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June 22, 2007

The Politics Of Energy Energy  Politics

A commenter to the previous post points out that when fuel efficiency increases, people just drive more. He/she has a point. This effect is an example of the Jevons Paradox: increasing the efficiency of the use of a resource is effectively the same as cutting its price — so people buy more of it. Total consumption may actually go up as the lower price makes new usage patterns affordable.

If the increases in efficiency are sufficiently great, however, it seems unlikely that usage will keep pace. If people started driving cars with three or four times better mileage than cars today, it seems doubtful that they would drive three or four times as many miles as a result. There are only so many hours in the day. Not that the proposed increase in CAFE standards will get us to those kinds of efficiencies, but you see my point.

The commenter also says (correctly, I think) that a stiff gasoline tax would be more effective than CAFE standards in getting people to conserve. I don't doubt that's true, although it would be an awfully regressive tax. But it's a moot point. A significant gas tax is, at present, a political impossibility.

By the target date of 2020, 35 mpg will seem ridiculously inefficient, so the CAFE increase may be of purely symbolic importance, telling the car companies to do something they were going to do anyway. Which may explain why the Senate was willing to pass it. But it at least acknowledges conservation as an important goal. And I guess that's worth something.

Meanwhile (CNN):

Republicans blocked Democratic efforts to pass a $32 billion package of tax incentives for renewable energy and clean fuels, objecting to increasing taxes on oil companies by $29 billion over 10 years to pay for it.

That's the real story of this energy bill.

Posted by Jonathan at June 22, 2007 10:46 AM  del.icio.us digg NewsVine Reddit YahooMyWeb


Her comment is partially true. LIke you observe, driving can't be a completely linear relationship.

The bigger issue is that cars per se should be taxed much more than they are. In the meantime, fuel can be taxed to build the real public transportation we should have been building in the last century. Road access could also be taxed more, through tolls, or as part of the income tax.

Posted by: Derek at June 22, 2007 02:57 PM

Jevons Paradox might be applicable if the cost of the commodity had remained constant. Thing is, the period between 1975 and 2000 saw a steady decline in crude oil pricing, bottoming out at a historically low $10 per barrel. You can't tell me this wasn't a factor not only in individual decisions about whether or not to drive, but also in the planning and construction of an infrastructure that practically requires driving.

The current CAFE increase is entirely symbolic, as its timeline makes it painfully obvious. You'll know congress is serious when they lower the speed limit to 55, or better still, 45 MPH, effective on a 90-day timeline.

Posted by: Michael at June 25, 2007 01:09 PM