Gas-Guzzling Is Still in Style
By the time Iran’s 1979 revolution sent oil prices billowing to $40 a barrel, Congress had already fashioned something of a cushion for Americans and their gas-guzzling automobiles.
Four years earlier it had directed Detroit to start building more fuel-efficient automobiles or suffer big financial penalties. It did not prevent gasoline lines at the beginning of this decade, but it did give American automobile manufacturers a head start on getting more miles out of a gallon of gasoline. It was a cushion that Detroit never would have fashioned for itself.
Detroit never did like the law, and now it has a federal transportation secretary who watches the world through the same rose-colored glasses that the industry uses to see how things are going. Next week Secretary James H. Burnley IV will hold hearings on the question of whether to relax the mileage requirements so that Detroit can build more gas-guzzlers. The hearing apparently is more a formality than a chance to gather information. Burnley thinks that the law is ridiculous, even though it gives him authority to tinker with the mileage standards.
If you are wearing the right kind of glasses, it is possible that all you can see is panic among the oil brokers because the price is falling so fast. Both Iran and Iraq are expected to push production back toward maximum capacity in order to pay for the reconstruction needed after their eight-year war. One analyst says that he would not be surprised to see oil drop to $10 a barrel from its present $14-plus. Nothing to worry about there, right? Maybe, but not necessarily.
In a few years American imports of oil will be back where they were 10 years ago when the country was just getting started on a regime of conservation. The United States imported half its oil then. Imports have fallen to 40% of consumption, but they are heading back up, and by the early 1990s the country will be importing the same percentage again--partly because domestic production is in decline and partly because consumer demand is up.
One thing will have changed since then. At the beginning of the decade the nation was the world’s biggest creditor. Now it is the world’s biggest debtor. And even if the price of oil kept falling, America still would be adding to its trade deficit with every barrel that it imported.
For example, the trade deficit has fallen in recent months. In the second quarter of 1988 it was $29.9 billion, down from $35.5 billion for the first quarter. But, because imports of petroleum rose, oil’s share of the trade deficit was up from around 29% when the year began to 34% at the end of the second quarter.
The way Congress wrote the gasoline-efficiency law, an auto maker can strike an average; by building enough small, high-mileage cars he can build some fancy low-mileage gas-guzzlers and still meet the federal standard. Foreign automobile makers, who have to meet the same fleetwide mileage standards that American manufacturers must meet, have figured out how to do that--and then some. The Japanese average is about 30 miles to the gallon now.
One thing that the American automobile manufacturers clearly have learned to do is petition the transportation secretary for more comfortable standards. They did it in 1986, and now they are back for seconds. The request is for approval of an average 26.5 miles a gallon, where current law would require 27.5 miles. The cushion against oil shock never was very soft. It makes no sense at all to thin it out even by one mile to the gallon.
