Why gas mileage has barely budged since 1980

(Mark Elias/Bloomberg) It’s sometimes suggested that American car companies have quit making more efficient cars and trucks in recent decades. But that’s not strictly true, according to MIT economist Christopher Knittel. In a new paper for the American Economic Review, building off his earlier research (PDF), Knittel calculates that automakers actually boosted vehicle fuel efficiency a whopping 60 percent between 1980 and 2006. Engine technology got better by leaps and bounds. It’s just that most of those improvements went toward making cars bigger and more powerful — and, as a result, all those advances barely increased gas mileage.

Knittel notes that automakers have made a slew of striking advances on the internal combustion engine over the past few decades — from variable-speed transmissions to front-wheel drive — that have drastically increased efficiency. But automakers mainly took advantage of those breakthroughs to build larger cars and light trucks with more powerful engines. Between 1980 and 2006, the average curb weight of vehicles increased 26 percent, while horsepower rose 10 percent. Average gas mileage, by contrast, improved just 15 percent.

The charts below, for instance, show how the Honda Accord has evolved over time. The car’s weight, horsepower and torque have all climbed dramatically since 1980. By contrast, the car’s gas mileage (shown in the lower right corner), spiked briefly in the early 1980s before plummeting and then largely stagnating for a decade:

Here’s another way of making the point: If Americans were still driving the same-sized cars that they were back in 1980, Knittel calculates, the average gas mileage of vehicles would be about 37 miles per gallon today, rather than the 23 miles per gallon we’re currently getting. But oil prices fell during the 1980s and 1990s, and fuel-economy standards stagnated. Automakers had few incentives to improve gas mileage. So they didn’t.

Is there good news here? Sure. Knittel argues that the lastest round of tighter Corporate Average Fuel Economy (CAFE) standards, under which vehicles will have to get a fleetwide average fuel economy of 54.5 miles per gallon by 2025, should be technically achievable. All automakers need to do is keep improving engine technology at the same rate they did between 1980 and 2006. The trick is that they’ll have to concentrate that innovation on boosting gas mileage rather than on hulking up vehicles and making engines more powerful.

Now, whether that will actually happen will depend, to a large extent, on how well the new fuel-economy regulations are structured and whether automakers will find new loopholes to exploit. Indeed, the fact that automakers were often able to get around previous fuel standards by making more SUVs is one reason why Knittel argues that boosting the gas tax is a better, simpler policy for improving fuel economy. (Here’s an earlier post on whether fuel-economy rules create perverse incentives to build bigger vehicles.)