Americans are burning record amounts of gasoline. The Energy Department announced Aug. 31 that the country fueled up more this June than in any other month the agency has measured, underscoring a finding last month that the United States is on track to set an annual gas consumption record in 2016. This was not supposed to happen.
A couple of years ago, government experts projected that gasoline use would bump up about now — but not that it would hit or breach its 2007 peak. The economic downturn cut gas demand after 2007, then persistently high oil prices kept it down. Now the economy has rebounded, which was fairly foreseeable, and oil prices are strikingly low, which was less so. Americans are driving more and buying bigger vehicles.
The Environmental Protection Agency recently projected that people would buy more trucks and fewer gas-sipping cars in coming years than its experts had previously estimated. All of this is happening while one of the EPA's marquee anti-climate change policies, increasingly stiff fuel efficiency requirements for cars and trucks, has been phasing in.
The news does not show that the EPA's fuel efficiency policy is failing. But it does punctuate the fact that it has some flaws. One of the most glaring is that, while EPA fuel efficiency mandates will require cars and trucks to use less fuel to go the same distance, they cannot control how much people drive or what type of vehicles people buy. As recent events have shown, when oil prices sink, people worry less about conservation, no matter how environmentally desirable. In fact, higher fuel efficiency might also encourage some people to drive more than they would have otherwise, because their gas bills are lower.
This effect is not likely to erase the benefits of the government's fuel efficiency program. Even with current conditions factored in, government experts project that fuel efficiency standards will put much more downward pressure on gasoline use in coming years, helping to bring consumption well below historical highs over the coming decades, even as the population rises and the economy expands. That is in part because the Obama administration's fuel efficiency goals are increasingly ambitious — cars and light trucks will get, on average, somewhere around 51 miles per gallon by 2025.
But it would be better to encourage people to buy cleaner cars and cut out unnecessary trips all at once — in fact, it would be better to establish a policy that encouraged individuals and businesses to account for the environmental impacts of driving, turning on the light switch, buying clothes or doing anything else that involves fossil fuels. This policy is a steadily rising carbon tax. A carbon tax would put a lower ceiling on national gasoline use without more aggressive regulatory interventions. It would also encourage every other piece of the economy to green up over time, starting with those for whom doing so is cheapest. This is why it is also the least expensive path to lowering the country's carbon dioxide emissions.
But a carbon tax would require Congress to act, which it has serially failed to do. In Congress' policy vacuum, fuel efficiency standards and other similar regulatory approaches are the best the Obama administration can do.