“Victory in Achieving Energy Security and Independence is in Sight, but Washington’s Leaders could Still Blow it” Says Energy Alternatives for the 21st Century

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An independent analysis by the citizen energy-independence advocacy group Energy Alternatives for the 21st Century (EA-21) confirms the conclusions of a just-released BP report that U.S./North America can become energy independent in the near future ... but EA-21 raises the concern that Washington policy makers are turning that dream to dust.

"For years, Energy Alternatives for the 21st Century (EA-21), has advocated energy security and independence. Our calculations confirm what the just-released BP energy study predicts: after years of hard work, finally, victory is in sight,” said EA-21 President Jack Halpern. “Despite this great progress, Washington’s leaders could still blow it if they fail to provide the support needed for advanced biofuels to fill the small remaining gap, and create obstacles to the production of unconventional oil from the Canadian tar sands and U.S. shale.”

Halpern cautioned that that there remain three potential obstacles to success that still lie ahead: the White House veto of the proposed pipeline from Canada to the U.S. gulf refineries, new regulations that would limit the recovery of oil and gas from shale without any scientific basis for those regulations, and a failure to support steps such as the Open Fuel Standard and R&D funding that would help bring advanced biofuels to consumers.

“Washington seems poised to snatch defeat from the jaws of victory,” explained Halpern. “Instead, they should realize that providing the energy we need for transportation will always entail some adverse impact, whether our nations relies on gasoline, natural gas, fuel cells, biofuels or even electricity from wind or solar. So the goal of policy-makers should be to support the best solutions rather than figure out ways to interfere with every proposed approach or project for supplying energy. They should maximize job creation, cost the least, reduce the need to import oil from insecure places, and provide a strategic reservoir of a variety of fuels for the future including sustainable fuels and unconventional oil and gas from tar sands and shale.”

“Despite the claims by naysayers, it now appears that U.S. energy security and an end to dependence on foreign oil from outside North America are well within reach,” said Neil Goldstein, Executive VP of EA-21. “Because of new so-called “unconventional” sources of oil and because of scheduled improvements in automotive efficiency, the gap that must be filled by exports from outside our region has shrunk enormously and could easily be filled by advanced biofuels.”

EA-21’s calculations are provided below.

EA-21 is a not-for-profit public interest advocate for U.S. energy independence that has led the effort for an Open Fuel Standard through production and sale of Flexible Fuel Vehicles that can run on ethanol and methanol in addition to gasoline.

Calculations: How close is the U.S. to Achieving Energy Independence?

Current Status
According to the U.S. Energy Information Agency:
1.    Total U.S. petroleum product consumption is 19.148 million barrels per day (mbd);
2.    Net U.S. imports of petroleum products amount to 9.44 mbd (i.e. 49% of the total petroleum products we consume);
3.    Combining the two figures above we can calculate that, net of petroleum products we export, the U.S. produces 9.7 mbd of petroleum products for domestic consumption;
4.    The U.S. uses 9.034 mbd of gasoline (378 million gallons/day) (i.e. 47% of the total petroleum products we consume).

From this current level, there are several improvements in the import picture that are scheduled to take place:

Scheduled Improvement 1 - Applying Stronger CAFE standards
Improvements in CAFE standards negotiated by the Administration and voluntarily agreed to by the auto industry will raise the average mpg from 27.5mpg for cars and 23.5mpg for trucks to a combined average of 56.5mpg for all vehicles. This approximate doubling of the average mpg will, once all old cars are replaced, cut gasoline consumption roughly in half (i.e. saving one half of the 9.034 mbd of petroleum products currently being used for gasoline). So, there will be a saving of about 4.5 mbd of gasoline. As a result, total U.S. consumption of petroleum products will be reduced to roughly 14.6 mbd (i.e. the current 19.148 mbd consumption minus 4.5 mbd).    Assuming that the U.S. continues to produce 9.7 mbd of petroleum products for domestic consumption that we now produce, the U.S. would need to import only 5.2 mbd of petroleum products after these new CAFE standards take full effect.

Scheduled Improvement 2 – Legally Mandated Biofuels
Under current law (i.e. the revised Renewable Fuel Standard, “RFS2” established by the Energy Independence and Security Act of 2007), the U.S. will be producing 36 billion gallons of biofuels per year, an increase of over 20 billion gallons a year of biofuels from current levels. Assuming that this fuel will have the BTU content of ethanol (80% that of gasoline), it could replace 16 billion gallons of gasoline per year, or more than 1 mbd. Thus total U.S. imports of petroleum products could be reduced to approximately 4.2 mbd (i.e. 5.2 mbd that results from the improvement in CAFÉ standards, minus this 1 mbd from biofuels).

Anticipated Improvement 3 – More oil from Canada
Of the 9.7 mbd of petroleum products that the U.S. currently imports, 2.532 mbd is currently imported from Canada (of this total, 1.972 mbd is crude oil). It has been estimated that, by increasing production from its tar sands, Canada could raise its exports to the U.S. in 2025 to as much as 3.5 mbd of petroleum products (i.e.an increase of approximately 1 mbd). In other words, after taking into account the CAFÉ standard improvements and biofuel production that are about to take place, Canada could supply all but 700,000 barrels per day of the petroleum products that we need to import to meet U.S. needs – even without taking into account the import of a single barrel of oil from Mexico and Brazil or increasing production from other domestic U.S. sources such as the Bakken formation or offshore waters.

In addition to the above, the most important and cost-effective additional step that could be taken would be to mandate the adoption of wide-spectrum Flexible Fuel Vehicles that could run on ethanol, methanol or gasoline. This step would create a market to ensure that the biofuels produced to meet the RFS would be used. And, it would put OPEC on notice that American consumers will no longer be forced to buy their gasoline.

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Neil Goldstein
Energy Alternatives for the 21st Century
(917) 650-1565
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