Fuel efficient cars will bring lower oil prices

[mailchimp_signup][/mailchimp_signup]In 2008, T&E commissioned the energy consultancy Enerdata to investigate what the presence of more fuel-efficient cars in Europe would do to global oil prices. The study showed that fuel-efficient cars would not just save money at the pumps because of reduced fuel per kilometre driven, but the lower demand would also drive down the fuel price, therefore saving even more money.

That study broke new ground, but now the IEA has, for the first time, made its own investigation, and has come up with results that are fairly consistent with what Enerdata produced last year.

In a presentation to the Paris Motor Show analysing the impacts of future car technologies, it says a fall in the demand for oil of 33% could make its price fall from $120 to $70 a barrel. This would mean if the world saves a third in oil use, it would pay 60% less for oil in the long run.

T&E director Jos Dings said: ‘Including this price effect roughly doubles the cost savings of measures such as new car fuel efficiency standards. The Commission has never taken this point into consideration in its impact assessments of climate policies. It’s high time it did.’