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

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

Comments

Patrick

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).

t

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.

marcus

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.

Brian

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.

Transparent

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?

K

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.

JROJAI

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.

marcus

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.

marcus

Sorry k, I didn't mean t!

Patrick

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.

Ladson

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!!!

zach

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.)

Sid Hoffman

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!

m

"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.

Tony Belding

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.)

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