Critics See Too Little Significant Change
Wednesday, January 24, 2007
The energy proposals President Bush outlined last night break new ground for his administration.
He combined a call to lower gasoline consumption with new mandates for oil companies and new standards for automakers. And he couched these in the context of enhancing U.S. energy security and addressing climate change.
"For too long our nation has been dependent on foreign oil," Bush said. "This dependence leaves us more vulnerable to hostile regimes and to terrorists, who could cause huge disruptions of oil shipments."
Bush said that the measures would not eliminate the need for imports, though, and each of his proposals immediately prompted questions about its ultimate effectiveness.
· Twenty in 10: Bush said he has a "goal of reducing U.S. gasoline usage by 20 percent in the next 10 years."
The fine print: Administration officials said that the goal is 20 percent below projected annual gasoline usage, not off today's levels.
That's very significant for oil markets, where analysts look at the balance of rising supplies and rising demand.
"If you made this type of reduction . . . U.S. petroleum consumption wouldn't be flat, but it would not grow meaningfully," said Frederick W. Smith, chairman of FedEx Corp., who said he applauds Bush's "balanced" approach.
But people worried about climate change were disappointed. Using projections means that carbon dioxide emissions from transportation fuels will drop only slightly from today's levels; other parts of the economy produce the other two-thirds of greenhouse gases.
"This is not nearly enough to really put us on the path of reducing emissions down to 60 percent or 80 percent of current levels, which is what we really need," said Eileen Claussen, president of the Pew Center on Global Climate Change.
· Raising fuel-economy standards: Bush advisers said that the president supports raising fuel-efficiency standards to take effect in model year 2010 for cars and model year 2012 for trucks. He also wants to change the way the standards are applied.
Currently the fuel standards apply to the average of all the cars each carmaker sells in a year. Bush would make new standards for cars "attribute-based" -- creating many different standards based on, for example, size. And he would give carmakers some flexibility in how they meet targets. (These standards are scheduled to go into effect for light trucks starting in 2008.)
The fine print: The new system promotes efficiency advances for every kind of vehicle, not just for one model. The president does not want Congress to set a new miles-per-gallon standard, but the Union of Concerned Scientists estimated that Bush's proposal could raise the fleet average to 34 miles per gallon by 2017.
The UCS warned, though, that if attribute-based standards are not combined with fleet averages, they "could actually encourage automakers to sell heavier or larger vehicles that guzzle more gas." That would mean more efficient gas-guzzlers, but still more gas-guzzlers.
· New renewable-fuel target: Bush said he will ask Congress to require oil companies to use 35 billion gallons of renewable and alternative fuels by 2017. The administration said this would replace 15 percent of the projected annual gasoline consumption.
The questions: How will that target be met? This year the ethanol industry will produce more than 7.5 billion gallons, almost all of it corn-based, passing the current target that had been set for 2012. But it would take more than last year's entire U.S. corn harvest to make enough ethanol to meet the target. Most industry experts say that there is not enough evidence that producing biofuels from other sources can be done on anything close to that scale.
The fine print: Bush changed the language on the mandate to say that "alternative," not just "renewable," fuels could be part of that volume. The only difference that makes by federal definitions is to add what are called coal-to-liquids fuels. One company has a proposal before the Energy Department for a $2 billion plant.
"You get the same amount of mileage and twice the pollution," said Anna Aurilio, legislative director of Public Interest Research Group. "That would be a huge step backwards." But an administration official said that the coal-to-liquids project could be used by the military.
· Doubling the Strategic Petroleum Reserve by 2027: The president's proposal calls for resuming the purchase of 100,000 barrels a day for the reserve, a practice suspended after Hurricane Katrina. The reserve has 691 million barrels; it has room for 727 million barrels.
The fine print: The plan calls for spending $10 billion to add storage facilities, including the expansion of sites in Louisiana and Texas, and addition of a new site at a salt cavern in Mississippi. An additional $55 billion would be spent buying the fuel over 20 years -- at a price of just less than $69 a barrel, a hefty premium over the current price of $54.77 a barrel.