Automakers have
made great strides in fuel efficiency in recent decades — but the
mileage numbers of individual vehicles have barely increased. An MIT
economist explains the conundrum.
CAMBRIDGE,
Mass. — Contrary to common perception, the major automakers have
produced large increases in fuel efficiency through better
technology in recent decades. There’s just one catch: All those
advances have barely increased the mileage per gallon that autos
actually achieve on the road.
Sound perplexing? This situation is the result of a trend newly
quantified by MIT economist Christopher Knittel: Because automobiles
are bigger and more powerful than they were three decades ago, major
innovations in fuel efficiency have only produced minor gains in gas
mileage.
Specifically, between 1980 and 2006, the average gas mileage of
vehicles sold in the United States increased by slightly more than
15 percent — a relatively modest improvement. But during that time,
Knittel has found, the average curb weight of those vehicles
increased 26 percent, while their horsepower rose 107 percent. All
factors being equal, fuel economy actually increased by 60 percent
between 1980 and 2006, as Knittel shows in a new research paper,
“Automobiles on Steroids,” just published in the American Economic
Review (download
PDF).
Thus if Americans today were driving cars of the same size and power
that were typical in 1980, the country’s fleet of autos would have
jumped from an average of about 23 miles per gallon (mpg) to roughly
37 mpg, well above the current average of around 27 mpg. Instead,
Knittel says, “Most of that technological progress has gone into
[compensating for] weight and horsepower.”
And considering that the transportation sector produces more than 30
percent of U.S. greenhouse gas emissions, turning that innovation
into increased overall mileage would produce notable environmental
benefits. For his part, Knittel thinks it is understandable that
consumers would opt for large, powerful vehicles, and that the most
logical way to reduce emissions is through an increased gas tax that
leads consumers to value fuel efficiency more highly.
“When it comes to climate change, leaving the market alone isn’t
going to lead to the efficient outcome,” Knittel says. “The right
starting point is a gas tax.”
Giving the people what they want
While auto-industry critics have long called for new types of
vehicles, such as gas-electric hybrids, Knittel’s research
underscores the many ways that conventional internal-combustion
engines have improved.
Among other innovations, as Knittel notes, efficient fuel-injection
systems have replaced carburetors; most vehicles now have multiple
camshafts (which control the valves in an engine), rather than just
one, allowing for a smoother flow of fuel, air and exhaust in and
out of engines; and variable-speed transmissions have let engines
better regulate their revolutions per minute, saving fuel.
To be sure, the recent introduction of hybrids is also helping
fleet-wide fuel efficiency. Of the thousands of autos Knittel
scrutinized, the most fuel-efficient was the 2000 Honda Insight, the
first hybrid model to enter mass production, at more than 70 mpg.
(The least fuel-efficient car sold in the United States that Knittel
found was the 1990 Lamborghini Countach, a high-end sports car that
averaged fewer than nine mpg).
To conduct his study, Knittel drew upon data from the National
Highway Transportation Safety Administration, auto manufacturers and
trade journals. As those numbers showed, a major reason fleet-wide
mileage has only slowly increased is that so many Americans have
chosen to buy bigger, less fuel-efficient vehicles. In 1980, light
trucks represented about 20 percent of passenger vehicles sold in
the United States. By 2004, light trucks — including SUVs —
accounted for 51 percent of passenger-vehicle sales.
“I find little fault with the auto manufacturers, because there has
been no incentive to put technologies into overall fuel economy,”
Knittel says. “Firms are going to give consumers what they want, and
if gas prices are low, consumers are going to want big, fast cars.”
And between 1980 and 2004, gas prices dropped by 30 percent when
adjusted for inflation.
The road ahead
Knittel’s research has impressed other scholars in the field of
environmental economics. “I think this is a very convincing and
important paper,” says Severin Borenstein, a professor at the Haas
School of Business at the University of California at Berkeley. “The fact that cars
have muscled up rather than become more efficient in the last three
decades is known, but Chris has done the most credible job of
measuring that tradeoff.” Adds Borenstein: “This paper should get a
lot of attention when policymakers are thinking about what is
achievable in improved automobile fuel economy.”
Indeed, Knittel asserts, given consumer preferences in autos, larger
changes in fleet-wide gas mileage will occur only when policies
change, too. “It’s the policymakers’ responsibility to create a
structure that leads to these technologies being put toward fuel
economy,” he says.
Among environmental policy analysts, the notion of a surcharge on
fuel is widely supported. “I think 98 percent of economists would
say that we need higher gas taxes,” Knittel says.
Instead, the major policy advance in this area occurring under the
current administration has been a mandated rise in CAFE standards, the Corporate Average Fuel Economy of cars and trucks. In
July, President Barack Obama announced new standards calling for a
fleet-wide average of 35.5 mpg by 2016, and 54.5 mpg by 2025.
According to Knittel’s calculations, the automakers could meet the
new CAFE standards by simply maintaining the rate of technological innovation
experienced since 1980 while reducing the weight and horsepower of
the average vehicle sold by 25 percent. Alternately, Knittel notes,
a shift back to the average weight and power seen in 1980, along
with a continuation of the trend toward greater fuel efficiency,
would lead to a fleet-wide average of 52 mpg by 2020.
That said, Knittel is skeptical that CAFE standards by themselves will have the impact a new gas tax would. Such
mileage regulations, he says, “end up reducing the cost of driving.
If you force people to buy more fuel-efficient cars through CAFE standards, you actually get what’s called ‘rebound,’ and they drive more
than they would have.” A gas tax, he believes, would create demand
for more fuel-efficient cars without as much rebound, the phenomenon
through which greater efficiency leads to potentially greater
consumption.
Fuel efficiency, Knittel says, has come a long way in recent
decades. But when it comes to getting those advances to have an
impact out on the road, there is still a long way to go.
