President Joe Biden announced Thursday afternoon that the federal government will release up to 180 million barrels of oil from the Strategic Petroleum Reserve over a six-month period. The move, aimed at lowering gasoline prices, is clearly politically motivated, with Biden tweeting that “Americans are feeling Putin's gas price hikes at the pump.” From a partisan perspective, it probably makes sense for Democrats going into a tough election year. But from a broader perspective, this is a policy mistake that builds on past policy mistakes. It's these mistakes that the Biden Administration is trying to fix, but isn't.
The origins of this problem date back to the 1973 oil crisis. In response to the crisis, Congress passed the Energy Policy and Conservation Act, which created the Strategic Petroleum Reserve. At the same time, the Corporate Average Fuel Economy (CAFE) was revised. Cafeautomobile standards. The aim was to reduce the country's dependence on foreign oil.
of Cafe From the start, the standards were easy to cheat: to meet the standards, automakers could sell lots of inefficient cars, so long as they sold enough efficient cars that the average fuel economy of the fleet reached a certain level. (When the standards were introduced in 1978, the average car sold had to get at least 18 miles per gallon.) A different, looser standard was put in place for “light trucks,” or pickup trucks used for work. Sport utility vehicles were so rare that no one paid much attention.
But that quickly changed. In 1984, Jeep introduced what was also known as the “mainstream” SUV, the Jeep Cherokee XJ. Sales of light trucks, which now include the Cherokee and its siblings, soared, making up more than half of new-vehicle sales by 2004. Consumers clearly loved SUVs, and automakers made a killing with them. The SUV loophole, as it became known, kept both groups happy. But the more Americans drove SUVs out of showrooms, the more oil the country burned and the more carbon dioxide it emitted. (Burning one gallon of gasoline produces 20 pounds of CO2.)2 This is the amount of carbon dioxide released into the atmosphere and does not include the carbon produced during the refining process.
In 2006, the National Highway Traffic Safety Administration, which shares responsibility for road safety with the Environmental Protection Agency, Cafe The company changed how it calculates the standard; instead of having to meet an average for all vehicles, automakers must meet different standards depending on what size vehicle and how many they sell. “It's the most complicated system they've come up with,” said Dan Becker, director of the Center for Biological Diversity's Safe Climate Transportation Campaign.
This new “footprint” method: Further afield It incentivized automakers to build cars that guzzle more gasoline. The system for calculating car size became more complicated, so the larger-footprint cars a company sold had to meet lower overall efficiency standards. In a 2011 paper, two University of Michigan researchers estimated that the new calculations would have the same effect as “adding three to ten coal-fired power plants to the electric grid each year.” In 2015, sales of SUVs surpassed sales of sedans in the U.S. for the first time, and last year sales of SUVs, vans, and pickup trucks combined were more than double those of sedans. Still, most automakers are Cafe The standards are imposed on automakers: Ford, Toyota, GM, Kia, BMW, Volkswagen, Nissan, Hyundai, Mercedes-Benz, and Stellantis, which owns Chrysler, all “exceeded” the standards in 2021. (Only Tesla, Subaru, and Honda fell short.) Chris Hart, senior energy policy analyst at Consumer Reports, calculates that roughly half of the fuel-economy gains in the U.S. from 2010 to 2020 have been wiped out by the shift to larger vehicles.
Meanwhile, drivers in other countries are also turning to sports utility vehicles (SUVs). In 2010, SUVs accounted for less than 17% of new car registrations worldwide; by last year, that figure had risen to 46%. The International Energy Agency recently reported that “if SUVs were a standalone country, they would rank sixth in absolute emissions in the world in 2021, emitting more than 900 million tonnes of CO2.” The agency urged governments to focus on policies to reduce SUV sales, noting that “some governments, such as France and Germany, have already begun to introduce related measures, such as taxing larger, more emitting cars.”
Coincidentally, the Biden administration is launching a new series of Cafe The standards, released Friday, replace those negotiated by the Obama administration with the auto industry in 2012 and repealed by the Trump administration in 2020. They're better than current standards, but nowhere near where they should be, and nowhere near what's needed to meet IEA guidance. Notably, they leave in place a loophole for SUVs.
The last time gasoline prices were as high as they are now was in 2008 (though inflation-adjusted prices were higher 14 years ago). What would have happened if more sensible auto efficiency standards had been put in place then? It's impossible to know for sure, but the U.S. could have reduced its oil consumption by 1 million barrels per day in that time, the amount the Biden administration says it will release from the Strategic Reserve (U.S. oil consumption is about 20 million barrels per day). Unfortunately, as Slate recently pointed out, “when it comes to oil shocks, we have the memory of a goldfish.”
