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Forgetting About Cutting Consumption?

September 12, 2012 By Conrad deFiebre, Transportation Fellow

By 2025, if all goes as planned by automakers and the federal government, the average American car will get 54.5 miles per gallon of gasoline, matching the efficiency of today's top hybrids. Yes, the technology to achieve this will cost consumers more at the dealer's showroom, as conservatives were quick to point out after the regulations were finalized last month. What they didn't mention is the projected $8,000 in fuel savings over the life of a car meeting the new standards.

"These fuel savings represent the single most important step we've ever taken to reduce our dependence on foreign oil," President Obama said. "This historic agreement builds on the progress we've already make to save families money at the pump and cut our oil consumption ... It'll strengthen our nation's energy security, it's good for middle class families and it will help create an economy built to last."

I sure hope so. But it's very hard to predict the price of oil a dozen years down the road. If it skyrockets the value of every bit of fuel economy wrought by the standards will rise in tandem. On the other hand, if oil prices tank with vast new supplies or cratered demand—remember the sub-$2 gas in the depth of the Bush recession?—investments in efficiency may prove less worthwhile.

Another question mark is the effect of super-high-mileage vehicles on our driving behavior. Will 54.5-MPG cars spawn another rush to the exurbs? Will we all drive more than before, negating the environmental benefits of fuel efficiency?

Plus, as I noted three years ago, Macalester College Prof. Sarah West and other economists have persuasively demonstrated that it's the miles, not the gallons, that ring up the most economic and environmental externalities of driving—costs imposed on society by drivers but not borne by them. She has estimated this freeloading as equivalent to at least $1 a gallon of gasoline. Skipping out on the bill fosters costly economic distortions that range from gridlocked highways, collision mayhem and falling bridges to pollution-borne disease and global climate change.

Lisa Jackson, U.S. Environmental Protection Agency administrator, hailed the standards as "another example of how we protect the environment and strengthen the economy at the same time." And U.S. Transportation Secretary Ray LaHood noted that "today automakers are seeing their more fuel-efficient vehicles climb in sales," a market signal that's in harmony with the new rules.

Leading conservatives, including presidential contender Mitt Romney, oppose the standards, although as governor of Massachusetts he said the answer to high gas prices was increased fuel efficiency. He added then: "I don't think that now is the time, and I'm not sure there will be a right time, for us to encourage the use of more gasoline."

Incentives for early introduction of advanced technology and flexibility to average fuel economy and emissions over the entire industry (using cap-and-trade-style credits) are included in the new standards, to which most domestic and foreign automakers and the United Auto Workers agreed. And it won't be just engine and alternative fuel technology that gets us to 54.5. More efficient auto accessories and air conditioning, lighter vehicles, lower tire rolling resistance and better aerodynamics will be part of the solution, as well.

But discouraging the use of gasoline, as Romney might once have said, will require more than tinkering with private motor vehicles. Alternatives to driving such as transit, bicycling, walking and telecommuting already are on the rise. Government should do its part, too, to meet the growing demand for transportation modes that burn no gasoline at all.

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