The Bush administration yeserday proposed higher fuel economy standards for light trucksi.e., SUVs and minivans. The current requirement is 21 miles per gallon for light trucks; it is scheduled to rise to 22.2 mpg for the 2007 model year. The administration's proposal would raise the 21 mpg requirement for each of five classes of light trucks, from 28.4 mpg for "small SUVs" to 21.3 mpg for "big trucks," to be phased in through 2011.
Washington Post reporter Margaret Webb Pressler, quite reasonably, included quotes from two representatives of environmental restriction groups. Eric Haxthausen of Environmental Defense of Washington said, "The proposal is almost embarrassing in terms of its effects on fuel consumption." He called the 10 billion gallons of fuel savings a "weak yardstick" because it would be spread over 15 years. Annual gasoline usage, the reporter added, was about 140 billion gallons. Pressler also quoted David J. Friedman of the Union of Concerned Scientists: "One of the fundamental problems with the system is automakers can add size, in some cases only a tiny amount, and meet a dramatically lower standard."
Friedman seems to be making a fair point, and Haxthausen's comment is within the bounds of reasonable advocacy. But one wonders whether they would have said the same if an identical proposal had been made by the Clinton administration or by a Gore or Kerry administration. Left out of the article is what I think is a useful bit of context: The Senate has rejected by wide margins higher mileage requirements. Although the administration's proposal allows "big trucks" and "pickups, large SUVs, and vans" to remain fractionally under the scheduled-for-2007 22 mpg requirement, it seems clear that the proposal will result in measurably lower gas usage than under current law. It's at least a little remarkable that a Republican administration is making such a proposal.
But don't count on spokesmen for environmental groups making favorable commentsor at least being quoted by the Post as making such comments. The environmental restriction groups raise much of their money by direct mail appeals, and direct mail appeals are most effective when they argue that the sky is falling. People employed by such groups have an institutional interest in emphasizing the negative. They have an economic interest at stake just as much as the spokesman for General Motors quoted in the article.
The SUV phenomenon is to some extent a result of a regulatory scheme that produced different mileage requirements for cars and light trucks. The difference allowed the automakers to produce what are in practice low mileage cars so long as they could be defined as light trucks, and consumers, for reasons of their own, have decided to buy these SUVs and minivans in large numbers. The environmental restriction groups are right when they argue that the regulatory scheme produced perverse incentives, and Friedman makes the same argument about the administration's proposal. But regulatory schemes often, perhaps always, produce perverse incentives. I'm inclined to think that we should have gas mileage requirements and that they should be raised from time to time (though there is a strong counterargument: lighter vehicles are less safe). But I don't think perverse incentives can be avoided, and I'm content with a proposal that seems likely on balance to produce lower gas consumption.