Let Consumers Drive Fuel Efficiency

Source: IndyStart
[May 13, 2006]

One of President Bush's proposals to cure the nation's oil addiction is to toughen fuel-economy standards for new cars, pickups, SUVs and minivans.

The federal government tried that approach decades ago during the Arab oil embargo. And it worked -- for a while.

Automakers improved the mileage of their fleets, a development that likely had more to do with rising gas prices than government requirements. But when gas prices dropped, motorists returned to buying bigger vehicles. Per-capita gas consumption is now about what it was before CAFE standards were imposed.

Allowed to function without interference, natural market forces tend to encourage consumers to respond to rising gas prices by demanding more fuel-efficient cars. Witness the growing number of people paying a premium to buy hybrids.

Brazil has kicked its dependency on foreign oil not by imposing tougher mileage standards but by promoting the use of ethanol derived from its abundant sugar crop. The United States could substantially wean itself from Middle Eastern oil and reduce air pollution by giving automakers incentives and credits for promoting flex-fuel vehicles.

Former Senate Minority Leader Tom Daschle, in a recent New York Times op-ed, argued that such incentives would promote energy independence, reduce carbon dioxide emissions, help Midwestern farmers and strengthen U.S. automakers, which have a lead over foreign companies in developing cars that run on bio-fuels.

The federal government also could encourage the nation's conversion to fuel produced from crops by temporarily suspending tariffs on imported ethanol while domestic producers gear up for national distribution.

Relying on market forces and offering incentives to convert to alternate fuels are the best means for changing Americans' consumption habits.