Several months ago I was on Capitol Hill meeting a prominent Congresswoman in the Rayburn Room. We met in a corner of the large room, while at its center a technical crew was preparing for a press conference. The banner behind the podium read “Energy Independence.” The House energy bill was going to be presented under that banner later in the day.
She asked, half jokingly, if we had come to talk with her about energy, it being the subject du jour.
Yes, I responded. She was somewhat surprised, as were some of the other Representatives and Senators I had approached. After all, what do Jews have to do with energy policy?
She had expected me to talk about the Iranian threat, or other Middle Eastern woes, but I used most of our time to discuss the energy bill.
Top of my list was the importance of supporting H.R. 1506, the Fuel Economy Reform Act that was to possibly be amended to the House energy bill. The Act would mandate Corporate Average Fuel Economy (CAFE) standards for passenger vehicles of 35 miles per gallon by 2018, up from 27.5 today. The last time CAFE standards changed was 1987.
A competing bill, supported by the auto industry, mandating lower CAFE standards, with many loopholes in it, was being circulated around the House, and this Congresswoman had yet to decide which bill to support.
Promoting a domestic energy policy that would address U.S. national security issues seriously, and wean the country from its crippling dependence on foreign oil, has been an AJC priority for over 30 years.
During the first oil shortages in 1973, the U.S. was importing roughly 36 percent of its oil. President Nixon stated he wanted the U.S. to be energy independent by 1980, and every president since has made similar pronouncements. We now import more than 65 percent of our oil from countries like Saudi Arabia, Venezuela, and Iraq. Now, more than ever, policy steps AJC has promoted during the years are needed.
It’s known that the majority of the world’s oil reserves lie under the surface of mostly undemocratic countries, with current high oil prices lining the pockets of despotic petro-regimes and fueling societies that often hate us.
Aside from helping our economy, reducing our dependence on foreign oil will help lessen our large military expenditures on securing oil production facilities and supply routes, and lower oil prices that allow such regimes to thrive. Ultimately, slowing the flow of petro-dollars from nations such as Iran and Saudi Arabia to regional terrorist groups would be in the best interests of both the U.S. and its allies.
Beyond that, it’s an open secret that the process of extracting and burning fossil fuels has a great, and often grave, toll on the natural environment and human health. The realities of human induced climate change are becoming all too apparent.
By promoting clean and renewable alternatives, such as ethanol fuel, plug-in hybrid vehicles, as well as wind, solar and biomass energy for producing electricity, we are being good stewards of the earth. We can move the U.S. away from the hydrocarbon economy into a “renewable era.”
Last year, U.S. oil imports stood at $309.4 billion, with an additional $137 billion going for oil-related defense expenditures. According to the National Defense Council Foundation, an estimated 2 million jobs could be gained in the U.S. economy if that energy were produced in the U.S.
Jobs could be created in the clean energy and energy conservation sector through the production of high efficiency and alternative fuel vehicles (the Japanese currently take the lead) and renewable electricity generators (currently the best wind turbines are imported from the EU).
Which brings us back to CAFE standards: if there is one policy measure that has the potential of putting the largest dent in our oil habit, it is reducing the amount of oil guzzled annually by our cars.
Seventy percent of U.S. oil consumption goes to transportation, and it is only logical to try and reduce the total mile-per-gallon of our auto fleet. U.S. automakers have mostly failed in producing fuel efficient cars, and have been advocating for years against any increase in CAFE standards. In the long term this has cost the U.S. precious time in producing efficient vehicles, and given Detroit’s foreign competitors an edge.
The Senate laudably passed an energy bill earlier this summer mandating 35 mpg by 2020. Sadly, no such language appeared in the final House energy bill. The Senate’s language should be included in the bill resulting from conference this fall.
If enacted into law, these new standards could save 2.5 million barrels of oil per day by 2025 – more than we import from the Persian Gulf.
In the next few weeks, it is important to contact your Senators and Representatives, and urge them to support a strong CAFE mandate. An energy bill without it would leave us vulnerable to the whims of the oil market, and at a competitive disadvantage.
A nation that has reached the moon and cracked the atom can undoubtedly produce safe, efficient vehicles.
Ami Greener is AJC’s Energy Specialist.
“A nation that has reached the moon and cracked the atom can undoubtedly produce safe, efficient vehicles.”
I strongly believe that the required MANHATTAN PROJECT effort (as coined by David Harris) to achieve reduction and or substitute our Energy Fossil Culture will be carried out by entrepreneurs with access to both public and private funds, much like the INTERNET start ups of the 90s and well beyond. There are many alternative initiatives going around. Some have HIGH barriers of entry due to costs, regulations and time to develop in the short term and some with manageable barriers. The latter includes existing proven technology and accessibility. Under this scenario, the opportunity is there, but so are the hurdles that the entrepreneurs face, which would require attention by the policy makers:
1. Rising cost and availability of feedstock.
Feedstock as a commodity is subject to the volatility of the markets. Ethanol has become the darling of many headlines since Bush’s recent trip to Brazil and President Lula’s visit to Camp David. This has contributed to the steep rise in corn, sugar cane, palm oil, soybean to name a few, forcing entrepreneurs to think again whether to jump into the lake. From the point of view of the small investor, we would be replacing Dependence on Foreign Sources with Dependence on Big Domestic Business that controls and trades these commodities. Without new and fresh tax incentives to the small investor, the development of this industry is destined for marginal growth
2. Existing and future legislation driven by the traditional agricultural lobby.
Current and New legislation is being driven by the BIG agricultural concerns (i.e. corn, soybean). The risk here is that not all of the alternative feedstock other than those under their control might benefit from equal tax incentives and grants. . Moreover, tax incentives should include the development of non-traditional feedstock that excludes the food chain debate brought about by the recent price hike in these commodities. BIG capital groups will always find loopholes to have access to tax incentives. A Special Agency should be created to oversee and fix the “holes”
3. Availability and Accessibility of Capital.
We read and listen to speeches made by all in elected office of the now household word ENERGY INITIATIVE and the Federal Commitment, a catchy word but far removed for the entrepreneur. From local COALITION CITIES FOR CLEAN ENERGY to local State Agencies to under financed foundations and to local financial institutions, there is a gap between what is said and done. Most of the grants and rightly so are geared to education, research. Grants allocated to entrepreneurial development are minimal. On the other hand, you have the Big Conglomerates that command the Capital Markets. The entrepreneurs are left not only with the task of procuring for the project but to sort out the access to these funds, and at times resorting to EXPENSIVE MONEY from the venture capitalists and hard lenders.
I strongly believe that capital flows according to the risk/reward curve but if we really want to develop this industry, these issues and many more must be raised in the public debate.
The Oil Lobby seems to be countering the push to alternative fuels with some unsubstatiated figure that corn ethanol will raise food prices by 10%, and hurt the poor all over the world.
I remember a economics professor saying the major problem for hunger in the world was the transportation of getting the raw food stuffs to the market, that there was plenty of production, and that the US government was paying farmers not to grow corn. Repeat, farmers are still getting subsidies not to grow grains that can turn into ethanol.
The US farmer has the ability and desire to harvest all the crops the market needs, as long as there is potential profit. What subsadies are farmers still getting not to plant grains, and why?
David Cooper
AJC-LA Green Task Force
heard you story energy independance today 8-30=07
use less energy in my car, would love to.i had honda station wagon backx in the early 80’s i got over 40 mpg
now i have samller hatchback honda and that gets 30 mpg.
i’ve noticced almost all the cars get 30 or less than that now a day, why?
congress states only so much mpg in cars, so i wonder if the car mfg buy oil stock and make money on us.
i read story of canada that mfg a large car with a diesel that get high 40’s mpg, will it be available in usa, NO!
why? how can i get one of those cars and use it in the state of ri where i live?
i think about buying a honda fit car at end of season, but find that they will lnot be discounted because they are economical and get fair mpg(in my opinion) and they do not stay on the dealers floors. they do not make enough of they to satisfy the need for them.
i feel i am cought between a rock and a hard place, and miles while we are all getting screwed, except people
with the oil stock.
what can we do?
Interesting that, by the author’s points here, the US administration has talked the “less oil” talk about 30 years ago and only now is it going somewhere serious in Congress, and in society. Perhaps global political realities brought this idea to its time?
The writer states that 70% of US oil is spent on transportation but the embedded piece in the factiod is that a great bulk of that trasportation, and this oil, is soely for our food industry.
Also, isn’t it the case that even if energy sources are re-directted so that fuels comes from ethanol/from corn that we’ll still be guzzling oil to produce more and more of those corn crops??
I wondered why even major oil companies are so giddy in their ads about turning to the use of ethanol, and this seems to explain why.