It's simple. Henry Ford knew how. Make the car lighter. Less weight means less power to move it. How do you reduce the weight? Again, simple, make the car smaller. Less metal means less weight.
The safety people are already crying that lighter cars are not as safe as heavy ones. They cite laws of physics showing that in a head on collision, the lighter car gets hammered harder. True, but do we really care? Head on collisions are so dangerous that you are in deep yogurt no matter what. Plus head on crashes are relatively rare, 'cause drivers know how deadly they are and do their damndest to avoid them. How often do you go head on with anything, let alone an 18 wheeler?
Real safety comes from good brakes, good tires, good handling, and reasonable engine power that allows you to avoid collisions. Plus seat belts, a roof strong enough to hold the car up in a rollover, head rests, and airbags.
How small is small? The VW Beatle got 32 mpg back in the 1960's, the VW Rabbit did 40 in the 1970's. That's how small cars will have to be to make Obama's 35.5 mpg average. Kiss your SUV goodbye.