How Car Mileage Demonstrates Problems With a Carbon Tax

The Wall Street journal has a powerful infographic on the front page of the Personal Journal section today, showing the 1986 Honda Civic CRX and the 2007 Honda Civic DX Sedan. The former got 52 miles per gallon in the city; the latter gets just 30 mpg.

The accompanying article shows how small cars are much bigger than they used to be, with more powerful engines – and therefore much lower fuel economy. "Even the smaller Honda Fit, considered almost impossibly small today, is larger than the mid-1980s Civic CRX," notes Jonathan Welsh. And Toyota's Scion xB, which had vaguely acceptable fuel economy of 30mpg in the city (and it's very much a city car) has now been retooled all the way down to a dreadful 22mpg. Even the Smart car, hugely popular in Europe and now being introduced in the US, gets nowhere near the mileage of that old Honda Civic.

I wonder what all this means for proponents of a carbon tax like Greg Mankiw, who cites with approval an article by Robert Samuelson on gas prices. Samuelson notes that demand for gasoline is very high, its record price notwithstanding, but adds that "steep prices, imposed by the market or by taxes, will encourage energy conservation".

Which is as may be, but I think the WSJ article does point up just how difficult that energy conservation will be to implement, at least in terms of gas mileage. It's been a long time since new cars have had any difficulty making it up steep hills, and the general reaction of Americans who visit Europe seems to be utter astonishment that families could possibly manage with such small cars. In other words, a gasoline tax might be much better at raising revenues than at reducing consumption.

Which is one of the reasons why I prefer a cap-and-trade system to a carbon tax: the former guarantees lower carbon emissions, while the latter merely hopes for them, with relatively little data about the elasticity of demand for energy.