A Coherent Energy Policy: Conservation?

Many on the Left, including Obama, seem to believe that conservation efforts are a major part of the solution. As part of this effort, the government has mandated that we use use 8 billion gallons of corn ethanol blended into gasoline by the end of this year. Obviously, corn farmers and their representatives are very happy about this. The government is so convinced that ethanol is the answer since we have expended over $37.3 billion in federal subsidies since 1995. However, several studies indicate it takes 29% more energy to produce ethanol than it produces. Ethanol produces 76,000 BTUs per gallon, but requires 98,000 BTUs per gallon to produce it. Does that make sense? Interestingly, if we meet the federal mandate and produce 8 billion gallons of ethanol, we will reduce our dependence on foreign oil by a mere 0.5%.

Most oil is refined into gasoline. Hence, the main way to reduce our reliance on foreign oil is to decrease our reliance on gasoline and, thus, the automobile. However, cars are a fact and necessity of modern American life. I admit that people using their car for a three-block round trip drive to get milk is a waste of gas. Congress has mandated CAFE standards where the civil penalty for failing to meet the standards is $5.25 for tenth of a mile under the targeted standard per vehicle produced. But this does not prevent the auto maker from producing vehicles that violate the standards- they simply pass the civil penalty on to the consumer. Mandates have done nothing to decrease the demand for low MPG vehicles in the United States.

Instead, perhaps a better solution would be using the MPG ratings as a “buyer beware” program for all vehicles. Few people are aware that vehicles exceeding 8,500 pounds- those most likely to be less fuel efficient- are excluded from the CAFE standards. I believe a program that penalizes the purchase and use of the less fuel efficient cars can be achieved through the registration process, not civil penalties against manufacturers which the consumer ultimately bears. There should be a graduated increase in registration fees as the MPG rating decreases and that it should be graduated based on the number of years that vehicle is on the road when engine performance, and fuel efficiency, should decline.

Just looking at registration fees in New Jersey and my proposed system, under an existing registration fee schedule, over the span of six years, the owner of a Toyota Prius would pay $377.50 in registration fees while the owner of a Hummer would pay $550.50. However, by lowering the initial fees for high efficiency vehicles and increasing them for low efficiency vehicles initially, then increasing both the older the vehicle got, in the new system the Prius owner would pay $179.50 (a 52% reduction/reward) while the Hummer owner would pay $1,000 (an 82% increase/penalty). That system, rather than one that penalizes all vehicle owners through higher gas prices- the preferred Obama method- is more fair. Of course, not to the owner of the Hummer, but that would be a financial choice they would have to make. And naturally, there would have to be some mechanism that takes into account fleet purchases for businesses.

Regarding ethanol, this is nothing but one of the largest institutionalized pork projects in American fiscal history. Besides not decreasing our dependence on oil, it also decreases the fuel efficiency of gasoline. It requires costly refinery retrofitting on a seasonal basis and requires additives to decrease the amount of pollution. When liberals decry Big Oil, it is really King Corn they should be protesting against. Today, we produce more corn than we ever did in our history, including the period after World War II when we were feeding Europe also. To illustrate this hypocrisy, Brazil has been efficiently producing ethanol from a non-food crop (switchgrass) for years, yet the farm lobby has prevented the importation of Brazilian ethanol. In 1917, Henry Ford knew a car could run on moonshine, but opted against it for a reason. Too bad politicians a century later don’t realize what Henry Ford knew then.

The solution du jour is the hybrid vehicle that, incidentally, requires gasoline also. JD Power estimates that by 2020, hybrids will be 20% of the US market, but all electric vehicles will be less than 1%. They create a problem all their own. There would have to be a massive construction of recharge stations and it takes energy elsewhere to charge those batteries. Since 2007 alone, the US has doled out $25 billion in grants for enhanced battery development. One Michigan plant touted by Obama opened with a $150 million federal grant and employed all of 300 people. That is $500,000 federal tax dollars for every job created in an area with dubious results. Recently, the on-line publication GreenBeat touted electric cars trying to enter the US market. Have you ever seen these things? They exist already. They are called golf carts! The average price is $67,500 with an average range before recharge of 108 miles and an average maximum speed of 71 MPH. That would mean a recharge station every 105 miles or so. The best ones are the Modec Electric Van and the Smith Electrical Vehicle’s Edison. Both are delivery vehicles with a cost of $41,000 and a range of 150 miles- ideal for urban delivery trucks. India’s Reva Motors produces the G-Wiz that took Britain by storm with heavy government help. However, within two years, sales declined 75% because there were so many problems with the cars that it left many owners actually saying, “Gee Wiz.”

So, we need to cease the government funding a dead end solution- electric cars. Instead, when discussing fuels, a better solution is using liquified natural gas (LNG). First, we sit on huge reserves of natural gas. Second, LNG burns cleaner than gasoline but is as fuel efficient as gasoline. Some argue that they are more dangerous, but studies have shown that vehicles powered by LNG are no more dangerous to operate or fill than regular gas-powered vehicles.

Here is a fact: if 50% of all vehicles were powered by LNG, we would decrease oil imports by 6-7 million barrels per day. That is 75% of our oil imports. That would keep $55 million a day in the country, or $182 billion annually! That is a stimulus program I think we all can live with. Brazil, Italy and even Iran use LNG vehicles on a wide scale. One problem would be the development of filling stations. But, if places like Oklahoma and Utah can do it, larger states with better infrastructure can do it also. The other problem is that more of the available natural gas would be diverted to vehicles and likely cause homes heated by natural gas to suffer price increases. But, that assumes we maintain our current rate of extraction. Of course, we would have to increase domestic production in order to meet increased demand. If Obama’s auto industry wanted to see a real resurgence while decreasing oil imports, addressing environmental concerns, break the cycle of corn subsidies