• 4 minutes Is The Three Gorges Dam on the Brink of Collapse?
  • 8 minutes The Coal Industry May Never Recover From The Pandemic
  • 11 minutes China Raids Bank and Investor Accounts
  • 4 hours Biden admits he has been tested for Cognitive Decline several times. Didn't show any proof of test results.
  • 3 hours During March, April, May the states with the highest infections/deaths were NY, NJ, Ma. . . . . Today (June) the three have the best numbers. How ? Herd immunity ?
  • 5 hours Putin Forever: Russians Given Money As Vote That Could Extend Putin's Rule Draws To A Close
  • 11 mins Apology Accepted!
  • 3 hours Tesla Model 3 police cars pay for themselves faster than expected, says police chief
  • 4 hours Putin Paid Militants to Kill US Troops
  • 3 hours Why Oil could hit $100
  • 9 hours The Political Genius of Donald Trump
  • 1 day U.S. natural gas at major disadvantage in Europe and China.
  • 1 day Biden came out of his basement today (Thursday) and said , "we have 120 Million deaths from Covid 19.
  • 38 mins Per most popular Indian websites it was Indian troops not Chinese troops breach of LAC that caused the clashes. If you know any Indian media that claim to the contrary please provide the link
  • 1 day The world is headed for big problems - interview with very smart economist
  • 1 day CoVid in Spain, 9 months before China
Big Oil’s Nightmare Is Coming True

Big Oil’s Nightmare Is Coming True

Royal Dutch Shell has followed…

Iraq Set To Fall Short Of Ambitious OPEC+ Targets

Iraq Set To Fall Short Of Ambitious OPEC+ Targets

Iraq, OPEC’s no.2 oil producer…

James Hamilton

James Hamilton

James is the Editor of Econbrowser – a popular economics blog that Analyses current economic conditions and policy.

More Info

Premium Content

Changing Oil Consumption Habits: Fuel Efficiency in Light Vehicles

I recently highlighted grounds for pessimism about the ease with which the U.S. could significantly change our oil consumption habits. Here I highlight some interesting new research by U.C. Davis economics professor Christopher Knittel which offers a more optimistic assessment.

Knittel's paper notes that although U.S. fuel economy has shown only a modest improvement over the last 30 years, vehicle weight and horsepower have increased substantially. For example, the diagram below shows weight, horsepower, torque, and fuel economy for the Honda Accord since 1980.

Honda Accord Attributes
Attributes of Honda Accord over time. Top row: weight and horsepower. Bottom row: torque and fuel economy. Source: Knittel (2009).

Knittel argues that manufacturers could produce cars with different combinations of these attributes, and that technological improvement has allowed them to give consumers more of everything. For example, the figure below shows combinations of fuel economy and horsepower offered by different passenger cars. The circles correspond to cars sold in 1980, and the squares to cars sold in 2006. A typical car improved on both dimensions-- the production possibilities set has shifted out over time, with consumer preferences opting to take more of the technological improvement in the form of higher horsepower rather than better fuel economy.

Fuel Economy versus Horsepower
em>Fuel economy versus horsepower for U.S. passenger cars in 1980 and 2006. Source: Knittel (2009).

Knittel estimated an empirical relationship between fuel economy, horsepower, size, torque, and other characteristics such as whether the vehicle uses automatic transmission, based on a panel data set of different models sold over time, allowing the intercept of this relation also to change over time. That changing intercept is a key magnitude of interest, since it captures the extent of overall technological improvement due to features such as more efficient engines and transmissions. Here is what Knittel concludes about the magnitude of the outward shift over time in the production possibilities set:

if weight, horsepower and torque were held at their 1980 levels, fuel economy for both passenger cars and light trucks could have increased by nearly 50 percent from 1980 to 2006; this is in stark contrast to the 15 percent by which fuel economy actually increased.

By. James Hamilton of Econbrowser
Econbrowser analyse current economic conditions and policy.
Reproduced from Econbrowser.com


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News