How we failed to adapt the last time this happened.

Gas prices hit a record high this week, according to AAA, and many Americans seem in disbelief.

It has not been it’s long. The last time we had a string of high gasoline prices was from 2011 to 2014. Admittedly, prices then peaked at just under $4 a gallon. But corrected for wages or inflation, prices felt even higher then. It was a major issue in the 2012 presidential campaign. We adapted – fracturing the hell out of the Great Plains and becoming the world’s largest oil producer – and the problem was all but forgotten.

Until now. Boosted by post-pandemic demand and Russia’s invasion of Ukraine, oil prices have gone vertical. Some Democrats want a gas tax holiday; Joe Biden blamed the oil companies for not accepting him on the permits offered to him and on the drilling; Republicans say environmental policy is at fault. Some economists think Congress needs to provide financial guarantees to the fracking industry.

Clearly, everyone and their mothers are mad, mad, mad about high gas prices, in part because Americans are starting to drive back to about as much as they did before the pandemic. We don’t go to the office, but we don’t stay home. From Virginia to Colorado, drivers are likely to stop at the pump and be greeted by a sticker of Joe Biden, showing their total: “I DID IT!”

A look back at 2011 suggests an interesting counterfactual: what if, in the face of these high prices, we had changed the demand side instead? Believe it or not, that’s what some people thought could happen. President Barack Obama used this moment (and the conditions created by the auto bailout) to establish new corporate average fuel economy standards, known as CAFEs, which set ambitious targets. energy efficiency for car manufacturers. “Slowly but surely, Detroit is shifting its focus from SUVs to cars,” All Things Considered reported in March of this year.

Another artifact of that heady time not so long ago was the widespread feeling that the American city was regaining its long-lost allure, driven by a combination of those high gas prices, low crime rates and generational change. In an iconic Harvard Business Review column, “Celebrating $4 Gas,” economist Matthew Kahn wrote that “some people (especially young, older, and working households in inner cities) will increasingly experience a urban living, occupying high-density apartment buildings close to public transportation and walking distance to shopping.

Of course, the Americans did do not end up driving smaller cars, taking more public transportation, living in smaller homes, or living in more walkable places. In fact, we did the exact opposite.

If any of these things happened, we would be in a much better position to withstand the sticker shock at the pump. This will only get worse in the summer, as road trip season rolls around and more expensive “summer mixes” arrive from refineries. (Yes, there is a winter blend and a summer blend of gasoline, adjusted to evaporate at different temperatures.)

What happened to emissions standards? Automakers complained that one-size-fits-all miles per gallon targets weren’t fair to producers of larger, heavier vehicles. The Obama administration responded with a loophole for vehicles with larger footprints, and automakers drove a giant pickup truck through it. (And then ended up turning against the standards completely, arguing that they were still unfair given the bigger cars Americans wanted to buy.) In 2018, Fiat Chrysler, Ford and GM weren’t just selling fewer sedans, they had stopped manufacturing them in the United States altogether!

Some analysts anticipated that this could happen. In 2011, Steven Skerlos, a University of Michigan professor who has studied CAFE standards, predicted that the big car loophole would have unintended consequences: “Are cars going to get bigger? Very probably. Will this lead to more pollution? Yes.” As gas prices slid to a 15-year low during the fracking boom, buyers went crazy for SUVs and pickup trucks. In 2018, two out of three new vehicles sold were SUVs or pickup trucks, compared to less than one in two ten years earlier.

This had a number of consequences, such as the death of a ton of pedestrians, but for our purposes the important thing is that it made America much more susceptible to high gas prices than we would have could have been otherwise. According to a study by the Paris-based International Energy Agency, “a large part of these fuel savings [produced by the CAFE standards] was compensated by the increased weight and power of the vehicle. In the United States, the IEA concludes, our transition to larger vehicles has negated 40% of the fuel savings achieved as a result of Obama-era CAFE standards. That’s a lot of gas!

Were automakers focusing on their most profitable products or responding to American demands? Both. But forward-looking federal policy — from raising the gas tax when oil prices fell, to discouraging the design of massive new trucks that go 20 miles per gallon — could have nudged buyers of cars in a direction where they would be less troubled by today’s gasoline. prices. (And, as a bonus for the climate, burning less gas.)

The other change on the demand side that would have been useful today was to help people live without cars. Whether a car is a prerequisite for a job, education, or social life is a huge financial burden right off the bat, and that’s especially true when gas gets expensive. U.S. public transit ridership has traditionally increased during times of high gas prices, and in cities where vehicular traffic has rebounded from pandemic-era lows, but transit ridership has not. common, like in New York, residents can have an easy time refueling.

But most people don’t have that option, because politicians have spent the past decade wasting the demand for urban living by refusing to build housing there. Instead, they allowed car-free neighborhoods or car lighting to appreciate as exclusive enclaves as population growth shifted to the suburbs. Some people really wanted that drive-everywhere life, but if real estate prices in walkable US neighborhoods are any guide, many others wish they could leave the car at home once in a while.

The fracking boom has spared us from embracing the lifestyle changes brought on by the latest gas price spike. So now, with gas prices in some states starting to resemble AM ​​radio station frequencies, we’re driving bigger cars and living in places where we need them. These tendencies are difficult to undo overnight. You can see why Biden and the Democrats facing the midterm elections are thinking instead: Cut gas taxes and start drilling.

amoloans