Saving the planet

You frequently hear discussion about the need for government to get involved to promote a cleaner and healthier environment. Particular attention seems to be given towards alternative energy and more fuel efficient cars. Indeed, I believe that one of the presidential candidates vowed last week to make the U.S. energy independent within 8 years. I've never really understood this, however. If we have less of something -- say oil -- the its price will go up. This will have the twin effects of both encouraging people to use less of it as well as rewarding those who come up with an alternative solution.

According to today's Wall Street Journal we already see this at work:

Small, low-cost cars have abruptly become the next frontier for the global auto industry, after almost 20 years in which major car makers dismissed such vehicles as a low-profit afterthought. As gas prices keep rising, consumer tastes around the world are shifting toward smaller, more fuel-efficient cars. In the U.S., drivers are trading in gas-guzzling SUVs like the Nissan Armada for smaller models like the subcompact Honda Fit. In developing markets, where sales are exploding, first-time drivers are starting out with the smallest, cheapest cars.

Global demand for small cars is expected to grow by 30% to 27 million vehicles by 2013, with the growth coming mostly from developing markets, according to auto research firm CSM Worldwide Inc. Demand for big SUVs during that time is expected to drop 4%, to 10 million vehicles.

I don't know why this is so difficult for politicians to grasp. It's almost enough to make one suspect that talk of ethanol and other alternatives is more of a payoff to farmers in Iowa that a response to a real need.

Update: We wouldn't see things like this if the free market was allowed to work and prices corresponded with demand.