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on if Toyota got that horsepower by allowing the engine to burn more fuel or by using more of the available energy in the same amount of fuel. Yes, modern engines may have larger valves and are typically larger in displacement than the engines they have replaced. But the biggest difference in the last 15 years has been computerized engine management systems that hold the combustion process right on the edge of premature detonation at all times and constantly optimizing the air/fuel ratio, extracting more BTU from the fuel and making the engine much more efficient.
One of the biggest roadblocks to fuel efficiency is constantly tightening emissions regulations. Modern cars are incredibly clean - you'd run out of gas before successfully asphyxiating yourself with your new Camry. The point of diminishing returns has long since past as far as making new cars cleaner is concerned, and modern cars actually remove some pollutants from the atmosphere. But the goverment is still focusing on private car emmisions almost exclusively when the low hanging fruit is factories, powerplants, and large trucks and busses.
Alowing industry to clean up those areas (at greatly reduced cost) would allow for the use of lighter weight materials without sacrificing safety, which would have a huge impact on fuel efficiency. The 1984 Volkswagen GTI I used to own weighed 1600 pounds. A new GTI weighs roughly twice that. So now the same gallon of gas has to move what amounts to 2 cars instead of 1 - not very efficient, but the fuel efficiency hasn't changed proportionally because of inreased combustion efficiency. A brand new GTI that weighed only 2500 pounds would likely get over 35MPG city, if VW was allowed to build it.
Last, the most effective and efficient method for reducing greenhouse gasses and increasing fleet fuel economy would be to simply offer every American $10,000 for any car built before 1997, and then recycle those cars to build new ones. More cost effective than anything we are doing now or have planned for the future, more effective in terms of overall results, great for our struggling car industry and its workers and our economy.
