Energy and the State of the Union

One of President's Bush's major themes in last night's State of the Union message was energy independence, wherein he proposed some "painless for the electorate" initiatives. I was disappointed, but not at all surprized, that there was no mention of changing consumer behavior in significant ways, such as by increasing fuel taxes. Biofuels are, as the following column says, may be good ideas but will not significantly impact energy independence in the foreseeable future. Playing around with CAFE will not probably have much real impact (other that causing the auto industry problems) if consumers have no economic reason to choose smaller, lighter vehicles and drive less and more slowly.

Nor was it surprising that President Bush had nothing to say about stationary sources of CO2. Apparently, he still doesn't believe in global warming.



Blindness on Biofuels

By Robert J. Samuelson
Wednesday, January 24, 2007; A23, Washington Post

President Bush joined the biofuels enthusiasm in his State of the Union address, and no one can doubt the powerful allure. Farmers, scientists and venture capitalists will liberate us from insecure foreign oil by converting corn, prairie grass and much more into gasoline substitutes. Biofuels will even curb greenhouse gases. Already, production of ethanol from corn has surged from 1.6 billion gallons in 2000 to 5 billion in 2006. Bush set an interim target of 35 billion gallons in 2017 on the way to the administration's ultimate goal of 60 billion in 2030. Sounds great, but be wary. It may be a mirage.

The great danger of the biofuels craze is that it will divert us from stronger steps to limit dependence on foreign oil: higher fuel taxes to prod Americans to buy more gasoline-efficient vehicles and tougher federal fuel economy standards to force auto companies to produce them. True, Bush supports tougher -- but unspecified -- fuel economy standards. But the implied increase above today's 27.5 miles per gallon for cars is modest, because the administration expects gasoline savings from biofuels to be triple those from higher fuel economy standards.

The politics are simple enough. Americans dislike high fuel prices; auto companies dislike tougher fuel economy standards. By contrast, everyone seems to win with biofuels: farmers, consumers, capitalists. American technology triumphs. Biofuels create rural jobs and drain money from foreign oil producers. What's not to like? Unfortunately, this enticing vision is dramatically overdrawn....

To read the rest of this column, go to:

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/23/AR2007012301562.html


Dan Howes of the Detroit News has some interesting reactions to President Bush's energy declarations in last night's State of the Union Message. To see them, go to:

http://www.detnews.com/apps/pbcs.dll/article?AID=/20070124/AUTO02/701240347/1148

To see the New York Times article of this part of the speech, go to:

http://www.nytimes.com/2007/01/24/washington/24energy.html?_r=1&oref=slogin

The Wall Street Journal take on the subject:

http://online.wsj.com/article/SB116957395027385156.html?mod=hps_us_pageone



Following are summaries of the President's energy proposals:

From the Detroit Free Press:

http://www.freep.com/apps/pbcs.dll/article?AID=/20070124/BUSINESS01/701240403/1002/


"Here are some details of President George W. Bush's 20 in 10 proposal. To reduce U.S. gasoline consumption by 20% by 2017, Bush wants to:

• Increase requirements for renewable fuels to 35 billion gallons a year by 2017. The current targets call for 7.5 billion gallons by 2012. This increase would account for a 15% reduction in gasoline use.

• Increase fuel economy by about 4% a year, starting with the 2010 model year for cars and 2012 for trucks. This would save up to 8.5 billion gallons of gas a year, the additional 5% reduction toward the goal.

If met, the moves would reduce U.S. gas consumption in 2017 to below today's levels and halt the increase in global warming gases from vehicles."

From the Detroit News:

http://www.detnews.com/apps/pbcs.dll/article?AID=/20070124/POLITICS/701240421/1148/

"Autos/energy

Slash gasoline consumption by up to 20 percent by 2017, primarily by increasing the amount of ethanol and other alternative fuels the federal government mandates must be produced.

Give federal officials authority to raise auto fuel mileage standards, allowing automakers to trade or "bank" credits among models.

Double the capacity of the Strategic Petroleum Reserve -- a protection against emergency oil market disruptions caused by terrorism or natural disaster -- to 1.5 billion and fill it by 2027."