Prospects for improving the fuel economy of light-duty vehicles
Abstract
US efforts to reduce light-duty vehicle fuel use have focused primarily on policies aimed directly at vehicle fuel economy not use, eg fuel economy standards and research on efficiency technology. Although economists have traditionally favored fuel taxes as a more efficient policy tool, the US political system seems allergic to higher taxes. This paper explores the potential effectiveness of higher gasoline taxes vs. more stringent fuel economy standards, focusing particularly on the fuel price sensitivity of gasoline demand and the technical prospects for improved fuel economy. We conclude that the evidence supports a long-run price elasticity of about -0.4, ie gasoline demand is relatively insensitive to the fuel price, despite early econometric analyses projecting high fuel price elasticities of demand. We also conclude that there are substantial technical prospects for improving fuel economy, although the current marketplace has little interest in such prospects.
- Publication:
-
Energy Policy
- Pub Date:
- 1997
- DOI:
- 10.1016/S0301-4215(97)00110-9
- Bibcode:
- 1997EnPol..25.1179P
- Keywords:
-
- Fuel economy;
- Light-duty vehicles