Commentary

Fuel Efficiency is Not the Answer

Increasing fuel efficiency in vehicles by itself simply lowers the cost of driving and encourages more sprawl development.

By Don McLean
Published March 19, 2007

People concerned about the fate of the planet should think carefully about calling for improved fuel efficiency in automobiles, and not just because George W. Bush is a recent convert to this idea. While on the surface this looks like a way to reduce emissions of carbon dioxide, even that objective may not be attained, and several related problems will actually get worse.

The OPEC oil price jump in the 1970s led various governments, including those in Canada and the US, to raise the standards for vehicle fuel efficiency. It is now understood that the initial reductions in fuel consumption were fairly quickly overwhelmed by an increase in the amount of driving and the number of cars, especially once the price of oil went back down.

This is often described as the Jevons Paradox, a reference to the observations of an English economist in the 1800s that improved efficiency of steam engines actually resulted in much greater consumption of the coal to drive them.

A more recent example is the rapid expansion in the size of houses (the McMansion phenomena) as the energy costs of heating such behemoths has decreased.

None of this should be surprising. Improving vehicle fuel efficiency means lowering the price of driving. A car that gets 20 km to the litre costs its owner half the amount of gas as a car that gets only 10 km to the litre to go the same distance.

To the extent that price matters to the owner of the more efficient vehicle, that may well lead him to drive twice as far in any given year. It also appears to have contributed to the shift from a one-car family to a two, three or four car family.

So the fuel efficiency that is supposed to reduce consumption of fuel, also increases consumption of vehicles (and all the energy output required to produce them)!

Evidence of this can be seen in the rapid rise in sales of Toyota, Mazda and other more fuel efficient vehicles, while the gas guzzlers are dragging GM, Ford and Chrysler toward bankruptcy. And this trend began well before the recent jumps in gas prices.

Another effect of improved car fuel efficiency is less incentive to switch to alternative forms of transportation such as transit, cycling and walking.

The price advantage of these much more environmentally friendly ways of getting around is eroded by improved car fuel efficiency, so higher car fuel efficiency likely means fewer people moving to transit.

Perhaps even more problematic is that improved fuel efficiency doesn't reduce any of the other problems associated with car dependency. Indeed it likely increases demand for more roads as well as for more sprawl development, since it is now cheaper to live further away from where you work and shop.

Since it leads to more driving, it also results in additions to the already staggering toll of injuries and deaths associated with vehicle use.

Fuel efficiency standards have other problems. They are applied to manufacturers of vehicles, not to the purchasers and users, so they perpetuate the myth that someone else is going to deal with air pollution and climate change. Indeed, instead of penalizing people for driving more and accelerating climate change, government imposition of fuel efficiency standards actually rewards people for driving more.

So what's the alternative?

One approach that would seem to hold more promise in a market economy is to impose regulations that directly increase the cost of driving. Some governments have gingerly started down this path by imposing higher vehicle licensing fees on V8s, SUVs and other high fuel consumption vehicle types.

But these measures only penalize drivers for the type of vehicle they own, leaving them free to drive that gas guzzler as often and as far as they want. Once you've bought the bigger vehicle, it's a big move to sell it just to save on the annual licence fee. There's no small step here, only a complete reversal of the original decision on what vehicle to buy.

So let's add another element to the licence fee mix by linking the amount of the fee directly to the amount of kilometres driven in the previous year. The more you drive, the more you pay. And conversely, if you drive less, you save money on your licence fee.

The average Canadian vehicle travels about 18,000 km a year (1,500 a month). We could start by charging an extra fee, on a sliding scale, for anything over this average, probably calculating in 1000 km increments.

So if you were over 19,000 you might pay an extra $25, and over 20,000 it would be an extra $50, and so on. This system should also allow for some reductions in fees – in small increments for driving 1000 or more less than the average.

Once the system was in place, then the distance per year at which there was no penalty could be steadily ratched down – in the same way that a carbon trading system works. So in the second year the "average" at which no extra charges were imposed could be moved down to 17,000. As governments (and the public) become increasingly worried about climate change, the ratchetting could become more rapid.

A step-by-step introduction would give drivers the time to modify their habits to avoid the extra charges – perhaps moving their home closer to their job, talking their kid out of "rep" hockey, using the transit system more often, cycling to the some destinations, and so on.

Such a system would be much fairer than the current one where the person wanting to reduce their greenhouse gas output usually has to pay far more for a hybrid or other more efficient vehicle – effectively penalizing positive behaviour and rewarding negative.

In this new system, the person who drove the most, and therefore put the most carbon and other pollutants into the atmosphere, would have to pay the most. The person who drove less, and thus demanded fewer roads, made less contribution to congestion and accidents, and probably used alternative transportation more often, would pay less and thus be rewarded for their more positive behaviour.

The fee structure for such a system would have to be set carefully to ensure that there was no financial incentive to go out and buy another car so both your vehicles would get under the ‘average' cutoff. This would require a relatively high basic charge for every licenced vehicle, but doesn't appear to be a insurmountable obstacle.

The same principles can be applied to electrical and other energy use. Increasing the price will have a lot more beneficial effect for the public good, than increasing the efficiency.

Does that mean that we should oppose increased fuel efficiency? No, but let's not get caught up in the false belief that it's going to get us much closer to addressing climate change, and we shouldn't allow governments and manufacturers to use fuel standards to avoid much more effective measures.

Don McLean is chair of Friends of Red Hill Valley and coordinator of Citizens at City Hall, a volunteer group that has monitored city affairs since 2004 and distributes free news articles via email. The group can be contacted at info@hamiltoncatch.org.

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By Ted Mitchell (registered) | Posted March 19, 2007 at 21:54:41

A much simpler answer is for gas to cost $3-4 / litre in today's dollars.

The rich wouldn't change, but most people would get the idea about car pooling, and improve on that little 25% seat occupancy problem. The poor would get rid of their cars, thus pulling away from car-induced poverty.

$3 gas would put my annual 2 car ownership costs up from about $8K to $10K assuming no change in mileage. Drop in the bucket really, unless your ego drives some insane guzzler.

I recall what the price was 20 years ago when I used to pump it: $0.40 Adjust that to $ 1 today and you have an equivalent annual interest rate of 4%, hardly above inflation. So those complaints about the current high price of gas are just illigitimate.

With $3/L gas, you can lower other forms of tax. Why should people pay tax based on the value of their house or even their income? That is much less "fair" than a big gas tax that places the burden on those who generate the massive costs, dollar and otherwise, of car culture on our society.

But I'm afraid this most fair scenario has no chance politically. We are too stupid to do anything but the status quo until hit by some really big problem. The most likely one is not climate change, war or terrorism. It's economic collapse.

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By Brendan (registered) | Posted March 19, 2007 at 22:24:22

Great article Don. The Jevons Paradox is a real pickle, and often doesn't get enough respect from activist circles.

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By appalbarry (registered) - website | Posted March 29, 2007 at 10:39:22

The problem of course is that hiking up the cost of auto ownership does nothing to slow down the folks driving a Cadillac Escalade, but directly hurts the people at the bottom of the economic ladder who are driving a ten year old Toyota.

Far better to create fast, reliable, frequent and cheap transit, and watch people abandon their cars because the streetcar or bus is the more convenient and affordable choice.

Hamilton sadly chose the other route - increase fares again, reduce overall transit ridership, and almost inevitably move more people into cars.

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By tomjen (anonymous) | Posted April 05, 2007 at 03:07:08

Why not just ban cars?

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By Chad (anonymous) | Posted April 07, 2007 at 15:49:29

Great article and provides some perspective on the 'silver bullet' or 'instant fix' mentality which is endemic in our North American society.

I believe some increase in the cost of gasoline is needed and the right thing to do. That increase however needs at least 2 preconditions:
1- make the price sufficiently high (say $2 per litre)to provide extra revenue beyond today's net resource allocation to transportation;
2- Take the extra revenue and apply it to a comprehensive transporation solution where local and inter-city transit can be provided and at cost (and service level) below that of driving a car for the same purpose;

In this way all transporation needs can be addressed by optimum application of resources to result in the most effective (economic and environmental) movement of people and goods.
This also would capture the policy-planning-tax allocation for airports and air travel, train travel, and freight transport.

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By Andy (anonymous) | Posted April 09, 2007 at 11:32:05

Great article on a topic that really needs consideration. One item it doesn't touch on however would be the application of this logic to other fixed costs of driving. We purposely chose to live in downtown Hamilton in part to reduce our "need" to drive. For that choice we pay insurance rates far beyond those in the commuter belts whose residents rack up miles and "have to" drive everywhere. Distances driven are one factor that don't seem to factor into the setting of rates. Folks who drive 5000 km a year should pay 20% of what those doing 25,000 km annually do. Ask your broker why this isn't the case the next time you renew.

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By seancb (registered) - website | Posted April 09, 2007 at 14:27:15

Funny... When I worked in Toronto, I lived temporarily in Little Italy (20km commute to work). It was about $800/yr cheaper for me to keep my parent's address (in Niagara) on my insurance and claim a 120km commute instead of a 20km commute. Figure that one out.

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By Frannie (anonymous) | Posted April 10, 2007 at 09:06:57

In some highly polluted cities, like Santiago (Chile), license plates have stickers marking which days they are not allowed to be driven (one day per week), where the driver gets fined if they are found on the road that day. This reduces driving immediately by 1/7th and prompts people to carpool or take public transit (which recently got a major boost by the new government).

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By jason (registered) | Posted April 10, 2007 at 10:48:26

Andy and Sean bring up a great point that has always irked me about this industry. Think about it - do insurance companies want us to drive less, or worse yet, get rid of our cars altogether?? Would an insurance company want to see sprawl reduced or continue on into the sunset??
they cite 'crime stats' or high accident rates as the reasons for downtown residents paying more, yet downtown residents drive far less than folks in the suburbs. It's just one more example of how slanted our entire economic system towards sprawl and bad planning. Infill apartments that add vitality and life to an urban street with residents more likely to walk or use transit do absolutely nothing for an insurance company that depends on sprawl and car-addicted growth to keep gaining new customers. Also, the same is true on house insurance. I live in the York/Strathcona area...my house insurance went up after the Locke south watermain fiasco and I was told it's because I live in 'that area'. Other people I know moving from Concession area to Corktown were told their insurance would go up. It has nothing to do with crime (which is virtually non-existent in Hamilton and pretty much the same everywhere) and everything to do with the addiction to sprawl that permeates the development/car/oil industry as well as the insurance industry.

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By Mike (registered) | Posted August 18, 2008 at 21:53:11

If improving the fuel efficiency of automobiles is a bad idea, then is improving the efficiency of mass transit vehicles also a bad idea?

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By seancb (registered) - website | Posted August 19, 2008 at 10:16:18

i don't think the point is that it is a "Bad idea" but that relying on fuel efficiency alone as a solution to energy crises or environmental damage is essentially useless. You have to attack it from many more angles, specifically you need to give people good incentives to NOT DRIVE. This doesn't mean stopping the efficiency race, it just means that efficiency should be a "side project" not the main theme.

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By canikia h. (anonymous) | Posted March 29, 2011 at 05:35:37

Rising auto prices in the aftermath of the Japan earthquake could possibly be just the beginning of a longer lasting trend. Cars built in Japan and American automobiles with parts built in Japan will be impacted by disruptions at Japanese auto plants. Auto experts suggest that customers act now before the law of supply and demand makes fuel efficient vehicles both harder to discover and more costly.

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