Fuel economy rebound effect for US household vehicles

This paper presents an econometric estimation of the "rebound effect" for h ousehold vehicle travel in the United States based on analysis of survey da ta collected by the Energy Information Administration (EIA) at approximatel y three-year intervals over a 15-year period. The rebound effect measures t he tendency to "take back" potential energy savings from fuel economy impro vements as increased travel. Vehicle use models were estimated for one-, tw o-, three-, four-, and five-vehicle households. The results confirm recent estimates based on national or state-level data: a long-run "take back" of about 20 percent of potential energy savings. Consumer responses to changes in fuel economy or fuel price per gallon appear to be equal and opposite i n sign. Recognizing the interdependencies among miles of travel, fuel econo my and price is key to obtaining meaningful results.