At a time when both consumer and automakers pocketbooks are pinched tight, the federal government is demanding higher fuel economy from passenger cars. And the CAFE (corporate average fuel economy) standards seem to be getting continually tighter, promising national fuel conservation, reduced operating costs for consumers and less dependence on foreign oil at the expense of increased development and marketing challenges for the beleaguered automotive industry. Now the 35 mpg fleet average mandated by Congress by 2020 looks likely to increase to more than 39 mpg.

In April, the National Highway Traffic Safety Administration (NHTSA), which administers fuel economy regulations, announced it would demand faster mpg increases than would be required under the Congressional mandate, passed in the Energy Independence and Security Act last December.

With the latest round of rulemaking, NHTSA released an environmental impact statement (pdf) that says it will likely continue the faster pace of fuel economy increases through 2020. The result would be higher overall fuel economy requirements in that timeframe than Congress required.

Even as NHTSA sped up necessary fuel economy improvements in its April proposal, the agency was criticized for estimating that gas would cost less than $3 a gallon in that timeframe. Now, with higher gas prices, the economic benefits of raising fuel economy are more pronounced, and NHTSA has to take that into account in this proposal.

Largely, CAFE has not been effective at raising the average fuel economy of vehicle fleets, however the rapid rise in fuel prices over the last couple of years has changed the market forces and made consumers think more about fuel economy. If prices continue to increase, the market may demand cars that get more than 39 mpg by 2020, making this ruling obsolete. More also needs to be done to improve mass transit systems, bus, commuter rail, bike paths, and other transportation options that will give consumers alternatives to automobiles.

Ironically, as the federal government battles California over competing fuel economy requirements, this coincides closely with the 40 mpg requirements California is trying to implement by 2019.

The public now has less than 30 days to comment on NHTSA’s latest proposal before it publishes its final regulation, expected in November.

—Eric Evarts

Learn more about fuel economy in our guide to driving green .