That Used to Be Us_ How America Fell Behind in thted and How We Can Come Back - Friedman, Thomas L. & Mandelbaum, Michael [116]
As technology improves, performance standards need to advance as well. As noted earlier, in 1974, in the wake of the Arab oil embargo, Congress doubled the average efficiency standard for new automobiles sold in the United States, from about thirteen miles per gallon to more than twenty-five, over the next decade. Unfortunately, “this improvement, designed as a floor, turned into a de facto cap on fuel economy for most manufacturers, and fuel economy remained stuck for two decades,” said Harvey. One reason was that Detroit fiercely—and, as it turns out, suicidally—fought any change in the standards the whole time. “Imagine if, instead, the fuel economy level had grown just 2 percent per year after 1985,” said Harvey. “U.S. cars would have reached an average of forty-four miles per gallon this year, Detroit would be a technology leader, U.S. oil consumption would be three million barrels per day less.” We would have saved hundreds of millions of dollars, and the recent oil shocks would have been avoided or been far less severe.
It is never too late to get this right, because the gains are so huge and the costs so low. In 2011, the Obama administration is expected to issue a proposal for new mileage standards to take us from 2017 to 2025. It is considering mandating annual improvements ranging from 3 percent to 6 percent. The current rules, which run from 2012 through 2016, compel automakers to decrease emissions—the proxy for fuel efficiency—by 5 percent each year. Automakers are pushing for 3 percent or less. We must go for 6 percent—and Dan Becker, a longtime environmental lobbyist and expert on this subject, explains why: “The technology to achieve 6 percent is on the shelves today. Most cars would get the mileage of today’s Prius. SUVs and other light trucks would average what today’s Ford Escape hybrid averages. This is auto mechanics, not rocket science. Most changes would be under the hood—better engines and transmissions, for example—and improved aerodynamics. The differences between strong and weak standards are huge: At 6 percent, we’ll save 2.5 million barrels of oil a day in 2030. That is more than our daily imports from the Persian Gulf. But if the standard calls for only a 3 percent decrease in emissions, we’ll save just over 1 million barrels a day. With the weaker standard, we’ll use an extra 1.5 million barrels of oil each day. That’s no way to curb our oil appetite.” By using less gas, the country would spend $645 billion less at the pump from 2017 to 2030, assuming gas costs $3.50 a gallon, according to the Union of Concerned Scientists.
Once we put in place steadily rising efficiency standards across the nation, a price signal—a tax on carbon and/or an increase in the federal gasoline tax—would reinforce them. People would have even greater incentives to look for more efficient homes, cars, and appliances, which the market would have made available thanks to the performance standards. “Then you have this huge market signal pulling you where the government is pushing you,” said Harvey.
Finally, when the market and the efficiency standards are both driving behavior in one direction, this creates a major incentive for private-sector investment and innovation. “California building codes get tighter every three years,” said Harvey. This has spawned ever more sophisticated window manufacturers, heating-and-cooling equipment producers, and insulation makers. These companies, in turn, have become a lobby for higher standards because with higher standards they have more customers for their higher-performing products and fewer competitors, especially cheap foreign competitors. “When Washington tried to pass a carbon cap, it got pecked to death by the vested interests,” said Harvey. “California passed a far more aggressive policy because the old vested interests from the fossil-fuel industries and the [U.S.] Chamber of Commerce have been supplanted by new vested interests that