Oiling Our Progress
Tom Vanderbilt on the future of the auto industry.
TWO BILLION CARS:
Driving Toward Sustainability.
By Daniel Sperling and Deborah Gordon.
Oxford Univ. Press.
304 pp. $24.95
Several months ago, Steven Chu, currently the head of the U.S. Department of Energy, told The Wall Street Journal, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” This was the voice of the rational scientist, correctly positing that higher gas prices will lead to less driving, and thus fewer tailpipe emissions. By the time of his confirmation hearing in January, he was forced to modulate his tune: “What the American family,” he said, using that great signifier of required political pandering, “does not want is to pay an increasing fraction of their budget, their precious dollars, for energy costs, both in transportation and keeping their homes warm and lit.” Politics, of course, is hardly as elegant as physics, but Chu articulated a sort of third way: efficiency.
“Efficiency” is a soothing, lovely word that means little on its own: efficient as compared to what? Take the American car (please). As veteran transportation and energy specialists Daniel Sperling and Deborah Gordon write in Two Billion Cars—their authoritatively prescriptive challenge to the “transportation monoculture” that plagues the United States and Europe and looms in China and India—automakers have been making their cars more fuel efficient on the order of two percent annually. And yet the actual “corporate average fuel economy” of cars has made less commendable gains: “The bottom line is that although technologically the modern U.S. car is more efficient than ever before, gaining more work from a gallon of gasoline, those efficiency gains don’t show up as fuel economy gains.”
What happened? All the efficiency gains were consumed, by size and horsepower (not to mention increased driving). In 1976, the Honda Accord, which captured the wallets, if not the hearts, of Americans reeling in the wake of high fuel prices, weighed 2,000 pounds and got a reported 46 miles per gallon in highway driving. “Ten million Accords later, the car had ballooned,” write Sperling and Gordon. “The 2008 model is 78 percent heavier, equipped with an engine nearly four times as powerful and loaded with power options.” It also gets 17 miles per gallon less on the highway than its predecessor. This example is not atypical: “Today’s granny car would have qualified as a performance car 25 years ago.” Neither increased weight nor greater horsepower provides any real societal good. Heavy vehicles are safer for their occupants (with certain exceptions, such as the SUV), but increase the risks to everyone driving a lighter vehicle. Increased speed increases crash risk and crash damage. What these traits appeal to is individual consumerist desire.
Mixed Signals may as well be the title of the book, for that is what U.S. consumers have been receiving from Detroit and federal policymakers over the last several decades. Rather than lock in and build upon the fuel efficiency gains made in the 1970s, automakers seized upon the emissions loophole for “light trucks” (a questionable label for vehicles that weigh several thousand pounds) and began building minivans, SUVs, and pickups—vehicles that Japan and Europe initially (and for good reason) had little interest in producing. And thus these vehicles, which occupied, as the authors note, a marginal 15 percent share of the market in 1971, made up more than half of sales in 2004.
The recent film Gran Torino can be read as a parable of Detroit: Walt Kowalski, the retired autoworker played by Clint Eastwood, is hostile to the changes occurring all around him, clinging to the past glory of his eponymous muscle car (and his pickup truck), yelling “get off my lawn” at interlopers. (As Sperling and Gordon note, Detroit still benefits from a 25 percent tax on imported pickup trucks.) Kowalski also embodies the typical Detroit customer these days: older, and living in a place where income and population are growing least.
While carving out a profitable, if precarious, niche in inefficient vehicles, American manufacturers were ceding ground in technological innovation to Japan. As the authors recount, in 2003 General Motors, “in the midst of its expansive hydrogen and fuel cell R&D program,” was granted fewer than 50 patents, while Honda secured more than 300. Meanwhile, GM head Robert Lutz was denouncing the science of global warming. The historian Lewis H. Siegelbaum, in Cars for Comrades (2008), his study of the Soviet automobile, noted that Detroit—with its bloated bureaucracy, expensive “pretend to work” job-bank schemes for downsized workers, and debilitating health insurance costs—resembles nothing so much as the Soviet car industry before its collapse. And that was before Detroit manufacturers asked the U.S. government for billions in bailout money.
But the problems extend far beyond Detroit. U.S. car companies, amid recent difficulties, were chastised in some quarters for not building the fuel-efficient cars that people wanted. In fact, apart from loyal drivers of the EV-1 (the first mainstream production electric vehicle) and its ilk, consumers were voting with their dollars for larger, less fuel-efficient vehicles. And why shouldn’t they? Gas was cheap, the federal gas tax hadn’t been raised—not even to adjust for inflation—since 1993, and the government even gave tax credits for the purchase of “light trucks,” heavier vehicles once used for “work” but now becoming personal cars. Perversely, tax breaks on hybrid vehicles were curtailed as their sales increased.
For a variety of reasons, more emotional than practical—some dim fantasy of a last unpaved frontier to be traversed, a misplaced feeling that being higher makes you safer (SUVs are prone to rollovers), or just a desire to dominate others—U.S. consumers bought trucks and SUVs, as family farming and manufacturing shriveled. The authors cite “expanding baby boomer families” as one reason for these vehicles’ popularity, but U.S. household size—in numbers, that is; people were getting heavier, and thus requiring more fuel to get around—was actually shrinking as the number of large vehicles grew. Consumers had little incentive to drive efficient vehicles, and producers had little incentive to make them. The number and design of cup holders, the authors note, has been a more important consideration for vehicle buyers than fuel efficiency.
Things are changing, of course. For years, Washington actively blocked states’ efforts to improve efficiency and reduce emissions, but the political capital of the reform-minded Obama administration and a vastly weakened Detroit may have finally ended this obstructionism. And even automakers are talking about establishing a kind of “floor” for gas prices. The reason is simple: The large investments they make in more energy-efficient vehicles, mostly in response to increases in the price of gas, seem to evaporate when the price declines. For example, Toyota recently canceled plans to complete a new factory in the United States to manufacture the hybrid Prius, whose sales plunged as gas dropped below $2 a gallon. Many propose higher gas and carbon taxes as a way to curb driving, encourage fuel efficiency, and keep fewer dollars from flowing to corrupt oil-producing regimes. These taxes might also go some small distance toward compensating for negative impacts of driving—including road damage, air pollution, noise, congestion, and higher crash risk for other drivers—for which motorists are currently given a free pass. But Sperling and Gordon caution against raising taxes as a silver-bullet policy instrument. “Producers and consumers would barely respond to even a $50-a-ton [carbon] tax, well above what U.S. politicians have been considering,” they write.
One problem is consumers’ dependency on (some would say addiction to) gasoline, which means, as the authors note, that demand (at least in the short term) is extremely price inelastic. The price has to rise a lot—the recent $4 per gallon level was a new psychic benchmark—before consumption drops. (Gasoline is much more price inelastic than addictive substances such as cocaine and heroin, though most of us don’t need those to go to work in the morning.) A gas-price floor is thus one of a basket of proposals laid out in the book, most of which center on two themes: innovation and incentives.
The urgency of these proposals hinges on a looming fact: Within the next 20 years, the planet is likely to host two billion cars. “One-fourth of all the oil consumed by humans in our entire history will be consumed from 2000 to 2010,” the authors write. “And if the world continues on its current path, it will consume as much oil in the next several decades as it has throughout its entire history to date.” Much of that will be due, of course, to the demands of China, which has reportedly surpassed the United States as the leading emitter of greenhouse gases.
There is a certain irony in the authors’ suggestion that “to promote progress, it’s in the interest of the rest of the world to enthusiastically back China in its pursuit of a more benign transport-energy path.” Shouldn’t that innovation and leadership be coming from the more advanced countries, which have been dealing with mass motorization for a century, not less than a decade? But whatever the roads not taken, the stakes are clear: By 2050, China may have as many as 600 million cars on the road. What will the price of fuel be in 2050? That’s really a moot question, for the reasons the world cannot afford another automobile century have little to do, in the long term, with fuel prices. As former Saudi oil minister Sheikh Zaki Yamani noted, “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.”