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December 01, 2005

Marginal Futility?

Yesterday, mega-pundit Dave Roberts over at Grist Magazine's blog put up a depressing little post on the Toyota Prius.  Basically, Dave seconds a claim made by the Wall Street Journal's editorial staff-- namely, that every drop of oil saved by eco-conscious Prius drivers simply gets snapped up by someone else, either in the US or overseas. 

Now, if that's really true, then all of the Prius drivers who think they're "saving" oil--or preventing climate-warming emissions--really aren't doing anything of the sort.

A sobering thought indeed.  But as it happens, I think this analysis is incorrect.  It may be that buying a Prius doesn't save as much oil as we'd like.  But I don't believe that it's simply an exercise in futility.

The Wall Street Journal does have a point, after a fashion.  The resource economics literature is chock full of reference to the so-called "rebound effect" -- which is the observation that efficiency gains (such as the rise of the Prius) are all too often undermined by rising appetites.

Here's one example of a rebound: if you buy a more efficient furnace, your heating costs fall -- but lower costs might also prompt you to turn up the heat a degree or two.  And that extra degree or two is the "rebound" that reduces the efficiency benefits from your new furnace.  On net, you still save on your heating bills, but you don't save quite as much as you might have predicted, based on the relative efficiencies of the two furnaces.

Just so, if you buy a fuel-efficient car, you might be tempted to drive an extra mile or two here and there -- which means that your gas savings are a little less than your mpg improvement.  (This earlier post argues that rising fuel efficiency standards would save fuel, but possibly backfire by inducing lots of extra driving.)

At the level of a market economy, rebound effects can be just as pernicious.  If enough people buy efficient hybrid cars, then aggregate gasoline demand falls enough to cause prices to drop.  But lower gas prices, in turn, spur extra consumption -- so other drivers use a little bit more than they otherwise would have. The system-wide benefits are a little lower than the Prius buyers might have hoped.

(On the converse, gas guzzling SUV's probably waste a little less gas than we think.  SUV drivers probably don't drive quite as far, on balance, as they would if their vehicles were more efficient; and high demand from SUVs raises gas prices, which probably holds down consumption a bit elsewhere in the economy.  Mind you, SUVs are still wasteful, but perhaps slightly less than their mileage would make us think.)

Now, the thing is that -- contrary to the Wall Street Journal's claim -- the rebound effect probably doesn't completely wipe out the benefit of rising efficiency.  The magnitude of system-wide rebound effects vary, but in typical circumstances they fall in the 10 percent to 40 percent range -- that is, for every 10 gallons of gas a car owner saves by switching from a regular car to a Prius, overall gas consumption might fall by 6 to 9 gallons.

Of course, the discussion above reflects the standard model for the rebound effect.  On occasion, however, new energy-efficient technologies create a "mega-rebound" effect, often called the Jevons Parodox.  William Jevons was the first to point out that  introduction of the Watt steam engine -- which was about three times as efficient as its predecessor -- led not to a decrease in coal consumption, but to a massive increase.  Previous coal-fired engines were so inefficient that they could only be used profitably in a few applications.  The Watt engine, however, was efficient enough that coal power became profitable for a dizzying array of uses -- so even though Watt each engine used coal more sparingly than previous models did, there were lots more engines in operation.  And, as a consequence, the introduction of an efficient technology caused coal consumption to soar.

Jevons-style mega-rebounds seem to be rare, however.  While it's theoretically possible that super-efficient cars will eventually make driving so cheap that the world will soon be awash in autos,  I don't see evidence that this is happening.  So while rebound effects raise some reasonable concerns about the system-wide benefits of buying a Prius, it's hard to say that the rising number of super-efficient cars on the road is having no effect on overall consumption. Rebound or no, it seems to me the Prius is almost certainly reducing -- albeit slightly -- the climate impacts of the transportation system.

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Comments

There are plenty of good reasons for buying a Toyota Prius - even more so now that the car has reasonable fit and finish inside, rather than being a Toyota Echo econobox with a luxury price tag.

There is a a long list of poor reasons for buying a Toyota Prius, including...

- Saving money (you won't, given the higher cost of the vehicle; particularly if you compare it against economic 4 cylinders.)

- Saving Oil (you're still perpetuating the culture of the car, with all of the asphalt and infrastructure that that implies.)

- Making Communities Cleaner (still using a two stroke lawnmower? It's emissions are higher than the average car. Own a boat? Horrible fuel economy.)

I'm doing more by riding a motorcycle - if everybody rode, we wouldn't need the same crazy road infrastructure. Realizing this isn't necessariily viable in all climates, the Prius is not the Earth's salvation. We'd all be better off riding bicycles, which I do fairly often.

Posted by: Scott Nelson | Dec 1, 2005 7:03:24 PM

Does anyone have snow or ice experience with this? If its electric drive could be given a wheel-slip preventer like locomotives it might be safer. A local added batteries and charges at home, and he gets real good milage. If the gas engine runs at a constant speed it should be cleaner.

Posted by: Walter E. Wallis | Dec 1, 2005 7:35:26 PM

When a more economical alternative to carbon-based fuels becomes available, people will choose it. Even with only a hybrid vehicle, this is being proven. If enough Prius' were made and incentivized, eventually there would be a reduction in greenhouse gas emissions. But why stop with a hybrid? Available today is an all electric vehicle that is sized and powered to meet our commuting needs and would double the capacity of our freeways. It, too, just needs to be manufactured in huge quantities. Small is beautiful. Go to www.commutercars.com.

Posted by: Larry | Dec 2, 2005 1:57:51 PM

There is a viable econimic alternative to oil consumption for transportation, granted that nearly half of trips in the United States are 3 miles or less and more than 25% of the car trips are less than 1 mile (Ryan, John C., Seven Wonders). At these distances these trips are walkable and very bike-able. Granted i understand that not every body is physically able to walk or ride a bike, most of us are.

The one urban luxury of which suburban design did not deprive us is the sidewalk. Unfortunately, suburban sidewalks, i fear, are grossly underutilized. Even though suburbia has increased the distace to the grocery store, the bank and other amenaties for many of us, there are still many of us who live close enough to walk to run our everyday errands.

Beyond those walkable trips are those that are easily bike-able. The bicycle is the most energy efficient form of transportation ever devised, and world wide the bicycle is the most widely used transport vehicle.

It will not take a great advance in technology to reduce our oil consumption, but rather a great shift in our mindset and our lifestyles. Further i don't think anyone could contend the fact that Americans could greatly benefit from the added physical activity.

Think globally. Bike locally!
or walk!
or take the bus! (We'll save public transportation for another post)

Posted by: mmoody | Dec 3, 2005 11:24:56 AM

The price of gasoline is inevitably rising because the remaining oil in the ground is going to be more and more expensive to extract. This limits the potential for a rebound effect. The prius market is a reaction to a supply curve that is shifting down and to the left. Since the prius is not actually less expensive to own and drive, it is not likely that its owners will actually be tempted to drive more, if they act rationally.

Posted by: sf | Dec 3, 2005 4:17:43 PM

The ideal hybrid, of course, would incorporate a constant speed multi-fuel diesel. With appropriate connections this unit could power a house through the usual outage. Get government out of car design and let the market decide.

Posted by: Walter E. Wallis | Dec 3, 2005 8:46:58 PM

Part of the problem with the WSJ analysis (or arguably any really focused analysis) is the lack of scope. Assuming a 100% rebound effect from the Prius, you still have a number of tangible effects that yield long-term environmentally positive results: an increased density of PZEV cars / lower total emissions per total consumption, a clear message to manufacturers that consumers care and will pay for greener cars, and a subtle social reminder to the people you know and who see your car that emissions matter. Each of these may be easily overemphasized and are harder to measure quantitatively than net consumption, but they are real and ought not be ignored. And regardless of the degree to which the rebound effect may cancel an individual's personal choices, it would take a starkly economic (or amoralistic) philosophy to conclude that if net consumption levels are unaffected, then the options are equal - just as it would take a surprisingly deluded philosophy to conclude that you'll save the world by driving a Prius. Their point is well taken, though, and it is depressing but as individuals we do what we can do.

Posted by: Patrick Niemeyer | Dec 8, 2005 7:03:11 PM