Thinking about Friedman's comments on Imus this morning, I saw this :
Hybrid Cars and Foreign Oil Dependency.: "Raise it [U.S. fuel efficiency standards] by 7.6 mpg, we eliminate one-hundred percent of our gulf oil imports into this country", Robert F. Kennedy, Jr.
I've heard a bunch of arguments
against CAFE standards, and while I will agree they are manipulative to businesses and citizens, a "social engineering" initiative, some of these arguments are just plain false.
Coon writes, "A more fuel-efficient vehicle costs less to drive per mile, so vehicle mileage increases. As the author of The Wall Street Journal article notes, "[s]ince 1970, the United States has made cars almost 50% more efficient; in that period of time, the average number of miles a person drives has doubled." This increase certainly offsets a portion of the gains made in fuel efficiency from government mandated standards."
This ignores Northeastern urban flight and unmanaged growth in new Southern and Western cities over the last two decades. Declining cost/mile may have enabled people to move out of dense population centers, but development practices that encourage exurban build-up has as much to do with increased mileage as efficiency gains caused by CAFE standards.
She also writes, "Clearly, the CAFE program has failed to accomplish its purposes. Oil imports have not decreased. In fact, they have increased from about 35 percent of supply in the mid-1970s to 52 percent today."
Oil production in the United States has declined in the last 30 years (you can see the downward trend since 1985
here). The only way imports could decrease if if total consumption goes down. First, the population of the U.S. has increased by about 80 million people in the last 30
years, so any efficiency gains must counter-act increased consumption due to population growth. Second, the majority of autos sold in this country fall into the "light truck" classification, where the CAFE standard is about 7 mpg lower than passenger cars, so any lower consumption that could be affected through higher efficiency standards has been circumvented by this difference.
The demand for larger cars has comes as
average household population has been in decline for the last 30 years, so consumer demand must stem from another reason. The safety evidence is compelling, but the truth is, most people in this country could do just fine with a
Honda Civic Hybrid. It just not what people want.
There is a market failure here - the positive externalities that can be achieved through higher fuel economy cars demand government intervention. The companies are making them, but we need to encourage people to buy them. Tax breaks are a start, but more can be done.
1. Raise the baseline of light trucks.
2. Remove the ability of manufacturers to "buy" deviations from standards. The deviations are passed onto consumers of smaller cars. By capping the deviations, this will create a shortage of SUVs, driving up pricing.
3. Adopt growth policies that encourage urban renewal and rebuilding within cities, rather than promote large exurban development.
4. Drill ANWR - we can't get stop population growth. We'll cut consumption to a new basic level, but that level will increase with population. We can provide for these increases internally without relying on Saudi Arabia.
5. An increase in gasoline tax, and a luxury tax on the most gas-guzzling cars to raise consumer prices, with the benefits passed onto auto companies for R & D.
It's like Friedman said this morning, once we stop treating the Middle East like our "gas station", we can work to improve the lives of people there without offending the Saudi Royal Family and protect our nation as well.
