TCS Daily

10 MPG: The Road to Energy Independence

By James K. Glassman - August 29, 2005 12:00 AM

With gasoline busting three bucks a gallon, the Bush administration Tuesday proposed higher fuel economy standards for SUVs and minivans, along with what the Washington Post called "a new regulatory system that sets different mileage goals for six sizes of vehicles, replacing the current single standard for all light trucks."

But greater efficiency doesn't reduce the amount of energy we use. Just the opposite. I'll explain in a second, but first the news....

This president, usually a fervent advocate of free markets and consumer choice, wants CAFE -- or corporate average fuel efficiency -- standards to get tougher and more complex. The government is telling manufacturers that they have to make vehicles that get more miles per gallon.

The new rules, said Norman Y. Mineta, the Democrat who is now serving his fifth year as President Bush's transportation secretary, will save 10 billion gallons of gasoline and "result in less pain at the pump for motorists."

The proposal is hardly a surprise. Politicians know that they have to respond in some fashion to higher prices, and, when it comes to energy, simply increasing incentives to increase supply, as the recently passed energy bill does, takes too much time. So, the quick antidote is supposed to be efficiency: requiring more output out of the same input. In this case, that means mandating more miles for every gallon of gas.

"The pursuit of efficiency," write Peter Huber and Mark Mills in "The Bottomless Well," their superb book on the future of energy, "has been the one completely consistent and bipartisan cornerstone of national energy policy since 1970."

We're told that higher mpg can even defeat our enemies. In a recent article that linked oil dependency with terrorism, Fareed Zakaria, editor of Newsweek International, concluded, "It's true that there is no silver bullet that will entirely solve America's energy problem, but there is one that goes a long way: more fuel-efficient cars. If American cars averaged 40 miles per gallon, we would soon reduce consumption by 2 million to 3 million barrels of oil a day."

Increases in energy efficiency have been the rule in the United States for a century -- and especially in the past 30 years. But, as Huber and Mills write, "Efficiency doesn't lower demand, it raises it.... Efficiency has come, and demand has risen apace."

In this graph, the authors show how the "energy cost" of transportation in the U.S. fell by nearly one-third between 1973 and 2003; that is, we used to use nine gallons of fuel for every vehicle mile, now about six. But over this same period, total fuel use did not drop by one-third (as it would under the silly static analysis employed by Mineta and Zakaria); instead, fuel use rose by more than half, from a little under 120 billion gallons per year to over 180 billion gallons.

This result is predictable in the world of economics. Only in the world of politics can it be ignored, or distorted.

When something works better or more efficiently, it is, by definition, cheaper, so we want more of it. Demand for computers rose sharply, for example, as faster microchips and better software increased the machines' ability to do more.

If politicians suddenly decided that we were using too many computers and wanted to meet the objective of lowering demand, then the best strategy would be to make computers less efficient. Slow down the speed of microprocessors, decrease the amount of storage, make monitors harder to read, software less user-friendly.

Similarly, the best way to reduce demand for gasoline is for government to require that cars and trucks get lower miles per gallon, become less efficient. That should be Mineta's new slogan, "10 MPG Equals Energy Independence!"

Don't get me wrong. I am all in favor of higher miles per gallon -- if that's what consumers want. But Americans should be free to decide for themselves which products they want to buy, and manufacturers free to satisfy their needs.

Certainly, if all automakers conspired to make cars and trucks that achieved only 10 mpg, then perhaps there would be a role for government in breaking the cartel and forcing manufacturers to boost efficiency.

But that is hardly the case. Choices are abundant. At a government website, you can download a 26-page report on mpg ratings for every 2005 model. There are 198 separate models in the "compact" class along. The choice is yours, not Norm Mineta's.

You can buy a Honda Insight, a small hybrid with manual transmission that gets 61 miles per gallon in the city and 66 mpg on the road, or you can buy a Chevy Suburban K1500 XL SUV that gets 11 mpg in the city and 14 on the highway. Or anything in between. And, by the way, there are many SUVs that get good mileage, if that's what you want. The Ford Escape, another hybrid, gets 36 mpg in the city.

CAFE standards don't lower energy use. They merely satisfy the need of politicians to convince an unsuspecting public that they're doing something. It's time for the public to wake up to this scam.



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