I had a 1974 AMC Matador that had a factory installed fuel economy guage. It would be relatively easy for auto manufacturers to put them in new cars. I don't know about requiring them tho'. It was mostly a novelty.

Require them, no. Have as an option or a standard feature by choice, yes on the dash, no on the rear.

certain BMW's had a MPG gauge in the instrument cluster... it was pretty useless... It updated in real time.... so pretty much all you had was a wildly swinging gauge that was correspondent to speed and engine rpm/load. As another poster said... more of a novelty than anything else.

Any luxury car made in the past 10 years (20-30 years for some models) has an accurate fuel economy gauge. Not only do most of them display the instantaneous MPG (rather useless, actually) and the average fuel economy (useful), they also display the miles until empty, or the range (VERY useful).

This feature is quickly becoming standard equipment on most midsize cars, and I think it'll only be a couple of years until they will be standard equipment on virtually all cars.

As for the "arms race" being caused by an exterior MPG indicator, it's pretty apparent by the prevalence of Hummers and other large SUVs that poor fuel economy = status. Such an indicator may not be so great for the environment.