Is the Hummer Back? How Falling Gas Prices Impact Clean Vehicles and Transportation

November 18, 2014
Josh Goldman
Former contributor

Gas prices are falling! Gas prices are falling! The average price of a gallon of gas near me in Washington, D.C. is $3.10 and the national average has dropped to $2.92. While this is good news for drivers in the short term, this dip also presents an opportunity to avoid a potential lag in reducing emissions from transportation by doubling down on increasing fuel economy and advancing electric vehicles.

Historically, there has been some connection between gas prices and how much we drive, also known as vehicle miles traveled, or VMT. On face value, this is intuitive. Cheaper gas means that driving costs less and we therefore drive more. However, this particular California-focused study found that the elasticity between gas prices and VMT is fairly small, meaning that the price of gas does not greatly impact VMT, especially over the short-term. Long term shifts in gas prices have larger impacts on VMT, but as we have seen from the price of gasoline over the past 5 years, the oil market is anything but stable. So, don’t be too concerned that the dip in gas prices is going to lead to a giant increase in VMT, and corresponding increases in tailpipe emissions.

Another potentially troubling correlation is that the recent drop in gas prices has led some analysts and news outlets to conclude that larger vehicles, like pickup trucks, SUVs, and even everyone’s favorite guzzler, the Hummer H1, are back baby! Sales of the recently redesigned Lincoln Navigator eight-passenger SUV, for example, jumped 38 percent in October, while sales of the Chevy Tahoe rose 6 percent. But SUV sales have risen due to a variety of factors – gas prices being just one of them – and 2014 is likely to be the best year for overall auto sales in more than a decade so although SUV sales are up, so too are sales of smaller vehicles and electric vehicles like the Nissan LEAF, which increased sales 29 percent in October.

The Hummer H1. Not the most fuel efficient vehicle. Source: Wiki Commons.

Even though more Americans are buying SUVs, it doesn’t mean that we need to give up on increasing fuel economy and advancing electric vehicles (EVs). Fortunately, the technologies that are helping spur the average fuel economy of new vehicles sold in the U.S. to all-time highs can be applied across vehicle fleets, meaning that they can be used in both small and big vehicles. Thus, even though people are buying more SUVs and trucks right now, our federal fuel economy standards are helping ensure that these vehicles become cleaner along with smaller vehicles by enabling all vehicles to travel further on each gallon of gas, saving drivers money and reducing tailpipe emissions.

Federal fuel economy standards are helping push the average mpg of all vehicles to all time highs

Federal fuel economy standards are helping push the average mpg of all vehicles to all time highs

And don’t forget that driving on electricity is still a cheaper and cleaner option no matter where you live. There are already a bevy of EV models to choose from and automakers are poised to introduce new models to showrooms floors in 2015 that will push EV technology further and provide consumers with even more clean vehicle choices. I’m particularly excited about the introduction of hydrogen fuel cell technology in California, which can be applied in bigger SUV-type EVs though automakers like Toyota are using it in sedans as well. Check out my review of a recent test drive of the Hyundai Fuel Cell Tucson, a SUV that runs purely on electricity produced from hydrogen.

So what can you do? You can certainly try your best oil/rain dance in hopes that gas prices stay low forever, but a smarter idea might be to choose wisely when purchasing or leasing your next vehicle. As we know from past experience, oil prices don’t stay anywhere for very long. Gas prices swing both ways: they rose by more than 45 cents in the seven months before hitting their high in June and there are several factors for the low gas prices we are seeing today, including an oversupply of crude oil. Part of the reason for the oversupply driving these lower prices is a decreasing demand for fuel in Europe and the United States, thanks in large part to fuel economy standards on cars and trucks as highlighted in a recent report from the U.S. Energy Information Administration. Choosing a fuel efficient vehicle can, therefore, act as an insurance policy against fluctuations in oil prices and will continue to save drivers money no matter what happens to the price of gasoline.

You can also support continued state and federal efforts to reduce emissions from transportation and increase access to EVs by following this blog or – even better – signing up for emails from me and the Clean Vehicles team. That way you can stay up-to-date on what’s happening in the world of clean vehicles and let your voice be heard via our one-click action alerts and other engagement opportunities.