Since the late 1980s, in the aftermath of the 1985 oil price crash, Detroit and Congress have seemed joined at the hip in a mutual suicide pact. Detroit promises to pound out larger and faster vehicles, and key members of Congress swear they will sideline any effort to tighten fuel efficiency standards.
Nearly two decades later they’ve succeeded to a tragic degree, under both Republican and Democratic administrations. During that time the auto/light-truck fleet’s fuel efficiency declined by close to 10%. While this pact isn’t the only reason Ford and GM are nearly on life support, terminating this efficiency lock-out deal a decade ago would likely have helped both American car buyers and Detroit’s manufacturers.
Now come the results from last week’s election. A voice for change echoes across the land. Energy policy even earned more than lip service in many races. Yet the ink on the e-vote tally wasn’t even dry when Detroit’s own Rep. John Dingell (D-MI), ranking member in line to chair the House Energy and Commerce Committee, declared that he wouldn’t raise fuel-efficiency standards for U.S. automobiles. A congressman since 1955, he told CNBC on Wednesday, "I’m not sure that there’s any urgent need for us to address those [fuel economy] questions."
This is nuts. Even the normally conservative International Energy Agency’s director Claude Mandel stressed last week that on the efficiency front, "Urgent government action is required. The key word is urgent."
How nuts? AutoNation president Mike Jackson recently claimed that the American driver’s love for power and size, fostered by government policy, has led to "car obesity." Jackson compared the situation to the government putting out two plates; broccoli covers one - "you should eat your broccoli" - but the other is piled high with donuts on a half-price sale. Most folks go for the donuts - the inefficient light trucks and SUVs. Saying, "You can’t leave national security to markets," Jackson called for a $1/gallon new tax on gasoline, spread over a number of years. Sounds like a vote for urgently addressing fuel economy.
In fairness to leadership in Detroit (and very little fairness is due), the American driving public is also on the take here. "We’ve built our entire society to run on cheap gasoline and don’t want to suffer the consequences of major changes to that policy. No gasoline taxes. Don’t force us (via CAFÉ standards) to drive smaller, lighter, more fuel-efficient vehicles. We just want the sugar, no medicine."
But backstopping all of this looms a harsh reality: worldwide production of petroleum liquids will peak, plateau and decline, a process that ASPO-USA projects could happen anytime between now and 2015. Oil industry banker Matt Simmons advises that it would be prudent to assume we’re peaking now and respond as fast as we possibly can to mitigate the attendant negative impacts to our society and economy.
Of late, an estimated 95 percent of federal policies focused on expanding supplies of conventional and alternative liquid fuels: enhanced oil recovery, ethanol from corn, liquids from coal, more oil from Canada’s tar sands, eventually ethanol from cellulose and oil from shale. But it’s pretty clear to this writer that they can’t expand fast enough; there will be a gap between demand for liquids and supply, even before supply plateaus and declines. Further, alternative liquids typically require unusually high levels of energy inputs and generate undesirable environmental outputs. Last year at the Denver ASPO-USA conference, Congressman Roscoe Bartlett posed the seminal question for our policy deliberations: "should we struggle to fill the gap?" That conservative Republican’s answer: no.
Given the scope of our looming transportation fuels problems -- related to national security, long-term supply vs. demand, lack of fuel diversity, too much reliance on the auto, etc. -- a crash program to develop a fuel-efficient fleet won’t by itself create a smooth transition to the post-petroleum era. But it’s time to stop treating efficiency as the wallflower at the dance. No more "it goes without saying..." treatment.
John Heywood, director of MIT’s Sloan Automotive Lab, told the ASPO-USA conference in Boston two weeks ago that substantive reductions in vehicle fuel consumption will require both technology improvements and (the dreaded) changes in consumer behavior. To achieve a crash one-third fuel consumption reduction, fiscal and regulatory measures will be needed.
What might those measures look like? Congress shuns both CAFÉ standards and gasoline taxes as poison pills, yet both should still be on the table. During the 1970s, CAFÉ worked. A few sample elements of a broader program:
- Set an oil savings target for the transportation sector, such as 1 million barrels per day by as proposed by Senator Landrieu during the 108th Congress, but make sure it has a demanding timeline and enforcement teeth. One path would include closing fuel economy loopholes: the dual-fuel loophole, the truck loophole, etc.
- Provide incentives for accelerated development of plug-in hybrid electric vehicles. Apart from being very efficient vehicles, PHEVs fuel-switch a large portion of their energy consumption from gasoline to grid-supplied electricity.
- Establish a feebate system. This revenue-neutral approach establishes sliding-scale fees for vehicles less efficient than a newly established standard, plus sliding-scale rebates for vehicles that beat that standard. For the standard, consider figures developed (for CAFE purposes) by the Union of Concerned Scientists: 40 mpg by 2012, 55 mpg by 2020.
This challenge isn’t rocket science. Several small European vehicles on the market today get over 60 and 70 mpg. Even light trucks and SUVs can make a great leap forward; over two years ago, Toyota started selling in Japan an SUV that gets 41.7 mpg -- the four-cylinder Highlander. More than technology, the largest challenge is finding the political will to move forward with.
Given the relatively flat or negative movement in fleet efficiency today, even a crash program won’t produce a silver bullet. But it’s probably the best -- and most ignored -- silver BB available today. We need Rep. Dingell and the next Congress to act on that widely accepted premise.