Environmental Engineering Reference
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well.” 72 In any case, the hit to domestic auto sales is historically much
larger and more persistent than the one to foreign cars and trucks.
But this may be changing, thanks to historic shit s in how Detroit
does business, with more fuel-ei cient cars in its l eets. Now, when
high oil prices hit, the pain is likely to be spread more evenly between
U.S. and foreign producers of cars and trucks. h is is not an entirely
new trend: according to Edelstein and Killian, “In the 1970s, U.S. auto
manufacturers were simply not producing any small, energy-ei cient
cars.” 73 h at changed substantially by the 2000s, despite the promi-
nent presence of SUVs in U.S. automakers' lineups. h e fact that the
U.S. auto industry isn't just Detroit and its surroundings anymore—it's
spread across the country—helps spread any vulnerability too.
It's important to be cautious, though, about just how far the United
States has come and what sorts of gains it might see in the future.
Economists regularly churned out papers in the i rst half of the 2000s
explaining why the U.S. economy was no longer particularly vulnerable
to oil prices. h e biggest factor was its falling oil consumption relative
to the size of the economy: crude prices could now double without
having a massive impact at the national level. But people missed the l ip-
side of this positive ef ect. Once upon a time, hundred-dollar-a-barrel
oil wasn't really plausible because the economy would be knocked on
its back, bringing prices down with it, well before the market could
get to that point. Paradoxically, though, energy ei ciency helped make
the world safer for much-higher-priced crude, as developed economies
could now tolerate higher prices without tipping into recession. By the
end of the decade, the United States was spending a far higher percent-
age of its income on oil than it had a decade before, even though it was
actually using much less oil for every dollar of GDP it produced.
In principle, something similar might play out with the current trend
toward greater ei ciency, allowing prices to rise even higher. But there
are reasons to be more optimistic this time. In particular, as U.S. oil con-
sumption shrinks, the U.S. economy will be a smaller piece of the oil-
price puzzle; constraints on economic growth in places such as China
and India in the face of expensive oil (and ef orts by oil producers to
keep prices at levels that those economies i nd manageable) may help
restrain price increases before they really hurt the United States. h
ere
 
 
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