Gas Prices Are Plummeting, and the Environment Could Be Roadkill

Gasoline prices keep plunging in the United States, falling to an average $2.73 a gallon on Wednesday—down 16 percent from a year ago. While that puts money in drivers’ pockets and boosts the economy, there’s an environmental price to be paid.

That’s because Americans seem to have a Pavlovian response to cheap gas: As prices get smaller, their vehicles—and greenhouse gas emissions—get bigger.

Case in point: Toyota reported on Tuesday that sales of its 4Runner sport utility vehicle jumped 53 percent in November, and sales of the Highlander SUV rose nearly 17 percent. “Toyota dealers set new November sales records for light trucks and SUVs,” the company said in a statement.

And sales of Toyota’s 51 mpg Prius hybrid? Down nearly 14 percent.

“Clearly, if oil prices stay low—and that is a reasonable probability—it does make the story for alternative vehicles and fuel-efficient vehicles more problematic,” said Daniel Sperling, director of the Institute of Transportation Studies at the University of California, Davis.

“Low gasoline prices are creating a problem for car companies, as they have government requirements to make vehicles more efficient to meet fuel economy and greenhouse gas standards, while on the other hand, low gasoline prices are pushing people in the other direction,” he added.

Given that Americans tend to keep their vehicles for a decade or more, many of those newly purchased SUVs will be on the road for many years to come. But it’s unlikely that people will be driving their big new cars more just because they’re saving money at the pump, said Sperling, who studies gas prices’ impact on consumer behavior.

“The effect of gasoline prices on vehicle driving is pretty small,” he said. “In economic terms, people are very inelastic in their response to gasoline prices in the short term. People are locked into where they live, where they work, and very few people have access to good public transit.”

But that’s not the case when it comes to vehicle purchases, he said, and drivers’ return to big SUVs and trucks is not good news.

In California, where transportation accounts for nearly 40 percent of the state’s carbon spew, regulators are counting on rising sales of plug-in hybrids, electric cars, and hydrogen fuel cell vehicles to help the state meet an ambitious goal of cutting greenhouse gas emissions 80 percent by 2050.

The plunge in gas prices comes just as Toyota, Honda, and Hyundai prepare to launch their first mass-market fuel cell cars in California, where the government is spending tens of millions of dollars to help build a statewide network of hydrogen fuel stations.

But Sperling doesn’t expect cheap gas to send the car of the future into a ditch. Automakers plan to sell or lease only a few thousand hydrogen cars initially, and buyers will be the type of environmentally conscious drivers who want the greenest ride in their driveway. (It helps that companies such as Hyundai are including the hydrogen fuel as part of the car’s lease.)

Even today’s biggest cars and trucks are much more fuel-efficient than those sold during the last big-car boom. “The automotive industry has changed dramatically in the last 10 years,” Sperling said. “They are putting massive amounts of money into improving the fuel efficiency of vehicles.”

One solution to the fallout from fluctuating gas prices would be for the government to impose what Sperling calls “feebates” on vehicle sales: If you buy a gas guzzler, you pay a $2,000 to $3,000 fee. But if you opt for a super-efficient car, you get that cash back as a rebate. “It creates the perfect funding source for electric and fuel cell vehicles, and no taxpayer money is involved,” said Sperling.

One more thing, before you consider trading in your 30 mpg Ford Focus for a 14 mpg Ford Expedition: Remember 2008? Gas prices soared to more than $4 in California, prompting scores of drives to ditch their suddenly very expensive SUVs and monster trucks.

“It is amazing how short people’s memories are sometimes,” said Sperling.