SEN. EDWARD KENNEDY'S energy policy invites attention. He's in favor of a moratorium on building more nuclear reactors (cheers from the audience). He's in favor of reducing American dependence on foreign oil (scattered applause). He's in favor of continued controls on oil prices (loud cheering). But how do you fit these various positions together? (Silence.)
Any prolonged nuclear moratorium is going to drive up oil imports. One way to hold them down -- the only way that has actually and demonstrably worked -- is to let prices rise. But the purpose of controls is to keep prices down.
Sen. Kennedy would probably answer by citing the legislation that he introduced last July for federal grants and loans to encourage conservation. That's on the right track. But here we come to an uncomfortable fact. Conservation doesn't produce much until prices start upward.
The experience with automobile fuel efficiency is a good example. The efficiency of American cars has been rising steadily to meet the standards that Congress wisely imposed in 1975. But when gasoline prices remain constant, more efficient cars only make it cheaper to drive -- and people react by driving more.
Over the past decade there have been two times, and only two, when the consumption of gasoline in this country dropped. The first was in 1974, when the price shot upward in the oil crisis. For the next four years the price rose slowly. In real terms -- adjusted for inflation -- it actually declined a little. Then came the second oil crisis and another big jump in the price. Although there are now several million more cars on the road than a year ago, driving and gasoline consumption are both significantly below last year's levels.
Consumption responds to price, not to automobile efficiency. The purpose of pushing up efficiency is to keep people from being hurt as gasoline gets more expensive. If you were driving the typical American car in 1973, getting about 13 miles to the gallon, you went a mile on three cents' worth of gas. If you're getting the same mileage today, you're paying more than seven cents a mile. But if you're driving a typical new American car (and driving it carefully), you're getting along for about a nickel a mile. And if you switched to a subcompact that can go 35 miles on a gallon, you are paying the same three cents that you did in 1973.
Greater efficiency -- that is, conservation -- holds down the cost of driving despite a rising price of fuel. That also holds down the amount of gasoline that the country uses, in turn holding down imports. But the past six years' experience demonstrates forcefully that it works only as prices rise.
Sen. Kennedy is altogether right in sayng that the country has to cut its dependence on foreign oil. The best and fairest way to do it is to impose a stiff tax on gasoline and use the revenues to cut other taxes. That returns the money to Americans rather than sending it off to people like, for example, the present Iranian government. But the only presidential candidate with the courage to suggest a thing is Republican Rep. John B. Anderson of Illinois.