The Cost Of New Speed Limits

The effective fuel efficiency of America's motor vehicle fleet is about to take a hit. Oil analyst Adam Sieminski of NatWest Washington Analysis notes that "legislation to abolish the national speed limit for automobiles has gasoline dealers salivating."

The change has already been approved by the Senate. Back in 1987, the national standard was raised from 55 mph to 65 mph in nonmetropolitan areas, and most states have now followed suit. The new law would give them leeway to set limits even higher. A 1984 Transportation Dept. study found that the average car got 34% and 17.7% fewer miles per gallon at 75 mph and 65 mph, respectively, than at 55 mph. Thus, even a small shift to higher speed limits should boost America's gasoline demand.