Why fuel efficient cars might do less for the environment than you'd think

Most people who buy a Prius also have a SUV

Opinion polls tell us Australians are worried about climate change and they think cars are part of the problem.

A recent Ipsos survey found voters rate motor vehicle emissions among the top four "specific activities" that cause climate change.

But that hasn't prompted us to cut back on the number of cars we own, even though light vehicles contribute about 10 per cent of Australia's total greenhouse gas emissions.

The Bureau of Statistics' annual count of registered vehicles shows the number of passenger cars for every 1000 Australians has risen from 567 to 581 over the past five years.

The 2016 national census, released in July, tells a similar story. The number of vehicles per household had crept up from 1.7 to 1.8 since the previous census five years earlier. It showed the share of households with no car shrank in that period (from 8.6 per cent to 7.5 per cent) while the proportion with three vehicles or more increased (from 16.5 per cent to 18.1 per cent). The overall share of two-car families also edged higher.

The good news, of course, is that cars are becoming more fuel efficient making their greenhouse gas emissions lower. A recent federal government report said all classes of light vehicles in Australia have become more efficient over the last 10 years. Plus there's a growing range of low emission hybrid and electric car models to choose from.

But a new investigation into the choices households make about car purchases raises questions about how much difference the trend for better fuel efficiency will make in reducing emissions.

A team of economists used car registration records in California to track the types of vehicles motorists purchased over time. They discovered that a typical two car household that buys a fuel-efficient vehicle is very likely to buy a bigger, more powerful second car to compensate.

Practical considerations are likely to underpin this pattern. For example, a family might use a small, highly efficient car for most day-to-day tasks, but use the bigger petrol guzzler more for weekend activities, road trips, camping and other purposes where more space and power may be useful.

This type of consumer behaviour – called "attribute substitution" by economists –happens with many purchases. A cafe goer, for instance, might opt for a skim latte rather than full cream to compensate for eating a donut. Or a household with a large television in the lounge room might choose smaller screens elsewhere in the home.

The tendency for motorists with a fuel-efficient car to buy a bigger second car has a significant impact on household fuel consumption.

The economists estimate this attribute substitution in vehicle purchases, combined with the changes in driving behaviour that result, may reduce up to 60 per cent of the expected future savings from increased fuel economy in two-car households.

It's a reminder that relatively straightforward climate change policies to improve efficiency, such as tougher fuel economy standards, could have unintended consequences.

"These results highlight the challenges in design or evaluation of any policy intending to alter consumer choices over a portfolio of goods," concludes the paper called "Attribute Substitution in Household Vehicle Portfolios" published by the National Bureau of Economic Research.

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Energy prices top risk for Australian business, says global survey

Energy price shocks are the number one concern of Australian business, according to a global survey.

The World Economic Forum Global Risks 2018 report, published by Zurich Insurance Group and Marsh and McLennan companies, surveyed more than 12,400 executives from 136 countries, and put energy pricing as the leading concern for businesses operating in Australia within the next 10 years.

Australia was the only country to rank energy price as its major concern, and the only other nation apart from Canada to include adapting to climate change within its top five risks.

This is a massive jump for energy pricing's risk rating; last year it was fifth on the list for Australian businesses.

About a third of commercial and industrial companies that have been affected by spiralling energy prices had considered either reducing production or shutting down because of energy pressures, the  Australian Competition and Consumer Commission said.

"Many medium-sized food and non-food manufacturers have seen prices increases by 20 per cent recently or 100 per cent over last five years," ACCC chairman Rod Sims said.

While energy prices took pole position for Australian business, it was closely followed by asset bubbles, cyber attacks, high unemployment, critical infrastructure shortfalls and climate change.

Globally, unemployment was ranked first, followed by fiscal crises, failure of national governance and energy prices at fourth.

"Energy pricing's leap to pole position reflects how pressing an issue securing our energy supply has become for Australian businesses," said Costa Zakis, Pacific head of Marsh Risk Consulting.

"While energy price shocks add to the cost pressures and challenges profitability for all businesses, in sectors like manufacturing, the prospect of energy shortages pose a serious threat to their ability to operate," he said.

This was supported by Australian Industry Group chief executive Innes Willox, who said the gas agreement between major eastern seaboard energy companies and the federal government had given manufacturers breathing room, but was not a long-term fix.

"The agreement should help avoid the looming supply crunch we've feared – for now," Mr Willox said.

Energy pricing's leap to pole position reflects how pressing an issue securing our energy supply has become for Australian businesses.

Costa Zakis, Pacific head of Marsh Risk Consulting
"[The government's] ongoing vigilance will remain necessary to guarantee supply and put downward pressure on prices for all energy users."

The World Economic Forum's full global risk survey will be released in January 2018.

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Nick Xenophon's dubious move back to State politics

Right now, Nick Xenophon is planning to spend his federal account balance in a "do-or-die" re-investment in his home state's political scene, wellspring of his electoral success.

The leader of the Nick Xenophon Team and SA-Best is turning his attention to Adelaide electorate of Hartley.

All the polls, and the last few elections, suggest he will prevail, it is just a question of how well. The first challenge is to win a lower house seat for himself (Liberal-held Hartley), and he hopes, for several others running under his SA Best banner.

The major parties have already been rocked by this bold, and typically left-field move. But it is the state Liberal Party which on the face of it, has the most to lose. On Saturday, Xenophon's team announced half a dozen candidates, and tellingly, five of the six are based in Liberal held seats.

Federally, the switch-out by Xenophon has significant implications. It is noteworthy that the four South Australia based MPs (3 x Senate 1 x Reps) sent to Canberra in 2016 were elected under the name, Nick Xenophon Team, but his state push is called SA Best.

Word is, he wants to broaden its mandate once elected to the state parliament, but also wants to make the party about something more than himself, if only to give himself an out at some point.

Nonetheless, in Canberra the NXT brand will continue to trade even after Xenophon leaves and his casual vacancy is filled by a nomination of the party's choosing (subject to the High Court case on dual citizenship starting this week). Go figure.

This is where the X-man's manoeuvring may be too cute, too clever by half. Xenophon has flagged continued involvement in delicate Canberra-level negotiations over legislation.

Really? This is unrealistic. Eponymous parties are invariably shortlived and unstable anyway - think Pauline Hanson's One Nation, or the shortlived Palmer United Party.

Palmer, you'll recall, struggled to exercise authority over his three senators, simply because he was sitting in another chamber - the House of Representatives.

Xenophon is 10 times the political professional that Palmer ever was.

Even so, maintaining legitimacy and directive influence over three senators remotely, when you're not even in Canberra, let alone in parliament, seems implausible.

That's the other thing about political capital. It fades. Fast.

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Israel Folau standing firm in his opposition to gay marriage, says backlash has not affected him

Wallabies star Israel Folau is unbowed by criticism of his opposition to gay marriage, saying he will “stand firm” on his views despite a public backlash.

Folau spoke for the first time after tweeting his intention to vote No and setting off a national firestorm last month.

In Argentina for the Wallabies clash against the Pumas tomorrow, Folau said the criticism had not affected him.

“I’m going to stand firm on what I’ve already said,” the Daily Telegraph quoted Folau as saying.

“That’s what I believe. I guess it doesn’t change anything for me and my mindset is still first-hand with what’s going on here with the Wallabies.

“It hasn’t really had an effect on me at all, so I stand firm on what I believe in and what I said.”

A devout Christian, Folau broke ranks with Wallabies teammates and the ARU by voicing his opposition three weeks ago.

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Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here