A free lunch at higher CAFE? A review of economic, environmental and social benefits

Pressure has been increasing to raise the corporate average fuel economy (CAFE) standard. Some researchers assert many benefits from increasing CAFE, from less dependence on imported petroleum to lower urban ozone. We find that fuel savings from increasing CAFE are subject to diminishing returns, with little or no effect on urban air pollution, and a less than proportional reduction in greenhouse gas emissions. Higher CAFE reduces safety, unless offsetting steps are taken. Should the public demand moderately higher fuel efficiency, the government should raise the CAFE standard and gasoline prices. Given current technology, substantial increases in CAFE have potential costs, and do not appear to offer significant benefits as contended.