July 25, 1994

Mike Wooldridge, MAWooldridge@lbl.gov

In real terms, Americans pay less for a mile's worth of fuel today than before the oil crisis

BERKELEY--Over the past two decades Americans have significantly improved automobile fuel economy relative to the rest of the world, according to a study by the International Energy Studies Group at Lawrence Berkeley Laboratory (LBL). This has substantially narrowed the miles-per-gallon gap between the United States and Europe and Japan.

Lee Schipper, an energy economist in LBL's Energy and Environment Division, led the research group. Results of the study appeared in the "ORNL Transportation Energy Data Book" published by Oak Ridge National Laboratory.

The increase in fuel economy, combined with stability of gasoline prices, made the real cost for Americans to drive a mile in 1991 more than a fourth less compared to the cost at the beginning of the oil crisis, the study shows.

The research group surveyed annual fuel use totals from 1970, before the Middle East oil crisis, through 1991, the last year international fuel totals are available.

The study reports that fuel economy for light-duty passenger vehicles (cars and light trucks) in the United States rose from an average of 13.3 miles per gallon (mpg) in 1973--the year of the first oil shock--to 20.1 mpg in 1991, an increase of 53 percent. Over the same period, European countries raised fuel economies only seven percent, from 23.0 mpg in 1973 to 25.0 mpg in 1991. Japan saw a gain of two percent, from 21.3 mpg in 1973 to 21.8 mpg in 1991. (The calculations take into account diesel cars and their fuel use.)

The research group gives several reasons for the greater U.S. gains. While the United States, Europe and Japan all raised fuel taxes in response to the oil crisis in the 1970s, the U.S. hike was much greater in a relative sense, since fuel taxes before then had been very low, Schipper says. (U.S. fuel prices still remain far below those of Europe.) The Corporate Average Fuel Economy (CAFE) standards implemented in the United States also applied significant pressure on auto makers to make more fuel efficient cars, he says.

Europe and Japan had no comparable standards. Europeans also moderated the impact of higher fuel prices in part by switching to cars that used lower-cost diesel fuel, he says.

Combining the fuel economy data with fuel price figures, the researchers found surprising changes in the real fuel cost in the United States compared to the rest of the world. Americans paid $6.28 for fuel to drive 100 miles in 1973 but only $4.51 in 1991, a drop of 28 percent (1985 U.S. dollars were used as a standard, with costs adjusted for purchasing power). In Japan, Britain, France and Italy, drivers paid about the same for fuel in 1991 compared to 1973. Drivers in Denmark paid 12 percent less, while Germans paid about 12 percent more, mostly on account of a fuel tax increase to fund German reunification.

Such a decrease in the real cost of fuel in the United States, Schipper says, could work to reverse the climbing trend in automobile fuel economies. "With the cost of using fuel at or below 1973 levels," he says, "there is less pressure for consumers and auto companies to be concerned about fuel economy."

LBL is a U.S. Department of Energy national laboratory located in Berkeley, California. It conducts unclassified scientific research and is managed by the University of California.

NOTE: For additional comment, contact Lee Schipper at LJSchipper@lbl.gov or (510) 486-5057.