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Reducing Petroleum Consumption from Transportation

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  • Christopher R. Knittel

Abstract

The United States consumed more petroleum-based liquid fuel per capita than any other OECD-high-income country – 30 percent more than the second-highest country (Canada) and 40 percent more than the third-highest (Luxemburg). This paper examines the main channels through which reductions in U.S. oil consumption might take place: (a) increased fuel economy of existing vehicles, (b) increased use of non-petroleum-based low-carbon fuels, (c) alternatives to the internal combustion engine, and (d) reduced vehicles miles travelled. I then discuss how the policies for reducing petroleum consumption used in the US compare with the standard economics prescription for using a Pigouvian tax to deal with externalities. Taking into account that energy taxes are a political hot button in the United States, and also considering some evidence that consumers may not correctly value fuel economy, I offer some thoughts about the margins on which policy aimed at reducing petroleum consumption would have the largest impact on economic efficiency.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17724.

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Date of creation: Jan 2012
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Publication status: published as Christopher R. Knittel, 2012. "Reducing Petroleum Consumption from Transportation," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 93-118, Winter.
Handle: RePEc:nbr:nberwo:17724

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References

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  1. Christopher R. Knittel & Ryan Sandler, 2011. "Carbon Prices and Automobile Greenhouse Gas Emissions: The Extensive and Intensive Margins," NBER Chapters, in: The Design and Implementation of U.S. Climate Policy, pages 287-299 National Bureau of Economic Research, Inc.
  2. Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel & Nathan C. Parker, 2011. "Some Inconvenient Truths About Climate Change Policy: The Distributional Impacts of Transportation Policies," Working Papers 1116, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  3. Christopher R. Knittel, 2009. "Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector," NBER Working Papers 15162, National Bureau of Economic Research, Inc.
  4. Michael Greenstone & Elizabeth Kopits & Ann Wolverton, 2011. "Estimating the Social Cost of Carbon for Use in U.S. Federal Rulemakings: A Summary and Interpretation," Working Papers 1106, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  5. Christopher R. Knittel & Douglas L. Miller & Nicholas J. Sanders, 2011. "Caution, Drivers! Children Present: Traffic, Pollution, and Infant Health," NBER Working Papers 17222, National Bureau of Economic Research, Inc.
  6. Shanjun Li & Christopher Timmins & Roger H. von Haefen, 2009. "How Do Gasoline Prices Affect Fleet Fuel Economy?," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 113-37, August.
  7. Kenneth A. Small & Kurt Van Dender, 2007. "Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-52.
  8. Ian W.H. Parry & Kenneth A. Small, 2007. "Should Urban Transit Subsidies Be Reduced?," Working Papers 060723, University of California-Irvine, Department of Economics.
  9. Meghan R. Busse & Christopher R. Knittel & Florian Zettelmeyer, 2009. "Pain at the Pump: The Differential Effect of Gasoline Prices on New and Used Automobile Markets," NBER Working Papers 15590, National Bureau of Economic Research, Inc.
  10. Delucchi, Mark, 2005. "A Multi-Country Analysis Of Lifecycle Emissions From Transportation Fuels And Motor Vehicles," Institute of Transportation Studies, Working Paper Series qt5x20v080, Institute of Transportation Studies, UC Davis.
  11. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers 12881, Iowa State University, Department of Economics.
  12. Christopher R. Knittel & Ryan Sandler, 2011. "Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation," NBER Working Papers 17390, National Bureau of Economic Research, Inc.
  13. Weinert, Jonathan X. & Lipman, Timothy, 2006. "An Assessment of the Near-Term Costs of Hydrogen Refueling Stations and Station Components," Institute of Transportation Studies, Working Paper Series qt65f0n732, Institute of Transportation Studies, UC Davis.
  14. Janet Currie & W. Reed Walker, 2009. "Traffic Congestion and Infant Health: Evidence from E-ZPass," NBER Working Papers 15413, National Bureau of Economic Research, Inc.
  15. Christopher Knittel & Daniel Sperling, 2006. "Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand," Working Papers 625, University of California, Davis, Department of Economics.
  16. Delucchi, Mark, 2005. "A Multi-Country Analysis of Lifecycle Emissions From Transportation Fuels and Motor Vehicles," Institute of Transportation Studies, Working Paper Series qt1z392071, Institute of Transportation Studies, UC Davis.
  17. Daniel J. Graham & Stephen Glaister, 2002. "The Demand for Automobile Fuel: A Survey of Elasticities," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 36(1), pages 1-25, January.
  18. Lipman, T E & Weinert, Jonathan X., 2006. "An Assessment of the Near-Term Costs of Hydrogen Refueling Stations and Station Components," Institute of Transportation Studies, Working Paper Series qt51c0937x, Institute of Transportation Studies, UC Davis.
  19. Delucchi, Mark, 2005. "A Multi-Country Analysis of Lifecycle Emissions From Transportation Fuels and Motor Vehicles," Institute of Transportation Studies, Working Paper Series qt8nf3606c, Institute of Transportation Studies, UC Davis.
  20. Austin, David & Dinan, Terry, 2005. "Clearing the air: The costs and consequences of higher CAFE standards and increased gasoline taxes," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 562-582, November.
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Cited by:
  1. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "The optimal subsidy on electric vehicles in German metropolitan areas: A spatial general equilibrium analysis," Energy Economics, Elsevier, vol. 40(C), pages 515-528.
  2. Christopher R. Knittel, 2013. "The Political Economy of Gasoline Taxes: Lessons from the Oil Embargo," NBER Chapters, in: Tax Policy and the Economy, Volume 28 National Bureau of Economic Research, Inc.
  3. Christopher R. Knittel, 2013. "The Energy-Policy Efficiency Gap: Was There Ever Support for Gasoline Taxes?," NBER Working Papers 18685, National Bureau of Economic Research, Inc.
  4. Ian A. Lange & Sarah Polborn, 2012. "Can Lobbying Encourage Abatement? Designing a New Policy Instrument," CESifo Working Paper Series 3760, CESifo Group Munich.
  5. Lucas W. Davis, 2013. "The Economic Cost of Global Fuel Subsidies," NBER Working Papers 19736, National Bureau of Economic Research, Inc.

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