We never learn, do we?
As gasoline prices surged past $4 a gallon on the eve of the global financial crisis in 2008, and returned almost to that level during a tepid recovery, American consumers responded accordingly, by turning in droves to small, fuel-efficient cars.
Today, it’s as if none of that ever happened. Gasoline prices plunged throughout 2015, and automobile buyers went right back to big sport-utility vehicles. As The Wall Street Journal reported earlier this week:
Low gas prices are great news for US automakers, which are more dependent on SUV sales than their Asian and European competitors. But the resurgence of demand for the biggest vehicles bodes ill for the environment — and it’s also bad for the economy in subtle ways.
When gas prices rise again, and they inevitably will, drivers of the worst gas-guzzlers will spend less on other things. Inevitably, pandering politicians will raise ideas like cutting the federal gas tax, which pays for transportation improvements that the country desperately needs, or dipping into the Strategic Petroleum Reserve, which is intended for genuine crises and not for the normal peaks of a volatile oil market. If car buyers remembered the pain of paying $4 a gallon for gasoline, they might choose vehicles that burn a lot less of it.
The other possibility, of course, is that American consumers have so strong a preference for plush, roomy vehicles with big engines that only an immediate hit to their pocketbooks can make them want anything else.
The usual way the United States encourages fuel economy is by regulatory fiat. The Environmental Protection Agency sets minimum mileage standards — and leaves it to the automakers to design vehicles that follow those rules but also appeal to consumers. Critics of the EPA standards say they force companies to build fuel-efficient vehicles that consumers don’t want to buy.
But there are easy ways to change consumers’ minds. A steep hike in the federal gas tax would make gas-guzzling vehicles less attractive, and economy cars more attractive, even when global oil prices are low. Automakers could focus on making engines more efficient — knowing there’d be consistent consumer interest in them — rather than on designing engines with ever-greater horsepower. Meanwhile, Congress could use the proceeds of the tax hike as a steady source of infrastructure money, or to pay for offsetting tax cuts.
Best of all, a higher gas tax would act as a national mood stabilizer. It would promote efficiency in good times and bad — instead of leaving consumers to stew over gas prices at one moment and blithely forget about them the next.