Today's NYTimes reports that the USEPA is delaying a report that says that fuel efficiency has declined significantly since the late 1980s (duh):
Some of what the report says reaffirms what has long been known. Leaps in engine technology over the last couple of decades have been mostly used to make cars faster, not more fuel-efficient, and the rise of sport utility vehicles and S.U.V.-like pickup trucks has actually sapped efficiency. The average 2004 model car or truck got 20.8 miles per gallon, about 6 percent less than the 22.1 m.p.g. of the average new vehicle sold in the late 1980's, according to the report.
The problem seems to be that the new energy bill does not improve fuel efficiency or conservation when one goal of the energy bill is (or should be) the reduction in dependence on foreign sources of oil, oil consumption in general and greenhouse gas emissions. Releasing the EPA report this week might be embarrassing.
But what about raising CAFE (corporate average fuel economy) standards in order to achieve this goal? Economists have, for a long time, said that CAFE standards aren't really the way to go.
For one thing, the amount that people drive, and therefore emissions, aren't regulated. The perverse effect of rising fuel efficiency is the increased incentive to drive more miles. If I get 40 mpg instead of 15 mpg it is cheaper to drive so I'll drive more. The positive impact of higher fuel efficiency is reduced.
Another problem is safety. One way to increase fuel efficiency is to make the cars lighter and therefore less safe. The increased miles driven also decreases safety. The increased time spent on the road by each driver and the increased congestion makes it more likely that something bad will happen.
So, what can be done to increase fuel efficiency and safety efficiently? How about raising the gas tax?
On economic efficiency grounds alone, raising the gasoline tax would be a far better approach to reducing gasoline consumption than tightening CAFE standards, because it exploits all potential behavioral responses for reducing fuel use .... Unlike CAFE, a fuel tax does not “work against itself” by encouraging people to drive more; instead it raises the cost of driving--and does so for both existing as well as new vehicles. Gasoline taxes encourage people to buy more fuel-efficient vehicles (and thus create incentives for automakers to produce them), to use more efficient vehicles if they have more than one, and to conserve fuel through their patterns of driving and maintenance.
Source: RFF Discussion Paper 03–44
