices as dishwashers. The present trends have increased the need for housing units, automobiles, and appliances, as well as the demand for transportation during rush hours. These trends not only increase energy consumption, they also carry considerable inertia, since work patterns, living arrangements, and commuting patterns are highly resistant to change. Other demographic trends may decrease energy use, however, at least as compared with past rates of growth. Many major household appliances have nearly saturated the market, and the increasing number of

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