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Reason Foundation

Higher gas prices = more fuel efficient inventions

Adrian Moore
June 19, 2007, 3:34am

A working paper out from two economists at Colorado College looks at what happens to patents for new inentions to make cars more fuel efficient when the price of gasoline change. They find that a a 12 cent rise in domestic gasoline prices leads to a 9% increase in energy-saving patents immediately, and many times that amount over a longer period. Higher gas prices don't explain all the new patents, but the connection is large and very strong. It makes simple economic sense that over time rising gas prices will be what really drives the switch to more fuel efficient technologies and eventually the move away from oil. And this force makes most government policies designed to speed up change marginal at best, ludicrous most often--like the new wave of ethanol polices.

Adrian Moore is Vice President, Policy


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