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Welcome back. Module 22 covers energy uses in transportation. This is the first of two models on
transportation. In this lecture, we'll look at the fuels and consumption patterns for transportation. So let's
get started.
Let's talk about transportation, energy uses for transportation. As a reminder, about 20% of our US
annual energy consumption is just for transportation. And a lot of that is from petroleum. In fact,
petroleum makes up about 93% of the energy for transportation, with a little bit also from biomass or
biofuels, some from natural gas, and some from electricity. We consume a lot of fuels for transportation.
We consume a lot of energy.
Of all the petroleum we consume in the nation each day, 12.7 million barrels per day, that is just for
transportation. There's another six million barrels or so per day that's used for other purposes, like
industry. But most of it's for transportation. That's 12.7 million barrels per day of petroleum just for the
liquid fuels for transportation.
That works out to about 133 billion gallons a year of gasoline E10 that we use on the roads and also
another 37 billion gallons a year or so of diesel fuel for our heavier trucks and some cars. So we use a
lot of fuels. We have many road vehicles.
We drive them many miles. The US population today is roughly 315 million people. And we have
something like 235 million light-duty vehicles, which is about 20% of the world's Light-Duty Vehicles, or
LDVs for short. We have about 135 million cars, with an average fuel economy of 23 miles per gallon.
And those cars have a median age of 10.6 years and an average lifetime of 16.9 years. We have
another 100 million light trucks, with an average of 18 miles per gallon for their fuel economy. So we
have a lot of vehicles out there. Their fuel economy is not very good, and they are lasting longer or are
pretty high-quality cars. So it takes a long time to turn the fleet over.
If we want to get more fuel-efficient cars out there, we have to displace the ones that are already on the
roads. And those are older but last so long it takes a while to turn them over with new cars. So this is
one of the public policy challenges we have with transportation. In addition to those light-duty vehicles,

we also have another 11 million heavy trucks. These are the big trucks hauling cargo on the roads.
And then every year, we purchase about another 13 million new vehicles in the United States. By the
way, the United States, for about a century, has been the largest car market in the world, has been
overtaken by China. So now China manufacturers and purchases more cars each year than the United
States. In total, we drive about 3 trillion miles in our light duty vehicles each year in the United States.
So we have hundreds of millions of people driving hundreds of millions of vehicles trillions of miles each
year. We have many more vehicles per capita than just about any other country. If you look at this
chart, it shows that we have something like 800 vehicles per 1,000 people in the United States, which is
much more than in Western Europe, much more in Canada, much more than in many countries,
especially compared to countries like India and China, which have much greater populations but many
fewer cars per capita.
As they start to buy more cars to match the United States, as they move up the economic chain, they
will drive a lot of the consumption and manufacturing of the cars around the world. Our vehicle
ownership in the United States has grown over time. As we get richer and as we enjoy the freedom of
transportation mobility, we tend to buy more cars. Families used to be two cars on average, now are
something like 2 and 1/2 cars, with multiple drivers.
So we have this chart showing that in the early 1900s, we had very few vehicles per capita and per
family. And that has increased over time. A couple downward dips from the great recession in the
1930s, from World War II in the 1940s, when we shifted manufacturing from cars to tanks and other
things. And then a recent dip for the great recession over the last few years.
We still have more cars per capita than Canada, Western Europe, and Eastern Europe, for example.
And as time moves along, those countries also increase their per capita vehicle ownership. If you look
at the way we use energy for our transportation, 3/4 of it is for roads and highways. Most of the energy
we use this is for driving our cars and light trucks and other surface vehicles on roads, mostly cars,
followed by light trucks, followed by medium and heavy trucks.
And then we have buses and motorcycles there as well. So the highway on-road use of energy is the
most important or largest consumer of energy for transportation. Then we have a variety of off-highway
or off-road purposes, things like aviation, waterborne transportation, pipelines, rail and off-highway

trucks. That's things like agriculture and construction trucks. So most of it is to drive ourselves around in
some cargo.
Then we also have these other purposes of energy and transportation. Our purchases over time for
those hundreds of millions of vehicles have shifted from cars towards trucks and SUVs. This breakdown
shows the market share or percentage allocation for new purchases among cars in the dark orange in
the bottom. And above that are pickups and small SUVs and large SUVs and vans.
And it used to be over 75% of our purchases were for automobiles, for cars. And over time, as the baby
boomer generation got older and were hauling around kids and a lot of gear and equipment, we have
shifted to buy larger trucks and larger vans and SUVs. So today, automobiles are about 50% or so of
our purchases in total. That means we're shifting from the relatively smaller, more fuel-efficient options
to the relatively larger, less fuel-efficient options as time goes on.
However, when gasoline prices are really high, there will be an upward spike in auto purchases, as we
see here around the 2008, 2009 time frame. Oil prices tripled over the span of a few months, and
people started to buy more cars instead of trucks. So we see changes in behavior based on the needs
of the population and demographics but also based on prices of the energy.
One of the important policy elements for transportation is what we call CAFE, or corporate average fuel
economy, which is a policy tool used to encourage conservation and efficiency in the transportation
sector. This is created by the Energy Policy and Conservation Act of 1975 in response to the first oil
shock in 1973. This requires each company to average the fuel economy for its entire fleet and then
achieve a certain standard.
Companies that do not meet that standard have to pay a fine. The fines are not that large. They're only
$24 million in 2010. But that's because those companies are compliant. They meet the standards, and
they have for decades.
Now, that doesn't mean every single car meets the standard. What it means is that a car-maker, like a
Ford or Toyota or Honda sells many cars. Some cars have really good fuel efficiency, some have bad
fuel efficiency. But the average, normalized by how many of those units they sell, must meet the
standards. So this is a policy to apply to each company.
And if that company does not meet the standard, it must pay a fine. The fuel economy standards that

were set in the '70s became stricter over a decade but then stabilized in the '80s and basically stayed
level for several decades until around 2007, when they were tightened again. So it was an effect of
policy in terms of improving the fleet-wide fuel economy, fuel economy has increased dramatically from
the '70s through the mid '80s, then basically stayed level or actually dropped as we shifted our
purchases from cars to trucks.
So we saw our purchasing behavior make up for some of the fuel economy improvements as we went
to the bigger cars and trucks. And then in the last few years, as oil prices have come up again and as
policy attention is focused on fuel economy, the standards have been increased, they've been
tightened, and its around a little bit. So we're seeing fuel economy improve again for the first time in
decades.
The standard that had been set was level until the mid 1980s. That standard set passenger cars to
meet a fuel economy of 27.5 miles per gallon on average. And light duty trucks had to be a 22 and 1/2
mile per gallon average. The Energy Independence and Security Act of 2007 tightened those standards
and raised them to be a combined 35 miles per hour by 2020.
This was a Bush-era policy passed by a Democratic Congress with a Republican president. The Obama
administration came in and then used executive orders to tighten and accelerate the standards. So now
the standard has been bumped up to 35 and 1/2 miles per gallon by 2016, instead of 35 miles per
gallon by 2020.
And an additional standard of 54 and 1/2 miles per gallon by 2025 was implemented. So these
standards can be tightened over time is sort of the idea. As companies meet the standard, it will be
raised again. It becomes a ratcheting effect to improve the fuel economy overall in the transportation
sector. While these standards have been tightened over time, we still lag behind the rest of the world.
So the US standards are shown here at the bottom of the chart in a purple curve showing our standards
increasing over time from 2000 through 2025, looking at the future. But those standards are less
stringent than what we see in the EU, Japan, South Korea, Australia, and China. So basically every
other country the world that has fuel economy standards has stricter standards than what we have in
the United States.
So while the trend is upwards in the United States-- that's a good trend-- we are still lagging behind the

world in terms of what we expect our automobile fleet to meet. While our vehicles have improved and
the fuel economy standards have worked and other standards, including safety, performance, and
cleanliness have also been tightened, we have driven our cars more, and that counteracts some of the
effects. This chart shows the normalize effects starting in 1970 for overall total absolute effect from the
transportation sector for light-duty vehicles over time.
And what we find is fatalities have dropped. We have fewer fatalities each year in the United States
despite having more people, more cars, and driving more miles. And that's because our cars are safer,
they have airbags and side impact restraints. They have more brake lights, better roads. We have all
sorts of implements that make our cars safer, and that has worked. Despite more people driving more
cars, more miles, we have fewer fatalities.
The air pollution is also down. In an absolute sense, we have cleaned up the tail pipes. We've reduced
the carbon monoxide, the unburned hydrocarbons. The NOx and the SOx and other pollutants are
much, much cleaner from the transportation sector because of these standards, despite driving more
cars more miles. At the same time, we're driving more miles. That's VMT-- Vehicle Miles Traveled. The
miles are up. Our oil consumption and CO2 emissions are also up.
Even though the fuel efficiency per car is better, we're driving those cars so much farther. The total oil
consumption has increased since 1970, as have the CO2 emissions going along with the fuel
consumption. So it's a mixed story. We're getting better with our transportation, but we drive so much
more we're counteracting some of the positive benefits. One of the things we've also seen in the
transportation sector is improvement in performance.
Much of the innovation over the last 40 years in the transportation sector has been for performance and
safety, as opposed to reducing carbon emissions or increasing fuel economy. So if we look at this chart,
it shows the horsepower to weight ratio, which is a measure performance. And it has increased over
time.
We now get more horsepower per pound of car weight. So that means our cars are faster and have
higher performance. Most of the innovation in the transportation sector is going to making our cars
faster rather than more fuel-efficient. And this raises the policy question, if we'd invested the same
innovation into fuel economy, how fuel efficient would our cars have been today if we had done that?

But it wasn't required. The oil prices didn't send the market signal. So we just didn't do it.
If you want to learn more, go online. Do the extra exercises with me. And that will reinforce what we
covered in today's module. And then I'll see you at the next lecture, too.
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