AJC Targeted Energy Plan to Reduce U.S. Oil Imports

Approved by National Energy Committee, May 26, 2011

AJC has long believed that the United States must adopt and implement comprehensive energy policy that includes as a primary goal a substantial reduction in U.S. dependence on imported oil. Elements of national energy-security policy must include substantial increases in vehicle fuel efficiency; reduction in wasteful energy consumption; increases in domestic supplies with appropriate attention to environmental safeguards; further diversification of foreign oil sources; and development and commercialization of alternative sources of energy and alternative vehicle technologies. With a growing political consensus that it is time to move on energy security—albeit with issues yet to be resolved as to the specifics of the proper mix of policies—it is urgent that the 112th Congress act to address this issue.

In furtherance of this policy priority, AJC presents a focused plan for energy security concerned specifically with our dependence on petroleum imports. This plan, prepared by AJC’s National Energy Committee, presents concrete goals for policy makers by providing clear targets and recommended pathways for reducing dependence on imported oil.

AJC ENERGY PLAN MISSION STATEMENT

To reduce total present U.S. imports of petroleum and petroleum products by a minimum of 2.75 – 3.25 million barrels a day by 2020.

BACKGROUND

In 2010, the United States imported daily approximately 12 million barrels of petroleum (+9.2mm bbls) and petroleum products (+2.8mm bbls). The goal would therefore be a + 25% reduction in daily imports by 2020. The goal adopted by AJC will:

  • Reduce price pressures on petroleum products such as gasoline;
  • Save the United States hundreds of billions of dollars;
  • Result in total reduction in petroleum use approximately equal to the amount of petroleum and petroleum product imported from the Persian Gulf countries, and from Venezuela; and
  • Result in the reduction of greenhouse gas emissions, to the extent we reduce total use of petroleum.

Importantly, this goal can be achieved by using presently available technology and under current and proposed policies as long as the United States remains focused on the goal of reducing its petroleum imports. This, the plan does not incorporate ground-breaking developments in technology, much as AJC supports efforts in that direction; such developments, when realized, will mean that the U.S. can move more quickly toward reduced energy dependence.

Also importantly, this plan is not a set of prescriptions for change in methods of generation of electricity. Crucial as change in that respect may be, it is not—under current circumstances—substantially related to energy security concerns, the focus of the plan. Oil is used for less than 1% of electricity generated in the United States. In contrast, 70% of the daily U.S. use of oil and oil products is transportation—cars, trucks, buses, airplanes, etc. Thus, if we, as a nation, are to have a material impact on the use of oil, the focus must be on transportation.

HOW TO GET THERE

Reduce energy consumption by strengthening fuel economy standards for cars and light trucks.
It is imperative that the U.S. maintain present strong CAFE (Corporate Average Fuel Economy) standards and put in place the increase in fleet standards recently proposed by the EPA. CAFE standards set the miles per gallon standard for all automobile and light truck transport in the fleet and allows the free market to determine which technology, or mix of technologies, will meet that standard most efficiently and most effectively. Some technologies, such as electric cars, may use no gasoline at all; some may be hybrids; and some may simply make more efficient and cleaner use of gasoline or diesel.

In the 1970’s and ‘80’s, fleet miles per gallon doubled in 10 years. Present CAFE standards require an increase in fleet mileage from 27 to 35 mpg (about 27%) by 2016. EPA is proposing a further increase to between 47 and 62 mpg by 2025, and expansion of the application of CAFE standards to heavy trucks and city buses. If adopted, this additional strengthening of CAFE standards will mean an estimated net saving of 1.00 – 1.50 million barrels per day by 2020, even with moderate overall fleet growth—a significant additional reduction in oil use.

Increase the variety and availability of alternative fuel vehicles

  • Flex Fuel Vehicles: Through mandate or incentive, move toward flex fuel capability by 2020 for a majority of cars and light trucks in the fleet. For a minimal cost of $150 per car (in 2011 dollars), most automobiles and light trucks will be able to utilize multiple alternate liquid fuels, allowing for the creation of a ready market for any reasonable source of alternate liquid fuel to petroleum. This program will provide a major market-based incentive for a variety of liquid fuels available now or in the near future, without ”picking winners and losers” in terms of which fuel will be used.
  • Natural Gas: Through mandate or incentive, move toward the use of compressed natural gas to displace diesel fuel in large 18-wheeler truck fleets, and in other large vehicles such as city buses. · Increased Domestic Oil Production: Go forward rapidly with offshore drilling in the Gulf of Mexico, and elsewhere, accompanied by substantial environmental and safety safeguards. Estimates indicate that, with prompt action, there can be gains of 250,000 net barrels a day by 2020.
  • Increased Production of Shale Oil: Shale oil is estimated to have the same potential increase in resources as we have recently seen with shale gas—possibly as much as 1.5 million net new barrels a day of oil production by 2020. U.S. oil production has already begun to increase as a result of shale oil development. However, development of this resource, as well as of the nation’s natural gas surplus, could be significantly slowed, or even stopped altogether, by proposals for far-reaching regulations of “fracking.” As with off-shore drilling, both environmental and safety safeguards and development to meet our nation’s energy needs are crucial elements of energy policy.

PUTTING IT ALL TOGETHER

These steps, most based on markets and some on government standards and incentives, will take us to or past the 2020 energy security goal of reducing petroleum and product imports by at least 2.75 – 3.25 million barrels per day, as long as we focus specifically and seriously on reducing imports. Reducing dependence on petroleum imports by at least 2.75 – 3.25 million barrels per day will lead to greater U.S. national security, and to fewer petro-dollars in the pockets of adverse interests. It will not happen unless policy is focused squarely on reducing our need for petroleum imports.