Can Improved Fuel-Efficiency Standards Increase Pollution?

Last month, President Obama announced a new national policy that will increase fuel efficiency for all new vehicles sold in the U.S. by 2012. By 2016, a new phase of the program will require cars, small trucks and SUVs to achieve at least 35 miles per gallon.

But some experts have slammed the policy on the grounds that it will lead to an increase in pollution. But is it true? Can improved fuel-efficiency standards actually increase pollution caused by vehicles? Let's examine the facts.

When manufacturers produce more fuel-efficient vehicles, it drives down demand for gasoline and makes fuel cheaper, encouraging Americans to drive more and, consequently, burn more fuel. Economists have labeled this the "rebound effect."

In fact, some experts claim that producing vehicles with lower fuel economy is the best approach to reducing pollution caused by automobiles, the idea being that if driving is made expensive, fewer Americans will do it, and those who do will drive less frequently.

Cheaper gas could also make gas-guzzlers more affordable to drive, leading Americans to hold onto their full-size trucks and SUVs longer.

The theory begins to fall apart, though, when one examines exactly how many more miles Americans drive when fuel is cheap. According to the US Department of Transportation, when gasoline prices skyrocketed to $4 per gallon in June 2008, Americans drove only 4.7 percent fewer miles than a year earlier when the average price of fuel was roughly a dollar less.

Even if gas fell as far as, say, $1 per gallon, it's unlikely that cheap gasoline will lead Americans to drastically change their driving habits--at least not enough to negate the environmental benefits of improved fuel-efficiency standards.

Additionally, the policy will save Americans an astronomical amount in fuel costs. President Obama expects the policy to save 1.8 billion barrels of oil over the lifetime of vehicles sold in the next five years.