TCS Daily

Inefficient Ideas

By Brock Yates - March 1, 2002 12:00 AM

I plead ignorance on the subject of economics. A "Gentleman's C" left me with the suspicion that this quasi-science can be reduced to two laws. Law No. 1: Too many bananas, cut the price; not enough bananas, jack it up. Law No. 2: Mess with the first law and you trigger the Law of Unintended Consequences, which can make the banana business really ugly.

We now have the solons in Washington fiddling with Law No. 1 (known to Harvard MBAs as "supply and demand") and the spectre of Law No. 2 is growing on the horizon. Brainiac Tom Daschle has introduced an Energy Policy Act designed to simultaneously solve the knotty problems of global warming and lighten the wallets of the Middle Eastern petromoguls.

Sen. Daschle's solutions are too murky to deal with here, but the Competitive Enterprise Institute notes that they will create 61 new federal programs, 13 new federal offices and fund 41 studies. These new centers of paper-shuffling and resolution-issuing will allegedly give us clean air and water plus energy independence for something north of the $35 billion proposed in a similar House bill. But hey, this is Washington, so who's counting?

Mixed up in the garble of this proposed legislation and others like it are plans to increase the CAFE (Corporate Average Fuel Economy) for new vehicles sold in America from current levels of 24 miles per gallon (cars and light trucks) to 37 mpg by 2014. A grand idea! Massive fuel savings for us witless victims of Dick Cheney's Oil Patch buddies and cleaner air to boot. But one is reminded of the immortal lines spoken by Bill Murray, playing Hunter S. Thompson in "Where the Buffalo Roam": "This could be the best thing I've ever done. All I've gotta do is write it up."

Writing it up is easy in Washington. Making it happen in the real world is another matter. Keep in mind that there are several vexing realities in the business of automobiles that serve as speed bumps on the road to Nirvana.

Reality One: Laws won't make fuel-efficient cars. Washington can't mandate cold fusion or a cure for the common cold, and it can't do it with 37 mpg either. What the boys in the Beltway forget is that nobody knows how to mandate high fuel mileage and retain the current vehicle mix. (And if you think everybody in the worldwide industry isn't working full-tilt to increase fuel mileage in a badly overcrowded, cutthroat business, then you're probably hugging a tree somewhere in Marin County.)

There are currently over 20 high-mileage compact cars on the American market. A conventionally powered Honda Civic HX, for example, can attain over 40 mpg under normal highway driving conditions as will the Toyota Corolla and Echo, the Saturn S-Series, the Chevrolet Prizm, Mitsubishi Mirage and the Volkswagen Golf and new Beetle turbo-diesel. But these cars, so beloved of the Greens and the editorial writers of the New York Times, comprise only 2% of the current market. This means that only 2% of the driving public will trade performance, function and safety for high-mileage. This, of course, produces a perverse conclusion among the media elites: 98% of American car and light truck owners are stupid, gluttonous, environment-hating status-slaves who need a good knuckle-rapping from Washington.

Enter the proverbial alternate-fuel vehicle. Don't listen to all that jazz about fuel-cells and electrics; the electric car is a hopeless chimera until somebody invents a light, quickly rechargeable, non-toxic, super-power storage battery. That should arrive right after the invention of perpetual motion. The isolation and distribution of hydrogen (Hindenburg redux), plus bulk and cost, are overwhelming problems for the fuel-cell that may take decades to solve, if ever.

While it sounds lovely on paper -- mix up a little oxygen and hydrogen and out comes electricity and a little water vapor -- the problems are mountainous. Most experts believe fuel cells will appear on the real-world market (wherein lies the ultimate test) as stationary home and industrial power plants long before they are compact enough, light enough and cheap enough to be used in passenger cars.

And lest we forget, at the end of both the electric car and the fuel cell chain is a power plant pumping out humungous wads of volts and amperes. So too, by the way, for renewable fuels like ethanol and bio-diesel, which also demand big juice to create and are therefore less efficient, dollar-for-dollar, than conventional gasoline engines. Considering the fact we haven't built a major new generating plant, nuclear or otherwise, in America since the Nixon administration, all alternate power options descend into theoretical limbo.

Reality Two: A 50% boost, or thereabouts, in CAFE will validate the Law Of Unintended Consequences. The National Academy of Sciences estimates the lighter, flimsier vehicles required by current CAFE regulations kill between 1,300 and 2,600 motorists annually. Imagine the bonanza the funeral directors and trial lawyers will experience if millions of commuters set out each day in a tin can with wheels.

Reality Three: While no one can argue with utopian visions of clean air and energy independence, government mandated car mileage borders on the idiotic. A free market will determine who drives what kind of vehicle and for what purposes. As for "energy independence," surely an economic guru can come up with a cost-benefit analysis explaining how the importation of free-market foreign oil integrates effectively into the most powerful, creative and energetic economy in the history of the world.

While the OPEC mullahs struggle to keep petroleum above 20 bucks a barrel, are we not getting a bit hysterical about the whole issue, especially when domestic drilling is verboten by the greens and the liberals (who, by the way, tout ghastly, sprawling windmill farms and solar panels as a trade-off for a few acres of drilling in the Alaska tundras)?

Reality Four: The intrinsic power of this nation lies in its unfettered mobility, both social and economic. The heart and soul of this mobility is the private motor vehicle. The nonsense spouted by the elites portraying a bozo trundling aimlessly around in his gas-guzzling, three-ton SUV is a slander on the millions who use their private vehicles each day for legitimate personal needs. It is de rigueur to revile motor vehicles in the plush towers of Manhattan's Upper East Side and in Georgetown's salons, but in the real world the car and the light truck are the life blood of a nation perpetually on the move

Reality Five: Right now there's plenty of money (and oil) on the table in the high-stakes, free-market game of world-wide supply and demand. Like it or not, the petroleum trade, OPEC and all, seems to work. Not perfectly, but vastly better than if Sen. Daschle and his fellow crypto-socialists begin playing games with the simple laws of economics understood even by gear heads like me.

This article first appeared in the Wall Street Journal.

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