(By Kateri Callahan) As we all are painfully aware, in addition to the human tragedy of the recent hurricanes, the catastrophic storms also are inflicting economic hardship on American consumers and businesses coast-to-coast in the form of high energy prices. Gasoline prices in some areas of the country already have exceeded $3 a gallon and the price of a barrel of oil is now in the $70.00 range. American consumers are finally waking up to the personal and societal implications of our countryâ€™s over-reliance on petroleum in the transportation sector. An Associated Press/AOL poll released in August showed that 60 percent of American consumers expect fuel costs to cause them financial hardship in the next six months. The domestic automobile industry even recently noted that it has witnessed a significant drop in SUV sales as a result of higher gasoline prices.
As we all are painfully aware, in addition to the human tragedy of the recent hurricanes, the catastrophic storms also are inflicting economic hardship on American consumers and businesses coast-to-coast in the form of high energy prices. Gasoline prices in some areas of the country already have exceeded $3 a gallon and the price of a barrel of oil is now in the $70.00 range. American consumers are finally waking up to the personal and societal implications of our country’s over-reliance on petroleum in the transportation sector. An Associated Press/AOL poll released in August showed that 60 percent of American consumers expect fuel costs to cause them financial hardship in the next six months. The domestic automobile industry even recently noted that it has witnessed a significant drop in SUV sales as a result of higher gasoline prices.
Importantly, Americans are turning to their political leaders for help in reducing the high price of gasoline. A Gallup poll showed that energy prices were one of the top five topics that Americans would discuss with the President if they had 15 minutes of his time. Consumers are not the only ones worried: as a stark indicator of this dire situation, energy companies are taking out full page ads in national newspapers calling for consumers to conserve gasoline! Hopefully the recent recognition that energy prices are having an impact on consumers will lead to the Congress and the Administration to take additional actions.
The Congress and Administration may think it sufficiently addressed the issue of energy when the Energy Policy Act of 2005 (EPAct 2005) was signed into law by President Bush on August 8. But it really only nibbles around the edges of our transportation woes. Perhaps the “shining star” of the transportation measures included in EPAct 2005 is a consumer-based tax credit for the purchase of hybrid vehicles. This sliding-scale credit ($250-3,400), which is determined by the qualifying car’s fuel economy and actual gas savings as compared to similar non-hybrid models, is capped at 60,000 vehicles per manufacture, and will be phased out by 2010.
Unfortunately, the new energy law took a step backwards when it included an extension of the current “dual-fuel” Corporate Average Fuel Economy (CAFE) credit. The Alliance continues to advocate for revising this program since dual fueled vehicles today are being fueled almost exclusively—99% of the time—with gasoline. This credit has encouraged manufacturers to put millions of dual fuel vehicles on the road, but it also has allowed them to put more gas guzzlers on the road, and thus the overall effect of the credit has been to increase gasoline use. Though Congress added a new caveat that duel-fuel vehicles must be labeled as such, the Alliance strongly believes that this credit should be tied to the actual use of alternative fuels, not just the ability to run on alternative fuel.
But perhaps the most glaring aspect of the transportation title of the law are the omissions. Amendments to increase fuel economy standards for cars and trucks failed in both chambers of Congress. Provisions to close loopholes and to fix faulty CAFE testing procedures were rejected. According to EPA, model year 2005 light-duty vehicles are estimated to average 21.0 mpg ”“ significantly lower than the required 27.5 mpg. CAFE standard. During the energy bill debate, the Alliance urged Congress to revise the testing procedures so that fuel economy ratings actually reflect real, on-road fuel economy, and to redefine SUVs and minivans to be what they actually are: passenger vehicles, but our attempts proved unsuccessful.
At the Alliance to Save Energy, we believe that the cheapest, quickest, and cleanest way to lower pump prices is to reduce demand through federal policies that encourage greater efficiency in the transportation sector. We will continue to sound our “call for action” by Congress to support policies and programs that will improve the efficiency of our transportation sector, a critical key to national energy security, a cleaner environment and a more competitive economy.
We are encouraged by the persistence of energy efficiency champions in Congress, who continue to introduce legislation that will cut our oil use. On September 14 , Congressmen Ed Markey (D-MA) and Sherwood Boehlert (R-NY) introduced H.R. 3762, which would require automakers to build vehicles that meet a fleet-wide average of 33 miles per gallon (mpg) by 2016. This bill would reduce the amount of oil used by cars in the U.S by 10 percent beginning in 2016. Similar legislation may be introduced in the Senate in the near future.
Policy makers must recognize that we cannot have a real energy policy in this country unless it tackles the enormous threats to our nation posed by the transportation sector’s near total reliance on petroleum ”“ most of which comes from unstable regions of the world, and the price of which is determined largely by demand that continues to grow inexorably. With only 2% of the world’s proven oil reserves within U.S. borders, and a thirst for oil that represents 25% of the world’s consumption, supply-side measures alone will never be enough. Energy efficiency is the cheapest, cleanest and quickest way to extend our supplies; and improving the efficiency of our vehicle fleet helps us toward a secure and sustainable energy future.
Kateri Callahan is President of the Alliance to Save Energy, a coalition of prominent business, government, environmental, and consumer leaders who promote the efficient and clean use of energy worldwide to benefit consumers, the environment, economy, and national security.