How to Put a Cap on America's Oil Dependency

Raymond J. Learsy offers his two-proned attack on cutting America's oil addiction.

Published: 09-Jan-2007

future but also our present. And it's long past time that we take a new look at the nature of our twin addictions to fossil fuels in the form of gasoline and the obsession it supports -- our love affair with the automobile. By separating these intertwined dependencies, we might just find a workable cure for our afflictions.

My two-part prescription involves weaning the automobile away from gasoline and putting policies in place that curb open-ended access to petroleum based gasoline. These steps are essential to substantially diminishing our dependence on fossil based fuels.

To begin, I believe we must create an infrastructure to power vehicles that use none or only minimal amounts of gasoline -- that is, hybrids/plug -ins or flex-fuel cars and trucks. This changeover would require:

• An electric grid system based on power generated from the traditional sources, but increasingly supplemented by nuclear,wind, and solar power generation, combined with greatly expanded delivery capabilities to permit the widespread use of plug-in hybrid vehicles.
• Broader cultivation and land use targeting greater production of ethanol from both corn and biomass to power flexible fuel/biodiesel vehicles (think of Brazil's astounding success with ethanol made from sugar cane).
• A national program to facilitate distribution of eco-fuels to a new generation of vehicles accessing alternative fuels -- plug-in stations for city dwellers, ethanol-pumping facilities, and so on -- must be as widespread as gasoline pumps are now.
• Policies designed to bring about an orderly conversion from gasoline-powered vehicles to hybrid, flex-fuel, and plug-in vehicles, including help for Detroit, car owners, and refiners that would be called upon to produce ethanol-rich gasoline formulations.

All this would take time and investment, but with a combination of national volition, incentives, and congressional leadership, it should be achievable within five years.

Then comes the hard part, a step that will take great political courage and leadership, and a government willing to face down powerful vested interests. In five years' time, the        Department of Energy would be called upon to establish a maximum quantity of petroleum based gasoline available for national consumption over each six-month period in perpetuity (ideally, an amount equivalent to the domestic production of oil and correspondent refining capacity- note, 60% of our oil is currently imported). Over time the cap would be reduced as alternative and ecologically sounder fuels take hold.

Each car owner would receive a magnetic debit card entitling that individual to a specific and equal allocation of gasoline. These allotments, let's call them 'Eco Purchase Permits' (EPPs), could either be used or freely traded to others who wanted or needed additional hydrocarbon gasoline for any reason. The buyers could obtain part of someone else's allotment through online bulletin boards, gas station-sponsored markets, personal transactions, and so forth. The key point is that those consumers wanting more gasoline could get it without increasing the overall consumption of gasoline.

The beauty of such a system is that it would allow the open-ended consumption of ethanol, bio-diesel and plug-in energy power. Consumers using gasoline-ethanol blends would be debited for the gasoline based content alone. In other words, only petroleum based gasoline would be limited -- and that cap would remain in place, irrespective of the price of gasoline, whether high or low, owing to its now well documented contribution to environmental pollution and also to protect the viability of the alternative energy infrastructure that will have been established in its place.

While ethanol and electric power would be freely sold at market prices as is presently the case, gasoline would also be priced according to market conditions but within the cap parameter. Under this program, the only thing being regulated would be the national cap on gasoline consumption.

Writing in The Wall Street Journal on December 30, James Woolsey laid out the encouraging prospects of hybrid plug-in and flexible-fuel vehicles. Woolsey, the former director of the        Central Intelligence Agency (        CIA), cited the National Energy Policy Commission (NERC) and its studies on the prospects for improved efficiencies in biomass cultivation and production. The commission projected that the price of cellulosic ethanol could be headed down toward 70 cents per gallon.

Whether or not NERC's prediction comes to pass, it is now clear that we can no longer depend on the world oil market to supply the nation's needs in a rational and dependable way. To quote the Energy Security Leadership Council from its report entitled, "Recommendations to the Nation on Reducing U.S. Oil Dependence" (which you can access by clicking on the following link: Securing America's Energy Future):

"Oil prices may be a function of supply and demand, but the American people must also recognize that the twenty-first century global oil market is well removed from the free-market ideal. At least 75 percent -- and by some estimates as much as 90 percent -- of all oil and gas reserves are held by national oil companies (NOCs) that are either partially or fully controlled by governments. Oil markets are not only politicized, they are also distorted by the presence of large economic externalities such as military expenditures that are not factored into final pricing. Consequently, we must accept that market forces alone will not solve our oil problems. . . ."

The program proposed will go a long way toward reestablishing our energy self-reliance. We are up against a problem that will continue to bedevil us and future generations if it is not met with courage and vision. It's been said that energy is the new weapon of mass destruction. Here is one solution, but certainly not the last word. If you've got a better idea, send it along.

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