Concerns over national security, environmental stresses, & high fuel prices have raised interest in reducing oil consumption. Through the Corporate Average Fuel Economy (CAFE) program, the Nat. Highway Safety Admin. (NHTSA) requires cars & light trucks to meet certain fuel economy standards. This report discusses: (1) how CAFE standards are designed to reduce fuel consumption; (2) strengths & weaknesses of the CAFE program & NHTSA¿s capabilities; & (3) market-based policies that could complement or replace CAFE. To do this work, the author reviewed recent studies & interviewed leading experts & agency officials. Includes recommendations. Charts & tables.