Efficiency is in the headlines again after President Obama recently finalized the Corporate Average Fuel Economy (CAFE) rules requiring a near-doubling of fuel efficiency (54.5 miles per gallon) by 2035.  The standards are predicted to create jobs and save consumers $5000 per vehicle by 2025, even after incorporating the cost of the better technology.  Amory Lovins, Chairman and Chief Scientist of the Rocky Mountain Institute, predicts a $0.5 trillion investment in energy efficiency will save $1.9 trillion over 40 years in U.S. buildings alone.  So, despite support for the new standards, why isn’t every single American jumping on the efficiency bandwagon?  Legislators, industry, and consumers are in no short supply of confusion over the matter.

As such, the politicians perpetuate a dichotomy between increased resource production and increased efficiency.  Confronted with an energy crisis, vice President Cheney published the National Energy Policy, known as the Cheney report.  Michael T. Klare’s Blood and Oil highlights the numerous interactions with oil representatives and discussion of drilling in the Arctic National Wildlife Refuge, while the president appointed numerous officials tied to Enron.  Upon, “close reading” of the report indicated only topical solutions in efficiency that would merely mask the underlying issue of importing more oil.  During the 2008 presidential campaign, Barack Obama advocated properly filling up tires, whereas John McCain called for increased offshore drilling.  Obama’s option would actually save more fuel than offshore drilling would produce, for the most part.  In response to new light bulb efficiency standards from the 2007 Energy Independence and Security Act (EISA), Congressional Republicans instead proposed the Better Use of Light Bulbs (BULB) Act.  They argued that light bulb efficiency standards, much like seat belt laws and food regulations, are an attack on the free market and should be decided solely by consumers.   The BULB Act did not, and will not ever pass, but its advocates were temporarily able to strip funding to enact the new light bulb standards.  The United States could utilize both options, yet efficiency more effectively prolongs the resource while quickly inducing cost reductions.  Perhaps efficiency could more effectively be labeled as a resource, such as “drilling for efficiency”.  The term is often called negawatts, indicating energy savings from efficiency or conservation.

Green-minded individuals do not always stress efficiency either.  Based on historical efficiency increases in coal burning technology, some critics argue that efficiency actually causes increases in consumption.  This is known as the Jevons’s Paradox or rebound effect.  In the Gulf of Mexico, Petróleos Mexicanos, the government-owned oil company commonly known as Pemex drilled over 2.1 million barrels of oil per day Cantarell field near the Yucatan Peninsula.  The oil began to deplete, and Pemex spent $6 billion to more efficiently extract the oil, according to Michael T. Klare’s Race for What’s Left.  Production neared record levels, but the drilling efficiency only led to a sooner downfall.  On the whole, though, the reality of the rebound effect has been fairly thoroughly debunked, but it still leads to confusion in the efficiency realm.  Although the paradox does not play out with every breakthrough in efficiency, the associated policy would still shift the emphasis to preservation.  For example, many are proponents of letting technology solve the problems of resource consumption.  Not only is it a sorry attempt to shift the burden to future generations, but it also is insulting to presently available technology.  If efficiency improvements were complemented with a guarantee to preserve resources, the sustainability of the particular action or product will increase substantially.

Obama’s fuel efficiency standards also induce their fair share of confusion.  The regulation calls for a class average fuel economy in vehicles to be 54.5mpg.  The mpg rating across a fleet of vehicles must average 54.5, which does not save as much fuel as every new car on the road being 54.5mpg.  This confusion arises from the reciprocal scale of miles per gallon.  According to the National Academy of Sciences, “Fuel economy data cause consumers to undervalue small increases (1-4 mpg) in fuel economy for vehicles in the 15-30 mpg range.  In fact, you can save more fuel by increasing fuel efficiency from 15 to 18 mpg than 50 to 100 mpg.  If you don’t believe me, get the mpg value out of the reciprocal scale and try the math yourself.  A more intuitive metric like the European and Canadian L/100km would facilitate educated purchasing of vehicles.  In addition, the new standards contain a handful of other issues that effectively lower the true efficiency value, such as a phony a/c credit and SUV loopholes.

While rational energy efficiency poses very few problems amidst the numerous benefits, the transition definitely requires new lifestyles and policy.  Even with the Republican-led most anti-environmental congress in history, the Republican presidential candidate as a governor touted high gas prices as beneficial to the country.  It is not politically popular to say so, as he has backed away from those statements recently, but those price increases from the government successfully address pollution issues and encourage efficiency.  The benefits do not stop there.  Since the federal gasoline tax does not correlate with inflation, not to mention even increased since 1993, the adjusted revenue from a gallon of gas has gone down.  Also, cars have become more fuel efficient since then.  Accordingly, funding for highway construction and maintenance has decreased per mile and will lead to a $400 billion deficit by 2015.  A similar problem faces water usage efficiency.  A vehicle-miles traveled (VMT) tax would fix the induced “problem” of efficiency.  Sure, many will be suspect Big Brother, but a wide array of tracking options from GPS to odometer readings would alleviate concern and actually offer a more free market solution to highway funding.  Critics will hesitate from changing their lifestyle to accommodate efficiency, but the benefits will outweigh the costs once they commit.

Although in part from an increasingly reliance on fiat currency, economy has successfully tripled in size while energy usage has only increased slightly.  The EIA forecasts energy consumption to decline 0.5 percent per person per year from now until 2035.  As in Norway and the U.K, I hope for that number to go up even further.

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