Automobile Fuel Economy:

Potential Effects of Increasing the Corporate Average Fuel Economy Standards

RCED-00-194: Published: Aug 15, 2000. Publicly Released: Aug 25, 2000.

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John H. Anderson, Jr
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Pursuant to a congressional request, GAO reviewed the Corporate Average Fuel Economy (CAFE) program standards, focusing on: (1) the impact of increasing CAFE standards on oil consumption, the environment, and automobile safety in the United States; and (2) other issues that affect the CAFE discussion.

GAO noted that: (1) according to the studies reviewed and the experts interviewed, raising fuel economy standards would reduce future fuel consumption and greenhouse gas emissions; (2) however, the impact of raising standards on vehicle safety is less certain; (3) the effect of increasing CAFE standards on vehicle safety is harder to quantify because it depends on many variables, such as the amount of lead time given to manufacturers, the size of the CAFE increase, and the strategies manufacturers use to achieve fuel economy gains; (4) in addition, there is little research linking CAFE increases and vehicle safety; (5) the major concern about safety is that manufacturers might produce smaller, lighter vehicles to meet more stringent CAFE standards and thus sacrifice some level of protection for occupants; (6) GAO found consensus among safety experts and auto manufacturers that as long as there is sufficient lead time to meet higher CAFE levels, auto manufacturers could use fuel-saving technologies instead of simply building smaller, lighter cars, thereby minimizing any negative impact on safety; (7) GAO also identified a number of other issues associated with raising CAFE standards; (8) automobile manufacturers have had little incentive to improve fuel economy because, over the past decade, gas prices have been low and consumers have consistently purchased larger, more powerful vehicles that emphasize performance over fuel economy; (9) the Environmental Protection Agency's (EPA) new, more stringent tailpipe emission standards may inhibit the use of certain technologies that have great potential for improving fuel economy but may not meet these standards; (10) EPA and the Department of Transportation are concerned that vehicle classification regulations may be outdated, reducing the incentive for manufacturers to increase the fuel economy of their light trucks; (11) it is possible that technology-driven economy increases could occur without increasing CAFE standards; (12) although it is unlikely that such vehicles can be cost-effectively produced and sold in the near future, it is possible that some of the technologies being developed through the Partnership for a New Generation of Vehicles could lead to improvements in fuel economy without increases in CAFE standards; and (13) finally, some analysts contend that increasing CAFE standards is not as cost-effective as other policy measures for reducing fuel consumption and greenhouse gas emissions, because CAFE standards do not affect older vehicles and may not result in reduced driving.

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