Automobile fuel regulations: Direct benefit-cost analysis, 1981-1984

Hyder Ali G. Lakhani

Applied Energy, 1980, vol. 6, issue 4, 313 pages

Abstract: The object of this paper is to analyse economic efficiency and equity aspects of the auto-gasoline mileage regulations for 1981-1984. The paper uses data available from the US Department of Transportation to estimate both the direct benefits of gasoline and maintenance cost savings and the cost of compliance by the manufacturers. The direct benefit/cost ratios exceed unity and it is concluded that the regulations are cost-effective. The equity aspects are analysed by grouping families according to income groups in the Consumer Expenditure Survey data of the US Bureau of Labor Statistics. The analysis shows that lower income groups owning fewer cars derive fewer benefits, relative to upper income groups, from fuel economy regulations. Income compensating measures such as [`]fuel stamps' are suggested as a way of mitigating this inequity.

Date: 1980
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