Saving Fuel Through "EcoDriving" Can Help Cool Off Oil Prices

It’s not often the main automaker lobbying association, the Alliance of Automobile Manufacturers (AAM), and NRDC find themselves on the same side of an issue. Usually, we are fighting about stricter fuel economy and CO2 pollution standards. But we do seem to agree that conserving fuel through changes in driving habits has great potential to help bring drivers relief at the pump.

And that’s why NRDC applauds today’s announcement by Governor Schwarzenegger of California and Governor Ritter of Colorado of their support for a AAM campaign called “EcoDriving”.This public education campaign aims to teaches drivers how to conserve fuel by accelerating slower, keeping their tires inflated and other changes, that can cut fuel consumption by up to 15 percent. While a cynic might call this automaker greenwashing, it’s also true that better driving habits can cut demand for gasoline which in turn acts to cool down oil prices. 

On the other hand, we know more drilling isn’t the solution. The Energy Information Administration, the statistics branch of the U.S. Department of Energy, estimated last year that opening the coasts to offshore drilling would not have a significant impact on oil prices before 2030.  The number of new offshore drilling permits has tripled since 2001– and yet we’re also paying triple what we were in 2001.

What the market has shown is that reducing demand can have an immediate impact on lower oil prices.  Oil prices peaked in early July at over $145 a barrel and now are at about $113. It is well accepted that this 22% drop is caused primarily by softening global demand which, as discussed in my colleagues blog, has been driven largely by reduced U.S. gasoline consumption.

In fact as chronicled in my colleagues blog, over the first 7 months of 2008 compared to the same period last year, the U.S. as a whole reduced it’s consumption by an astonishing 860,000 barrels per day, roughly 4.2%. Americans have cut back on gasoline consumption in the face of higher fuel prices, and programs like EcoDriving can likely help us save even more. 

There is good evidence from Europe, where nine countries have EcoDriving programs, that better driving habits can reduce gasoline consumption. Tests indicate that if drivers practice EcoDriving techniques, they can reduce consumption by roughly 5 to 10%.  Less clear is how many drivers have actually changed their habits because of the campaign and if they have, how long their EcoDriving behavior lasts.  Effectiveness in the U.S. will largely depend upon the advertising resources that the auto industry and the government put into the campaign.

Because of these limitations, it is clear that EcoDriving type programs will never fully replace the need for stricter fuel economy or CO2 standards, especially since we need much deeper cuts in CO2 emissions to solve global warming and break our dependence on oil. But reducing demand, assisted by programs like EcoDriving, stricter standards and other measures, must be front and center for any credible policy response to cooling down oil prices.