President Carter's energy proposals are meant to discourage gasoline consumption, but under his plan the cost per mile of driving a car would actually decline 8 per cent between now and 1985, the Congressional Budget Office said yesterday.
Without Carter's plan, which includes an increase in the gasoline tax, this cost per mile would fall even more - by about 18 per cent - the CBO said. This is because Congress has already required that auto makers increase their cars' mileage per gallon in the future.
Carter would increase the price per gallon, but motorists would need fewer gallons to go the same distance.
The CBO used its driving cost-per-mile projections to help make the case that Carter's plan is far from the "moral equivalent of war" involving national "sacrifice" that the President has depicted it to be.
The Carter energy proposals, CBO Director Alice M. Rivlin told a press conference would slow, not reverse the increase in national energy consumption, and would not entail dramatic changes in American lifestyles.
"There has been a lot of talk of 'sacrifice' or of the 'moral equivalent of war,' but one doesn't see it in this plan," Rivlin said. The general thrust of the CBO report was that the administration's estimates of the energy, its proposals would have save were "overoptimistic."
In response to questions, Rivlin agreed that the report implies that if Congress wants to pursue the goals of reduced gasoline consumption and sharply curtailed dependence on imports, set out by Carter, "the choice is either a tougher plan or a more distant timetable."
Illustrative of the point that the Carter program would not reduce the U.S. standard of living was a calculation that the American family, which now drives slightly less than 15,000 miles a year, would be driving 17,000 miles a year under the Carter program. Without it, the family mileage might have been 18,000.
Instead of saving a potential 4.5 million barrels a day in consumption by 1985, the CBO calculates a saving of 3.6 million barrels a day under the President's plan. The major differences are lesser estimates by the CBO on how much would be saved by industrial conversion to coal, and by homeowners and renters through insulation and solar heating equipment.
The report found that there would be only relatively minor impacts on jobs, prices, inflation and the national budget, but listed many probable "micro-economic" effects that would affect almost everybody.
For example, under the Carter-proposed system of rebating to the public the increased taxes imposed on domestic crude oil, lower-income families would receive a disproportionately large share. The Carter program, Rivlin said, "does protect the poor, on the average."
Thus, one effect of the program overall would be at least a modest redistribution of income between the poor and rich - who would be paying a higher absolute amount of their income for energy.
Some of the more interesting effects would relate to automobiles - on the industry that makes them and the public that buys and drives them. Assuming that the entire Carter program were adopted, including "gas-guzzler" taxes and rebates on high-mileage cars, the report drew these conclusions:
The number of cars sold in future years would decline, possibly by 1 million units in 1985, a reflection of the higher price of gasoline and higher prices ($400 to $600 per car) charged by the industry to cover costs of technological improvements.
Despite what might be assumed at first blush, the report says, there would be "a shift in market share away from small cars and toward larger cars that are relatively fuel-efficient." The CBO explains this by indicating that the big untapped area of fuel efficiency is in larger cars, compared to already efficient small ones.
In the used-car market, there would be competing forces that might cancel each other out. The gas-guzzler tax and rebate system would tend to increase the value of old, big cars, and lower the used-car prices for compacts, the CBO report said. But increased gasoline prices would tend to have the opposite effect.