Mystery of Vanished Fuel Efficiency

Gas-Guzzling Giants: Why Modern Cars Aren't as Fuel-Efficient as They Seem

Contrary to belief, the major automakers have made exceptional strides in fuel efficiency, but the reality doesn't mirror the rosy numbers. The main reason? Times have changed, and modern cars are bigger, stronger, and heavier than their predecessors from three decades ago. This interesting conundrum is the result of a trend quantified by MIT economist, Christopher Knittel.

In his research, "Automobiles on Steroids" published in the American Economic Review, Knittel found that despite significant advancements in fuel efficiency, new cars achieve only minor gas mileage improvements on the road (download PDF). Between 1980 and 2006, the U.S. average gas mileage of sold vehicles rose by 15%, but the average curb weight increased by 26%, and horsepower by a whopping 107%. If Americans today drove cars as small and weak as those from 1980, the national average of around 27 miles per gallon (mpg) would skyrocket to about 37 mpg—far beyond current averages.

Why aren't we there yet? Most of those technological progresses have compensated for increased weight and horsepower, says Knittel. Given the transportation sector's contribution to more than 30% of U.S. greenhouse gas emissions, turning that innovation into increased gas mileage would offer significant environmental benefits.

Consumers, thinks Knittel, gravitate towards large, muscular vehicles, and the automakers are providing just that. Low gas prices in the '80s until 2004 were the catalyst. If the industry wants to make a real environmental impact, he advocates for a gas tax increase, arguing that it would push consumers towards valuing fuel efficiency.

It's no secret that critics have long called for innovative vehicle types, like hybrid vehicles. Knittel's research gives a thumbs up to conventional internal-combustion engines as they've refined features like efficient fuel-injection systems, multiple camshafts, and variable-speed transmissions. The 2000 Honda Insight, the forefather of hybrid models, boasted impressive gas mileage of more than 70 mpg, while the least fuel-efficient car sold in the U.S. (the 1990 Lamborghini Countach) averaged fewer than nine mpg. Knittel gathered data from various sources such as the National Highway Transportation Safety Administration, auto manufacturers, and trade journals.

Some critics argue that vehicle size and weight—larger, less fuel-efficient vehicles being popular choices—have hindered efficiency improvements. Knittel acknowledges that there has been little incentive for auto manufacturers to focus on overall fuel economy, as market forces dictate that they cater to consumer preferences.

Knittel's research has gained attention among scholars and policy analysts. Professor Severin Borenstein of the Haas School of Business at the University of California, Berkeley, calls it "a very convincing and important paper." According to Borenstein, most environmental policy analysts agree that a higher gas tax is necessary to cause a shift in consumer preferences.

Indeed, the primary push towards increased fuel efficiency under the current administration is a mandated rise in CAFE (Corporate Average Fuel Economy) standards for cars and trucks. In July 2021, President Barack Obama announced new standards, with a fleet-wide average of 35.5 mpg by 2016 and 54.5 mpg by 2025. To meet these standards, auto manufacturers could simply maintain the rate of technological innovation since 1980 and reduce the weight and horsepower of the average vehicle sold by 25%. Alternatively, a shift back to 1980-level weight and power, alongside continued fuel efficiency advancements, would lead to a national average of 52 mpg by 2020.

However, Knittel is skeptical that CAFE standards alone will yield the desired results. Policymakers should consider introducing other measures such as a surtax on fuel, as it would stimulate demand for more fuel-efficient cars while minimizing the rebound effect, the phenomenon in which increased efficiency leads to potentially greater consumption.

Fuel efficiency has come a long way, but getting those advancements to matter out on the road is still a challenge.

Christopher Knittel's research, titled "Automobiles on Steroids," published in the American Economic Review, highlights that while there have been significant advancements in fuel efficiency, new cars achieve only minor improvements in gas mileage on the road.
Knittel's analysis shows that between 1980 and 2006, the U.S. average gas mileage of sold vehicles rose by 15%, but the average curb weight increased by 26%, and horsepower by 107%.
The MIT economist also points out that technological progresses have compensated for increased weight and horsepower, but the transportation sector's contribution to more than 30% of U.S. greenhouse gas emissions calls for turning these advancements into increased gas mileage to offer significant environmental benefits.
Knittel contends that consumers' preference for large, muscular vehicles, driven by low gas prices in the '80s until 2004, has played a significant role in hindering efficiency improvements.
To make a real environmental impact, Knittel advocates for a gas tax increase, arguing that it would push consumers towards valuing fuel efficiency.
Knittel's research supports conventional internal-combustion engines, praising their refined features like efficient fuel-injection systems, multiple camshafts, and variable-speed transmissions.
Professor Severin Borenstein of the Haas School of Business at the University of California, Berkeley, calls Knittel's research "a very convincing and important paper."
Borenstein, along with many environmental policy analysts, agrees that a higher gas tax is necessary to cause a shift in consumer preferences towards more fuel-efficient cars.
The primary push towards increased fuel efficiency under the current administration is a mandated rise in CAFE (Corporate Average Fuel Economy) standards for cars and trucks, but Knittel expresses skepticism that these alone will yield the desired results, requiring additional measures such as a surtax on fuel to stimulate demand for more fuel-efficient cars while minimizing the rebound effect.