MARKET FORCES ALONE WILL NOT PROVIDE TIMELY SOLUTIONS TO OUR PROBLEMS IN TRANSPORTATION

The nation's transportation system faces problems on both sides of the supply-demand equation. Analysis of these problems has resulted in identification of two broad transportation energy conservation program areas: (1) more-efficient and environmentally acceptable heat engine systems are needed; they must be optimized for available fuels and eventually alternate fuels; and (2) alternate propulsion systems such as electric or hybrid vehicles are also required. A difficulty arises in that these solutions may not come about in a timely fashion due to market forces alone. It is necessary to understand why this is so in order that appropriate government actions can be taken. Discussed first is a fundamental premise or assumption that the public good is best served by a free market which presumably allocates resources optimally; in other words, for the greatest positive net social benefit. Optimal resource allocation is considered synonymous in this discussion with conservation. This fundamental assumption has been challenged in that, if public and private objectives diverge, sub-optimal resource allocation could result with attendant social disbenefit. This divergence of objectives can come about in the transportation sector in two ways. First, when the market value of energy is below the true marginal value, markets will tend not to effect conservation measures. On the other hand, when the market price of energy is at the true marginal value, markets may still be unable to effect conservation measures. These issues are examined and then the situation faced by the industrial portion of the market in implementing conservation strategies is examined. In summary, the ability of the transportation market to effect optimal energy conservation is unlikely because, although world resources are limited, oil prices may soften temporarily thus delaying normal market response to higher prices. (ERA citation 02:017495)

  • Corporate Authors:

    University of California, Livermore

    Lawrence Livermore National Laboratory
    Livermore, CA  USA  94550

    Energy Research and Development Administration

    20 Massachusetts Avenue, NW
    Washington, DC  USA  20590
  • Authors:
    • Anderson, C J
    • O'Connell, L G
  • Publication Date: 1976-7-29

Media Info

  • Pagination: 12 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00155155
  • Record Type: Publication
  • Source Agency: National Technical Information Service
  • Contract Numbers: W-7405-eng-48
  • Files: TRIS
  • Created Date: Aug 31 1978 12:00AM