Second Blog: Gas, Oil, SUV’s and market failure.

Another interesting note from Detroit is that once again people are buying gas guzzling SUV’s. Car purchases as a whole are down, but now that gas prices are significantly lower than a few months ago, once again behemoths are the vehicle of choice among consumers. This may be slightly good news for the big three who dominates the truck and SUV market and who were hurt the most when fuel prices skyrocketed, forcing people to invest in smaller cars, but it’s not good for responsible American who buy fuel efficient vehicles. Gas prices are already going back up yet people continue to ignorantly buy the vehicles that guzzle the most gas. What we can conclude from this observation, as well as the last time gas prices spiked, is that consumers reactions to price increases lags behind said price increases.

Now, I have no problem with people buying trucks and SUV’s who need them. If you haul tools to your worksite, need to tow a boat or equipment, or live or travel on treacherous snowy highways or dirt back-roads, that’s fine. But many people who buy big vehicles have absolutely no practical use for them, and this is a problem because it hurts those of us who own smaller, more efficient cars. When we have more trucks and SUV’s on the road, we use up our scarce oil resources at a faster rate, driving the prices up even faster, hurting the pocketbooks of not only those who purchase these behemoths, but those who drive family sedans and compacts as well. This is unfair to those of us who have said family sedans and compact cars.

We need to urgently raise our CAFE (Comparative Advantage Fuel Efficiency) standards. CAFÉ standards set the minimum fuel efficiency requirements for manufacturers that produce vehicles to be sold in the United States. Under CAFÉ standards, a company can still produce big trucks and SUV’s that fall below the fuel efficiency benchmarks, but it must produce enough vehicles that exceed the benchmarks to bring the average fuel consumption rate up to the minimum standard. In other words it limits the ratio of trucks that can be produced to cars that can be produced. While this may be frustrating for suburbanites that just have to have the new Cadillac Escalade, it protects those of us who drive smaller cars from getting hurt worse at the pump. Many of the people who drive smaller cars need this relief the most, as they tend to be those in the lower income brackets.

While an increase in CAFÉ standards is critical, it is also essential that we invest more in renewable energy research. Once we can operate our cars on renewable energy, we can travel at a cost that is much better stabilized.

That said we must realize that this will not happen overnight. In the immediate future we need to achieve the greatest level of energy independence possible. This means allowing for more oil drilling here at home, and allowing for the production of more nuclear energy.

Members of both parties must come together for the common good on this issue. We need the clean, renewable energy and efficiency that the Democrats fight for, but we also need the energy independence in the form or U.S. based drilling and nuclear technology that Republicans champion.