Testimony to the U.S. Senate Committee on Energy

and Natural Resources

**Near Term options to increase fuel economy and decrease petroleum
Demand**

9:45 am Wednesday, July 23, 2008

Dirksen Senate Office Building, Room 366

Washington, DC

by

Dr. David L. Greene

Corporate Fellow

Transportation Science and Energy Division

Oak Ridge National Laboratory

July 23, 2008

Good morning Mr. Chairman, distinguished committee members and guests.
Thank you for the opportunity to comment on what can be done in the near
term to reduce our demand for petroleum by increasing motor vehicle fuel
economy. Before I do that, I would first like to note the important
actions Congress has already taken to promote fuel economy. The Energy
Independence and Security Act (EISA) of 2007 requires a 40% increase in
the fuel economy of passenger cars and light trucks by 2020. I estimate
that this law alone will save consumers about 60 billion gallons of
gasoline a year by 2030. The Act also calls for a study of fuel economy
standards for heavy trucks, a policy that has been successfully
implemented in Japan. Just as important, you are allowing energy markets
to work. Market responses to higher oil prices, though painful, are an
essential part of both the long and short-run solution. I believe these
measures have already sent a signal to world oil markets that the United
States is serious about reducing its oil consumption in the longer term.

There are many things consumers can do themselves to improve the fuel
economy of their vehicles, and there are also things the Congress can do
to help. By combining a number of individually small improvements
consumers' gasoline bills can be reduced significantly. Some actions can
be taken immediately, others will require a few years.

Improving fuel economy, by itself, will not bring oil prices back to
\$30 a barrel. That will require a comprehensive, long-term strategy,
one that addresses both climate change and energy security
simultaneously, and one that sets measurable goals for both reductions
in greenhouse gases and oil dependence (Greene and Leiby, 2008).

.

**immediate actions to increase miles per gallon**

Many consumers are already aware of actions they can take to get more
miles per gallon. The Department of Energy (DOE) and Environmental
Protection Agency (EPA) website,
[www.fueleconomy.gov](http://www.fueleconomy.gov/), itemizes and
explains a number of proven driving and maintenance tips. These tips
have been publicized on television, in newspapers and magazines, and on
the internet through programs such as the Alliance to Save Energy's
Drive \$marter Challenge at <http://drivesmarterchallenge.org/> .
However, as a provider of this information, I am well aware of its
deficiencies. Often, the best information available is out of date and
may not be accurate for today's automotive technology. Some of it is
based on studies of a very limited number of vehicles and there are
questions about how confidently it can be applied to all vehicles. Just
this year, the DOE's Vehicle Technologies Program began an effort to
update and validate the fuel economy information it provides to the
public. I believe it is appropriate for the DOE to take on this
responsibility and that the Congress should encourage it to expand and
continue the effort.

**Driver Behavior**

After a vehicle has been designed, engineered and manufactured the
driver can have the greatest influence on its fuel economy. Different
driving styles are a major reason why the fuel economy label says, "your
mileage will vary". What little research there is on the subject
indicates that typical drivers can increase their miles per gallon by
about 10% by diligently adopting the driving tips provided on
fueleconomy.gov.

> ***Curb aggressive driving*** - 5% improvement in city driving and
> even more on the highway
>
> ***Observe speed limits*** - 7-8% fuel economy benefit for every 5 mph
> slower at highway speeds
>
> ***Car "housecleaning"*** - remove unnecessary weight from the cargo
> compartment, as well as cartop carriers when not in use (2%
> improvement for each 100 lbs. unloaded).
>
> ***Plan ahead*** - to combine trips to avoid cold-starts (especially
> in cold weather), and use your most efficient vehicle as much as
> possible.
>
> ***Avoid unnecessary idling*** -- idling for more than a few seconds
> wastes fuel versus shutting down the engine and restarting.

**Vehicle Maintenance**

Proper vehicle maintenance can also improve fuel economy. Keeping tires
inflated to the manufacturer's recommended pressure, keeping wheels
properly aligned and balanced, oil changes on manufacturers' recommended
intervals with the recommended grade of fuel saving oil, replacing dirty
air filters and keeping you engine in proper tune can all help maximize
miles per gallon.

**Speed Limits**

Reducing speed limits can save fuel, but at a cost of increased travel
time. For each 5 mph above 55 mph, fuel economy decreases by about 7%.
For most Americans the value of their time would exceed the value of the
fuel saved. A retrospective study of the 55 mph speed limit by the
National Academy of Sciences (NAS) found that it saved 1-3% of highway
fuel use and also improved highway safety (NAS, 1984). Because many
drivers now routinely exceed the speed limit by 5 mph or more, an
alternative to lowering speed limits would be to more strictly enforce
those we have now.

The fact that not all vehicle travel occurs under free-flowing highway
conditions limits the potential benefits of lower speed limits.
According to the Federal Highway Administration (FHWA), less than 40% of
all vehicle miles are traveled on interstates, freeways and expressways
or principal rural roads (U.S. DOT, 2005). A substantial fraction of
these miles will occur under congested conditions. Thus, a 5 mph
reduction in speed limits, if strictly enforced, would reduce fuel
consumption by up to 7% on the roads where it applied, and 2-3%
nationwide.

**Heavy Trucks\
**

Strategies available to improve heavy truck fuel consumption include
idle reduction (up to 1,000 gallons per truck per year), improved
aerodynamics (up to 600 gallons per truck per year), wide base tires,
automatic tire inflation systems, and hybrid powertrains (EPA \$martway,
[www.epa.gov/smartway/smartway_fleets_strategies.htm](http://www.epa.gov/smartway/smartway_fleets_strategies.htm)).

**Near-term (1-5 years) options**

**Low Rolling Resistance Tires**

Americans spend about \$20 billion purchasing 200 million replacement
tires each year. A recent study by the NAS concluded that it was
technically and economically feasible to reduce the rolling resistance
of replacement tires by 10% (NRC, 2006), saving 1-2% or 1-2 billion
gallons in fuel consumption. To encourage more widespread use of low
rolling resistance tires, Congress has required the National Highway
Traffic Safety Administration (NHTSA) to develop and implement an energy
efficiency labeling system for replacement tires, as recommended by the
NAS panel. This is yet another accomplishment of the EISA of 2007. The
effectiveness of this system remains to be seen. Congress might also
consider establishing rolling resistance standards (relative to original
equipment tires) for replacement tires.

**Driver Training**

Fuel efficient driving behavior, correctly done, should also contribute
to safe driving. Observing posted speed limits, avoiding aggressive
driving behaviors, anticipating traffic situations and avoiding
tailgating all improve fuel economy and traffic safety. A
well-maintained vehicle is a more fuel efficient and safer vehicle.
Unfortunately, higher fuel prices have encouraged what has been called
"hypermiling" which includes some extreme and unsafe driving practices
such as drafting behind other vehicles to reduce aerodynamic drag or
coasting with the engine off (in a vehicle not equipped for
engine-off-at-idle). Congress might seek ways to encourage the inclusion
of safe, fuel efficient driving practices in standard driver training
curricula.

**Updating Fuel Economy Test Procedures**

The time has come to update the test procedures for determining
compliance with Corporate Average Fuel Economy (CAFE) Standards.
Beginning with model year 2008, the Environmental Protection Agency
fundamentally changed the fuel economy estimates it provides to the
public on window stickers, in the Fuel Economy Guide and via
[www.fueleconomy.gov](http://www.fueleconomy.gov/). These changes
incorporate several important real-world factors that affect in-use fuel
economy but are not included in the city and highway test cycles used to
determine compliance with CAFE Standards. These factors include use of
air conditioning, cold starts and aggressive high speed driving. As a
result, the standards provide no incentive for the adoption of certain
technologies that can improve real-world fuel economy but are of little
or no benefit on the city and highway test cycles. Because most
accessories, such as air conditioners, power steering pumps, and
alternators, are operated little or not at all on the CAFE test cycles,
there is no incentive for manufacturers to improve their efficiency in
order to meet fuel economy standards. The standards also offer no
incentive to reduce cooling loads by improved insulation or specially
tinted glass. It has been estimated that adoption of such "off-cycle"
fuel economy technologies could raise real-world fuel economy by 10% or
more (Duleep, Fulton and Perkins, 2005).

**Voluntary Labeling of Used Cars**

While every new car bears a fuel economy label, used cars, which
comprise the vast majority of sales transactions, do not. New car fuel
economy ratings should be useful for used cars, since research indicates
that fuel economy deteriorates very little with age for a reasonably
maintained vehicle (Greene et al., 2006). The National Automobile
Dealers Association is currently considering a voluntary labeling
program for used cars and there may be ways in which Congress could
facilitate such a program.

**Individualized Fuel Economy Estimates**

In the belief that it's previous fuel economy numbers were biased, the
EPA recently revised its procedures for calculating the fuel economy
estimates it provides to the public. Despite this, most car buyers will
remain highly uncertain about the fuel economy they will actually
achieve in real-world driving. This is because the EPA's estimates are
intended to be an average for all American drivers and not an
individualized estimate for any particular driver. Many factors affect
real-world fuel economy, especially traffic conditions, driving style,
trip lengths, and climate. The result is tremendous variance in real
world experience around the mean estimate (Figure 1). For the data shown
in Figure 1, a confidence interval that includes 95% of motorists is a
band 16 mpg wide around the mean estimate. To improve the usefulness of
MPG estimates to consumers we need more *accurate* predictions for
individuals not less biased estimates for the average driver. This means
finding ways to take account of driving style, traffic conditions,
climate and possibly other factors to produce an individualized
estimate. I believe the internet provides a means for creating such
individual fuel economy estimates. With some research effort, I believe
much better (but still not perfect) fuel economy information can be
provided to consumers.

![](media/image1.wmf){width="6.447916666666667in"
height="4.541666666666667in"}

Figure 1. Real World Fuel Economy Estimates from Over 20,000 U.S.
Drivers

Strong consideration should be given to reporting fuel economy to
consumers in terms of fuel consumption per distance, rather than
distance per fuel consumed. There is evidence that consumers
misinterpret miles per gallon estimates, assuming that the 5 mile per
gallon difference between 15 MPG and 20 MPG is the same as the 5 mile
per gallon difference between 45 and 50 MPG (Larrick and Soll, 2008).
Thus, fuel economy improvements tend to be undervalued for low MPG
vehicles relative to higher MPG vehicles. Most of the rest of the world
now reports fuel economy in terms of fuel use per distance traveled.
This makes it easier for consumers to compare fuel economy among
vehicles and to do such calculations as average city and highway
estimates.

**Fuel Economy Gauges to Provide Feedback to Drivers**

Drivers of most vehicles cannot see how their driving behavior affects
their vehicle's fuel economy. Some cars now provide digital displays of
instantaneous fuel economy so that drivers can see how speeding or
aggressive driving behaviors waste fuel. While it is virtually certain
that such devices will improve in-use fuel economy, current test
procedures give no credit for them. Research is now ongoing at the
University of California at Davis to better understand how fuel economy
feedback devices can improve in-use fuel economy. Congress may wish to
explore ways to encourage the installation of fuel economy feedback
devices in all motor vehicles.

**Pay-at-the-Pump Minimum Liability Insurance**

At a time of record high gasoline prices, it may seem strange to propose
a policy that would increase the price of gasoline at the pump. However,
pay-at-the-pump insurance would have no impact on the overall cost of
driving. It would simply transfer the incidence of a fraction (perhaps
one fourth) of the total cost of auto insurance to the cost of motor
fuel. This would increase the cost of gasoline by \$0.25 to \$0.50 per
gallon but reduce the cost of auto insurance by an equal amount.
Motorists would still be required to enroll with an insurance carrier to
establish coverage and to purchase any additional insurance needed. The
increased cost of gasoline would encourage manufacturers to adopt more
fuel efficient technologies and consumers to choose more fuel efficient
vehicles and operate their vehicles more efficiently. It would also
reduce the problem of uninsured motorists since everyone would be
purchasing a minimal amount of liability insurance on a pay-as-you-go
basis. It would also improve the economic efficiency of the insurance
system by making at least a fraction of insurance payments proportionate
to the amount of transportation done.

**Incentives for Energy Efficient Vehicles**

Gasoline at \$4/gallon provides a strong economic incentive to increase
fuel economy for both car makers and car buyers. Still, there are good
reasons to believe that the market for automotive fuel economy is not
itself efficient and that market outcomes could be improved by means of
economic incentives to vehicle purchasers (Greene, German and Delucchi,
2008).

Extending and simplifying incentives for hybrid vehicles would raise new
vehicle fuel economy and encourage the transition to more efficient
electric drive systems (Kromer and Heywood, 2007). Incentives could be
based on fuel consumption (on the quantity of fuel saved) rather than on
a technical measure of degree of hybridization. For example, a hybrid
pickup truck that got 18 miles per gallon instead of 12 would benefit
from a larger incentive than a hybrid passenger car getting 45 mpg
instead of 30 because it would save 200 gallons more in a typical year
of driving (333 gallons in driving 12,000 miles instead of 133). Of
course, incentives for higher fuel economy have two drawbacks. First,
some car buyers would have bought a hybrid vehicle anyway, especially at
today's high fuel prices. Second, the incentives will be a drain on the
treasury unless they are offset by comparable increases in revenue. The
first problem can be mitigated but not eliminated by announcing
incentives at least two years in advance to give manufacturers time to
expand production. The second problem can be eliminated by implementing
disincentives for inefficient vehicles.

In the longer run, fiscal incentives for more energy efficient vehicles
may be the most efficient policy not only for encouraging consumers to
choose higher fuel economy but also for encouraging manufacturers to
invent and adopt advanced fuel economy technologies. Feebates -- fiscal
incentives based on fuel consumption per mile -- are a flexible market
based policy for promoting fuel economy. Feebates can be indexed to
vehicle attributes, such as NHTSA's footprint metric, in the same way
fuel economy standards can (Greene, 2008). Feebates can be revenue
neutral or can provide a net subsidy for new vehicle purchases. They can
be a complement to fuel economy standards, or possibly even a substitute
for them.

**Concluding observations**

In my remarks I have concentrated on actions individual motorists can
take to increase fuel economy and thereby reduce the burden of high
gasoline prices, or things Congress can do to promote light duty vehicle
fuel economy. Yet we cannot solve our oil dependence problem unless we
address all uses of petroleum throughout the transportation sector and
throughout our economy. Light-duty vehicles account for less than half
of total U.S. petroleum use. Other transportation vehicles account for
more than one-fourth of petroleum demand. Industry consumes almost
another fourth and we burn up an average of 1 million barrels per day of
distillate fuel heating buildings. All of these uses must be addressed.
Only through a comprehensive strategy to reduce petroleum use and
increase energy supply, directed towards a measurable oil independence
goal, can we be confident of achieving energy security.

![](media/image2.wmf)

Figure 2. Petroleum Use in the U.S. Economy, 2007

**References**

Duleep, K.S., L. Fulton and S. Perkins. 2005. Technology and Policies to
Improve Light-Duty Vehicle In-Use Fuel Economy," Transportation Research
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Davis, S.C. and S.W. Diegel. 2008. *Transportation Energy Data Book,
Edition 27*, ORNL-6978, Oak Ridge National Laboratory, Oak Ridge,
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Greene, D.L. 2008. "Feebates, Footprints and Highway Safety,"
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