FRED WOLFERMAN: It's the Law - Supply and Demand Changing Auto World
For something over 30 years, governments at state and federal levels have been half-heartedly trying to legislate efficiency and conservation into our driving habits.
Congress has imposed fairly mild average mileage standards on automobile manufacturers, who have skirted them, pretty much as intended, by pumping out some small cars to offset the important, high-margin sales of SUVs and trucks.
California, followed by other states, has imposed fuel-blend standards within the state, in an effort to reduce emissions. This has led to a variety of fuel mixtures sold regionally, increasing refining and distribution costs, for some presumptive marginal improvement in air quality.
Local governments have built expensive subsidized mass-transit systems in an effort to get commuters off the road, while at the same time sucking up federal dollars to add and improve highways.
Except for nibbling around the edges of the real problem, none of this has really had much effect. It has been a sometimes-showy political response to various interest groups' efforts to change Americans' love of the open, or, in many cases, congested, road.
Well, guess what. Statistics released for March have shown the steepest decline in miles driven in history, 4.3 percent on a year-to-year basis. That amounts to 11 billion fewer miles in one month.
Why this sudden improvement? You already know, of course. The cost of gasoline has hit all-time highs, with no end in sight.
Once again we see that economics trumps government. The market has accomplished, with the law of supply and demand, what legislators have been afraid to accomplish with taxes.
So what happens now that people are actually driving less? Politicians are talking about "gas tax holidays." Oil executives are being excoriated. Auto manufacturers are whining and laying off workers. Isn't this what we have all wanted? Reduced dependence on the automobile? Cleaner air? Conservation of natural resources?
I would argue that it is, and though we will have a possibly costly and unpleasant transition period, life will go on; and though the cost of gasoline will stay high, and possibly go higher, the amount of money we spend on it will not increase much.
The reasons are really quite simple. It's that marketplace again. Car manufacturers know how to build much more efficient cars. Look at the hybrids already out there. The reason they have not yet built them is because they haven't had to. They've been able to sell all the gas-guzzlers they could make. That is changing fast.
They may be laying off workers now, but you can bet their design departments are creating a whole new generation of efficient vehicles, without the slightest prodding from Congress. They will get these cars into showrooms as quickly as possible, and customers will be ready to snap them up.
We will soon be drilling for oil in Alaska, off the coast of Florida, and on the front lawn of the White House, if it looks promising.
People will actually ride mass transit systems, consolidate their errands, and vacation closer to home.
All this will happen because the laws of economics will cause us to modify our behavior, not the laws passed by legislators.
We still have a very long way to go to reduce our dependence on oil, and energy in general, to sustainable levels. The way to get there is not for governments to subsidize the cost of energy for the convenience, and votes, of their citizens.
It is for energy to be priced at its true market value, which includes not only the cost of pumping oil, or digging coal, or making solar panels, but also the cost of replacing those things, if possible, or the cost of discovering and building new sources if not.
The increasing cost of gasoline is a very timely shot across our bow. Expect more of them.
Fred Wolferman lives in Southern Pines. Contact him by e-mail at firstname.lastname@example.org
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