ConocoPhillips CEO Calls for Improved Fuel Efficiency
19 June 2006
Speaking on Sunday’s edition of Meet the Press, James Mulva, the CEO of ConocoPhillips, called for improvements in the fuel-efficiency of vehicles as an important step in resolving the current energy situation.
ConocoPhillips is the third-largest integrated energy company in the United States, based on market capitalization, oil and gas proved reserves and production; and the second-largest refiner in the United States.
Also participating in the interview with Mulva were David O’Reilly, the CEO of Chevron and John Hofmeister, President of Shell Oil Company. The topic of discussion was the price of fuel and the future of energy.
We need to add supply. It’s getting more difficult, more challenging. We have to go into more hostile, more difficult places, it costs us more. But we need to do a great deal more work on the demand side. We need to more efficiently utilize energy. So we need to add supply, but we also have to reduce demand.
We need to develop every source of energy. It’s oil, gas, coal, nuclear, solar, alternatives, renewables. But on the other hand, we also need to face the facts—we can point our fingers politically to how this has happened over the last 20, 30, 40 years, but the facts are we’re going to be based on fossil fuels for a long period of time, even with all these other sources of energy.
...If we use one-fourth of the globe’s oil, we need as a consumer to work with the producing nations in a much more sophisticated, ongoing dialogue so as to make sure for energy security that it’s available medium- and long-term where it’s a much better dialogue between the producers and the consumers. We need to be doing this.
And the second thing that’s mentioned just a moment ago with respect to demand, you know, we—you look almost 30 years ago that we made any real movement or progress on efficient use of transportation fuels, and when we did this 30 years ago we effectively over a five-year period of time reduced demand for oil for transportation fuels by two to three million barrels a day. It seems to me there’s been enough finger-pointing for a long period of time that we need to improve the efficiency of transportation fuels. And this goes a long way.
—James Mulva
Although all three executives stressed the need for greater investment in alternative source of energy, neither of the other two execs echoed Mulva’s call for greater fuel efficiency.
The current average fleet economy for new passenger cars is 27.5 mpg— the same level set as a target for 1985 by Congress in 1975 after that period’s energy shocks.
the total vehicle fleet average is much lower than 27.5mpg since the vehicle fleet includes a large number of light-duty trucks being mis-used as passenger vehicles.
so, really, we are below the goal set for 1985 thanks to short-sighted politicians in 1975 that effectively forced the american automakers out of the car business and into the truck business by establishing two different standards for fuel economy and emissions. one for passenger vehicles that included a gas guzzler tax set at a fixed mpg and one for trucks that had no similar regulation.
this short-sightedness, was, of course, reinforced recently with an act of flat-out somethingness (pig-headedness, i think, but i'm sure there are better explainations) when the EPA set the new fuel efficiency standards specific to each class of vehicle, allowing larger trucks to use even more fuel.
wouldn't it make more sense to acknowledge that light trucks are passenger vehicles and slowly change the regulations so that all passenger vehicles (including trucks) follow the same rules and set a dynamic gas-guzzler tax based on the fuel economy of the fleet?
anything that resides in the bottom 10% of mpg fuel consumption ratings is a gas guzzler. that sort of thing.
Posted by: shaun mann | 19 June 2006 at 07:12 AM
The whole CAFE system has been corrupt and politically manipulated for decades now and should be scrapped. It boils down to the fact that there will always be special pleading from one sector or another who will want to exempt certain vehicles from stringent mileage standards. The latest change was the ultimate exercise in cynicism. See, we're making things better by allowing giant vehicles their own standards -- that way it is easier for the automakers to meet the standards. On top of that we pretend that ethanol is a free ride, so we make our effective gas mileage even worse.
This will continue until we cut through the b.s. with a carbon tax that taxes the carbon content of all fuels wherever used. If certain sectors of society suffer from this arrangement, bite the political bullet and subsidize them directly -- not under table.
Posted by: t | 19 June 2006 at 07:36 AM
Well versed summation, t!
Posted by: fyi CO2 | 19 June 2006 at 09:12 AM
ConcocoPhilips is the company that feeds the lie that they only make 9 cents on a gallon of gas.
What they say is not worth listening to.
Posted by: Joseph Willemssen | 19 June 2006 at 11:07 AM
A large part of the problem is that the government thinks part of its job is to lookout for US Auto companies, especially GM. So many of the CAFE BS has to do with protecting GM. This has to stop. The tax payer should not be rewarding GM management for making bad decisions.
Better just to stop cold turkey and leave GM to its own devices. If GM goes belly up, well yes, it will hurt for a while, but it's better in the long run. It would probably ensure the survival of Ford.
More likely, GM stockholders will eventually grow a set of big ones, toss out the accountants and instill a management team that knows something about making cars. When than happens, GM can compete with the best of them, as we would all like to see it do.
Posted by: An Engineer | 19 June 2006 at 11:09 AM
If GM goes belly up, it will not be better in the long run. That would have a domino effect on the rest of the US economy. And I dont think it ensure the survival of Ford.
Sort of a normal reaction to bash GM on this forum, even when the article has nothing to do with them. GM is making very good progress on fuel efficiency, compared to say 2 years ago. Considering how big GM is, thats a monumental task in a short amount of time, to turn something that big.
Automakers, as a whole, must improve. And yes, that includes the Japanese and Koreans, and not just us Americans.
Posted by: Mark A | 19 June 2006 at 12:28 PM
Well, Mark, seeing as GM's most efficient vehicle is the 27th most efficient among all vehicles for sale, it's kind of silly to say that all automakers must improve amd deflect away from their abysmal performance relative to their competitors.
Posted by: Joseph Willemssen | 19 June 2006 at 01:09 PM
The only realistic way to reduce petroleum use is rationing. If we had followed Jimmy Carter's plan of a gradually reducing oil import quota we would all be driving hybrids or straight electrics today and not have an army in Iraq.
Fossil fuels are for fossils not humans.
Posted by: tom deplume | 19 June 2006 at 01:43 PM
A simple plan that will NEVER happen without a leader that defines patriotism as freeing ourselves from the middle east crazies.
1. $1.00/ gallon fed tax hike on all petrol fuels and remove all fed taxes on ALL bio fuels.
2. fed income tax - agi < 50,000 joint, < 30,000 ind = ZERO .
3. federal registration fee on ALL new vehicles of $4.00/lb for each lb > 3,000.
This I believe will unleash the power of our capitalist system to
solve the transportation part of the problem.
Posted by: tonyd | 19 June 2006 at 05:11 PM
tonyd,
Maybe you would be happier in China. The US doesn't openly manipulate the buying practices of the population. That is the sort of big-government activity that leads to people joining freedom settlements in montana.
In the US, the right of the individual to do whatever they want is preserved so long as it isn't directly provably harmful to another person. Love it or leave it, that is how the US constitution has been interpreted.
China, on the other end of the capitalism-socialist-communist spectrum, openly manipulates it's markets with interventionist policies, with Europe obviously in the middle.
As it happens, I personally agree that the federal tax system should be simplified to eliminate loop-holes, that an effort should be made to determine the real cost of fossil fuels and pass this cost on to customers, and that heavy cars should be discouraged because of the threat they pose to drivers of smaller cars and the environment in general.
Unfortunately, these are all initiatives that value social equity over individual "rights." Because of this, they would fly in the face of what the US believes in.
They would fit well in more community-minded socialist countries.
1) All of Europe has similar tax schemes for fossil vs bio fuels.
2) New Zealand has a simple 1 page income tax form for everybody.
3) Japan taxes cars according to engine size and exterior dimensions, which is effectively the same as a tax on vehicle weight.
Posted by: shaun mann | 20 June 2006 at 04:59 AM
a caveat, though, should be kept in mind. even though the US is largely in favor of free markets and small government, we should keep in mind that this is only in general and obviously doesn't apply to imports, exports, agriculture, or energy.
sure, the US gov't may have fought a war for oil, but it also built all of the major hydro dams that have been providing electricity at .02 $/kWh for several decades, and the wind industry in the US would still be non-existent if not for subsidies from the federal gov't.
Posted by: shaun mann | 20 June 2006 at 05:08 AM
It's pretty tiresome hearing people say "Move to [insert Communist country here]".
Posted by: Joseph Willemssen | 20 June 2006 at 07:01 AM