Monday, June 27, 2005

Given the recent arrival of $60-a-barrel oil, conspicuously absent from the Senate energy bill likely to be passed today is any authorization for drilling for oil in the Arctic National Wildlife Refuge. Granted, the United States will never be able to drill its way out of its oil problems. Nevertheless, excluding from development the nation’s largest untapped onshore oil reserves — a decision that was required to avoid a Democratic filibuster — hardly represents a pro-active energy policy. This oversight needs to be corrected when the Senate legislation is reconciled with the House’s energy bill in the conference committee.

On the other hand, although a ban remains in effect on new federal leases in most of the Gulf of Mexico, the Senate bill does contain a provision calling for an inventory of offshore oil and gas resources. Moreover, as the nation increases its dependency on natural gas to produce electricity, the Senate bill sensibly has given the Federal Energy Regulatory Commission, rather than NIMBY-afflicted state and local governments, the final authority to decide where liquefied natural gas importing facilities will be located. Regarding the emission of carbon dioxide and other greenhouse gases, the Senate defeated an amendment that would have mandated reductions and overwhelmingly endorsed a proposal offering incentives for voluntary reductions.

Nobody claims that, in the near term, the Senate bill would lower the price of gasoline, reduce America’s growing dependency on imported oil or satisfactorily address the concerns of some environmentalists over climate change. Yet, as New York Times columnist Thomas Friedman has recently argued, a combination of existing technologies can be exploited today to immediately begin solving these long-term energy-related problems. Noting that half of Americans drive 20 miles or less each day, Mr. Friedman recommends tax incentives to encourage automakers to offer plug-in hybrid cars, whose batteries, currently capable of storing enough energy to cover 20 miles of driving, could be charged overnight. Drivers traveling less than 20 miles per day would use no oil at all. What about 40-mile round-trip commutes? The first 20 miles would be gasoline-free; and the next 20 miles, powered by an engine getting 50 miles per gallon, would consume less than half a gallon of gas. Over a five-day workweek, the cumulative 200 miles of commuting would use two gallons of gas. That works out to 100 miles per gallon.

Now, Mr. Friedman effectively asks, what if that gallon of fuel used by the plug-in hybrid commuting 200 miles per week is a mixture of 80 percent alcohol (ethanol or methanol) and 20 percent gasoline? In other words, let’s make the plug-in hybrid a flexible-fuel car, which can be done at an additional cost of only $100 per vehicle. The flexible-fuel/plug-in hybrid could then travel 500 miles on one gallon of gasoline. With skyrocketing oil-fuel efficiency, the emission of greenhouse gases would plummet, especially if nuclear energy were used to charge the hybrid’s battery overnight. Mr. Friedman’s scenario invites serious questions about industrial policy and the cost of highly subsidized alcohol-based fuels. But the miles-per-gallon arithmetic does add up.

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