Quote:
"If Greenspan were right that market forces were the most important thing, then when oil prices collapsed in the 1980s and then again in the 1990s, fuel economy would have collapsed too. Thankfully, fuel economy regulations stopped such a collapse from happening."

Regulations didn't stop fuel economy from collapsing, the fact that we'd figured out new technologies did.  Why would manufacturers go back to using older, less efficient technologies just because the reasons for developing the new ones went away?  Wouldn't we continue to use the new and better technologies?

And incidentally, fuel consumption (fuel economy is only an intermediate statistic) did increase faster when the prices dropped in the 80's and 90's.  That's why we had such a surge in the number of SUVs and such an increase in the number of people living farther and farther from their jobs.  When the price went down we used more petroleum.  When the prices go up we find ways to use less, and increased efficiency is only one of the ways we do it.

Well the reason is that even though we got better engines.

We got engines which predominantly focused on horsepower, rather than fuel economy.

Strange nobody mentioned the effect of foreign imports on average fuel economy in the US.  Except for a few economy models, most US automakers build outrageously inefficient cars and light trucks.  People recognize quality and started buying Honda, Toyota, and the likes.  As we all know, US automakers couldn't compete in smaller vehicles so they put all their energy and innovation onto a new kind of vehicle ... a truck hybrid called the SUV.  Funny, Chevy has five economy models sold in Mexico but one here in the States.  Oh well, to tell the whole story, imports have to be addressed.

As to Alan Greenspan, I like him because he pissed all over George Bush's pant legs and actually praised Clinton for good economic policies.  His book seems to say Bush didn't have any economic policy at all, aside for tax breaks for the rich, which is probably a fair assessment.  One could argue that if anything, Greenspan should have anticipated that these free-for-all economic policies were a direct cause of the housing and credit market slumps.

Which leads to my third point, that a continued and inflationary / recessionary "bad" cycle could impact how we deal with global warming.  Now this is something way beyond Greenspan's expertise as was mentioned in this blog.  

My predictions?  Growth could slow (as well as CO2 emissions) and we'll muddle along.  A complete melt-down could happen but I doubt it.  What will be difficult is to raise money on the credit markets ... such as for investments in wind farms and such.  That's a complex subject for a different thread, though...
sammie

Onward through the fog

The Federal Reserve can only do what it can do.   We cause many of our own problems, not saving enough.   we save a -2 percent savings rate.  

what greenspan did was discount rate of 7 percent in year 2000 and 1 percent in 2003.   He missed that completely, way to tight, then he had to go so low to make up for it.    He over played his discount rate hand against the future and we were in for a ride.

But at least he gets global warming a little bit.

Greenspan's book is self-serving rubbish.  Many dont realize that funding government (aka not cutting taxes) is an environmental issue of the first magnitude.  This slobbering sycophant didnt have the backbone to admit that four huge tax cuts in six years would be a long-term fiscal disaster, especially when combined with a bloated Medicare Part D handout to the drug industry and an unfunded war.  

I think you have created a bit of a false choice by saying that is a question of a gas tax OR improved economy standards.  Both are probably necessary.

There are many problems relying only on fuel economy standards.  First, the market movement to heavier SUV-like vehicles has meant that a portion of the market has left the light-duty vehicle category, and thus has circumvented LDV fuel economy standards.

Second, even in the car-saturated US, there is an annual trend to driving more distance.  Thus, savings from better fuel economy simply are being overwhelmed by the increasing number of kilometres driven.

While I am not necessarily a fan of Greenspan, his proposal for a US$ 3 per gallon gas tax is very much welcome.  Such a tax would have a significant impact on usage (probably more than a fuel economy increase).  We would be wise to use Greenspan's tax recommendation for political gain (and conveniently ignore most of the rest of his recommendations).