Former Cabinet members say U.S. must support alternative transportation fuels

Source: Katherine Ling, E&E reporter • Posted: Wednesday, October 16, 2013

National energy security will be achieved only when fuel alternatives can compete and give oil a run for its money, a group of former presidential Cabinet members and military officials announced today.

The United States must lower regulatory barriers for nonpetroleum transportation fuels to open the transportation market to competition and allow other energy commodities to vie with petroleum for market share, a new report from the U.S. Energy Security Council (USESC) says.

The current national energy security policy focused on boosting domestic oil production and vehicle efficiency is not working because oil prices are set on a global market, so U.S. efforts are relatively modest, the report says. U.S. oil imports have dropped from 60 percent in 2005 to 36 percent today, yet prices at the pump stay high and the share of oil imports in the overall U.S. trade deficit increased from one-third to nearly a half, according to USESC. Even if oil imports were eliminated, prices wouldn’t be significantly affected because of the growing demand from developing countries, the report says.

USESC says the most politically and economically viable path to compete with oil is to provide corporate auto fuel efficiency credits to manufacturers to open at least half their fleet to competing fuels; consider expanding U.S. EPA’s Tier 3 rules to include all alcohol fuels; tax all fuels on energy content rather than volume; and not count upstream emissions in EPA compliance, as they are not counted for gasoline.

The report also recommends providing flexibility to states to use transportation fuel strategies to meet Clean Air Act standards and expanding international research and collaborations on alcohol fuels, electric vehicles, and standards for retrofits to flexible fuel and compressed natural gas vehicles.

This in turn could be adopted by other countries, further reducing prices and dependence on oil, according to USESC.

The call for more competition in the transportation fuel market comes as EPA is considering new 2014 renewable fuels mandates that may lower both corn ethanol and advanced biofuel targets. The renewable fuel standard is taking a lot of heat on Capitol Hill, especially from the House Energy and Commerce Committee and from leaders in the oil and gas industry, who say the higher standards would require them to blend more ethanol into gasoline than is technically feasible, known as the “blend wall” (Greenwire, Oct. 9).

USESC includes Shell’s former president, John Hofmeister; former Federal Reserve Chairman Alan Greenspan; former CIA Director James Woolsey; T. Boone Pickens; former secretaries of Defense, State, the Interior, Transportation, Homeland Security, Agriculture, the Navy and the Air Force; former senators and governors; and a Nobel laureate.

On the 40-year anniversary of the Arab oil embargo, “it has become increasingly apparent that our oil paradigm which focuses exclusively on reducing import dependency is not working,” former National Security Adviser Robert McFarlane, USESC’s co-founder, said in a statement.

“It is past time to recalibrate our national thinking on oil to a more accurate problem definition and thus reduce the strategic importance of oil with its attendant national security implications, and reduce the Nation’s vulnerability to oil price shocks,” he said.