## State of the Union Preview: Twenty in Ten

##### 23 January 2007

Among the many policy initiatives President Bush will propose in his 2007 State of the Union Address tonight is the goal of reducing US gasoline usage by 20% in the next 10 years—“Twenty in Ten”—through a program that includes increasing the required use of renewable and alternative fuels and increasing fuel-efficiency standards for cars. The plan would result in reducing oil consumption by 10% in 2017, or 2 million barrels per day.

The White House released a compilation of all the policy initiatives today prior to the actual speech tonight.

To achieve the Twenty in Ten goal, the President will propose the following:

A 35 Billion Gallon Renewable Fuel Standard by 2017. This is nearly five times the 7.5 billion gallons by 2012 currently set by the existing Renewable Fuels Standard in law. Achieving the 35 billion gallon mark in 2017 would displace 15% of projected annual gasoline use.

The new proposal increases the scope of the current RFS, expanding it to an Alternative Fuel Standard (AFS) which includes sources such as corn ethanol, cellulosic ethanol, biodiesel, methanol, butanol, hydrogen, and other alternative fuels.

The EPA Administrator and the Secretaries of Agriculture and Energy will have authority to waive or modify the standard if they deem it necessary, and the new fuel standard will include an automatic “safety valve” to protect against unforeseen increases in the prices of alternative fuels or their feedstocks.

The increased and expanded fuel standard creates a tremendous incentive for research, development, and private investment into alternatives to oil, according to the Administration, and will encourage needed advances in crop yields, optimization of crops and cellulosic materials as fuel feedstock, and cost reduction in the production of cellulosic ethanol and other alternative fuels.

The 2008 Presidential budget provides $179 million for the President’s Biofuels Initiative, an increase of$29 million (19%) compared to the 2007 budget. The Biofuels Initiative aims to accelerate cost reduction and commercial development of cellulosic ethanol, which can be made from abundant biomass materials, including agricultural waste and forest residues, and from dedicated energy crops such as switchgrass.

Reforming Corporate Average Fuel Economy (CAFE) Standards for Cars and Extending the Current Light Truck Rule. The Whitehouse suggests that the result would be a reduction in projected annual gasoline use by up to 8.5 billion gallons in 2017—a further 5% reduction.

Achieving that level of reduction assumes that on average, fuel efficiency standards for both light trucks and passenger cars are increased 4% per year, beginning in Model Year 2010 for cars and Model Year 2012 for light trucks.

The Secretary of Transportation will determine the actual standard and fuel savings in a flexible rulemaking process, according to the Administration. The President will insist that Congress not legislate a specific numeric fuel economy standard, but leave that to the Secretary of Transportation.

Congress reformed the CAFE rules for light-trucks in 2006 (earlier post), but left the rules for cars untouched. The reformed CAFE rules for light-trucks establishes individual targets for automakers based on a combination of different targets based on vehicle footprints and the composition of the automakers’s new car fleets. The President is asking Congress to authorize the Secretary of Transportation to apply the same kind of attribute-based method to passenger cars.

The proposal also would allow automakers to buy and sell CAFE credits.

Reducing Congestion, Commute Times and Associated Fuel Consumption. In 2003, drivers in America’s 85 most congested urban areas experienced 3.7 billion hours of travel delay and wasted 2.3 billion gallons of fuel, costing a total of $63 billion. The 2008 Budget redirects DOT funds to a new$175 million highway congestion initiative for the demonstration of ideas to address this problem including: congestion pricing, commuter transit services, commitments from employers to expand work schedule flexibility, and faster deployment of real-time traffic information.

Stepping Up Domestic Oil Production. The President will call for Congressional action to authorize oil and gas exploration in the Arctic National Wildlife Refuge, to develop legislation to encourage investments in refinery capacity, and to encourage all parties to resolve remaining issues regarding the Alaska Natural Gas Pipeline.

Doubling The Current Capacity Of The Strategic Petroleum Reserve. The President will propose doubling the current capacity of the Strategic Petroleum Reserve (SPR) to 1.5 billion barrels by 2027. Doubling the SPR will provide approximately 97 days of net oil import protection, enhancing America’s ability to respond to potential oil disruptions.

The SPR currently contains 691 million barrels. Due to increased consumption, this represents only 55 days of net oil imports. In 1985, the SPR, with 493 million barrels of oil, represented 118 days of net oil imports.

Resources:

Here are some ideas to lower the oil usage of Americans immediately and not ten years from now.

(1) Increase the gas tax one penny per month for three years. So after 36 months, the federal oil tax would have raised 36 cents. Enough of an increase to change people's behavior, but low enough to not hurt people's pocketbooks. Plus, it is spread over three years.

(2) Have the Police enforce current speed limits without speed traps. Instead, the police cruiser will drive in the middle lane of a highway driving the speed limit (or 5 mph above the speed limit). The first person who passes the police cruiser to the left or right of the cruiser will be pulled over and given a ticket. This would upset many people, but it is the only way to get people to slow down (by hitting them with expensive speeding tickets). Plus, by people slowing down, the collective fuel economy of the nation would rise.

(3) Make all purchases of bus passes, subway passes, 100% tax deductible. Or better yet, let people take the bus or subway for free.

(4) Multi-passenger cars will not have to pay one toll in the country. This would encourage car-pooling. If cities/states/municipalities see toll revenue decrease, then raise tolls for people driving solo.

I can go on and on with more fascist like policies to lower oil usage, like banning all engines with more than six cylinders. Little things will help us in the long run.

I read somewhere that if the US car fleet had similar properties as the current European one, the amount of oil saved every year in the US would be equal to that of Russia's yearly production. This with existing technology... So the 20% in 10 years shouldn't be too hard of a goal.

Anyway I applaud Bush for this. Of course it could have happen sooner, and I don't agree with the AWR drilling. But, anyway, the direction is good.

er:

The difference between Europe and the United States is that our air quality standards are much stricter. We've therefore made a trade-off between air quality and fuel economy. We also have a higher birthrate and thus larger families, so we need bigger vehicles.

I'm still amazed that there isn't a hybrid full-sized SUV, though. A 30mpg Tahoe would make certain people grumble less.

One of the things I note is absent from this announcement is CTL. But then, the Democrats recently proposed a huge CTL bill. Oil prices also jumped over 4% on the SPD announcement.

I'm disappointed that Bush didn't make a push for plug in hybrids or clean diesel...

Great ideas David, I'd like to add to them:

1. Have "Pace Cars" on heavily trafficked highways such as I-4 in Orlando, I-94 and I-55 in Chicago, etc. Basically a car in each lane traveling along side each other. They would travel at the speed limit, making it impossible for anyone behind them to speed.

2. Slap a $1 per gallon gas tax and have it fund either CTL or plug in hybrid development. 3. Have the DOE decide once and for all what fuels we will use going forward. E10 and B10 for the next 10 years would be a nice start. Having 10 different fuels will only confuse the consumer. Most of these pie in the sky SUPPLY SIDE efforts to curb demand? Bush proposals won't make Ten in Twenty. And then there is: "The President will insist that Congress not legislate a specific numeric fuel economy standard, but leave that to the Secretary of Transportation." - why? And why no mention of dropping the E85 loophole? BTW, nice points David! How much did Archer Daniel Midland give to the Republican Party? The increase in corn to alcohol is a lobbyist's dream. Smoke & mirrors and a double coat of Greenwashing. One major reason Europeans have more effecient cars is they have gas at 5-7$ US / US Gallon of gasoline.

It the US had gas at this price, people would very quickly switch to more effeciant cars ( in 2-5 years ).

Noone "needs" a full size SUV, except perhaps a few farmers.

A 1$/ gallon tax would be a very good thing, even if you just used it to reduce the deficit. The question is: do you bring it in all at once to get some "shock" effect or bring it in more slowly so people notice more - Say 3C / month for 3 years. Even 5C / month for 3 years. [ Or a "ratchet" tax - every time the price of Gas goes down, a tax is levied to take the reduction ] The problem is could the government hold its nerve. You could also consider providing health care for people with no insurance and that would offset the health problems associated with diesel fumes. I just read a report that said the true cost of gasoline (after you factor in all the subsidies) is$15.14 per gallon.

Just charge that. We'll hit the 20% goal (and then some) literally overnight. And probably also fix the budget deficit.

DHofmann:

Charging that much for gas would "literally overnight" plunge us into a Depression. Which isn't good for tax revenues. You would starve the poor and middle class alike.

When gas hit $3 last year the Democrats were using it to club Bush. I don't think they would do something that would hurt their constituents like a huge gas tax increase. Make a graduated tax starting at$30/barrel, such that at higher charges by OPEC, etc, there is an exponentially increasing tax to fund alternative research, efficiency, highways.... This would tend to buffer the OPEC price since we're not talking a free market.

Twenty in ten is actually not only doable but a lowball estimate. Clean diesel is coming to the US, spark ignition engines are learning new tricks and, battery/ultracap technology is advancing by leaps and bounds. Not to mention there's now a booming market in domestically produced alternative fuels incl. ethanol. Much the same is true in Europe and Japan, further accelerating the global pace of innovation in fuel economy and energy independence.

What the Feds can sensibly do to nurse this process along is lay out a doable timetable for either

o phasing out CAFE + gas guzzler tax in favor of federal fuel taxes that rise slowly, predictably and for a long time or,

o aligning CAFE + gas guzzler MPG computation to the stricter one EPA will be using for showroom stickers PLUS closing the E85 loophole by switching to a metric of miles per lb of CO2 or miles per 1,000 BTU, whichever you prefer as a basis for comparison across different fuel grades. Note that PHEVs and BEVs can also be compared on this basis, if you use a realistic model for the electricity generating mix.
If ethanol is to be a key element of US energy security in the transportation sector, simply mandate E85 capability on 100% of new LDVs by e.g. MY 2010. The incremental mfg cost is only about \$100.

o Individual states can help by shifting from vehicle license fees based on residual value of the vehicle to a new model based on EPA fuel economy estimates (based on new model) and the age of the car. Austria uses a mixed model, with a one-time fee based on fuel economy plus an annual fee based on rated engine power.

o The Feds and thee state of Michigan need to come up with some type of plan that allows both the Big Three and the UAW to gradually put their health care and retiree arrangement on a solid competitive footing. Any assumption of risks or operating expenses by state or federal government should, however, be closely linked to meeting negotiated performance targets in terms of fleet average fuel economy in excess of CAFE requirements.

20%? Kid stuff.

We can get 20% in one day, literally.

I've seen several studies that say if people just eased off on the hard acceleration, it would save 25 to 30%. No new tech., no new taxes, no reduction in miles driven, etc.

Of course, getting Americans to do something like that in the real world would take a pretty extreme incentive, like a big gas tax increase.

My point is that we have a lot more "low hanging fruit" in potential conservation of energy, particularly in transportation, than many people (who don't read GCC) think, and that we can see pretty big savings with very little or no sacrifice, in any meaningful sense of the word.

It amazes me that nearly all the proposed "solutions" here are to raise taxes. More and higher taxes aren't the solution to all our problems, they are problems in themselves. Give the public quality fuel efficient cars and they will buy them.

Cervus,
Tahoe/Yukon 2mode hybrids are on the way (2nd half 2007), but they do not reach 30mpg...unless hypermiling or modded. Similarly with Silverado/Sierra 2modes.

Rafael Seidl,
Other uses for these taxes include:
a) Fully funding Dept of Transportation outlays (ie. highway, mass transit, rail, air, and sea transportation security and capacity improvement).
b) Fund R&D for new tech.
c) Fund pilot deployment programs (to get technology off the ground).

A few days back I was reminded why few drive small cars in cummute here.

Morning rush to work.. 1 riny car slpattered with blood all over... then near destination anouther small car again utter wreck.

In each case tends of thousands were reminded that day why they wont buy a small car ever. We want tomake it home.

Congress isn't going to raise gas taxes because they want to get re-elected, so stop dreaming! And who really that believes low oil/gas prices are going to stick around? People will buy higher mileage cars only when they have too. We can’t become more energy independent without a plan and at least this 20 in 10 is a start. It would have been helpful if Prez. Clinton had started this whole process years ago, but he other ideas/issues at hand! LOL

A few days back I was reminded why few drive small cars in cummute here.

Morning rush to work.. 1 riny car slpattered with blood all over... then near destination anouther small car again utter wreck.

In each case tends of thousands were reminded that day why they wont buy a small car ever. We want tomake it home.

Cars don't have to be dangerous to get good gas mileage, and they don't have to weigh seven thousand pounds to be safe.

It amazes me that nearly all the proposed "solutions" here are to raise taxes. More and higher taxes aren't the solution to all our problems, they are problems in themselves.

Taxes or CAFE limits. Pick yer poison. If you're really enamoured of the Free Market, then let's have one. That means externalities like the cost of oil wars, global warming, and particulate-induced illness need to be priced into the cost of gas.

Give the public quality fuel efficient cars and they will buy them.

It's easier to pimp out a Suburban, call it a Cadillac, and wait for the morons to show up with fifty grand.

If you're really enamoured of the Free Market, then let's have one. That means externalities like the cost of oil wars, global warming, and particulate-induced illness need to be priced into the cost of gas.

Give me a method that is apolitical, unbiased, and objective for determining the costs of those externalities and I just may listen to you.

It's easier to pimp out a Suburban, call it a Cadillac, and wait for the morons to show up with fifty grand.

Want to know why GM and Ford push these big, high-profit margin SUVs? They lose money on small cars, that's why. The big 2.5's legacy pension an health care costs make selling smaller vehicles at a profit nearly impossible and still be competitive with Toyota, Honda, and Hyundai.

They lose money on small cars, that's why.

OMFG!!! My hear bleeds for Detroit! Those Evil Japanese!!
How DARE they make a profit selling popular & efficient cars.

DS:

I'm trying to point out that there is a reason why Detroit cannot make money selling small cars, so this is why they make the choices they do regarding what products they develop and sell. I can't really fault them for that. GM and Ford have done some major renegotiations with the UAW in order to reduce those costs in order to stay in business.

Cervus, while the unions have helped create their own mess I just want to clarify that what keeps being labeled "legacy costs" are really deferred wages. If workers had their normal place in the front of the line for their wages, banks and Wall Street would have quit lending money to the companies long before it reached this point.

"At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving."
-- President Richard M. Nixon, November 1973

"Beginning this moment, this nation will never use more foreign oil than we did in 1977, never."
-- President James E. Carter, July 1979

"Tonight, I ask Congress to join me in pursuing a great goal. Let us build on the work we have done and reduce gasoline usage in the United States by 20 percent in the next ten years."
-- President George W. Bush, January 2007

At least he didn't go as far as Nixon and Carter and pretend that we would actually accomplish this goal.

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