• 3 minutes Electric cars may make driving too expensive for middle classes, warns Vauxhall chief
  • 6 minutes Natural gas mobility for heavy duty trucks
  • 12 minutes Colonial pipeline hack
  • 14 mins U.S. Presidential Elections Status - Electoral Votes
  • 26 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 16 mins Texas Power Outage Danger Until June 18th. Texans told to conserve energy!
  • 12 hours Succession Planning in Human Resources for Vaccinated Individuals in the Oil & Gas Industry
  • 16 hours Federal Judge Says Biden Probably Wrong for Halting Drilling on Federal Land
  • 1 day And now, hybrid electric locomotives...
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




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News