Everything has unintended consequences, but sometimes they are positive. A new study commissioned by T&E, the European Federation for Transport and Environment, says there is an overlooked element in the public discussion about corporate fuel economy. Lower overall fuel consumption as caused by more economical cars, T&E says, would lead to lower fuel prices. “Economic benefits of energy conservation policies in Europe are consistently underestimated. But until now very few have made the point that a policy-induced decline of demand for oil could also result in lower oil prices, and hence greater economic benefits.” They’re not talking about the flawed US CAFE system, however.
Energy consultancy Enerdata which wrote the study focused on the European fuel efficiency standards which come into effect in 2012, which call for a fleet average of 130 g/CO2. Enerdata says that for every 1% reduction in global fuel consumption, fuel prices drop by two percent. So, funny enough, the US might benefit from EU regulation. The irony of this is not lost on us: do-gooder Europeans causing gas to become cheaper for American SUV owners? But wouldn’t people just drive more if gas was cheaper?
This is where T&E gets all Euro-lefty, and says that the “obvious” solution is increased fuel taxes. Which of course is a toxic argument, even though it’s right.
Meanwhile, in other Gallic-related news, a spokesman for French oil giant Total told Der Spiegel that high taxes on oil are necessary “as an incentive to economize, as well as to develop alternatives,” and that the lack of taxes on aviation fuel is unreasonable.
I said it before, and this “study” so nicely validates it.
“Drive a bus, save the world”.
or conversely, “You’re choice of a Prius makes my Hummer possible.”
The coming giant fleet of TATA Nanos will make your Hummer painful soon.
# Bytor :
April 17th, 2009 at 3:56 pm
The coming giant fleet of TATA Nanos will make your Hummer painful soon.
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Very true. Be careful what you wish for.
Well duh. Car fuel is, in the economists’ terms, inelastic in both supply and demand. More demand doesn’t increase the supply much (supply inelasticity), so the fuel prices skyrocket in chaotic shocks. Similarly, people HAVE to have fuel on a daily basis (demand inelasticity) so it takes an enormous increase in price to have much change in the demand.
The only thing you can do is to change the game, and one way to do that is drastically increase the efficiency of transport. If you cut the demand drastically, the fuel production infrastructure is still there…and allasudden, there’s a glut…and competition…and falling prices.
Of course that’s when the Hummer come out again :(
Please explain what a g/CO2 is.
Juniper, that’s the standardc measurement for CO2; just as miles per gallon for fuel consumption, there is grams CO2/kilometer. The most efficient VW polo Blumotion (a diesel, natch) gets 99gmCO2/km…the least 150…so a fleet average of 130 is pretty ambitious….
http://www.vw.co.uk can give you the figures for the whole VW line…
No argument out of me in regards to the conclusion that lower overall consumption equals lower demand and lower prices, but taxes are not the answer.
I drive a subcompact. When gas prices are high, I save proportionally more than people who have larger vehicles. They pay extra every time they pump. That’s incentive enough to purchase a vehicle just large enough for their needs. If they delude themselves into thinking they need something larger, they are only hurting themselves.
@ConspicuousLurker: Exactly. When the price of gas crashed this winter, my girlfriend kept asking me why I’m still driving so damn slow, because “gas is cheap.” Sorry, but even when gas is cheap, I still save money by simply not driving like a jerk. It just happens that I don’t save quite as much, but every dollar counts. Through conservative driving over the last year, I’ve spend something like $150 less than if I were getting the EPA-figured combined 29mpg that I “should” be getting.
Yes, I keep a meticulous fuel consumption spreadsheet. It’s a good motivator.
If lower consumption = lower prices explain why oil is at $50 a barrel and gas in Canada is $.85 a litre. The last time oil was at $50 a barrel gas was $.65 a litre. In the end Big Oil controls the prices and if conservation cuts too deep into their profits they will simply raise the price.
ex-dtw:
“You’re choice of a Prius makes my Hummer possible.”
Even the pro-global warming demographic responds to incentives – a friend swaps between Exploder and Corolla depending on gas price. Although he’s tempted after long trips to ditch the Corolla’s driver seat for a Recaro.
System Note: The comments are buggy.
Just think…These idiots have guns and jails.
If taxes were raised for production of more oil (such as drilling or octane producing algae) and ANY research into actually removing polutantscarbon from the air, then I’d actually be for it. Unfortunately this makes too much sense. I guess it’s easier to just social engineer our rights away for ‘the common good’ than than exert some effort into a have your cake and eat it too strategy. I don’t need my son less to keep his dirty diaper count low. I’d rather feed him all he wants and just wear gloves change to his diapers. A little innovation can make everyone happy.
ihatetrees :
ex-dtw:
“You’re choice of a Prius makes my Hummer possible.”
Even the pro-global warming demographic responds to incentives – a friend swaps between Exploder and Corolla depending on gas price.
I’d leave the Exploder as far away from home as possible.
Although he’s tempted after long trips to ditch the Corolla’s driver seat for a Recaro.
Can’t blame the guy for that!
System Note: The comments are buggy.
That’s due to a regression. Another regression and they’d be hoarse and buggy.
Many oil companies are now supporting fuel prices and carbon taxes paid AT THE PUMP, in order to avoid hidden taxes such as the so called cap and trade proposal from the Obama administration.
I don’t need my son less to keep his dirty diaper count low. I’d rather feed him all he wants and just wear gloves change to his diapers. A little innovation can make everyone happy.
So you’re advocating that we just deal with the mess and wear protective clothing instead of dealing with the issue responsibly? Your son eating and thereby filling his diapers is not a choice you made; i.e., you didn’t shop around to pick out a baby like you would a car.
For myself, I traded in my F250 not because I felt any burning desire to met anyone’s social agenda, but more to the fact I hated putting 30 gallons of fuel in it to tool around to work and back. It wasn’t worth the waste so I traded it in for an Astra, which is more than enough to motivate my fat ass around and still capable enough for trips to Lowes.