Saturday, August 27, 2005

Transportation Secretary Norman Mineta proposed imaginative fuel efficiency standards for new SUVs, vans and pickups. This scheme would divide light trucks into a half-dozen categories based on size, not weight.

By 2011, the smallest so-called “truck” (a PT Cruiser) would have to attain 28.4 mpg, while the largest could get by with 21.3. Add a few inches, and the standards drop. Fatten up to 8,500 pounds, and there are no rules.

A New York Times editorial, “Foolishness on Fuel,” began with vital facts, but promptly switched to foolishness, as promised: “Cars and light trucks — SUVs, vans and pickups — account for roughly 40 percent of all United States oil consumption, which now amounts to about 20 million barrels a day The same vehicles also account for more than one-fifth of the country’s emissions of carbon dioxide.”

Since 58 percent of the oil we use is imported, while only 40 percent goes into cars, SUVs, vans and pickups, it follows we would still import millions of barrels a day even if there were no passenger cars or trucks. Yet when it came to that other 60 percent of U.S. oil consumption, not to mention the other four-fifths of carbon dioxide, the New York Times had little to say. There was just the ritualistic hand-wringing over “minivans and SUVs, which are held to more lenient fuel economy standards.”

When it came to Mr. Mineta’s new regulations, the editorial rightly noted these “are unlikely to make any serious dent in consumption.” They couldn’t possibly make a dent because SUVs, pickups and vans only account for half of the vehicles subject to such regulations. And half of 40 percent is just 20 percent of total oil consumption.

“Soaring gasoline prices,” says the editorial, “tell us that we need to act quickly to cut down on imported oil” and “there is no better short-term answer than a more efficient transportation fleet.” But the world oil price has nothing to do with how much a country imports. Exporters like Canada face the same price. And new trucks are a tiny fraction of the fleet.

Mr. Mineta said, “The plan will save gas and result in less pain at the pump for motorists.” But the surest prediction in economics is that if the price of anything goes down, demand for it will rise. If Smith’s fuel frugality could actually cut the cost of gasoline for Jones, then Jones would drive more. And “Jones” may live in China.

Fuel efficiency rules for new vehicles cannot provide any “short-term answer” because 93 percent of the fleet is not new. In the short term, better fuel economy for new SUVs, vans and pickups could affect only 7 percent of the 20 percent of oil used by such vehicles, or 1.4 percent of total U.S. oil use.

The editorial cites a report “from President Bush’s own Environmental Protection Agency” supposedly proving “America’s cars and trucks are significantly less efficient, on average, than they were in the late 1980s, and that leaps in technology have been used to make vehicles more powerful but not more fuel efficient.”

What did that EPA report show about those demonized SUVs? In 1978, SUVs weighed 4,202 pounds, produced 146 horsepower and got only 12.3 miles per gallon (mpg) in combined city-highway driving. By 1988, they were down to 3,859 pounds, had only 144 horsepower but got 17.4 mpg.

By 2005, by contrast, SUVs were up to 4,649 pounds and had 236 horsepower yet achieved a record 18.1 mpg. That demonstrates a huge fuel efficiency increase — much more space, safety, comfort and performance with less fuel. Efficiency means getting more for less, not getting less for more. The United States is impressively energy-efficient.

Citing an environmental group, the editorial remarked that “even the Japanese… are doing poorly on a fleet-wide basis. The culprit in all cases was the increasing market share of minivans and SUVs.” Well, the Infiniti M45 and Lexus GS 430 are not exactly turtles in the latest ill-timed horsepower race. But it is true Japan and Europe are quite eager to supply us with any large or powerful vehicles GM, Ford and Chrysler dare not produce for fear of offending federal officials.

The New York Times editors claim, “The efficiency standards enacted 30 years ago after the Arab oil embargo made a huge difference in consumption.” That echoed an April 19 letter to the Wall Street Journal, in defense of assorted subsidies, signed by Robert C. McFarlane, R. James Woolsey, Frank J. Gaffney Jr., C. Boyden Gray and Timothy E. Wirth. It said: “The last time Washington took oil conservation seriously, Detroit got the job done. In a little over a decade after 1975, the fuel economy of new cars and light trucks went from 15 mpg to 26 mpg. The fiasco has been in the nearly two decades since then, during which fuel economy for new passenger vehicles has declined to 24 mpg [actually 24.6], while horsepower has increased by 93 percent and weight by 24 percent.”

Fuel economy did not rise after 1975 because Washington took anything seriously or because American Motors was saved by getting the job done. CAFE standards did not begin until 1978, when they were toothless at 18 mpg. What really happened was that gas prices soared from 61 cents in 1976 to $1.38 in 1981 — a level not seen again until late 2002.

In 1981, imported cars achieved 31.5 mpg, while domestic cars averaged 24.2 mpg; imported light trucks got 27.4 mpg, while domestic light trucks got by with 18.3 mpg. Average fuel economy of new vehicles did not jump from 19.9 mpg in 1978 to 24.6 mpg in 1981 because Big Brother could mandate what sort of vehicles we buy, but because domestic car sales collapsed by 40 percent from 1978 to 1981 (from 9.1 million to 5.4 million), while sales of fuel-frugal imports rose.

The mix of new car sales — with imports accounting for 30 percent rather than 18 percent — is the main reason the combined mileage of domestic and imported cars improved. No such miraculous “improvement” is possible today because mileage of domestic and foreign car and trucks is virtually identical — 30 mpg for cars, about 22 for light trucks.

Irrational antagonism toward SUVs and affection for fuel efficiency standards is pure symbolism, the equivalent of wearing a green ribbon to show solidarity with trees. Fuel efficiency standards for new U.S. cars and trucks have never caused anything but trouble and never will.

Campaigning for the presidency in 1980, Ronald Reagan said, “Detroit doesn’t need protection from Japan; it needs protection from Washington.” I’ve always admired that line — and not just because I wrote it.

Correction: There was a careless blooper in my last column, “Estate tax spin” (Aug. 21). I wrote “the alleged revenue loss from scrapping the estate tax — $27 billion a year after 2010 — would be less than one-thousandth of 1 percent of total revenue, estimated at $3.8 trillion by 2015.”

Actually, $27 billion is seven-thousandths (0.007) of $3.8 trillion, or seven-tenths of 1 percent. That is nonetheless quite small — much smaller than typical revenue-estimating errors.

Alan Reynolds is a nationally syndicated columnist.

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