Planet Gore Wrong on CAFE Rebound Effect

Let’s set the record straight on fuel economy standards and the so-called rebound effect. PG claims

CAFE is ineffective as a tool for reducing foreign oil consumption because both theory and history show that increasing fuel economy makes it cheaper to drive and when you make it cheaper to drive people do more of it. The number of miles people drive has doubled since CAFE was first enacted — cancelling out the gains from fuel economy.

PG does not provide a single hyperlink to a supporting study — mainly because there aren’t any. Why? Because the primary reason people drive more is that they are wealthier than they were three decades ago, not because their cars are more fuel efficient.

You have to factor out the tremendous rise in wealth — U.S. per capita real GDP — which itself nearly doubled in the last three decades (calculations can be done here). When you do, the rebound effect turns out to be much lower — at most 20%, and probably much less, possibly 10%.


One of the best recent studies is “Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect,” by two University of California economists. Also, you can Google “CAFE rebound effect” and find lots of articles and PowerPoint presentations. PG, however, rarely cites independent studies to support their views and never seems touse Google to check their facts.This is Planet Gore Disinfotainment Watch #38.