Decades of failed U.S. policy led to current oil situation
Sunday’s New York Times had a great piece outlining the recent history of American policy (non-policy) towards oil consumption. Reading this article, one begins to understand the massive policy mistakes we have made over the past 20 or so years that have led to the situation we currently face. In order to understand the depth of this failure, we have to look back to the oil shortages of the 1970s. In response to those shortages, the U.S. realized that cheap and plentiful oil supplies were not a guarantee, and consequently implemented the CAFE standards (“corporate average fuel economy”), which mandated a minimum average fuel efficiency level for automakers. As a result of those standards, by 1989, the average fuel efficiency for a car sold in America increased from 13.8 to 27.5 miles per gallon. However, our national policy began to fall apart soon thereafter.
Throughout the 90’s, oil prices dipped to lows around $10 per barrel and our consumption increased dramatically. Cheap gas and big SUV’s, that were governed by less stringent regulations due to a loophole in the original 1975 law, led to substantially more oil consumption and waste.
Throughout this period there were a number of attempts to increase fuel efficiency standards and gas taxes, however they were usually rejected or watered down by politicians from oil or car producing states. Not only did the Congress fail to enact tougher standards, they actually included a provision in a 1995 appropriations bill affirmatively prohibiting the National Highway Traffic Safety Administration from spending money to increase the CAFE standards.
At the same time that the government was failing to require car manufacturers to produce more efficient cars, there was also a series of moves to prevent additional domestic oil exploration in places such as Alaska. Additionally, federal gas taxes were kept substantially lower than other countries, which also removed any disincentive to conserve gas.
As a result, we are now faced with the current situation where gas is nearing $5 per gallon, American automakers are in serious financial trouble, and there is no clear solution in sight. While there is no magic bullet for this situation, understanding its causes and identifying the actions/inactions that lead to it, can help us craft better policy in the future. Additionally, politicians who opposed comprehensive and intelligent energy policies should be held accountable.
Given our experiences with oil shortages in the 1970s, and the generally anticipated global growth from countries like China and India, it cannot be said that this current situation was unforeseeable. Consequently, those leaders who refused to enact sensible policy (or worse, actively opposed it), should be held accountable. After all, this is what is currently happening with American automakers who fought fuel standards for many years– they are now suffering the consequences of plummeting sales.
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