Fuel efficiency has quickly become the most important factor for many people exploring car purchases, but it may not be as simple as we thought. A car that gets 34 miles per gallon is more fuel efficient than one that gets 32, but it's hardly worth upgrading, right? Well, maybe not.

A paper in Science entitled The MPG Illusion makes the case that the "miles per gallon" label is opaque and difficult for consumers to make calculations with. The authors have set up a one question online quiz to show how difficult it is to make judgments based on the miles per gallon label.

For details on the math behind it, check out this article from the USA Today. But it makes perfect sense: thinking about efficiency in terms of gallons per miles provides a clearer idea of fuel savings.

With all the emphasis on fuel efficiency, car makers and regulators could do a lot to make it easier for consumers to do research and make good decisions about transportation. The basic takeaway from the paper is this: seemingly small increases in fuel efficiency will save you a lot more gas than it intuitively seems like they would.

General Motors has announced an official shift from the production of large, gas-guzzling vehicles to smaller more fuel-efficient sedans. If you didn't see this coming then you're surely living under a rock. High gas prices have forced a change in car-buyers. They simply aren't buying SUVs and larger trucks like they used to, and car companies have finally realized that the key to their financial future is changing their business accordingly.

GM's "official" announcement of the switch to focusing on more fuel-efficient vehicles is discussed in this video. The company made tons of money on larger vehicles, but has suffered in the last year. Let's hope that this wise shift in their business model will help shore up the company's financial future.




Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.