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Speed limits on motorways will remain 70mph (112kph), but on dual carriageways they will become 60mph (96kph), and on all other roads 50mph (80kph).
Motorists could previously drive up to a limit of 70mph.
Anyone breaking the new restrictions will be reported, though not necessarily summoned.
The maximum penalty for speeding has been doubled to £100.
Police patrols in unmarked cars will be looking for drivers not observing the new restrictions and will also be using speed traps.
A major publicity campaign informing drivers of the new restrictions was launched last week and so road signs will not be changed.
Police expect the new speed restrictions to lead to a rise in the number of speeding offences but a fall in the number of road accidents.
The measures have been introduced indefinitely by Energy Secretary, Eric Varley, as part of a 12-point package of energy conservation measures aimed at saving £700m in imports annually.
Oil prices fluctuate
The Ministry of Transport said even a speed reduction of 5mph would save about £10m a year in fuel costs.
Mr Varley unveiled the package six days ago to the House of Commons as the landed price of imported oil is now five times higher than a year ago.
Prices rose after the Middle East oil embargo during the Arab-Israeli war last year.
The plan includes restrictions on heating levels and on the use of electricity for outdoor display and advertising.
There will also be loans to industry for energy-saving investment and a doubling of the standards of thermal insulation for new homes.
The strict controls on energy consumption will form the British way of life for the foreseeable future, he said.
Last November petrol ration coupons were introduced and in February 1972 a three-day working week was imposed on British industry to conserve power supplies due to the coal miners' strike.
In the wake of the 1973 Arab-Israeli war, the Arab oil-producing countries (OPEC) imposed an embargo on supplies to the US on 20 October 1973.
For the wider world, oil prices went through the roof, from around $3 a barrel before the war to over $11 by early the following January.
The crisis led to a recession in 1975, the first of four world downturns where oil price increases caused by events in the Middle East played a key role.
The finger of blame was also pointed at Opec when prices spiked in the second half of 2000 and prompted fuel protests across much of Europe.
But in recent years, Opec has been trying to ensure market stability through a price range mechanism and, as more sources of oil come to market, consumer countries are also less reliant on oil from Opec countries.
In 1974, the US Congress imposed a nationwide 55 mph (89 km/h) speed limit - it was estimated that a speed of 55 mph used 17% less fuel per mile than a speed of 75 mph.
The limit was unpopular, especially in Western states and in 1987 states were allowed to raise speed limits to 65 mph (104 kmh) on rural interstate highways.
All federal speed limit controls were lifted in 1995, leaving speed setting to the states.
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