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Myths About That $3.18 Per Gallon

A recent report by the McKinsey Global Institute says that Americans could reduce the amount of energy we use between now and 2020 relatively easily. We wouldn't need huge investments -- just current technology that offers a yield on investments of 10 percent per year. What we would need, however, is leadership willing to enact tough energy standards and eliminate the perverse incentives (such as tax credits for big vehicles) that encourage us to squander fuel.

5. When gas prices get high enough, people will drive less. (And the corollary: What this country needs is a big, fat gas tax.)

According to some conservatives, when gas prices are high enough, people will drive less and buy more efficient cars. According to some liberals, nothing but high gas prices or taxes will pry the rich from their fancy sport-utility vehicles and the rest of us from our wasteful routines.

But when conservatives and liberals climb into their cars, they ignore these supposed market forces. In the past five years, the price of gasoline has doubled -- and American drivers have hardly blinked. In March 2002, we were paying $474 million a day for gas, according to the Oil Price Information Service. Last week, we paid more than $1.25 billion a day. Over the past five years, we've driven 8 percent more miles overall, according to statistics from the Transportation Department. And even with record-high gas prices, SUV sales are up this quarter, after taking a dive in 2006. Rather than finding alternatives to driving, consumers will absorb the increases, charge gas on credit cards or save pennies elsewhere.

High prices have hit the poor the hardest. They're also particularly unfair outside of Washington, where the average person drives only 6,700 miles a year (and some of that in a Toyota Prius hybrid, which receives a tax rebate and a free ticket to the HOV lane). The typical Wyoming resident, by contrast, drives nearly 18,000 miles a year -- probably in a big old pick-up truck. Gas costs now suck up as much as 15 percent of people's annual income in some poorer rural areas but consume closer to 2 percent of annual income in wealthy suburban areas. Years of laissez-faire energy policies have left the poorest Americans struggling to get to work so they can buy more gas to get to work. And the rest of us? We're losing billions of dollars a week just driving around in circles.

We can't afford to continue blathering about gouging, ethanol and China. It's time policymakers abandoned the theater and started the hard work of remodeling the U.S. economy to get more bang out of that $3.18 gallon.

Margonelli@newamerica.net

Lisa Margonelli is an Irvine fellow at the New America Foundation and the author of "Oil On the Brain: Adventures From the Pump to the Pipeline."


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