Energy security is expected to remain a high agency priority in 2011. Recent political upheaval in the Middle East has led to a rise in oil and gas prices that has had a debilitating effect on the US economy (every recession over the past 35 years has been preceded by---or occurred concurrently with---a spike in oil prices), causing increased prices at the pump as well as increased food and production costs. In addition to its security implications, our dependence on foreign oil incurs environmental damage that pollutes the air, leads to increased health risks and hastens the effects of global climate change.
AJC has long believed that the United States must set as a primary national goal a comprehensive energy policy aimed at a substantial reduction in U.S. dependence on imported oil, with the potential for energy flexibility and near independence in the longer term. Such a policy should encompass: 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.
The following is an overview of major energy issues that are likely to arise during the 112th Congress.
Fuel Economy Standards
In the Energy Independence and Security Act of 2007, Congress increased Corporate Average Fuel Economy (CAFE) standards from 27.5 miles to 30 miles per gallon and, for the first time, made them applicable to medium-duty and heavy-duty vehicles. These new standards were first enforced in 2009 and 2010, marking the first substantial improvement to the nation's fuel economy standards in 30 years.
Position: AJC works to safeguard—and further increase—these standards as part of our commitment to decreasing dependence on foreign oil through enhancement of vehicular efficiency.
Open Fuels Standard
In order to truly be rid of U.S. dependence on foreign oil, the United States must develop alternative fuel options. Since most cars sold in America today can run only on gasoline, most consumers have no choice but to buy oil that is supplied by unstable and often unfriendly regimes. Fuel choice via flex fuel can break that monopoly. Since cars consume approximately half of the 20 million barrels of oil we consume daily, this would have the greatest impact for the least cost. As part of a broad coalition of policy makers, energy industry groups, and grassroots organizations, AJC continues to work toward passing the Open Fuel Standards Act (S.835). S.835 mandates that starting in 2012, 50% of new automobiles be powered by an internal combustion engine, and that starting in 2015, 80% of such new automobiles must be flex fuel vehicles warranted to operate on gasoline, ethanol, methanol or biodiesel. The additional cost to the manufacturer of making a vehicle flex-fuel capable is approximately 100 additional dollars per vehicle.
Position: AJC is continuing its efforts to promote enactment of legislation aimed at expanding the number of vehicles that can run on flex-fuels.
Electric and Natural Gas Vehicles
In his 2011 State of the Union, President Obama set a goal for increased production and infrastructure of 1 million plug-in electric cars by 2015. Vice-President Biden subsequently stated that this effort will be supported by plans to transform an existing $7,500 tax credit for electric vehicles into a rebate that will pay out immediately at the point of sale; ramp up federal investments in advanced vehicle technology by 30 percent; and expand a community incentive program for early adopters of electric vehicles by awarding up to 30 grants of up to $10 million each to individual communities.
During the previous congress, Sens. Reid (D-NV) and Menendez (D-NJ), introduced the Natural Gas and Electric Vehicles Bill (S.3815), which would have appropriated $3.8 billion for rebates to natural gas vehicle buyers and $500 million in subsidies to encourage the manufacture of natural-gas vehicles. In addition, it would have authorized $1.5 billion for research and development of plug-in electric hybrid vehicles over the next decade. It is expected that this bill will be reintroduced in the 112th Congress.
Position: AJC echoes the president's call for renewed investment in alternative fuel and electric vehicles as part of our nation's effort to reduce U.S. dependence on foreign oil. In addition, as discussed above, AJC continues to urge the passage of a flexible fuel mandate, either as a stand-alone bill or as part of a larger package encompassing other alternative fuels.
Domestic Oil and Gas Exploration (including on and offshore drilling)
Legislation will soon be introduced in the Senate Energy and Natural Resources Committee (expected mid-March) that will incorporate the recommendations of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Oil Drilling. The report calls for a balanced energy policy that meets the following six criteria: maintains a sufficient petroleum reserve to protect America's national security interests; requires the promotion of energy efficient vehicles and transportation alternatives; promotes the development of clean and domestically produced alternative fuels or sources of power for transportation; manages the inherent risks of domestic production of oil and gas; requires safe operation to protect human health; and protects the natural environment, including steps to limit climate change.
The Obama administration took a commendable step in announcing that it was lifting the offshore drilling ban instituted in the wake of the disastrous Gulf spill. With increased oversight measures that address the lax safety and environmental regulations that led to the disaster, the promised resumption of deepwater drilling marked an important step in continuing the development of domestic oil sources and the reduction in our dependence on foreign oil. Nevertheless, notwithstanding that the Department of Interior recently approved its first deep-water drilling permit since last year's spill, the absence of action on several pending permits has raised concerns that offshore drilling may not soon be moving forward.
Position: AJC strongly believes that a multi-faceted approach to reduction in our dependence on foreign oil must include, at least for the short- and medium-term, serious commitment to development of domestic oil sources—with, of course, substantial environmental and safety safeguards. Learning the lesson of last year's disastrous Gulf oil spill, oil producers must pay better heed to their obligation to harvest petroleum in a manner that is state-of-the-art in its attention to environmental safeguards, the government must be more effective in its regulation and oversight of the oil industry, and greater transparency and accountability must be kept in place for all parties involved in the process.
Clean Energy Standard
During his 2011 State of the Union, President Obama called for Congress to pass several clean energy mandates including a mandate to produce 80 percent of the nation's electricity from clean energy sources by 2035. A "clean energy" standard would add nonrenewable sources (such as clean coal and nuclear energy) to the existing renewable energy mandate (i.e. solar, wind, hydro and geothermal). In addition, President Obama requested $8 billion for new clean-energy funding in the upcoming budget, roughly a third more than requested in the 2010 budget. This will likely be paid by cutting tax subsidies for fossil fuel producers.
Position: AJC supports measures aimed at developing clean energy technology, including renewable energy standards, although the focus on AJC's legislative activities is on policies that directly impact America's dependence on foreign oil.