[Silent A]

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So I think the economic incentive is already there for private industry and I have a hard time understanding why the government even needs to step in.

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Again, you answer your own question ...

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Further, isn't the easiest way to let people know to conserve by raising prices of fuel and allowing economics to solve the problem? I think increased fuel standards will be demanded by the public and industry responds by adapting to those demands.

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The reason why government has to step in is to set and enforce things like higher fuel prices (to account for the environmental damage they cause). No private initiative could possibly do this.