Expert Commentary

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The Heat Is On

By Deron Lovaas
Natural Resources Defense Council

"It is only common sense to recognize that the great bulk of Americans, whether Republican or Democrat, face many common problems and agree on a number of basic objectives."
—Dwight D. Eisenhower

The heat is on. We feel it at the pump, where Americans now routinely pay more than three bucks a gallon for gasoline, in the undeniable climatic trend that steals away glaciers and boosts hurricane intensity, and in jarring images from a Middle East increasingly on fire with extremism and violence.

There is a common element here: Oil. Combustion of this resource contributes to global warming, it is the lifeblood of our economy and transportation system, and it swamps the Middle East with vast revenues, some of which end up in the wrong hands.

The President has admitted our complicity in fanning the flames in his State of the Union: “We’re addicted to oil.” On the other side of the aisle, Democratic Senator Barack Obama stated in March: “…for all of our military might and economic dominance, the Achilles heel of the most powerful country on Earth is the oil we cannot live without. Two months later, Republican Senator Richard Lugar noted that “The new realism of energy geopolitics requires us to abandon the notion that simply finding more oil will solve oil-driven threats to our national security.”

The consensus grows stronger by the day that we must get clean of the oil habit as opposed to scouring the land and sea for more “fixes” as an addict would. Small wonder. It’s folly to try to address only the supply side of this equation, while doing nothing about demand. The U.S. has a mere three percent of global reserves of conventional oil. Three-quarters is in foreign government control, with much of that in the unstable Persian Gulf region.

Meanwhile, demand continues to boom. We consume more than 80 million barrels a day, or as one analyst noted nearly 1,000 barrels a second. Projections of ever-increasing consumption and strained production capacity have driven prices up. And painful though our experiences be at the pump, demand for oil hasn’t slackened.

Prices are spurring investment and a hunt for technologies which reduce or substitute for oil use. In the near term, as one recent study from the Consumer Federation of America noted, high prices make consumer investment in efficient technology a “cost-neutral” venture for consumers. They also drive enthusiasm for biofuels, as Worldwatch describes in a recent book, Biofuels in Transportation. And the American Public Transit Association notes a first-quarter surge in transit use of 4.25%, with light rail use zooming up 11.2%.

But heartening though these trends are, in absolute terms they are barely denting our oil dependence. True, hybrid-electric vehicle sales have doubled or nearly so every year since the turn of the century, they still account for 1-2% of total vehicle sales. Ethanol production may be soaring, but transportation is still 97% dependent on petroleum-derived fuels and less than .5% of the nearly 170,000 retailers of gasoline even have a pump that carries E85 (a blend of 85% ethanol, 15% gasoline).

Plus, many investors are holding back for fear that history will repeat itself. Prices of oil rose after the embargoes of the 1970s, spurring investment in alternatives then too. Then OPEC flooded the market with new oil, causing prices to collapse and many investors to lose their shirts.

However, we don’t have the luxury for the market to sort this out unaided. We need policy reform to dramatically improve the context for entrepreneurship and investment in alternatives to oil.

Time is emphatically not on an ally. As some have pointed out, a portion of the money that we are funneling overseas to buy oil ends up in the wrong hands, which means we are funding both sides of the escalating conflict in the Middle East. Thanks to reduced oil intensity, high prices haven’t tipped the economy into recession yet. But consumers and business are taking a battering. Last but not least, scientists warn that we are approaching a tipping point with the climate system. It’s imperative that we reverse the trend of rising carbon concentrations, and soon.

Fortunately, Senator Lugar has joined with nearly one-third of the U.S. Senate in cosponsoring a bill which would help us break the oil habit, reducing demand by 36% in 25 years. Support for this bill, the Vehicle and Fuel Choices for American Security Act (S. 2025), as well as its companion (H.R. 4409) is fittingly bipartisan.

The bill starts with the end in mind by specifying oil savings targets, beginning with 2.5 million barrels a day ten years hence (this is about what we currently import from the Persian Gulf). A flexible action plan is required to achieve these targets – savings can be had from any sector, any technology. The bill further provides new means for achieving these ends: Requirements and incentives for 1) boosting efficiency in heavy trucks, tires and cars; 2) dramatically ramping up production and distribution of alternative fuels; and 3) funding for more transit in targeted areas.

S. 2025 would put us squarely on the admittedly challenging path to energy security, weaning us off our dangerous addiction to oil. More immediately, it would send a clear signal that the U.S. is committed to winning the war on terrorism, to reversing dangerous global warming trends and to pushing the oil intensity of our economy down, thereby insulating it from price hikes and spikes.

Congress should press forward with this bipartisan, bicameral, commonsense energy policy.

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