Fuel-efficient cars lead to lower oil prices
Fuel efficiency standards for new vehicles will lead to a lower global oil price according to a study by Enerdata energy consulting, commissioned by environmental group Transport and Environment (T&E).
The report found that for every one per cent reduction in global oil consumption, the price of oil drops by up to two per cent. Furthermore it found that the economic benefits of fuel efficiency measures in Europe are typically underestimated by up to 17 per cent because of the failure to account for a drop in oil prices.
Economic assessments of energy efficiency measures normally use fixed oil prices when accounting for economic benefits. But the Enerdata study, for the first time, examined the future effect on the oil price itself when carmakers are forced to comply with EU fuel efficiency standards from 2012.
“This study shows that the economic benefits of energy efficiency measures in transport have been seriously underestimated in the past because nobody ever looked at what happens to oil prices as a result,” Jos Dings, director of T&E said. “The EU needs to send a strong message that fuel tax increases at national level will have to go hand-in-hand with fuel efficiency standards if we are going to seriously tackle spiralling transport CO2 emissions.”
The study, “The impact of lower oil consumption in Europe on world oil prices” by Enerdata, as well as a two-page briefing on its key findings can be downloaded from the T&E website: http://www.transportenvironment.org/publications