August 1, 2007
Energy is the hot topic on Capitol Hill this summer. Separate bills are emerging that include increasing mileage standards and encouraging the use of alternative fuels.
Philosophical differences among the two parties may preclude comprehensive legislation. Progressives are arguing that conservation and more reliance on renewable fuels is the right solution while conservatives are saying that the country must boost all of its energy supplies. Oil, of course, is the dominate fuel source today. And the demand for it is only expected to escalate as developing nations become increasingly industrialized. Toward that end, the United States must expand fuel alternatives, take steps to reduce usage and consider allowing developers to explore for new sources.
A report authored by the National Petroleum Council that has been presented to U.S. Energy Secretary Samuel Bodman warns that the global community faces some "hard truths" as it relates to energy consumption and production. "The world is not running out of energy resources," says former Exxon Mobil Corp. Chief Executive Officer Lee Raymond, who chairs the committee that wrote the report.
World energy demand has grown by 60 percent over the last quarter-century, the report says. And over the next 25 years, many forecasters predict similar growth, coming largely from the developing world. The number of cars operated in China, for example, doubled between 2000 and 2006. Still, only one in 40 people own autos in the world's most populated nation. That is compared to one vehicle for every two Americans.
Can the expected future demand for oil and other resources be met? Right now, about 84 million barrels of oil a day are pumped. But, future estimates vary as to how much oil can be produced by 2030. Those who subscribe to the "peak oil" theory are saying that future production will be 5 percent less than today. Others say that oil producing nations can crank out even more than 120 million barrels a day. The international oil companies participating in the petroleum council survey estimated, on average, that about 105 million barrels a day would be generated.
The U.S. is a key player in the global energy system, ranking not only as the world's largest energy consumer but also the second-largest natural gas producer, second-largest coal producer and third-biggest oil producer. To help deal with future energy conditions, the draft report recommends that U.S. officials raise fuel mileage requirements for cars and light trucks to the "maximum rate possible." It also suggests giving oil producers access to areas now off limits, both onshore and offshore as well as the incentives to help develop unconventional fuel sources from tar sands and shale.
Bridging Differences
Fuel efficiency is a critical matter. The Senate has already approved a bill that would raise those standards for vehicles. The House, however, is divided on the issue.
The Senate energy bill, approved in June, is heavily weighted toward reducing the demand for oil. Measures in the House are still pending and range from updating national and state building codes to the establishment of programs to support new green buildings. They also focus on the promotion of alternative fuels such as ethanol by helping convert existing gas pumps so that they would be able to carry blended fuels.
The American Council for an Energy-Efficient Economy released a study that says efficiency provisions in pending energy legislation in the Senate and House can reduce expected U.S. emissions of carbon dioxide in 2030 by 13 percent and 6 percent, respectively. "These reductions in greenhouse gas emissions represent a significant down payment in efforts to address global warming," says Steven Nadel, executive director of the American Council.
No single bill is certain to emerge intact as the various positions try to reconcile their differences. While the Senate supports increasing fuel efficiency standards, the Chairman of the House Energy and Commerce Committee John Dingell does not. The Michigan legislator takes the side of the automakers that argue an aggressive jump in those standards -- from an average of 25 miles per gallon to 35 miles per gallon by 2020 and four percent increases a year until 2030 after that -- would cost lives and jobs. The auto industry supports modest adjustments.
"None of the Senators have ever designed a car and sold it in the marketplace for a profit, yet they see fit to tell the entire automobile industry what is possible," says Sterling Burnett, senior fellow at the Dallas-based National Center for Policy Analysis, in an op-ed. "People can choose fuel efficient cars if they want them. There are more than 60 car models sold today that get more than 30 miles per gallon and more than 30 that get more than 40 miles per gallon. None of these vehicles are best sellers because most people choose vehicles based on factors other than fuel economy."
That's a strong argument -- and one that has kept higher fuel efficiency standards at bay for more than two decades. However, greater standards are backed by President Bush and Speaker of the House Nancy Pelosi. The speaker supports the Senate's version and will allow an up or down vote by the full House. Other competing measures, though, would consider differences in auto classes before requiring higher efficiency standards.
Potential deal making behind the scenes could help cobble together a comprehensive energy package. If progressives bend, for example, and agree to greater drilling rights, then conservatives may compromise and accept higher fuel efficiency standards.
The ultimate goal is to increase the number of fuel options so that the nation can meet its future energy needs in an environmentally-friendly way. Oil and natural gas will remain integral. Unconventional fuels, green energy and energy conservation, meanwhile, are becoming increasingly vital to the mix. None of the choices are mutually exclusive and subsequent energy policies should reflect that reality.
