Between January 2007 and August 2008 gasoline prices rose more than $2 per gallon. Much discussion was had over the woes of $4 gas. Yet according to a report released this month by the Environmental Protection Agency, real world average light-duty vehicle fuel economy is projected to rise only 0.1 miles per gallon (mpg) between model year (MY) 2008 and MY 2009, from 21.0 mpg to 21.1 mpg. The fact that the fuel economy of new cars sold is barely increasing means that higher gas prices, though damaging to the economy, had no effect on the vehicle fleet.

The peaking of prices in the summer of 2008 did yield a revision in the EPA’s MY 2008 actual value compared to pre-model year production volume projections, which had suggested a fleet-wide average of 20.8 mpg rather than the actual 21.0 mpg. On the bright side, since 2004 (the lowest fuel economy by model year since 1980) fuel economy has improved 9 percent. Yet the graph below suggests that the improvement since 2004, especially considering the record high prices that have come and gone since 2003, is not terribly impressive.

Adjusted Fuel Economy by Model Year (Annual)

Between 1990 and 2004, fleet fuel economy by model year steadily declined. Yet during that period technology improving engine efficiency raced ahead. One reason is that the SUV market share (which includes many crossover vehicles) increased from 6 percent of new light-duty vehicles to 30 percent between MY 1990 and 2005. The explosion in SUV’s is part of a larger trend: increasing weight AND performance.

While engine efficiency constantly increased between 1987 and 2004, that technology innovation was used to add gadgets, like navigation systems and air conditioning, as well as to improve performance. Making cars more comfortable, commodious and gadget-ridden requires more heft. Improving performance means reducing the time it takes to accelerate, which means larger engines. Together, these two forces drive down fuel economy. Since technology has improved, the outcome has simply been only slight decreases in fuel efficiency. In the graph below, the time it takes to accelerate from 0 to 60 mph has fallen from more than 14 seconds to 9.5 seconds, while weight has increased from around 3,200 pounds to 4,200 pounds.

Weight and Performance (Annual)

The lesson of this year’s EPA fuel economy trends report is about the dangers of oil price volatility. Because gas prices are as likely to drop as to rise at any given moment, high prices are assumed to be ephemeral and do not affect consumer behavior. In the absence of very high (and politically unpalatable) fuel taxes, we must rely on fuel economy regulation and support for alternative technologies, like plug-in electric vehicles.

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