Improvements in Fuel Economy Cut Nationwide Consumption


Reeling from record-high oil prices it was unable to rein in, the revelation of the United States’ stunning level of energy insecurity served to be an important legacy of the 1973 Arab Oil Embargo. “The event was hailed as the first major victory of the Third World,” wrote energy experts Amy Myers Jaffe and Ed Morse in a recent article for Foreign Policy, “bring[ing] the West to its knees.” The fact that several oil-producing countries could deliver such a heavy blow to the U.S. not only revealed our strategic dependence on oil, but also forced American consumers and policymakers to reexamine how efficiently we use our resources. By the time of the oil crisis, vehicle fuel-efficiency had fallen from 14 miles per gallon (mpg) in 1923 to 11.9 mpg. Two years later, the average light-duty vehicle traveled a paltry 15 miles on one gallon, marginally worse than the Ford Model T of nearly a half century prior.

In the political reaction that followed, Congress sought to improve American energy security by enacting legislation to improve vehicle fuel economy. In 1975, it passed the historic Corporate Average Fuel Economy (CAFE) standards, mandating improvements in average annual mpg. In the two decades that followed, mpg improved slightly. Light-duty passenger fleets achieved an average on-road fuel economy of 16.9 mpg by 1991 – still better than the 15 mpg the average model year vehicle received in 1975. By 2002, the average vehicle fuel economy had improved to 19.5 mpg, equating to gasoline savings of 14 percent over non-CAFE projections, according to the National Academy of Sciences. Now, a new report from the University of Michigan’s Transportation Research Center has found great increases in mpg over the last seven years to yield more impressive fuel savings. Researchers Michael Sivak and Brandon Schoettle found that, between October 2007 and September 2014, the average, sales-weighted fuel economy of light-duty vehicles sold in the U.S. increased from 20.1 to 25.3 mpg. In the third quarter of 2014 alone, vehicle fuel economy increased by 0.3 to 25.6 mpg (Figure below). Sivak and Schoettle estimate that, of the 234 million light-duty vehicles on U.S. roadways, 89 million were purchased during their seven years of observation, or 38 percent of the U.S. light-duty fleet. Using their estimates of fleet size, as well as Environmental Protection Agency window sticker ratings, they ask an important question: How much fuel was saved under improved fuel economy standards?

The answer: a cumulative total of 15.1 billion gallons of fuel, or enough to power all vehicles on U.S. roadways for 33 days. Without these fuel economy improvements over the last seven years, the U.S. would have consumed more than 175 billion gallons of fuel (Figure 2, below). Last month alone, efficiency improvements drove savings of 614 million gallons of gasoline, or “six percent of the monthly average fuel consumption […] of all light-duty vehicles on the road,” the researchers said.

What is remarkable about this report is that it underscores the progress that has been made in the fuel economy space. Just like in 1975, light-duty passenger vehicles remain an important mode of transportation in the U.S. According to the Bureau of Transportation Statistics (BTS), in 2011, 192.5 of the 253.1 million registered vehicles on U.S. roadways were light-duty passenger cars. In 2014, BTS found that the average age of these vehicles was 11.4 years—three years longer than the average age of vehicles on U.S. roadways in 1995. And as new fuel-economy standards kick in, like the current administration’s 2012 mandate to improve fuel economy to 54.5 mpg by 2025, the share of automobiles with improved fuel economy will not only continue to grow, but also last longer. And, of course, there is the added bonus of wider consumer adoption of electric vehicles, and those run on energy sources other than oil. As these cars penetrate a wider share of the market, overall average fuel-economy will continue to improve. More importantly, the kind of intense scarcity precipitated by the Arab Oil Embargo will at least be tempered by fuel source diversity, as consumers not only do more with less oil, but consume less petroleum-based fuels more generally.