Energy policy, information costs, and secondary demand effects. [Emergency Highway Energy Conservation Act]

Journal Article · · Policy Stud. J.; (United States)

OSTI ID:7209464

Martin, D T

In response to the OPEC nations' oil embargo of 1973, the U.S. Congress enacted Public Law 93-239 on January 2, 1974. The Emergency Highway Energy Conservation Act has as its stated purpose the conservation of fuel ''during periods of current and imminent fuel shortages through the establishment of a national maximum highway speed limit.'' The act specifies that the Secretary of Transportation shall not approve any project involving the use of Federal funds in any State that has (1) a maximum speed on any public highway in excess of 55 mph, and (2) had a speed limit on an interstate divided highway of more than 55 mph as of November 1, 1973. This paper focuses attention on the secondary demand effects of Public Law 93-239, and through the use of an elementary deductive model, explains the observed response of individuals to the current energy policy. In addition, this approach should provide a meaningful method to evaluate the impact of future policies. Economic analysis implies that as the relative price of any activity increases, the amount of that activity which an individual undertakes will decline. The imposition of a national maximum speed limit brought about a decline in the average speed of highway travel. In consequence, the gasoline consumption per mile dropped. A further implication of economic analysis is that individuals will readjust their pattern of consumption so as to minimize the ''disutility'' of the price rise. This adjustment process spills over into many other markets as consumers realign their consumption bundle to take into account the initial price rise in the given market. The spillovers into other markets are generally termed ''secondary effects.''

• Research Organization: Univ. of Nebraska, Lincoln
• OSTI ID: 7209464
• Journal Information: Policy Stud. J.; (United States), Journal Name: Policy Stud. J.; (United States) Vol. 5:3; ISSN PSJOD
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
291000* -- Energy Planning & Policy-- Conservation
298000 -- Energy Planning & Policy-- Consumption & Utilization
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320203 -- Energy Conservation
Consumption
& Utilization-- Transportation-- Land & Roadway
AUTOMOBILES
BUSES
CONSUMPTION RATES
COST
DEMAND FACTORS
ECONOMIC IMPACT
ENERGY CONSERVATION
ENERGY MODELS
ENERGY POLICY
ENERGY SHORTAGES
FUELS
GASOLINE
GOVERNMENT POLICIES
IMPLEMENTATION
INTERNATIONAL ORGANIZATIONS
LAWS
NORTH AMERICA
OPEC
PETROLEUM PRODUCTS
PUBLIC RELATIONS
SIMULATION
SOCIAL IMPACT
SPEED LIMIT
TRANSPORTATION SECTOR
TRUCKS
USA
VEHICLES