Commentary

Energy Disinformation

This article originally appeared in the Washington Times on June 27, 2004.

“We have apparently used up to 40 percent of our oil supply. … There is need for a countrywide thrift campaign looking to the saving of this essential resource.”

When U.S. Geological Survey Director George Otis Smith issued that warning in 1920, he probably was prompted by the jump in the crude oil price to $3.40 a barrel — a level not seen again for 50 years.

We have heard Smith’s story repeated many times since, whenever the price oil went up. A National Geographic cover story for June, “The end of cheap oil,” suggested the oil price is high because the world is using it faster than it can be replaced. But if high oil prices today prove the world is running out of oil, what was proven by $11 oil in late 1998?

By mid-June, the Economist price index for industrial metals was 34 percent higher than a year ago, while oil was up less than 20 percent. Should we conclude the planet is suddenly running out of iron and copper this year, or (more sensibly) that global industry picked up smartly after the paralysis that preceded the Iraq war?

In 1920, conservationists like Smith pointed at the gigantic cars of the day, such as Packard and Pierce Arrow, which were soon displaced by more economical cars like Ford’s Model T, which achieved 20 to 25 miles per gallon (mpg), but with only 20 horsepower. Today those fingers are pointed at SUVs. The common belief is that if more Americans could be shamed, bribed or compelled to buy small cars, the price of oil and gasoline would come down and stay down.

National Geographic thus ends its essay by asking, “Should tax deductions for hybrid cars (i.e., subsidies to those affluent enough to purchase new imported cars) be increased?”

The concept of conserving fuel among the small number of new passenger vehicles to lower prices is chimerical, since lower prices would encourage more driving among owners of the much larger fleet of older vehicles. Besides, the trendy idea SUVs use a huge share of energy is wildly inaccurate.

On June 13, The Washington Post’s writer Jonathan Weiseman wrote a feature subtitled, “History says gas spike won’t smother SUV love.” That familiar theme was undermined, however, by an accompanying table showing small cars accounted for 40 percent of U.S. passenger vehicles in 1975, yet average mileage was then only 13.1 mpg.

By 1988, the small car share was up only modestly to 43.8 percent, yet average mileage had improved enormously to 22.1 mpg. Clearly, nearly all the 1975-88 improved average fuel economy was due to technological advances such as fuel injection and radial tires, not a significant shift to smaller cars.

By 2004, small cars accounted for merely 22.9 percent of the fleet, yet average mileage nonetheless declined by only 1.3 mpg (to 20.8). That 1.3 mpg is what the SUV fuss is all about. It is certainly true dangerously tiny cars have recently become less attractive to consumers than in 1988, but one reason is even luxury cars have become much more fuel-efficient.

Before 2001, I drove an SUV — a stick-shift Toyota RAV-4 that was EPA-rated at 22 mpg in the city and 27 on the highway. Now I drive a BMW 330 coupe with automatic (which the EPA rudely describes as a “subcompact”) rated at 19 mpg in the city and 27 on the highway. By switching from an SUV to a subcompact, I could be accused of slightly reducing the estimated miles-per-gallon of U.S. passenger vehicles. But I actually get 29 mpg on the highway, which is not bad at all. And the larger six-cylinder Lincoln LS, Chrysler 300 and Cadillac CTS are nearly as frugal with gas.

On June 20, New York Times writer Timothy Egan wrote, “Suddenly, it’s hip to conserve energy.” A sidebar by Dylan Loeb McClain, however, claimed, “The growing popularity of sport utility vehicles and other light-duty trucks… has really had an impact. More than half of the growth in transportation consumption has been among light trucks.”

An accompanying graph showed light duty trucks (mostly pickup trucks and vans) accounting for 18 percent of oil consumption in 2001, up from 13 percent in 1990 and 9 percent in 1980.

Be careful to notice, however, that SUVs account for less than half of light truck sales, and that the growth of consumption Mr. McClain mentions is mainly due to more people driving more miles, not that “the average fuel economy of vehicles sold in America has stagnated.” Since average fuel economy has barely changed, it cannot possibly account for a significant oil-consumption change.

Transportation accounts for 67 percent of petroleum use, but only 27 percent of total energy use. The other third of each barrel of petroleum goes to produce plastics, synthetic fibers, pesticides and fertilizer, fueling farm machinery, generating some electricity and heating some homes.

Even within transportation, cars accounted for less than 34 percent of energy use in 2001 and light trucks for less than 25 percent. That is, heavy trucks, airplanes, boats, trains and buses accounted for more than 41 percent of transportation energy use. And nearly all that energy comes from petroleum — gasoline and diesel fuel. Many cars and light trucks, such as taxicabs and delivery vans, are also used for business.

Transportation accounts for two-thirds of total U.S. petroleum use, or about 13 million barrels a day out of the 20 million barrels a day the U.S. used 2003. But household vehicles, such as cars and SUVs, account for only about half of the petroleum used in transportation, roughly 6.5 million barrels a day. Oil imports are much larger than that, about 10 million barrels a day. So, even if U.S. households had no cars, pickups or SUVs at all, we would still import about 3.5 million barrels a day — for other transportation and for industrial uses.

Since light trucks account for 18 percent of oil used for transportation (which is 67 percent of all oil use), and SUVs for no more than half of that, it follows that SUVs account for no more than 6 percent of U.S. petroleum use and 2.4 percent of total U.S. energy use. Blaming cyclical swings in energy prices on SUVs may be politically correct, but it’s quite absurd.

Alan Reynolds is a senior fellow with the Cato Institute and a nationally syndicated columnist.