Transportation Fuel Use, Technology and Standards : The Role of Credibility and Expectations

There is a debate among policy analysts about whether fuel taxes alone are the most effective policy to reduce fuel use by motorists, or whether to also use mandatory standards for fuel efficiency. A problem with a policy mandating fuel economy sta...

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Bibliographic Details
Main Authors:	Eskeland, Gunnar S., Mideksa, Torben K.
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCIDENTS AIR AIR POLLUTION AIR QUALITY ALTERNATIVE POLICIES APPROACH AUTO MANUFACTURERS AUTOMOBILE AUTOMOBILE FUEL AUTOMOTIVE FUEL AVERAGE FUEL EFFICIENCY BUS BUS SYSTEMS BUSES CAPITAL GAINS CAPITAL GOODS CAR CAR FLEET AVERAGE CAR INDUSTRY CAR MILEAGE CAR OWNERSHIP CAR OWNERSHIP RATES CAR SALES CAR TECHNOLOGY CAR USE CARBON CARBON DIOXIDE CARBON DIOXIDE EMISSIONS CARBON EMISSIONS CARS CERTIFICATION STANDARDS CHOICE OF FUEL CLEAN TRANSPORTATION CLIMATE CHANGE CLIMATE CHANGE POLICY CO2 CO2 EMISSIONS CONGESTION CONSUMPTION OF FUEL COST BENEFIT ANALYSIS COST EFFECTIVE POLICIES COST EFFECTIVENESS COST OF GASOLINE COSTS OF FUEL COSTS OF TRAVEL CRASHES DEMAND CURVE DEMAND ELASTICITIES DEMAND ELASTICITY DEMAND FOR ENERGY DEMAND FOR GASOLINE DIESEL DISCOUNT RATES DISPOSABLE INCOME DIVIDENDS DRIVING DRIVING FORCE DRIVING RESTRICTIONS ECONOMIC PERSPECTIVES ECONOMISTS EFFICIENT VEHICLES ELASTICITIES ELASTICITIES OF DEMAND ELASTICITY OF DEMAND ELASTICITY OF TRAVEL EMISSION EMISSION CONTROL EMISSION RATE EMISSION REDUCTION EMISSION REDUCTIONS EMISSION STANDARDS EMISSION TAXES EMISSIONS EMISSIONS OF POLLUTANTS EMPIRICAL RESEARCH EMPIRICAL STUDIES ENERGY CONSERVATION ENERGY CONSUMPTION ENERGY EFFICIENCY ENERGY SHORTAGE ENERGY SUPPLY ENERGY USE ENVIRONMENTAL ENVIRONMENTAL ECONOMICS ENVIRONMENTAL PROTECTION EQUILIBRIUM EXTERNAL COSTS EXTERNAL COSTS OF TRANSPORT EXTERNALITIES FISHERIES FIXED COSTS FOSSIL FOSSIL FUEL FOSSIL FUEL USE FUEL CONSERVATION FUEL CONSUMPTION FUEL COST FUEL DEMAND FUEL ECONOMY FUEL ECONOMY STANDARDS FUEL EFFICIENCY FUEL EFFICIENCY IMPROVEMENTS FUEL EFFICIENCY STANDARDS FUEL EFFICIENT CARS FUEL PRICE FUEL PRICES FUEL SAVINGS FUEL STANDARDS FUEL TAX FUEL TAX INCREASE FUEL TAX INCREASES FUEL TAXATION FUEL TAXES FUEL TYPES FUEL USE FUELS GAS GUZZLER TAX GAS TAX GAS TAXES GASOLINE GASOLINE CONSUMPTION GASOLINE DEMAND GASOLINE PRICE GASOLINE PRICES GASOLINE TAX GASOLINE TAXES GLOBAL ENVIRONMENT GOODS TRANSPORT GREENHOUSE GAS GREENHOUSE GAS EMISSION GREENHOUSE GAS EMISSION REDUCTIONS GREENHOUSE GAS EMISSIONS GREENHOUSE GASES HEAVY VEHICLES IMPROVEMENT IN FUEL EFFICIENCY IMPROVEMENTS IN ENERGY EFFICIENCY IMPROVEMENTS IN FUEL EFFICIENCY INCOME LEVELS INSURANCE LIGHT TRUCKS LOCAL AIR POLLUTANTS MARGINAL COST MARGINAL COSTS MARKET PRICES MILEAGE MOTOR VEHICLE MOTOR VEHICLE EMISSIONS MOTOR VEHICLE FUEL MOTOR VEHICLES MOTORISTS NATIONAL OIL NEGATIVE EXTERNALITIES NOISE OIL OIL CONSUMPTION OIL EMBARGOES OIL EXPORTING COUNTRIES OIL PRICE OIL PRICES OIL SUPPLY PASSENGER CARS PEDESTRIANS PERSONAL VEHICLES PETROLEUM PETROLEUM USE POLICY INSTRUMENTS POLICY MAKERS POLITICAL ECONOMY POLLUTERS POLLUTION POLLUTION CONTROL POLLUTION CONTROL POLICIES PRICE CHANGES PRICE ELASTICITIES PRICE ELASTICITY PRIVATE SECTOR PRODUCERS PROPERTY RIGHTS PUBLIC TRANSPORT PURCHASES QUOTAS RATIONAL EXPECTATIONS REAL RATE OF INTEREST ROAD ROAD SPACE ROAD USER ROAD USER CHARGES SAFETY SOCIAL COSTS SUSTAINABLE TRANSPORT TAX RATE TAX RATES TECHNOLOGICAL CHANGE TRAFFIC TRAFFIC ACCIDENTS TRAFFIC FATALITIES TRANSPORT TRANSPORT INFRASTRUCTURE TRANSPORTATION TRANSPORTATION FUEL TRANSPORTATION FUEL USE TRANSPORTATION FUELS TRANSPORTATION SERVICES TRAVEL DEMAND TRIPS TRUCKS VEHICLE VEHICLE FUEL EFFICIENCY VEHICLE KILOMETERS VEHICLE KILOMETRES VEHICLE MILES VEHICLE MODEL VEHICLE USAGE VEHICLE USE WELFARE ECONOMICS WELFARE GAINS WILLINGNESS TO PAY WORLD MARKET PRICES
Online Access:	http://documents.worldbank.org/curated/en/2008/08/9778611/transportation-fuel-use-technology-standards-role-credibility-expectations http://hdl.handle.net/10986/6793

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Summary:	There is a debate among policy analysts about whether fuel taxes alone are the most effective policy to reduce fuel use by motorists, or whether to also use mandatory standards for fuel efficiency. A problem with a policy mandating fuel economy standards is the "rebound effect," whereby owners with more efficient vehicles increase vehicle usage. If an important part of negative externalities from transport are associated with vehicle kilometers (accidents, congestion, road wear) rather than fuel consumption, the rebound effect increases negative externalities. Taxes and standards should be mutually supportive because fuel taxes often meet political resistance. Over time, fuel efficiency standards can reduce political resistance to fuel taxes. Thus, by raising fuel efficiency standards now, politicians may be able to pursue higher fuel tax paths in the future. Another argument in support of fuel efficiency standards and similar policies is that standards to a greater extent than taxes can be announced in advance and still be credible and change the behavior of inventors, firms, and other agents in society. A further argument is that standards can be used with greater force and commitment through international coordination.

Transportation Fuel Use, Technology and Standards : The Role of Credibility and Expectations

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