May 7 2008
HIGH gasoline prices could lead to a dramatic saving in US greenhouse-gas emissions. That's the conclusion of economists in the US, who suggest high fuel prices are turning consumers off SUVs and onto smaller, more fuel-efficient vehicles.
What’s more, car owners are predicted to cut back on driving in order to save money. Together, these changes in consumer behaviour could make an important dent in the US contribution to global warming, reducing annual carbon dioxide emissions by tens of millions of tonnes per year. The impact will be dramatic, says Chris Knittel, an economist at the University of California, Davis, who was involved in one of the studies.
The changes are being driven by record fuel prices in the US, where, at the end of April, the average price of gasoline stood at $3.65 per gallon, 20 per cent more than in January and treble the price of a decade ago. Until recently, these increases did not seem to be having a consistent effect on the car market and fuel use. Though sales of SUVs in the US have been falling over the past few years, this decline has come on the back of years of rapid growth, and overall gasoline consumption has been increasing every year since 1991.
That could be about to change. Knittel and colleagues looked at data on 1.4 million car purchases over the past 10 years, comparing sales patterns with gas prices. They found that sales of the least fuel-efficient cars, such as SUVs and pick-up trucks, fell by 13 per cent for every $1 per gallon increase in the price of gasoline. The biggest SUVs suffered the most, with sales dropping by over 25 per cent for every dollar by which the gas price rose. And for every $1 hike in gas prices there was a corresponding 17 per cent sales boost for the most efficient vehicles, such as compact cars and hybrids. Knittel estimates that over about a decade, such changes in buying habits could cut the amount of gasoline used by US drivers by around 7 per cent for every $1 increase in its price.
Knittel’s findings, presented last month at the University of California Energy Institute in Berkeley, are in broad agreement with those of economist Kenneth Small of the University of California, Irvine. Small looked at data on US fuel consumption and prices over the past 40 years, and projected last year that the recent doubling in fuel prices would quickly lead to a 4 per cent drop in the total mileage covered on the roads. In the longer term, as drivers continue to react to rising prices, he projects the size of the reduction will grow to around 20 per cent (The Energy Journal, vol 28, p 25).
This would lead to a substantial reduction in carbon emissions. Small says that a $1 per gallon rise in gasoline prices, roughly that seen over the past two years, will result in motorists using 14 per cent less fuel in the long term. That would avoid the release of some tens of millions of tonnes of CO2 per year, equivalent to roughly 2 per cent of the country’s greenhouse-gas emissions for 2006. That is a hugely significant drop, close to the level of cuts that some nations are required to make under the Kyoto protocol.
Small’s prediction comes with major caveats, however. Gasoline prices are not expected to return to the lows of a decade ago, but could fall by 10 or 20 per cent in coming years. And any US economic recovery will boost fuel consumption, partly through raising incomes, which would dilute the pressure on motorists to drive less. So while expensive fuel will rein in consumption, Small and other economists question whether this will be enough to cause an overall fall in emissions from cars.
It is also possible that politics will intervene before any of these effects has a chance to kick in. Presidential hopefuls John McCain and Hillary Clinton have reacted to consumer protests over soaring fuel prices by declaring that they would suspend federal gasoline taxes. “It’s a fantastically stupid idea,” says Roberton Williams, an economist at the University of Texas at Austin.
“But people don’t like high gas taxes, so it’s popular.”