Automobile Fuel Economy

One of the most implacable rules in existence is the Law of Unintended Consequences. We ignore it at our peril but rarely can we avoid it.

The Energy Policy and Conservation Act of 1975 created standards (Corporate Average Fuel Efficiency or CAFE) for automobile and light truck fuel efficiency. The current standard for automobiles is 27.5 mpg and for light trucks is 20.7 mpg.

The first unintended consequence was that the full sized station wagon - a marvel of usefulness - was no longer offered. A gigantic loophole, whereby mini-vans and sport utility vehicles (SUVs) were classified as light trucks, created a whole new market and the need for families to move many children (and their junk) was preserved. Unfortunately these vehicles are much less efficient than the now extinct full sized station wagon could have become.

The second unintended consequence was the purchase of millions of overweight four wheel drive vehicles (SUVS and pickup trucks) by people - mostly men - who would have scorned a station wagon as "wimpy" or only fit for fathers and "girly men" and whose likelihood of driving in snow, off-road, or hauling hay is vanishingly close to zero. The result was a vast diminution in the potential reduction in gasoline usage.

The third unintended consequence resulted from the reduction in the cost of driving. Economics 101 includes the concept of supply and demand curves: simply stated, when cost goes down, demand rises and vice versa.

As the cost of driving went down, the miles driven increased: more distant vacations were a part of the problem but the largest part of the increase was suburban sprawl. As people moved further from cities, where their jobs were located, trips to work not only became longer in miles but took more time as commuters sat in traffic burning gasoline and going nowhere fast. When not in a traffic jam, average speeds have increased significantly with the expected impact on actual fuel economy.

With luck the new standards being promulgated will not result in too many more unintended consequences. Recent increase in the price of gasoline, while uncomfortable for all of us, are slowly beginning to change our behavior: moving closer to work, taking fewer trips by car and combining errands and shopping are rational and effective responses.

As cars are replaced, perhaps drivers will willingly buy more economical vehicles rather than the inappropriate behemoths that occupy too much road space now. But then, we can expect the miles driven to increase again.

We may be trapped in a circular problem where the only way to break out is for prices to become really high. To avoid massive economic disruption, that can only happen over a period of time but Senator McCain's suggestion that the Federal Tax on gasoline should be waived for the summer takes us totally in the wrong direction.

The sooner we start responding to higher prices, the better. Far better too, that a good part of the increased price comes from taxes (received by our government) than increased crude oil prices received by our "friends" in the Middle East and other ugly places.

Increased price = reduced demand = reduced price which can be supplemented by increased taxes to maintain the price status quo.