two pigeon-hole arguments on oil

Topics: Transportation
07 May 2006

From: Ervan Darnell

The legislative gimmicks coming out of Washington for the hike is gas prices are preposterous. It's one of those moments when I cannot stop shaking my head wondering why anybody votes for these fools. Instead of shooting fish in the barrel, I had a thought on two more subtle fallacies:

1) Liberal theory: Raising CAFE standard will stop global warming. The assumption in this line of reasoning is that if we raise mileage from 20mpg to 30mpg we are burning 1/3 less gas and producing 1/3 less CO2.
This might be true in a rate sense, i.e. how much we produce today, but it's not true in an absolute sense. Well, it's not even true in a rate sense because higher mileage means lower demand, means lower prices, means more consumption, means more CO2. Maybe the consumption moves to China, but there will an offset somewhere. It won't be a 100% but a good portion of what is saved will be consumed in some other way. But forget about that part.

There is a deeper issue here: the amount of oil is finite and we are going to burn essentially all of it. All of the carbon now in oil in the ground will eventually be released into the atmosphere. The net greenhouse warming effect is the same. This is not exactly true because if we take more time to burn it, carbon sinks might respond better. And (as Clive pointed out), it gives us time to find better technology, maybe some way to directly sequester CO2 generated by internal combustion. That helps, but to first approximation the idea that higher mileage leads to correspondingly lower CO2 emissions runs afoul of the pigeon-hole principle.

2) The Bush theory: Raising CAFE standards will save money. Consumers are paying too much for transportation (in fuel) therefore we should force them to pay yet more for transportation (by buying new cars). The Democratic version of is that gas prices are too high therefore we should raise taxes on gas (via the windfall profits tax).

Not in the offered policy, but in his speech Bush suggested that it was necessary not merely to see that the next cars people buy are more fuel efficient, but rather that the turn over rate should be increased. Here's the pigeon-hole problem: where do those old cars go? Bush acts as if they just disappear. Are perfectly reliable cars going straight to the junk yard? Not likely. We're talking about trying to induce people to sell low-MPG cars in the interest of buying new high-MPG cars. To the extent that succeeds, low-MPG cars become cheaper and more appealing to people seeking an automotive discount. All of that gas will still get consumed. It might even make it worse by creating a relative discount for low-MPG cars that brings poorer people into the market as drivers.

Ervan Darnell

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