Time to declare independence from expensive oil

shutterstock_194720870Happy Fourth, America. Take the day off. Take three days off, actually.

On this day, 238 years after the phrase “Put your John Hancock right here” was born, we celebrate our nation’s Declaration of Independence from Britain in different ways. We can run a 5K, stay put and watch a parade, buy a hundred bucks’ worth of rockets’ red glare at the fireworks stand, or keep the home fires burning at the grill.

Many of us will observe that most American of traditions – climbing into our cars and hitting the open road. AAA Travel estimates that 41 million Americans are venturing at least 50 miles from home sometime between July 2-6. Eighty percent of them, 34.8 million people, are choosing vehicles as their mode of transport. That’s the highest number since 2007, before the recession.

We cherish our “unalienable rights,” as the Founding Fathers decreed on that mild 76-degree day in Philadelphia (Jefferson took note of the temperature) on July 4, 1776. But our freedom to choose our own destiny ends once we pull up to the gas pump.

At the pump, our only fuel choice is gasoline refined from crude oil. Although domestic oil production keeps growing, surging demand here and around the world has kept prices inflated. The U.S. average for a gallon of regular unleaded on June 24 was $3.667 in the U.S., according to the AAA’s Daily Fuel Gauge Report. That’s 19 cents higher than a year ago.

Fuel Freedom Foundation is working to bring competition to the U.S. transportation fuel marketplace for the first time by making it easier to obtain other fuels like ethanol and methanol. These fuels, which can be made from abundant natural gas, are cheaper to buy and cleaner to burn than gasoline. Giving consumers choices will give them more money to spend, create jobs, improve health and mark the beginning of the end of our addiction to imported oil.

We don’t have to accept high gas prices as a fact of life. We can fight back. Just ask the guys in the powdered wigs who put pen to paper more than two centuries ago.


Resources for the future and an alternative vehicle and fuel pathway

I have been a fan of Resources for the Future (RFF) since my early days in Washington many years ago. While the organization’s reports won’t keep you awake at night nor can they easily convert into a Bollywood movie, they generally provide sound nonpartisan analyses of resource and environmental issues. In this context, the Fuel Freedom Foundation (FFF) retained RFF to independently study the potential economic, environmental and national security gains from replacing a portion of domestic gasoline use in the light-duty fleet with various natural gas-based fuels such as ethanol or methanol.

The request reflected the relatively large price differential between the growing supply of natural gas and gasoline and FFF’s assumption that natural gas-based fuels (ethanol and methanol) could not only offer the U.S. security benefits, they would be cheaper and cleaner than gasoline. If FFF’s assumption was right, public and private sector strategies to encourage the conversion of older vehicles to FFVs and to increase the production of new FFV vehicles in Detroit would seemingly be in order. Similarly, finding financially feasible ways to produce, develop, distribute and successfully market natural gas-based alcohol fuels would appear quite sound.

RFF’s study was completed last September and is available online.

I have read the document many times. It is compelling because it honestly portrays gaps in information and uncertainties concerning public policy and regulation, technology, geography, price trends, competition, and availability as well as access to natural gas-based fuel. Indeed, embedded in the report is the fact that policymaking in public, nonprofit or private sectors or predictions concerning consumer behavior is never perfect. As complexity increases, decisions often require reliance on perfectibility over time, rather than perfection in the present time.

Apart from RFF’s marshalling of available, relevant data and its related analysis, the study’s conclusions are supportive of leadership groups and leaders who seek an “alternative path” in support of the use of natural gas-based fuels and the conversion of older cars to flex-fuel vehicles.

What RFF concluded is that the only replacement fuel currently available to the more than ten million FFV E85-capable vehicles “does not have a cost advantage at the pump over conventional gasoline.” But assuming companies like Coskata, Inc. and Celanese are able to deliver on their financial modeling, live tests and price predictions concerning the production and distribution of natural gas-based ethanol, owners of FFVs, including owners of new and older converted vehicles could see cost benefits near $1 per GGE (gasoline gallon equivalent) in the very near future.

This is no small benefit. It will be particularly important to low and moderate-income folks, permitting them more choices when it comes to jobs, housing and other basic needs. It will also reduce the strain caused by reduced economic and income growth on middle class households. RFF also indicates, with somewhat less certainty as to how much, that there will likely be environmental benefits.

Making this new replacement fuel path viable will require the EPA to lower the costs of certification of kits that help convert older cars to FFVs, and to sanction relatively simple software adjustments, particularly for newer FFVs and their twins (not the human kind but automobiles whose engines reflect FFF characteristics. This path will also need the EPA and advocates of natural gas-based ethanol to work together to develop a vehicle-testing procedure for older cars that is both cost efficient, sound and hopefully, relatively quickly. Finally, it will necessitate a fuel market that reduces, if not eliminates, the almost monopolistic conditions generally imposed by oil companies and often supported, at least implicitly, by government policies and regulations.

Consumers, clearly, would benefit from more competition at the pump and from more pumps devoted to replacement fuels. Auguste Comte, the great 19th century philosopher and founder of positivism, never saw a gasoline station, but his simple motto, “Love as a principle [need for increased natural gas-based flex fuels and need for flex-fuel cars], the order as a foundation [development of policies and infrastructure for natural gas-based fuels and increased FFVs] and progress as a goal [extend consumer choice]” nicely frames RFF’s narrative. In turn, RFF’s study, while recognizing the value of renewable fuels, supports an alternative, natural gas-based replacement fuel as well as a vehicular pathway to help achieve national, regional and local economic, social welfare and environmental benefits. It’s near July Fourth. Let’s move toward freer increased choices among fuels and increased vehicular capacity to use them.