SNOWMASS, COLO. — They're at it again.
The same people who brought us gasoline lines and brownouts are warning us of more of the same--while they advocate policies that could make their warnings come true.
Not that we don't have a choice. Since 1979, Americans have gotten more than seven times as much new energy from savings as from all net increases of supply, and more new supply from renewable sources than from fossil and nuclear fuels. Savings achieved since 1973 are saving $150 billion in annual energy costs today--more than $600 a year, tax-free, in every American's pocket. Even so, we've barely scratched the surface of how much efficiency is available and worth buying.
Yet listening to the presidential campaign, one might think none of these striking advances had in fact been made; that our energy choices remain limited essentially to the same old disagreeable supply options--oil, coal and nuclear. Consider, for example, the decision made Oct. 3 by the National Highway Traffic Safety Administration, an obscure and unaccountable branch of the federal Department of Transportation, to roll back the federal new-car efficiency standards for the fourth consecutive year, in response to pleas by General Motors and Ford that higher standards would force cutbacks of big-car production and cost hundreds of thousands of jobs.
Congress adopted the standards in 1975 in order to reduce U.S. dependency on imported oil. Before the imposition of fuel-efficiency standards, there was little incentive for consumers to buy cars that used less fuel. Of the total driving cost of a typical car, less than a fifth is fuel; a more efficient car can cost about as much more to buy as it costs less to run. Without the threat of federal gas-guzzler penalties, buyers would thus be indifferent to whether a car gets 20 miles per gallon or 60.
Yet choices toward the lower end of this fuel-efficiency range incur enormous costs for everyone. Persian Gulf oil imports, which the United States could eliminate by a 3-m.p.g. gain in fleet efficiency, are costing this country $50 billion a year in military bills for patrolling the gulf. As for environmental considerations, gas-guzzling autos spew air pollutants--a typical car emits nearly its own weight in carbon every year, contributing to global warming.
Congress' 1975 standards embodied a strong social interest in efficient cars--and the standards worked. In recent years, new domestic cars grew increasingly efficient, while imports that got 30-m.p.g.-plus--too efficient to be constrained by the standards--were getting less efficient as fuel prices fell.
Moreover, the cars now sold in Europe and Japan are scarcely more efficient than the average car sold in the United States. But Europe and Japan achieved those efficiency levels at enormous cost, via fuel excise taxes (a different form of government intervention) that raised gasoline prices several times above the U.S. level. U.S. standards achieved virtually the same result at far lower cost. Federal analysts found that it cost manufacturers at most $80 billion to achieve light-vehicle efficiency gains from 1975 to 1987, but that the increased efficiency saved American consumers a cumulative $260 billion (in 1987 dollars) in fuel costs.
The 1975 car standards were thus a howling success--one of the most effective oil-saving measures the world has ever known. They caused a fifth of all the oil savings achieved during 1979-83 by the 21 non-communist nations in the International Energy Agency. But of the domestic auto-makers, only Chrysler complied with the standards: General Motors and Ford have flunked them for each of the past six model years, disingenuously claiming helplessness in the face of a "consumer preference" that they assiduously manipulate to favor their least efficient but most profitable models.
GM and Ford used a loophole written into law in 1979 to avoid paying statutory fines for their non-compliance. In 1985, however, they could no longer carry forward earlier "overcompliance" credits to offset continuing non-compliance. This left them liable for something like $1.2 billion in federal fines (the actual figure remains an official secret). To avoid this distasteful imposition, the Reagan Administration made an administrative finding--apparently challengeable in court only by auto-makers themselves--that the 27.5-m.p.g. standard originally mandated for 1986-88 cars was no longer "feasible" and would be rolled back to 26 m.p.g. GM and Ford could then "overcomply" with the reduced standard, wiping out their fines. Learning that they could defy Congress with impunity, the two companies intensified their already active marketing of inefficient models--while Chrysler was competitively penalized for consistently obeying the law.