Wednesday, June 13, 2007

More Random Notes

So I saw bits and pieces of the Democratic debate and the part that sent me through the roof was not anything that the Democrats said but rather one of Wolf Blitzers questions. It went something like this "What would you do as a president about high gas prices?" Now the correct answer is nothing but this questions conveys a total ignorance on Mr. Blitzer's part. At least in the short term, the President has very little ability to influence things such as price (they are driven by supply and demand). Clinton released some fuel from the strategic reserve to ease the price of gas by a nickel or so but that is about all that can be done. Ostensibly the President could lobby congress to give the President authority to set gas prices and we could all return to fuel shortages, gas lines, and even and odd numbered fueling days. That would be assanine. There is only so much that can be done. The candidates to be honest, acquitted themselves quite poorly. John Edwards muttered something inane about investigating oil companies (cuz gee whiz, they are making so much money) and almost pretended that gas prices operated in a vacuum. Chris Dodd said something stupid. Yet they all proceeded to move from gas prices to two things: Energy Independence and Environmental Protection. If you champion the latter then high gas prices have to be viewed as an unmitigated good. People's behavior is being influenced in a direction towards your policy goal (via purchasing autos that have a higher fuel economy, driving less, etc.).



Now on to energy independence. I was listening to C-SPAN radio on the way home from work and there was some subcommittee hearing (it was like the catchall subcommittee of current big fads- global warming, energy independence, tinky winky, etc.) and the chairman (rep. Markey (D-MA)) was bitching at the head of NHTSA (National Highway Traffic Safety Administration or something rather) for not mandating higher a fuel economy for Auto Manufacturers. So he goes on to talk about Europe and how they have very high fuel economy standards there (it's 35 mpg right now, which is what is being proposed here for ten years hence) and how Ford and GM are able to meet these standards in Europe, how come they don't here. Then he did his bit about how there is no reason the American manufacturers can't meet these standards today and cited the Ford Escape hybrid as an example (it manages 36 mpg v. 26 mpg for the standard model) of how the American manufacturers can meet a higher fuel economy without sacrificing safety. But his example is telling, the Ford Escape hybrid is several thousand dollars more expensive than the equivalent standard engine version.

In Europe where energy is expensive (i.e. where they tax the bejeezus out of gas) cars are smaller, much smaller. I drive a Volkswagen Rabbit (the Golf in Europe). In the U.S. the Rabbit VW's entry level car. In Europe it is considered a full-size car, there are two cars below it in horsepower and curbweight- the Polo and the Lupo. A car that weighs 2000 pounds and has 80 horsepower is unthinkable in the U.S. but it is quite standard in Europe. There are reasons other than gas prices (smaller families, greater population density provides for greater economies of scale vis-a-vis public transport, urban running as opposed to highway driving, etc.) but ultimately gas is expensive there and cheap here, ergo, we have gaz guzzling cars. If you want to change that, change the market incentives. Fuel Economy mandates may have some effect but ultimately the consumer will chase the exemption (read: Minivan, SUV, CUV).

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