In a paper titled Automobiles on Steroids, published by Christopher Knittel in the American Economic Review, the researcher states that from 1980 to 2006, the average fuel efficiency of vehicles sold in the U.S. has increased over 15 percent — a somewhat modest improvement. Meanwhile, according to Knittel, the average curb went up 26 percent and horsepower rose 107 percent. Consequently with all factors being equal, fuel economy has actually increased by 60 percent during those years.
The era of the modern SUV began in 1984 when the first Jeep Grand Cherokee rolled off the line. It has been so designated by Robert Casey, curator of the Henry Ford Museum.
It was a different world then – in 1981 the New York Times declared a worldwide Oil Glut, caused by cooling economies in the industrial nations. In 1986 the price of a barrel of oil fell to $10 – today it tends to waver from $90 to $110. The low price of oil set the stage for Americans to embrace the SUV wholeheartedly.
By the 1990’s they were the vehicle of choice due to their perceived safety and security. Remarkably, wild tales of how an SUV saved someone’s life have become part of the lexicon of American Urban Legends.
The engines may have gotten more efficient, but the utilities were so big and heavy most got only 13 mpg. Detroit didn’t care because they were easy to sell and profited them from $10-18K. In contrast, small cars like the Ford Focus were sold at a loss.
This imbalance contributed greatly to the Big Three failing to see the writing on the wall and why you could hardly give an SUV away at the end of 2008, when the economic collapse began.
Getting back to Knittel’s study, if Americans today drove cars of the weight and power typical in1980, the country’s autos would have leapfrogged to an to an average 37 mpg, well above the current average of around 27 mpg. “Most of that technological progress has gone into [making up for] weight and horsepower,” he told Peter Dizikes of the MIT News Office.
The transportation sector produces over 30 percent of the greenhouse gas emissions in the country, fortunately a lot of the progress has resulted in cleaner burning cars, even if not in quantum leaps in mileage.
Knittel thinks the most logical way to reduce emissions is through an increased gas tax that leads consumers to value fuel efficiency more highly. “When it comes to climate change, leaving the market alone isn’t going to lead to the efficient outcome,” Knittel says. “The right starting point is a gas tax.”
Here we have to disagree with the learned gentleman. We think the CAFE requirement’s effect on the market will be sufficient. It’s clear Knittel isn’t running for office or he wouldn’t even think of suggesting this.
Knittel drew upon data from the National Highway Transportation Safety Administration, auto manufacturers and trade journals to arrive at his conclusions. The numbers revealed the reason overall mileage has increased slowly is Americans have chosen bigger, less efficient vehicles. In 1980, light trucks represented about 20 percent of passenger vehicles sold in the United States. By 2004, light trucks, including SUVs, rose to 51 percent of passenger-vehicle sales.
“I find little fault with the auto manufacturers, because there has been no incentive to put technologies into overall fuel economy,” said Knittel. “Firms are going to give consumers what they want, and if gas prices are low, consumers are going to want big, fast cars.” Between 1980 and 2004, gas prices dropped by 30 percent when adjusted for inflation. They remain relatively low, by modern standards, even today.