Concerns over national security, environmental stresses, and high fuel prices have raised interest in reducing oil consumption. Through the Corporate Average Fuel Economy (CAFE) program, the National Highway Traffic Safety Administration (NHTSA) requires cars and light trucks to meet certain fuel economy standards. As requested, the author discusses: how CAFE standards are designed to reduce fuel consumption, strengths and weaknesses of the CAFE program and NHTSA's capabilities, and market-based policies that could ...
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Concerns over national security, environmental stresses, and high fuel prices have raised interest in reducing oil consumption. Through the Corporate Average Fuel Economy (CAFE) program, the National Highway Traffic Safety Administration (NHTSA) requires cars and light trucks to meet certain fuel economy standards. As requested, the author discusses: how CAFE standards are designed to reduce fuel consumption, strengths and weaknesses of the CAFE program and NHTSA's capabilities, and market-based policies that could complement or replace CAFE. This is an excerpted and edited version.
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