It is not like there have not been significant advancements in many parts of the current cars of those 10 or 20 years ago but when it comes to gas mileage it basically gets down to physics.
Yes they can make a car that will get much better mileage but only with trade-offs that until recently have only been marginally accepatable by at least US consumers.
Taking the hybrids out of the mix, there is really only a few factors you can mess with the increase mileage in a gas engine based car and the biggest is the weight of the car or HP of the engine.
Making the car lighter you can use a smaller engine and thus less gas, however at about 40 MPG the trade offs get pretty significant.
Most of your gas when you are going over 35-40 mph is going against wind resistance on a flat road, so making the car lighter offers less and less. Making them more aerodynamic tends to make them smaller and often very ugly (odd how jets tend look cooler the more aerodynamic they are and cars uglier)...
There are some new tricks like how the fuel is injected, deactivating cylinders once you are at cruising speeds but these tricks tend to introduce other issues, like reliability.
So if buyers are willing to buy cars that can fit 2 people tops in comfort, are pretty ugly by current standards, have very poor accelaration, and a top end of 60-70 MPH with no head wind, and they load it with every gas saving trick in the book you can end up with a car that might get even 60-70 MPG and that costs 40,000-60,000 bucks, the problem is there is no market for a 40K ugly 2 seater...
So there is really one area in auto advancements that has pretty much hit the wall with technology, but so many other things have come a long way, my current car has built in GPS, bluetooth that senses my phone as I get in and auto-links to it, the GPS has traffic / cogestion avoidance (works ok where there is good data), it has side, front and lower air-bags, keys you can't lock in by mistake, auto-dimming rear-view mirror, USB connection, MP3 player connection, sat radio, anti-skid, auto traction control, On-Star with auto diagnostics and calls for help when the air bags are deployed, seats and mirrors that remember where I like them and the list goes on and all this in a car in the 30K range, what is amazing is most of these features can even be found in under 20K cars.
So I have to put it at laws of physics and consumer desires, most people want a car with reasonable power, enough safety features to make them as safe as possible, not ugly, air conditioning, power everything and you just can't have it all.
Sixteen years ago I did my computing on an Amiga with 512K of RAM and no hard drive because I couldn't afford it. The add-on of a 40 MB hard drive was over $400. In December of 1992 I bought a $13,700 Honda Civic EX Coupe which according to the sticker would get 41 MPG highway and during the first four years actually averaged over 50 MPG. (On long trips where all the miles were highway, it would get 54) A year later my sister bought the Civic VX that had a sticker highway MPG of 50.
Here we are 16 years later and I am now computing on a Dell with several GB of RAM, a terabyte hard drive that cost me less than $200, and my mind gets twisted when I begin to think of the various innovations that have taken place with processors through those years, yet if I want a car that can get more than 40 MPG I have to get a hybrid and the Civic EX is rated at 34 MPG highway. Wait, what? No seriously, take a look. http://www.mpgfacts.com/?year=2009
So why is it technical advances have been made in so many of the products we use, with some products seeing technical advances many times over, but if I go get another Civic EX it will get 34 MPG highway, 7 less than the one I bought 16 years ago? If we had put the Maxtor and Seagate and other hard drive engineers in the car industry a decade ago, I think they might have had us up to 100 MPG by now. And while the hybrid is a great innovation for the auto industry, I'll be impressed when it can get better mileage than my 1993 Civic did.
I don't think government dictating a mileage minimum is a good thing, but shouldn't the industry be farther than they are? According to MPGFacts.com in 1994 there were 9 cars that could get highway mileage over 40; 4 of them were even made by American auto makers, including a Geo at the top of the heap with 51 MPG. http://www.mpgfacts.com/?year=1994 Fifteen years later the VW Jetta is the only non-hybrid that is rated over 40 MPG highway.
Does anyone have some insight on this? Lazy engineers? Laws of physics? Government conspiracy? Since American auto makers were at the top of the heap 15 years ago and now only has a handful in the top 35, I'm leaning to the latter until someone tells me different.