August 4, 2011

AMERICA DOESN’T have to use so much gasoline. Cars can get lighter. Automakers can produce vehicles with more advanced internal combustion engines. Motorists can cut down on unnecessary trips. The government can accomplish all of this not by restricting consumer choice but by harnessing it. If Congress placed a higher tax on gasoline — making up for some of the hidden environmental and geopolitical costs of using the stuff — market demand would drive the deployment of more advanced cars according to Americans’ preferences, rather than those of Congress or a government agency, and car owners would also choose to drive less.

But the gas tax is politically toxic, particularly in the GOP-controlled House of Representatives, which is why it hasn’t been raised since 1993, declining in real value every year. There is, however, a second-best option.

In a grand deal between industry and government regulators, President Obama last week announced new fuel-efficiency standards for cars and light trucks. Vehicles sold in America in 2025 will have to achieve an average of 54.5 miles per gallon — which should work out to 62 mpg for cars and 45 mpg for light trucks, according to an administration official. These drastically more efficient vehicles will cost more, of course. But the Obama administration estimates that, compared with today’s cars, they will ultimately save consumers an average of $8,200 each by 2025, since motorists won’t have to buy as much gasoline. They will also reduce U.S. oil consumption by 2.2 million barrels per day by 2025. That doesn’t even count the money saved because of reduced air pollution.

This is arguably the president’s most significant achievement on energy policy. Before Mr. Obama entered the White House, no administration had exercised the executive branch’s statutory authority to regulate vehicle efficiency with such ambition. In 2009, the president struck a bargain with the auto industry on model years 2012-16. Last week’s announcement built on top of that 2009 agreement, again with the cooperation of automakers, to double the fuel efficiency of American cars and light trucks in 15 years.

The plan isn’t perfect. But the next step is a public comment and review period. As far as possible, energy policies should be technology-neutral, focusing on a specific goal but not prescribing a specific way to get there. The ingenuity of private actors in competition will achieve the government’s aims most efficiently. So the Obama administration should reconsider special credits for electric cars and other technologies it wants to push into the market. If the most cost-effective policy — the gas tax — is off the table, the Obama administration can at least make its fuel standards as simple as possible.