DailyDisgust pere on fuel efficiency

Below is my father’s take on the issue of fuel efficiency that I posted on yesterday.  He knows this stuff much better than I!  (Emphasis added.)

The gasoline demand snap-back effect from increased fuel efficiency will not be substantial. Because the demand for gasoline is highly inelastic, the net effects of substantially increased fuel efficiency standards will be substantial reductions in gasoline demand. Because people will spend less for gasoline, they will buy more goods and services, increase savings, and reduce debt. The economy and employment levels will improve as more goods and services are produced to meet increased demand. .
Increasing gasoline taxes is a very poor alternative for tighter fuel efficiency standards. In the short run, gasoline use will not decline very much since transportation is essential and mass transit alternatives are limited. In the long run, unless they are required to do so, automobile producers will not substantially improve fuel efficiency. Since people will spend more for gasoline, purchases of other goods and services will decline and the economy and employment will weaken. While government tax revenues will increase, given past political behavior, tax rates for corporations and upper income individuals will likely be reduced with hardly any benefit to others.
Few if any serious individuals argue for an efficiency-only energy policy. Increases in clean energy supply is very much needed. However, there are very substantial gains that can come from increased energy efficiency. The most effective way to assure energy efficiency improvements is through mandated efficiency standards.

So there you have it.  Thanks, Dad!

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3 Comments on “DailyDisgust pere on fuel efficiency”

  1. Adam says:

    Higher gasoline taxes might not improve fuel efficiency but would they not curb demand or reduce carbon dioxide emissions?

  2. DailyDisgust says:

    Whether we’re talking gas-tax or efficiency, the ultimate goal is a reduction in fuel usage and carbon dioxide emissions. The question now that I’m thinking about this from the other end is how the effects of higher gas prices would be felt across the economic spectrum. That gas tax hurts the person living paycheck to paycheck much more than it does the wealthy farmer.

    • Adam says:

      My own dad is always griping about gas prices. Like most Americans, fuel is a tiny proportion of his expenses, but he thinks gas prices should remain low for the sake of poor people. That’s his excuse anyway. Keeping gas prices low benefits the wealthy more than the poor, though. The rich simply buy more like in the 1990s when gas was dirt cheap and suddenly SUVs were everywhere. It seems like we ought to subsidize the people who need fuel rather than the fuel itself.

      I’m sure both our dads are going to take me to task now.


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