Energy Efficiency is Overrated

If you thought splurging on that Prius was a good idea, then think again.  The federal government is looking for more ways to funnel money into the Highway Trust Fund since gains in fuel efficiency are cutting into the Fund’s revenue stream provided by the gasoline tax.

Over the past few years the government has supplemented the fund with about $30 billion from the Treasury’s general revenues.  And unless we cut spending (ha!),  lawmakers are going to pass a new tax to close that energy efficiency loophole.

A mileage-tracking monitor

At the request of Senator Kent Conrad (D-ND), the CBO issued a report on taxing mileage.  A Vehicle-Miles Traveled (VMT) tax is simple:  The government installs a meter in your car and you pay a tax based on the number of miles you drive.  (Bear in mind this is in addition to the current gasoline tax)

From The Hill:

CBO’s report stressed it was making no recommendations but seemed to support a VMT tax as a more accurate way of having drivers pay for the costs of highway maintenance. The report said miles driven is a larger factor in highway repairs than fuel consumption and suggested that having drivers pay for the real costs of highways “would involve imposing a combination of fuel taxes and per-mile charges.”

I have no qualms with energy efficiency but these government ideas make it less likely that I’ll spend extra for the car that gets better gas mileage. 

The same paradox occurs with energy efficiency in your home.  Electric utilities earn their revenue based on the amount of energy they sell to their customers.  The revenue funds employee salaries, maintenance and generation assets. 

But you cut into their budget when you install energy efficient light bulbs.  For that reason, the utilities raise electric rates to offset the losses from customers that ‘go green’.

This is exactly what the law of unintended consequences is about.  Outcomes rarely happen as originally intended.