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Lugar Blasts Inaction on the Transportation Energy Problem; Calls for Mandates If Necessary

29 August 2006

In the keynote address to the Richard G. Lugar-Purdue University Summit on Energy Security, at Purdue University, US Senate Foreign Relations Committee Chairman Dick Lugar (R-IN) called for a set of immediate actions to address US transportation energy vulnerability, including flex-fuel capability in all new light-duty vehicles, accelerated investment in cellulosic ethanol and the institution of more aggressive fuel economy standards.

Lugar asserted that none of the major stakeholders—the oil companies, the car companies, the Federal government, and US consumers—are taking the necessary, substantive actions to address what he calls a national security emergency.

Neither American oil companies, nor American car companies have shown an inclination to dramatically transform their businesses in ways that will achieve the degree of change we need to address a national security emergency. Most importantly, the Federal Government is not treating energy vulnerability as a crisis, despite an increase in energy related proposals.

...Unfortunately, although many Americans are embracing the idea of changing our energy destiny, they have not committed themselves to the action steps required to achieve an alternative future. This is an important distinction, because although national acceptance that there is a problem is a necessary condition for solving the problem, it does not guarantee that the problem will be solved.

In fact, advancements in American energy security have been painfully slow during 2006, and political leadership has been defensive, rather than pro-active. One can point with appreciation to a few positive trends...but these are small steps forward in the context of our larger vulnerability.

If our economy is crippled by an oil embargo, if terrorists succeed in disrupting our oil lifeline, or if we slide into a war because oil wealth has emboldened anti-American regimes, it will not matter that before disaster struck, the American public and its leaders gained a new sense of realism about our vulnerability. It will not matter that we were producing marginally more ethanol than before or that consumers are more willing to consider hybrids and other alternative vehicles.

Not all indices and measures of energy progress are even moving in the right direction. The American people are angered by $3.00 gasoline, but they are still buying it in record quantities.

Lugar described the energy dilemma in terms of six threats to national security:

  1. The vulnerability of oil supply to natural disasters, wars, and terrorist attacks.

  2. The increasing tightness of supplies and the associated rising cost of oil and natural gas as global consumption increases. “As we approach the point where the world’s oil-hungry economies are competing for insufficient supplies of energy, oil will become an even stronger magnet for conflict.

  3. The use of energy supplies as a economic weapon by adversarial regimes.

  4. The transfer of energy payments to “some of the least accountable regimes in the world.

  5. The exacerbation of the threat of climate change, “made worse by inefficient and unclean use of non-renewable energy. In the long run this could bring drought, famine, disease, and mass migration, all of which could lead to conflict and instability.

  6. The burden of rising energy costs on developing nations, “with negative consequences for stability, development, disease eradication, and terrorism.

Despite a growing awareness of the scope of the problem, and the shift to a “new energy realism”, far from enough is being done by any of the major actors involved, according to Lugar. Conflicting interests tend to cancel out meaningful progress.

Breaking through a political logjam often requires a crisis that focuses the nation in a way that achieves a consensus. But consider that the combination of September 11, 2001, the war in Iraq, the conflict on the Israeli-Lebanese border, the nuclear standoffs with Iran and North Korea, the Katrina and Rita hurricanes, sustained $3.00 per gallon gasoline, and several other severe problems have not created a consensus on energy policy.

This leads one to the sobering conclusion that a disaster capable of sufficiently energizing public opinion and our political structures will have to be something worse than the collective maladies I just mentioned—perhaps extreme enough to push the price of oil to triple digits and set in motion a worldwide economic downturn. None of us want to experience this or any of the nightmare scenarios that await us. It is time to summon the political will to overcome the energy stalemate.

Lugar outlined a national program that would include:

  • Making virtually every new car sold in the US a flex-fuel vehicle;

  • Ensuring that at least 25% of filling stations in the US have E85 pumps;

  • Expanding ethanol production to 100 billion gallons per year by 2025;

  • Creating an approximate $45 per barrel price floor on oil through a variable ethanol tax credit to ensure that investments keep flowing to alternatives; and

  • Enacting stricter vehicle mileage standards.

To break oil’s monopoly on American roads, some experts favor a giant leap in technology to hydrogen. But that will require new engines, new distribution systems, new production technologies, and is decades away from commercialization. Instead, we can start to break petroleum’s grip right now. The key is making ethanol as important as gasoline in our transportation fuel mix.

While Lugar suggested that initially the Federal government should work with car companies on achieving the goal of equipping all new vehicles with flex-fuel technology, he said that a failure to act should result in a Federal mandate.

...if car manufacturers do not respond with a sufficient plan in a short time period, Congress should mandate that all new autos sold in the United States have flex-fuel capability.

I do not suggest this lightly. But my observations of the post-Katrina response by car companies, oil companies, and consumers is that in the short run, the evolution of market forces won’t be capable of producing the progress that we need to achieve our national security goals, particularly since the car fleet turns over slowly.

Lugar also called for much more aggressive support for the development of cellulosic ethanol.

Far in the future, historians may point to the energy policy of the last several decades as the major national security failing of the American government in this era. In the absence of decisive policy changes, historians will rightly ask how the wealthiest and most powerful nation on earth with abundant land, a magnificent industrial infrastructure, and the world’s best universities and research institutions simply would not reorient itself over the course of decades despite repeated warning signs. Our failure to act will be all the more unconscionable given that success would bring not only relief from the geopolitical threats of energy-rich regimes, but also restorative economic benefits to our farmers, rural areas, automobile manufacturers, high technology industries, and many others.

We must be very clear that this is a political problem. We now have the financial resources, the industrial might, and the technological prowess to shift our economy away from oil dependence. What we are lacking is coordination and political will. We have made choices, as a society, which have given oil a near monopoly on American transportation. Now we must make a different choice in the interest of American national security and our economic future.

Resources:

  • Full text of Lugar Speech at Lugar-Purdue Summit on Energy Security

August 29, 2006 in Cellulosic ethanol, Ethanol, Fuel Efficiency, Policy | Permalink | Comments (67) | TrackBack (1)

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Indiana is number five in the US for corn production...no wonder why he wants every car to be flex fuel for ethanol. Yes, I do recognize he mentions cellulosic ethanol.

Why no mention of electric vehicles to also help get us off of oil?

Hmmm...small displacement turbocharged E85 vehicles with hybrid setup would probably yield quite good fuel economy if the engine is tuned for E85. 1.5L 180-200hp powerplants with the additional torque of an electric motor to mask any off the line turbo lag (higher power rating possible with E85 versus what would be expected of a standard gasoline turbo engine).

It's mostly about corn. Using up our corn to increase fuel secuity will jeopardize our food security. In any event, ethanol will never fix our energy security problem.

He claims he want stricter fuel economy standards, but I'll bet he also suports the current loophold which lets laggards like GM pretend they are getting better gas mileage than they really are.

Bring in a carbon tax and watch it all happen. Nothing works better than prices to change consumer habits and producers will follow accordingly. It is a simple solution but probably one that is still beyond the realms of consideration by most Americans. There is a semi religion here in the US who's central dogma is that tax increases lead to government tyranny. Go figure.

Luger seems to have forgotten that Biodiesel is another viable alternative.

The big advance that I believe that the US is really far behind on his mass transportion. I believe that in addition to switching to non-imported fuels, we need to improve our infrastructre to enable high speed travel that does not involve air travel. In my travels to Europe, high speed train travel was excellent. Living on the East coast, I would gladly take a train on my long range trips (to avoid I-95)...if it wouldn't take significantly longer then a vehicle.

I would love to see a US plan that is comprehensive and not tied into a presidential term. We need a plan that cannot be dismissed if oil prices decline.

Senator Lugar seems to be thinking that energy independence can only come from ethanol - Right, Indiana is a big corn producer. These one sided demands for keeping the status quo (big oil must run the show) are old-fashioned pork barrel politics that got us here in the first place.

Flex-fuel is only one contribution to our energy independence. ALL viable alternatives must be pursued simultaneously. These old style politicians are afraid of electric, hybrid, biofuels, hydrogen, because they insist on only considering their fiefdom (Indiana)in "what's good for the country." What is good for the country Mr. Lugar is to support new, innovative industries producing alternative vehicles, fuels and energy. The big Ag and Oil boys have already had a pretty damn good run. How 'bout giving the newcomers a chance?

marcus: I sure wish the carbon tax would be levied.

But the carbon tax is too simple. Politicans want the most complex and confusing energy programs possible. That makes it almost impossible to see what any given politican is responsible for and whether it was good or bad. It also hides thousands of little schemes to funnel money to supporters.

The carbon tax falls on oil, natural gas, and coal. It is very hard to evade and cheap to collect since refineries, tankers, pipelines, and coal mines aren't easy to hide.

The tax would produce a shift toward ethanol. And later it might be worthwhile to apply the tax to ethanol imports or even domestic ethanol. They are not yet significant fuels.

The tax would also increase food and utility prices. Not good. But it is probably our best deal anyway.

According to Lester Brown of the Earth Policy Institute, if the United States used all of its grain that it grows for production of ethanol, we would supply only 16% of the nations fuel supply for transportation... and this would leave no grain for food.
Ethanol is not the answer. Any politician that promotes ethanol over other renewable energy options is missing the boat and is trying to line the pockets of his/her supporters and get reelected.

Thanks for your thoughts t. I think to make things easier such a tax could certainly be offset in many different ways, especially for food and perhaps even for gas if prices continue to increase on their own.

Sorry k, I didn't mean t!

Not a carbon tax...fuel rationing. You get XX gallons of fuel (modify the gallons equation by the energy content of the fuel or just make it flat XX gallons of all fuels combined) for transportation. This addresses the problem of people, like a co-worker of mine, who want to live in Coer 'd Alene, ID and drive or fly into Seattle, WA every week...they'd burn through their ration quite quickly and have to either move close to work or find a job close to where they live. This forces people to buy the most fuel efficient vehicles if they want to live in the suburbs and "ex-urbs". This allows the people who want a big dinosaur to still buy it...they just have to live close enough so that they don't use more than their allotment of fuel (essentially everyone gets the same amount of gas, how you use it is up to you). This could be applied to corporations as well to induce more fuel efficient practices.

Go over the rationed amount and the fees should be substantial ($3/gallon? $5/gallon? who knows...).

BTW- don't use three "X"s in a row or you hit the spam filter.

When any politician makes a recommendation, one is wise to try to identify the winners and losers. Winners, just to name a few: Big Politico, gains at a minimum more campaign funds and may be scores a third party real estate deal; Big Corn, big shuckers from the huge farms selling more grain at higher prices; Big Oil, big greedy carbon merchants distributing corn juice through existing service stations; Big Auto, replacing old gasoline guzzling Detroit iron SUVs with new alcohol guzzling Detroit iron SUVs; Big Ads, Madison Avenue spinning reasons to continue buying the energy guzzling Detroit iron SUVs, Big Lobby, K street Money Pirates who started this whole circle of financial romance for special interest in the first place.....Losers: Guess who....why its you, Mr. Public Puke! All over again!!!

Well plenty of posters have noted that corn ethanol is a bad "solution" due to its lack of large scale viability. I agree, and won't say it's a solution. But even if his motives are impure, following his proposals might still get us moving down a path toward alternative fuels and increased mpg vehicles. Ethanol from non-food sources may ultimately end up being a good fuel (my crystal ball is cloudy today) and E85 vehicles don't care what biological produced the ethanol.

I would be all for a decent high-speed rail system in the US. I can't explain why we don't have one, except that there are big hidden subsidies for airlines and there don't seem to be the same subsidies for passenger rail. (There was, of course, a massive land giveaway to railroads in the 19th century.)

I'm all for gas rationing. Make it really low too, like 10 gallons per person. I'm gonna make a KILLING by driving across the border to Mexico and filling up a trailer with gasoline, then towing it back to Phoenix and selling it on ebay to people who've blown through their ration!

"I'm gonna make a KILLING by driving across the border to Mexico and filling up a trailer with gasoline, then towing it back to Phoenix and selling it on ebay to people who've blown through their ration!"

Then you'll go to prison.

I agree with most of the senator's sentiments, excepting only his perverse fascination with ethanol. But as far as the need to do something -- and our country's shameful failure to act, thus far -- he's right on the money. I do think a big failure here is one of leadership. I'd love to see the President stand up and say, "Our nation is engaged in a struggle for survival. I call upon patriotic Americans to drive more efficient cars and burn less gasoline. Your country needs you!" I think people today would be ready to respond to that message. There's still a perception that V8-powered musclecars and hulking SUVs are The American Way, but some leadership from the top could turn that around. I know, I know. . . Fat chance of our current President ever saying such a thing! (And yet if he did, just imagine how much more impact it would have, as opposed to a known "green" like Gore or Nader saying it.)

I think the idea of rationing is simply too inflexible. A carbon tax has many benefits. The potential for trading schemes, offsets (such as tree planting etc) and encouragement for capitalists to invent new efficiencies and energy production schemes. It also can be applied to anything from coal to plastic production. It keeps a relatively free market intact but takes into account externalities. I kind of agree with m in that rationing would encourage black markets which drain resources to try and police.

I meant to agree with both Sid and M that a black market would be encouraged by rationing and such a scenario would require policing!

Why would Sid go to prison? What makes you think selling gas would send someone to prison. The only place someone would go to prison for selling fuel is in your fascist fantasy world.

I swear, they should rename this website "control freak congress". We could just come up with better ways to stick it to everyone that disagrees with us and uses a little bit too much fuel.

I don’t like putting the blame on consumers...

"Unfortunately, although many Americans are embracing the idea of changing our energy destiny, they have not committed themselves to the action steps required to achieve an alternative future."

For the average consumer, we can't just move closer to work - many of us can't afford to live downtown in cities like LA, Seattle, and New York. Some are forced to live where they can afford it. Some of the solutions above, like fuel rationing, just allow the rich to get richer and the poor to put down even more.

Many consumers can't just rush out and buy a new car - Hybrids are expensive. Many have other things to pay for, like a college education for the kids.

About the most an average consumer can do is limit trips by combining, use public transpiration, change their light bulbs out for more efficient fluorescents, and try to limit activities that depend on foreign oil as much as possible, like turning down the thermostat in the winter.

For most consumers, buying a new car doesn't make a lot of sense. Even looking at the current crop of cars, GM doesn't have any models that get over 40 MPG on the freeway - NONE. But, that has nothing to do with why they aren't selling any cars, or does it? Taking a look at FORD, I didn't see any over there at above 40MPG either. And we know their EPA Numbers are B.S. - the average consumer knows they will get less than advertised. However, I have seen that a lot of GEO Metros have been brought back to life and are back on the road. I also see more scooters and more motorcycles than ever before.

I think many consumers are doing what they can within their budgets.

Let's talk about what the government can do:

1. I am tired of hearing Midwest politicians tout E85, with barely a mention of BioDiesel. E85 can't be sent down the existing pipelines - it has to be trucked our shipped via rail - both of which take Diesel (or BioDiesel). BioDiesel, on the other hand, won’t damage the existing pipeline network currently used for petroleum products.

2. E85 pumps and holding tanks for gas stations must be installed, as most of the current tanks, and none of the current pumps used for gasoline in the retail market are compatible - forcing gas stations to upgrade infrastructure at 25% of all stations would do nothing more than give them a reason to raise prices even more. BioDiesel, on the other hand, will work in any system designed to dispense petroleum based diesel. Id settle for making the Big Oil Companies sell 5% BioDiesel (B5) at 2% of their stations (1 in 50), and mandate it be avialable at any location that sells more than 30,000 gallons of Diesel per month (in other words – all truck stops)

3. The federal government could get the CARB States to allow clean burning, highly efficient Diesel engines that meet current European emissions standards to be brought into the US. These could run on BioDiesel or BioDiesel blends. In Europe, Diesel cars that get well over 50MPG are common. Even on older designs, like a 1.9L VW Jetta TDI, which is sold in the US, can get 48MPG on the freeway, or more. This feat is accomplished every day by many drivers, not driving 45MPH, but at the legal freeway speed limit, which in some cases is 70MPH. Note that since the government allowed the Oil Industry to delay Ultra Low Sulfur Diesel (ULSD) until October 15th of this year, even though CARB emissions standards in five states kick in on January 1, 2007, VW has decided not to sell their diesel cars for 2007 in the US. Nice work on the part of the government to keep some nice fuel efficient cars that can burn BioDiesel made in the US out of the hands of the consumer.

4. The Government absolutely needs to mandate high quality diesel- ULSD is not enough – we need a guaranteed 52 Cetane and a good standard aromatics package. In fact mandating 2% BioDiesel (B2) nation wide would help this. And what the heck is “Premium Diesel?” I think the government could set some standards, like Premium has to mean 3% BioDiesel, 10ppm Sulfur, 55 Cetane, and some aromatics and additives package that deserves the label “Premium.” Without higher quality diesel, automobile manufacturers will not be able to meet CARB standards for light passenger vehicles without very expensive emissions systems that will keep these vehicles out of the financial reach of the average consumer. As an aside, BioDiesel is now cheaper than regular diesel in many parts of the country, has a high cetane number, and burns very clean compared to regular diesel.

5. BioDiesel is a replacement for heating Oil in existing oil based furnaces. Ethanol is not.

6. BioDiesel makes more sense for the Trucking industry than Ethanol. Ethanol converted test trucks had very limited range. BioDiesel works in the existing trucks already on the road.

7. BioDiesel has a higher yield of energy per acre than Ethanol, as it takes a lot less energy to produce BioDiesel.


Don’t get me wrong, I am all for E85, and getting more E85 cars on the road. Consumers should have the choice to use E85 instead of gasoline if they buy a new gasoline powered vehicle, but I also think they should also have the choice to buy a new vehicle that will burn BioDiesel. I think farmers and truckers who need diesel fuel to do their jobs and people who heat their homes with heating oil should be able to choose BioDiesel and BioDiesel blended products instead of foreign oil based products.

I think government support for BioDiesel has been poor at best. The speech above is just one example.

If you want a good read on why BioDiesel is the answer, go to the following page and download the .pdf report (note it is almost 2 years old):

http://www.changethis.com/9.biodiesel

The senator is on the right track, except for the exclusive focus on ethanol. What happens if there's a drought ? The best solution(s) will be to utilize a combination of every resource this country has : oil shale, coal,nuclear and all of the various renewables - bio alcohols (not just ethanol--butanol is closer to gasoline in energy content) -preferably with non-food crops, biodiesel-preferably with fast growing algae(maybe some grown w/help of CO2 from fossil fuel consuming facilities), solar - incorporated into buildings (glass, roof, walls), wind, and wave. Ideally the vehicle fleet will be a mix of vehicles able to run off of the various power sources and mixtures of sources so that the owner could run off of the cheapest available energy : gasoline/alcohol,diesel(coal derived)/biodiesel, pure electric, electric/gas hybrid, electric/diesel hybrid, natural gas, fuel cell etc, etc. Besides increasing the fuel mileage requirements, the government could mandate, yes mandate, that auto makers have available more than one energy-type powertrain. Even if very few are sold, at least they're available and the automakers & public gain experience with the powertrain.

I, for one, commend Senator Lugar for bringing these important points to national awareness! According to a Green Car Congress article, nearly ½ of all car buyers are not interested in buying a flex fuel vehicle. (July 26, 06). Most sited limited fuel stations as their main reason.

Senator Lugar is doing more to address this than most others in Washington. I also appreciate his pointing out some of the down sides to not taking action. I found myself saying, “Wake up, everybody!”, as I read his speech.

I also agree with his correctly, IMHO, identifing fuel cell technology as “decades away from commercialization.” So, (my words), lets not wait around like most of Washington, and cross our fingers, and hope we have enough affordable oil to get us there.

I was, however, disappointed that he did not mention some of the other near term technologies, such as PHEV – my passion. In fact, I believe that the best near term way to get off oil is with the combination of cellulosic E85, PHEVs, and biodiesel fueled vehicles.

In the context of the full speech, I understand why he talked about E85, as something we have now, but we need to build an infrastructure of more E85 pumps, provide govt. loans, increase automobile fuel standards, etc. He also concluded with, “But the long term advancement of ethanol as a national transportation fuel requires a focused effort to perfect and commercialize cellulosic technology…”.

That said, I would have liked to see a little more optimism here. This is the first time I find myself defending someone in the Govt. pushing E85 ethanol higher fuel standards, and cellulosic ethanol. Usually, I’m the one pushing people to ask their car salesman about PHEVs and E85 capability. Here’s an influential Senator, pushing a way to get off oil. He’s enthusiastic about it and he’s got bipartisan support. If you read the full speech, he is tired of lots of rhetoric and little action in Washington. My suggestion is, help him, don’t tar and feather him. Write his staff with constructive suggestions for other, near term solutions that you feel are important.

I agree with his sentiment but his focus on only one solution (ethanol) is problematic. Like an eariler poster said, he's right about the source of the problem. It's also interesting to hear a republican stating the obvious... a lack of leadership. He didn't mention PHEVs, which will be necessary to give ethanol any hope of being a sustainable and significant player in the transportation dilemma.

If the consumers are really so poor why would they buy an overly large SUV in the first place? Cheaper SUVs (like the ones which are around $20,000 or less brand new) tend to get better fuel mileage than larger ones and used are even cheaper. I laugh when I hear someone with a 3 ton vehicle crying about gas prices. If they were not concerned with image so much they wouldn't be crying right now.

Even better mid-size sedans get better fuel economy and suit most peoples needs for 95% of the time anyways...what would a poor person who can't afford fuel want with a boat, RV, etc? With a carbon tax you hit everybody (the poor included) immediately. With rationing you don't hit anybody unless they don't know how to conserve the fuel they are alloted.

what would a poor person who can't afford fuel want with a boat, RV, etc?

Maybe because life consists of more than driving to work and back? Maybe owning these things give them happiness?

With a carbon tax you hit everybody (the poor included) immediately. With rationing you don't hit anybody unless they don't know how to conserve the fuel they are alloted.

This is one of the most moronic statements I have ever seen here. Fuel rationing won't hurt anybody? What the hell? Not everybody needs the same amount of fuel per week, you know. And what if their allotment is not enough to even make it to work and back? What then?

A carbon tax would be preferable to rationing, if I had to make such a choice. When it comes down to it, though, both solutions involve using government coercion to modify individual behavior, be it how much they can drive or what cars they decide to own. Frankly, that's just not the proper role of government.

More taxes and rationing is not the solution. Encouraging private investment in alternative energy technologies is.

"Why would Sid go to prison?"

Because under the scenario described he'd be breaking the law.

"The only place someone would go to prison for selling fuel is in your fascist fantasy world."

The sale of plenty of substances are controlled in the US. So you must think this country is fascist already.

"We could just come up with better ways to stick it to everyone that disagrees with us and uses a little bit too much fuel."

I find offering a counterproposal to be more effective than getting worked up like that.

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