The author analyses the fuel efficiency of private cars in relation to both technical characteristics and the socio-economic characteristics of the drivers for a sample of Dutch drivers. The age and profession of the driver, and fuel prices, have more significant effects than the gender and income of the driver, or the annual or commuting mileage.

A model is developed which identifies and separates the effects of several responses by the household to a change in gasoline prices. It also estimates the manufacturers’ response of improving the technology of new cars. The results point to improving fuel efficiency as an effective means of energy conservation.

Gasoline demand elasticities in the OECD are analysed and used to forecast gasoline consumption and carbon emissions under various price and tax policies. If the whole OECD had taxes as high as Italy, emissions could be reduced by more than 30 per cent in the year 2000, instead of increasing by almost 50 per cent if taxes remained unchanged.