Degree Name

Master of Arts (MA)

Semester of Degree Completion


Thesis Director

Patrick M. Lenihan


Vehicle fuel economy has become the object of intense government regulation in the last two decades. In 1975, Congress legislated Corporate Average Fuel Economy (CAFE) standards for all new cars produced after the 1978 model year. Today, Corporate Average Fuel Economy regulations are being criticized as overly strict in an era of falling gasoline prices. This study provides an assessment of the costs and benefits of the controversial CAFE program and empirically analyzes its effects. The author concludes that the increase in fleet fuel economies, across the line, is approximately what one should have expected given the rise in real gasoline prices since 1968. Moreover, the main determinant of automobile fuel economy is the pump price of gasoline. The author finds that a higher federal gasoline tax would be a much more efficient approach to energy conservation and energy security. Empirical and historical evidence supports the hypotheses.