Con: Greener cars are insurance against risky oil dependence

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John D. Graham & Denvil R. Duncan
November 26, 2014

EDITOR’S NOTE The writers are addressing the question, “Should new GOP Congress rescind EPA’s 54.5 mpg mandate for 2025 models?”

BLOOMINGTON, Indiana -- As fuel prices fall below $3 per gallon in much of the country, it is tempting to think gasoline is so plentiful that we no longer need regulations to improve the fuel efficiency of vehicles. We believe such thinking is unwise.

If the last 40 years teach nothing else, it is that the world price of oil is unpredictable and volatile.

Unforeseen developments in the Mideast could cause disruption in oil markets and a surge in gasoline prices. If the Chinese economy ramps up again, expect oil prices to rise again.

The politics of oil production in the United States are also unpredictable. Oil production is surging now due to technical advances called “fracking,” but many communities vigorously oppose that extraction process.

Indeed, some towns and states are passing resolutions—unwisely in our view—to prohibit oil and gas development, and such developments only complicate the future of domestic production. Greener cars are an insurance policy against our risky dependence on oil.

More fuel-efficient cars are also good for the environment. When consumers use a car with high mileage per gallon (mpg) instead of a car with low mpg, the environmental benefits include less smog and less soot as well as fewer greenhouse gases—the pollutants that contribute to global warming.

It is true that policymakers could achieve the environmental benefits by implementing alternative policies such as a tax on vehicle emissions.

Alternatively, policymakers can boost consumer demand for fuel-efficient vehicles by increasing the fuel tax rate or implementing a mileage user-fee with rates that adjust for mpg.

Unfortunately, we are not convinced that either of these policies is likely to be implemented in the current political climate. Our safest bet, then, is the status quo.

Significant progress is being made toward the 54.5 mpg target. Ford’s Ecoboost engines are achieving large gains in fuel economy at modest costs to consumers. German manufacturers are penetrating the U.S. market with clean diesel technology that also provides enhanced performance for the motorist.

Toyota’s commitment to conventional hybrid engines has been a significant commercial and environmental success. And Ford and General Motors are using advanced aluminum materials to enhance mileage ratings of pickup trucks.

Since all of these manufacturers—and their suppliers—are making major investments to enhance fuel economy, removing the regulation will simply reward automakers who won’t innovate.

Is 54.5 mpg by 2025 written in stone?

Absolutely not. Indeed, federal policymakers have already made a decision to revisit this figure—including other aspects of green-car policy—in 2017, just a few years from today.

That time can be well spent collecting data on current policies, analyzing costs and benefits, exploring possible safety impacts, and making wise refinements to the current mileage program. Now is NOT the time for hasty deregulation.

John D. Graham is dean of the Indiana University School of Public and Environmental Affairs. Denvil R. Duncan is an assistant professor in the school conducting research in public economics and economic development. Readers may write them at SPEA, 1315 E. Tenth St., Bloomington, IN 47405.


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