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Increase fuel economy of America's autos

by REP Policy Director Jim DiPeso
published May 23, 2004 in the Detroit News

The cover of the latest edition of National Geographic ought to concentrate the mind of every American. In bold letters, the magazine proclaims "The End of Cheap Oil." Two questions spring to mind: Why and what do we do about it?

Second question first. We've been down this road before and figured out an answer. A generation ago, high energy prices unleashed American ingenuity, which led to more efficient use of fuel, electricity and other energy sources.

Today, we use far less energy per dollar of economic product than we did before the 1973 oil embargo, saving the nation hundreds of billions of dollars. But more efficiency opportunities remain to be tapped. Efficiency is a proven strategy for taking control of our energy future. Efficiency is the American weapon that the Organization of Petroleum Exporting Countries fears most.

A modest increase of 2.7 miles per gallon in average auto fuel economy would save the equivalent of today's imports from the Persian Gulf. Significant savings can be achieved through new engine technologies, such as variable cylinder management and hybrid-electric drives. Simply installing replacement tires with low rolling resistance can shave fuel use by 4 percent, at a modest extra cost of $5 to $12 for a four-tire set.

Getting more work out of each barrel of oil will buy time to commercialize new energy technologies, including fuel cells and ethanol produced from abundant crop wastes. The new technologies promise to lessen our vulnerability to overseas events outside our control.

Which brings us to the first question. Why the high gas prices? The laws of economics and geology have converged at the pump. Demand is up in America, which imports close to 60 percent of oil used daily. Demand is up in China, which now is the world's second largest oil consumer. Supplies are tight worldwide. As wealthy nations shake off recession and poor nations develop their economies, rising demand will stretch supplies even tighter.

Unpredictable events shake up the market further. The risk premiums tied to Saudi pipeline bombings and Venezuelan civil unrest show up in pump prices.

Federal forecasts expect the volatile Persian Gulf region, home to the world's largest reserves, to capture a larger share of the market, supplying half to two-thirds of the world's petroleum in 20 years.

America must face up to the problem with big solutions to ensure our long-term security, prosperity and quality of life.

So far, Washington has failed to develop a long-term energy vision. Politicians bloviate about nickel-and-dime fixes - jawboning OPEC or turning scenic public lands into oil production zones, for example.

The quick fixes are not a strategy. Coaxing the Saudis to open the taps may provide short-term relief, but perpetuating our dependence on the House of Saud's whims is not a path to greater energy security.

Boosting domestic output is not a magic wand because new U.S. wells won't keep up with surging demand. A recent Energy Department analysis estimated that full-tilt production from the Arctic National Wildlife Refuge would cut foreign oil's share of U.S. consumption from 70 percent to 66 percent by 2025.

We need three strategies. In the short run, there is only one surefire solution - rediscovering the thrift ethic that was second nature to our grandparents during World War II.

For the medium term, boosting motor vehicle fuel economy standards and offering generous tax breaks for buying hybrid-electric vehicles will push efficient technologies faster into the marketplace.

For the long run, an Apollo-scale project of research and development, incentives, and standards will speed the arrival of a hydrogen economy running on renewable energy resources that America has in abundance.

Keeping America secure, boosting the economy, and protecting the environment depend on making the right energy choices. We must rise to the challenge with bold solutions.