Are fuel-efficiency standards a smart way to reduce oil consumption?
Fareed Zakaria has a nice rundown of the many ways our hunger for oil distorts our foreign policy and makes a mockery of our efforts to fight terrorism and spread democracy. At the end, he briefly mentions solutions:
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-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. That could translate into a sustained price drop of more than $20 a barrel. … I would start by raising fuel-efficiency standards, providing incentives for hybrids and making gasoline somewhat more expensive (yes, that means raising taxes).
If you want to reduce gasoline consumption, what you want to do is tax gasoline consumption, not inefficient engines. CAFE is appealing because the tax it imposes is "invisible," and legislators can pretend they’re voting to encourage the production of more efficient cars. In the real world, however, it doesn’t work that way, and someone needs to pay the piper either way. A much better way of reducing consumption would just be to tax it straightforwardly with higher gasoline taxes. The revenue could then be used for a progressive tax cut.
He points out, reasonably, that what we really want to discourage is heavy fuel use. Someone who drives a Prius on a daily 50-mile commute uses considerably more than someone who drives a Hummer H2 to da club once a week. And someone who doesn’t own a car uses still less, while receiving no benefit whatsoever from high CAFE standards.
The trouble is that liberals are failing to be clear about what it is we’re trying to accomplish. Environmentalists would like us to use less oil to keep the air cleaner and help fight global warming. Foreign-policy people see geopolitical benefits in reduced consumption. But pollsters see a public infuriated by high gas prices. Thus, it’s convenient to politicians to pretend they have ideas that solve all three problems simultaneously, and more efficient cars seem like they might fit the bill. But the first two goals — eminently reasonable ones — are actually inconsistent with the third. Saving the environment and reducing our exposure to Middle Eastern instability require higher prices, through higher taxes, not wishful thinking.
This is true as far as it goes, but as is typical of the policy literalists at the Prospect, it’s not clear whether Matt’s making a purely substantive or a political argument.
Lowering gas prices is unwise, and maybe impossible (at least for the feds). But the public’s awareness of and anger about gas prices is a potent force. Greens and geo-greens are trying to piggyback on that sentiment to advance their goals. It’s incoherent as a matter of policy, possibly somewhat devious, but I don’t see any other way to do it. Any politician or group that advocated for higher gas taxes would be immediately and summarily dismissed from public life.
It’s politics. The citizenry is ill-informed. Politicians are looking to the next election. Powerful economic interests cushion average folk from the consequences of their decisions. It’s just not possible in that milieu to achieve the optimal policy solution. In the interim, CAFE is better than nothing.