Reducing Gasoline Consumption: Three Policy Options |
November 2002 |
Notes
Numbers in the text and tables of this report may not add up to totals
because of rounding.
Unless otherwise indicated, all years referred to are calendar years.
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Several Members of Congress and public interest groups have recently proposed policies that would reduce gasoline consumption in the United States. Such proposals stem primarily from a desire to enhance the nation's energy security and to decrease its emissions of carbon dioxide, a key greenhouse gas that
affects the Earth's climate. This Congressional Budget Office (CBO) study--prepared
at the request of the Senate Committee on Environment and Public Works--compares
three methods of reducing gasoline consumption: increasing the corporate
average fuel economy (CAFE) standards that govern passenger vehicles, raising
the federal tax on gasoline, and setting a limit on carbon emissions from
gasoline combustion and requiring gasoline producers to hold allowances
for those emissions (a policy known as a cap-and-trade program).
The study weighs the relative merits of those policies against several
major criteria: whether they would minimize costs to producers and consumers;
how reliably they would achieve a given reduction in gasoline use; their
implications for automobile safety; and their effects on such factors as
traffic congestion, requirements for highway construction, and emissions
of air pollutants other than carbon dioxide. In addition, the analysis
examines two more policy implications that lawmakers may be concerned about:
the impact on people at different income levels and in different regions,
and the effects on federal revenue. In keeping with CBO's mandate to provide
objective, impartial analysis, this report makes no recommendations.
The study was written by Terry Dinan and David Austin of CBO's Microeconomic
and Financial Studies Division, which is directed by Roger Hitchner. Robert
Dennis, Barbara Edwards, Arlene Holen, Mark Lasky, Deborah Lucas, John
Peterson, and Tom Woodward of CBO provided valuable comments, as did Haynes
Goddard of the University of Ohio at Cincinnati and Margaret Walls of Resources
for the Future.
Christian Spoor edited the study, and Christine Bogusz proofread it.
Angela McCollough and Cecil McPherson produced initial versions of the
tables and figures, Kathryn Winstead prepared the study for publication,
and Annette Kalicki prepared the electronic versions for CBO's Web site.
Dan L. Crippen
Director
November 2002
Tables |
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1. |
Average Characteristics of New Cars, Model Years 1978-2000 |
2. |
Estimated Burden of Gasoline Spending on Households |
3. |
Revenue Effects of a 15-Cent Increase in the Federal Gasoline Tax |
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Figures |
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1. |
Vehicles' Average Fuel Economy Compared with CAFE Standards,
Model Years 1978-2000 |
2. |
Total State and Local Gasoline Taxes, End of 2001 |
3. |
Gasoline Prices and Federal Gasoline Taxes, 1950-2000 |
4. |
Fatality Rates for Cars and Light Trucks, 1975-2000 |
5. |
Annual Cost to Households in Different Regions from a 4.3-Cent Rise
in the Federal Gasoline Tax |
6. |
Annual Cost to Households in Different Regions from a 4.3-Cent Rise
in the Federal Gasoline Tax, as a Share of Household Income |
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Boxes |
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1. |
Making CAFE Standards More Cost-Effective by Improving Their Design |
2. |
Is the Market for Fuel Economy in New Vehicles Efficient? |
3. |
The Effect of Price Changes on Gasoline Consumption |
4. |
Changing the Design of CAFE Standards to Improve Auto Safety |
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