The Effect of Supply and Demand

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Improvement in energy efficiency depends on legislation and funds for research to develop the necessary technology, both of which are influenced by supply and demand. For example, fuel economy standards were first enforced in 1975 in response to the 1973 energy crisis. In 2002 Corporate Average Fuel Economy (CAFE) standards were 27.5 MPG for passenger cars and 20.7 MPG for light

The EnergyGuide label that is affixed to new appliances sold in the United States. (© 2003, Kelly A. Quin. Reproduced by permission.)

catalyst a substance that changes the speed or yield of a chemical reaction without being consumed or chemically changed by the chemical reaction trucks, including sports utility vehicles (SUVs). Due to the increasing popularity of SUVs in the United States starting in the late 1980s, the combined average MPG rating fell from 25.9 in 1987 to 24.6 in 1997. Energy efficiency in many areas increased through the late 1980s because of the shortage or threatened shortage of cheap imported oil. This was followed by a reversal or slowing of efficiency gains through the 1990s, when there were ample supplies of cheap fuel.

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