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Breaking Out of the Oil Trap: “Big 3″ Bailout & An Open Fuel Standard

| Saturday November 29th, 2008 | 2 Comments

cropcircleouroboroshillbarn2001a.jpg A great opportunity for the US to break free of the foreign oil trap presents itself before the incoming Obama administration and the US Congress, according to the Set America Free Coalition, a non-profit organization dedicated to breaking America’s dependence on foreign oil: any use of public finance to bail out the “Big 3″ automakers should include establishing an Open Fuel Standard so that most new cars sold in the US will run on a variety of liquid fuels.
The Detroit-based automakers have conveniently shunted aside any real move towards making flex-fuel vehicles though they have said they are willing to commit to make 50% of new cars sold in the US fuel flexible by 2012. Indicative of a glaring lack of responsiveness, or sense of social and environmental responsibility, they have zealously maintained this stance despite the fact it costs only around $100 per vehicle for them to do so, according to Set America Free research.
The “Big 3″ auto executives are shuttling back and forth between their monolithic Detroit headquarters and Washington D.C., again crying wolf to lawmakers in order to preserve their own bacon. The present political-economic drama is shaping up as yet another instance of throwing good money after bad, in the form of public funds and financing no less, something that has become the norm in the US. Lawmakers can change all this by requiring the automakers to do what they’ve chosen not to do for decades.
Set America Free is behind a push on Capitol Hill to pass the Open Fuel Standard Act (Senate bill S.3303; House bill H.R. 6559), a piece of legislation that would catalyze the transition to flex-fuel vehicles and give the driving public their choice of liquid fuels. Enacting this legislation would be beneficial in a number of important respects: it would set us squarely down the path towards cutting the cord on our reliance on oil, imported oil in particular, thereby enhancing energy and national security, promote the development and use of cleaner, less polluting and environmentally damaging biofuels, it would be complementary and smooth the transition to hybrid electric vehicles, and it could lead to a much reduced military presence and sacrifice of life in oil-rich, geopolitical hot zones.
Moreover, it would save consumers money. The price at the pump of methanol, including taxes, distribution and mark-up, comes in at $2.03 per gasoline equivalent gallon, according to Set America Free.


Time for Some Real Change
biofuels_farm.gif The Fed and Treasury have been given a free hand to dole out hundreds and hundreds of billions in taxpayer funds to private companies that by all rights should be allowed to fail. Instead, in time honored tradition, the Bush administration has favored and pushed for a “rescue” that allows Fed chairman Bernanke and Treasury Secretary Paulson to bail out the very same managements that led their banks and funds over the brink by spreading the pain broadly across the base of US taxpayers.
Rather than lending to small businesses and easing the terms of existing mortgages, the money’s going to mergers and acquisitions. Now it looks like the US Congress, sitting president and president-elect are contemplating doing the same for the very well entrenched managements of the “Big 3.”
With a strengthening US dollar – thanks to massive de-leveraging and a flight to safety – the price of crude oil has plummeted in recent months. How have our friends in OPEC responded? Two production cuts, and the likelihood of more. Saudi King Abdullah says oil should be at $75 a barrel. Right or wrong, our dependence on oil and fossil fuels has become a greater and greater liability.
Though other factors are involved, the cost to the public of fighting two wars in the Middle East, not to mention Gulf War I and all the other foreign aid and investment of our military in the region down through the decades has never been factored into the cost of the oil we receive from exporters in the Middle East and elsewhere around the world.
Moreover, any forward thinking organization with public responsibility and accountability, especially government, has to seriously consider and plan for somehow addressing the growing risk and costs of climate change and environmental degradation. Clearly, the present administration has not only consciously chose not to do so, they’ve promulgated policy decisions and taken actions likely to worsen the situation.
Passage of an Open Fuel Standard would rectify a lot of this. The OFS legislation before Congress would require that by 2012 50% of new vehicles would be warranted to run on gasoline, ethanol and methanol or biodiesel. That would rise to 80% by 2015.
As Set America Free points out, the US should take a lesson from Brazil. “Fuel flexibility is complementary to other vehicle technologies such as plug in hybrids. It is a simple and inexpensive feature that should be standard in cars, like seat belts or airbags. The ratio of flex fuel vehicles in Brazil increased from zero to 70% within three years, and thus as oil prices increase consumers in Brazil can protect themselves by putting alternative fuel in their fuel tank.”
To find out more, check out the video and all the other info on the Set America Free Coalition’s web site.
Here’s a link to another short video which puts the big picture numbers behind ethanol and foreign oil in some perspective.


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  • http://www.theenergyroadmap.com garrygolden

    I appreciate the post… but think this type of effort misses a key point.
    The Auto companies don’t have a problem with liquid fuels or oil, they have a legacy cost problems associated with the combustion engine. Too many factors running at too low capacity utilization. Simple.
    It’s about how we build cars, not fuel them that really changes the economics. Flex fuel vehicles still require the same complex network of combustion engine factories.
    Electric motors powered by modular energy storage systems integrating batteries, fuel cells and capacitors change how factories run… at a higher utilization. Reduce supply chains, start making money per mile with services, not per new vehicle.
    Why are we trying to focus on the fuel?
    Oil isn’t the problem, it’s the engine. We need to simplify how cars are built. IMHO!
    Thanks for the post…!! But I think we need to step back a bit- and look at the manufacturing side of the problem.
    Some recent posts to add to the conversation:
    http://www.theenergyroadmap.com/futureblogger/show/1272-the-future-of-the-us-auto-industry-
    Garry Golden
    Editor
    TheEnergyRoadmap.com
    http://www.theenergyroadmap.com

  • Andrew Burger

    I appreciate your appreciation…Who are you again? Just kidding. Your point is well made and well taken.
    This post was not intended to address the very real issue of the need for the US automakers to retool, rationalize and revitalize their production capabilities in the US, something they are clearly incapable of doing, nor was it to provide an overview of your Energy Roadmap.
    It was meant to argue in favor of an Open Fuel Standard and argue that the US government should make this a requirement for any additional taxpayer funding and public finance to the US automakers.
    When we’re talking about weaning ourselves off of oil and petroleum products, fuel choice is very germane and for that we need alternative engine technology, which should include more incremental, shorter term changes to flex fuel vehicles, as well as the more substantial, longer term shift to the type of electric and electronic engine technology you mention.