Break out of the oil box
As President elect Barack Obama and the new elected Congress are preparing to govern, America's auto industry appears to be on its death bed. Barring decisive action GM, Ford and Chrysler might soon slide into bankruptcy. Coming in the midst of one of the worst financial crises in our history, the demise of the automobile industry could send the economy from its current recession to a full fledged depression. If Congress and the Administration decide to use more taxpayer money to try and save Detroit, taxpayers must get something in return. Specifically, any bailout should include an open fuel standard so that most new cars sold in the U.S. will enable liquid fuel choice. It costs automakers about $100 per car to make a vehicle fuel flexible, so it can handle a variety of alternative liquid fuels in addition to gasoline, giving consumers choice at the pump. Fuel efficient technologies are great but they are not enough: efficiency will do little to reduce oil's strategic value. With this year's high oil prices U.S. gasoline demand dropped by 10%. What was OPEC's response? The cartel cut production by 1.5 million barrels per day. Indeed, when we drill more, they drill less, and when we use less, they drill less. As long as oil is the only option in the transportation sector, OPEC will sit in the catbird seat. Detroit's automakers have repeatedly said they are willing to commit to make 50% of new cars sold in the U.S. be flex fuel vehicles by 2012. As the Big Three come to Capitol Hill on bended knee to ask for taxpayer help, the least Congress should do is require by law that they make this commitment a reality. Click here to make your voice heard.
Bailout every year
No doubt $700 billion is a huge sum of money. It is equivalent to the GDP of Taiwan or four times the size of the economic stimulus package Congress enacted last February. In light of the futility of the latter there is no surprise so many Americans are ambivalent about the idea of shelling out as many of our tax dollars as Congress did recently in an attempt to restore confidence in the nation's banking system. But no matter where one stands on the costly bailout it is still--hopefully-- a singular event. This cannot be said about an economic burden of vast magnitude that is weighing down on the economy on an annual basis--foreign oil. Even assuming prices stay at their current levels all told this year the U.S. will have spent some $400 billion on foreign oil. This bleeding prevents our economic recovery. The U.S. is like a sick patient lying on an operating table bleeding profusely. Medications will not help unless the bleeding is stopped.
About time
You may remember the sunny day in 2006 when the Set America Free Coalition brought plug in hybrids to Capitol Hill for the first time, with our coalition member CalCars, enabling many Senators and Representatives to test drive the cars (see pictures.) The excitement sparked on the Hill that day, and the Coalition's continuous educational efforts on the topic of electrifying transportation and collaboration with electric utilities, battery makers, and other industry members standing to benefit from a shift to electricity in the transportation sector, brought last winter as part of the energy bill to the passage of most of the transportation electrification provisions of the DRIVE Act - bipartisan legislation inspired by Set America Free's Blueprint for Energy Security - and culminated recently in the passage of tax-credits for plug-ins as a rider to the recent financial industry "bailout" bill.
Food vs. Fuel myth busts itself
Remember the claims that ethanol drives up food prices? Well, something strange happened on the way to the supermarket. Oil prices have fallen over 50% from a record $147 a barrel in July 2008. Over the same period of time corn prices also fell from $7.50 a bushel to under $4 today. Was this because we used less ethanol? No. To the contrary, since the summer ethanol production has risen by nearly 10%. Food prices track oil prices regardless of how much corn is used for ethanol production. When oil was up it affected the cost of essential components of our food supply like operating agricultural machinery, fertilizers, packing, labor and transportation. When oil prices came down, commodity grain prices quickly followed (processed food manufacturers, enjoying healthy profit margins, haven't chosen to bring down prices in any perceptible manner, but that's a separate issue.) It is now clear that it was not ethanol that drove up grain prices but the same speculative forces that jacked up oil prices. When the bubble created by commodity speculators popped in the current financial crisis, grain commodity prices declined. Sooner or later the economy will pick up steam and oil prices will most likely rebound, perhaps even to a much higher level. At this point the anti-ethanol coalition will no doubt regroup to resume its effort. When this happens let's make sure to remind them of the fall of 2008.