cleaner cars, less foreign oil

8/7/2019 Cleaner Cars, Less Foreign Oil

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EmBARGOEDNOt fOR DIStRIBUtION OR CItAtION

1 Center for American Progress | League of Conservat ion Voters | Sierra Club | Cleaner Cars, Less Foreign Oil

LEAGUE OF CONSERVATION VOTERS

Cleaner Cars, Less Foreign Oil

A Path to Economic Prosperity and Oil Security

John Podesta, Carl Pope, Gene Karpinsk i March 2011

Introduction and summary

America is suering rom anoher oil price shock less han hree years aer prices hi a

record o$147 per barrel in July 2008. Over he pas monh oil prices rose by over $20

per barrel, or more han 25 percen. Tis price hike reecs poliical insabiliy in manyoil-producing Persian Gul naions. And Wall Sree speculaors have preyed upon oil

users ears abou supply inerrupions o bid up he price o over $100 per barrel.

As he price o oil climbs, so oo does he price or gasoline. Every$10-per-barrel

increase in oil prices booss gasoline prices by 25 cens per gallon. Many Americans do

no have he opion o signicanly reduce heir driving or easily buy more uel-efcien

new cars, so hey spend more on gasoline and less on oher goods and services. Tis

slows our naions sill shaky economic recovery and disrups job growh. Meanwhile,

our economy ships onearly a $1 billion per dayo oher naions o purchase oreign

oil. And higher prices due o insabiliy and speculaion inae he pros o big oilcompanies while Americans wages remain sagnan.

Is ime o ge conrol o volaile oil prices ha are huring our economy, our securiy,

and he everyday budges o American amilies. Tese measures are crucial or long-

erm economic growh, more jobs, and less dependence on oreign oil. Tey work

ogeher o reduce impors and save money.

We propose a bold Cleaner Cars, Less Foreign Oil plan ha has our crucial elemens.

Cut foreign oil use by 5 percent annually to slash these imports in half by 2022.

Imporing oreign oil sends $1 billion per day o oher counries insead o invesing

hese dollars a home. Foreign oil purchases are nearly hal o our rade deci.

Invest in 21st century clean, efficient vehicles and transportation. We need o

build 21s cenury cars ha ge 60 miles per gallon by 2025, rucks wih a 15 percen

improvemen in uel economy, and inves in elecric cars. And we need o modernize

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http://www.usatoday.com/money/economy/2008-07-11-3815204975_x.htmhttp://www.livecharts.co.uk/futures_commodities/oil_prices_historical.phphttp://www.livecharts.co.uk/futures_commodities/oil_prices_historical.phphttp://1.http//www.businessinsider.com/crude-oil-and-gasoline-could-spike-from-gadhafis-long-war-in-libya-guest-post-2011-3http://2.http//www.trumanproject.org/files/papers/Oil_Addiction_-_Fueling_Our_Enemies_FINAL.pdfhttp://www.trumanproject.org/files/papers/Oil_Addiction_-_Fueling_Our_Enemies_FINAL.pdfhttp://yglesias.thinkprogress.org/2010/11/us-trade-deficit-is-half-oil/http://yglesias.thinkprogress.org/2010/11/us-trade-deficit-is-half-oil/http://www.trumanproject.org/files/papers/Oil_Addiction_-_Fueling_Our_Enemies_FINAL.pdfhttp://2.http//www.trumanproject.org/files/papers/Oil_Addiction_-_Fueling_Our_Enemies_FINAL.pdfhttp://1.http//www.businessinsider.com/crude-oil-and-gasoline-could-spike-from-gadhafis-long-war-in-libya-guest-post-2011-3http://www.livecharts.co.uk/futures_commodities/oil_prices_historical.phphttp://www.livecharts.co.uk/futures_commodities/oil_prices_historical.phphttp://www.usatoday.com/money/economy/2008-07-11-3815204975_x.htm


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our ransporaion inrasrucure by providing more ransporaion choices o con-

sumers. Te domesic manuacure o hese cars and rucks o he uure alongside a

21s cenury ransporaion nework will dramaically cu oil use, save vehicle owners

housands o dollars, creae jobs, and resore Americas manuacuring migh.

End tax loopholes for big oil.End billions o dollars o ax giveaways o big oil compa-

nies. Use hese unds o suppor ransporaion choices and deci reducion. Recoverone cen o every dollar o Big Oil pros o inves in advanced vehicle echnologies,

such as cars wih double he uel economy, elecric cars, and naural gas powered

buses.

Stop speculators from driving up oil prices. Prohibi Wall Sree speculaors rom

driving up oil prices by hiring more cops on he bea a he Commodiy Fuures

rading Commission o police oil rades. Tere is evidence ha speculaors are driv-

ing up oil prices o make a quick buck, jus as here were during he record oil and

gasoline prices in 2008.

Presiden Barack Obama and Congress mus ac o make undamenal changes in our

energy policies. Tese sysemic changes we recommend will enable us o nally shed

he chains o oil dependence aer 40 years o impors, high prices, sagnan growh, and

polluion. Bu we mus ac now.

Our nations appetite for oil

Americans have a legendary appeie or oil. For a cenury open roads mean ree-

dom. Bu every presiden beginning wih Richard Nixon is on record explaining o heAmerican people ha his reedom is no longer ree. Te recen Middle Easern democ-

racy movemen is inspiring, bu i also sparked oil price increases ha deliver higher

coss o American amilies. And buying hal o our oil rom oher naions means ha

insabiliy 10,000 miles away can harm us here.

Te botom line is hisimpored oil coss oo much in dollars and in independence.

Te Unied Saes mus ake immediae and long-range acions o lower he price o oil

in he only way ha worksby reducing our use o oil hrough energy diversicaion.

On March 23, oil prices reached heir highes level since Sepember 2008. Tis $20-plus

per-barrel increase is nearly a 25 percen hike rom a monh ago. Economiss esimae

ha a 20 percen rise in oil prices amouns o a ax increase o $150 billion over a year,

only his ax increase is imposed on our economy no o reduce our own ederal bud-

ge deci bu insead o aten he reasuries o counries such as Venezuela and Saudi

Arabia. Tis massive drain on our economy is dragging down our recovery because i

is an immediae problem or businesses and amilies. Tey require as much relie rom

high gasoline prices as we can provide.

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We need o adop measures o reduce oil use, make Big Oil pay is air share, and sop

speculaors rom driving up prices. Beore we presen in ull our recommendaions o do

his, les rs deail why is necessary and proper o do so.

Higher oil prices led to many rising costs

Te bills or our oil dependence add up in many ways. We send nearly a billion dollars

a dayo oher counries o purchase oil, an amoun equal o anoher big bank bailou

every seven days. Foreign oil impors also coun or nearly hal o our rade deci.

Rising oil prices hreaen o hal he curren economic recovery. Analyss projec ha

every $10 increase in a barrel o oil reduces our gross domesic produc by one-enh. So

ar his year, we have los 0.2 percen rom our projeced economic growh or 2011.AP

repors ha Mark Zandi, chie economis a Moodys Analyics, has reduced his orecas

or 2011 economic growh rom 3.9 percen o 3.5 percen, in par because o gas prices.

Now add in he miliary coss. We rely on dangerous or unsable naions or one o every

ve barrels o oil. Te Deense Deparmen repors ha we spend up o $100 billion a year

o provide securiy in he Persian Gulo ensure ha his lieblood o he worlds economy

ows reely hrough his roubled regionand ha gure is in peaceime.

Ten here are public healh coss o burning oil in our cars, rucks, and buses. Te

harmul ingrediens ha orm smog and he carbon-dioxide polluion ha comes rom

our ailpipes, moors, and reneries leads o ashma atacks, respiraory ailmens and

oher serious illnesses. Te Naional Academy o Sciences esimaes ha he addiional

exernal cos o burning oil is approximaely $60 billion annuallydue o premauredeahs, healh care coss, and los produciviy.

Finally, here are real burdens on amilies budges. Teir commues o work, rips o he

grocery sore, visis o heir place o worship, and aking heir children o school are more

expensive. Many have no real alernaives o driving o go o hese and oher places ha

are essenial pars o peoples lives. American amilies, businesses, and governmen have

been orced o spend over $56.2 billion$183.06 per personmore over he pas year

as gasoline prices rise.

High oil prices only slightly reduce demand

Unless we ake acion as a governmen and as a people o reduce our reliance on oreign

oil, rising gas prices will coninue o haun our economy and our individual amily

budges. And rising oil prices only slighly slake our hirs or oil. Gasoline consumpion

is buil in o mos peoples lives. A plumber who drives 50,000 miles a year can jus sop

drivingis his livelihood. Unil recenly, he couldn even buy a highly uel-efcien

panel ruckno one made one.

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http://www.trumanproject.org/files/papers/Oil_Addiction_-_Fueling_Our_Enemies_FINAL.pdfhttp://www.trumanproject.org/files/papers/Oil_Addiction_-_Fueling_Our_Enemies_FINAL.pdfhttp://www.nytimes.com/packages/html/national/200904_CREDITCRISIS/recipients.htmlhttp://www.nytimes.com/packages/html/national/200904_CREDITCRISIS/recipients.htmlhttp://yglesias.thinkprogress.org/2010/11/us-trade-deficit-is-half-oil/http://news.yahoo.com/s/ap/20110310/ap_on_bi_go_ec_fi/us_economyhttp://news.yahoo.com/s/ap/20110328/ap_on_bi_go_ec_fi/us_economyhttp://news.yahoo.com/s/ap/20110328/ap_on_bi_go_ec_fi/us_economyhttp://www.americanprogress.org/issues/2010/04/oil_quench.htmlhttp://www.americanprogress.org/issues/2009/08/securing_future.htmlhttp://www.lungusa.org/assets/documents/healthy-air/toxic-air-report.pdfhttp://www.lungusa.org/assets/documents/healthy-air/toxic-air-report.pdfhttp://www.nytimes.com/2009/10/20/science/earth/20fossil.html?_r=3http://www.eia.gov/emeu/steo/pub/cf_tables/steotables.cfm?tableNumber=9&loadAction=Apply+Changes&periodType=Annual&startYear=2006&endYear=2010&startMonthChanged=false&startQuarterChanged=false&endMonthChanged=false&endQuarterChanged=false&noScroll=falsehttp://www.eia.gov/emeu/steo/pub/cf_tables/steotables.cfm?tableNumber=9&loadAction=Apply+Changes&periodType=Annual&startYear=2006&endYear=2010&startMonthChanged=false&startQuarterChanged=false&endMonthChanged=false&endQuarterChanged=false&noScroll=falsehttp://www.nytimes.com/2009/10/20/science/earth/20fossil.html?_r=3http://www.lungusa.org/assets/documents/healthy-air/toxic-air-report.pdfhttp://www.lungusa.org/assets/documents/healthy-air/toxic-air-report.pdfhttp://www.americanprogress.org/issues/2009/08/securing_future.htmlhttp://www.americanprogress.org/issues/2010/04/oil_quench.htmlhttp://news.yahoo.com/s/ap/20110328/ap_on_bi_go_ec_fi/us_economyhttp://news.yahoo.com/s/ap/20110328/ap_on_bi_go_ec_fi/us_economyhttp://news.yahoo.com/s/ap/20110310/ap_on_bi_go_ec_fi/us_economyhttp://yglesias.thinkprogress.org/2010/11/us-trade-deficit-is-half-oil/http://www.nytimes.com/packages/html/national/200904_CREDITCRISIS/recipients.htmlhttp://www.nytimes.com/packages/html/national/200904_CREDITCRISIS/recipients.htmlhttp://www.trumanproject.org/files/papers/Oil_Addiction_-_Fueling_Our_Enemies_FINAL.pdfhttp://www.trumanproject.org/files/papers/Oil_Addiction_-_Fueling_Our_Enemies_FINAL.pdf


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as he dominan uel o our ransporaion sysem; and inves in alernaive sources o

energy and new, uel-efcien ransporaion neworks. Only a clear U.S. commimen

o reduce oil impors seadily, gradually, bu predicably will pu oil marke manipulaors

ou o business.

Presiden Obama recognizes he urgency o reduce oreign-oil impors. In 2008, he

Obama-Biden campaign commited o save more oil han we currenly impor rom heMiddle Eas and Venezuela combined wihin 10 years, abou 3.3 million barrels a day.

In 2008, he Unied Saes impored an average o 3.3 million barrels o crude oil per day

rom he Persian Gul and Venezuela.

o achieve his goal, he Unied Saes should cap is impors a 10.5 million barrels per

day in 2012, and hen reduce impors by 5 percen o his cap, or 500,000 barrels per

day, annually, unil we reach he presidens iniial goal in 2018. Congress should enac

a limi on he imporaion o oil and peroleum producs wih a limi ha declines by an

average o 500,000 barrels per day annually.

We should hen coninue o urher reduce impors down o 5.5 million barrels a day by

2022. Tis would cu impors in hal over en years. Tis reducion arge is more han all

he oil we impor rom he Easern hemisphere, including he Persian Gul and Arica.

In 2010, he Unied Saes had oal ne peroleum impors o 9.4 million barrels per

day. Tis year impors will likely rise o 10.5 million barrels a day. Te impor limia-

ion program would cap hem a 10.5 million barrels a day in 2012, and hen begin a

gradual, seady, and predicable decline in oil impors over he ollowing years. I would

help expand he marke or nonoil ransporaion uels. Tis would pu he naion ono

a pahway o lower energy coss and energy independence. Tis is a reasonable, pru-den, and achievable proposal o reduce he economic and securiy hrea posed by our

dependence on oreign oil.

Build 21st century fuel-efficient vehicles and transportation networks

o cope wih he cap on oreign-oil impors and o jumpsar rapid and susained inves-

men in new modes o ransporaion, which will boos job growh now and ino he

uure, we need o build 21s cenury vehicles ha maximize uel efciency and inno-

vaion, and reduce polluion. Tis requires invesmens, incenives, and sandards o

make sure ha all our vehiclescars, rucks, buses, rains, planesare modernized and

improved o ge as many miles ou o every gallon o uel hey use, and o use uels oher

han oil when possible.

Te oil we don wase is oil we don have o impor.

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Nex years cars will arrive in showrooms across he naion his all. Because o acions

by Presiden Obama, hese vehicles will have o achieve an average uel economy o

29.7 miles per gallon. Tis is he rs signicanly higher average uel-economy sandard

since he original 1975 uel-economy law was ullyimplemened in 1989. Te ee-wide

uel-economy sandard or new vehicles sold in model year 2016 is se a 35.5 miles per

gallon, wih a carbon-dioxide polluion sandard o 250 grams per mile. Tis is a one-

hird improvemen in uel economy compared o oday.

Tese new sandards will save nearly1.8 billion barrels o oil over he lie o hese

vehicles. Te average owner o a new car will save a leas a neto $2,800 rom lower

gasoline purchases, bu will save much more i gasoline prices remain high. Bu more

can be done, and more needs o be done.

Maximize fuel efficiency and pollution reductions

Te Obama adminisraion and Caliornia are developing new uel-efciency and emis-

sions sandards ha improve on he requiremens or model year 2012-2016 vehicles.

Te nex improvemens will begin wih 2017 models and culminae in 2025. Tese newsandards should reduce oil use and polluion by 6 percen per year o achieve an aver-

age combined uel economy o a leas 60 miles per gallon or cars and ligh rucks in

2025 (and emi no more han 143 g/mile o carbon dioxide).

Tis would urher reduce oil use by 2.8 million barrels per day in 2030, in addiion o

he savings rom he 2012-2016 program. I gasoline coss $3.50 per gallon when hese

cars are on he road, drivers would save a ne o $7,700 in reduced-gasoline purchases

over he lie o he vehicle. Te 60-mpg sandard or 2025 compares o he European

Union uel-economy requiremens o nearly 65-mpg sandard in 2020, which means

ha his sandard is echnologically and economically achievable. In addiion, auo com-panies will have o produce even more uel-efcien cars or he EU marke.

According o ederal and sae engineers, echnologies are available today ha could

decrease he oil use and polluion o new vehicles beween 3 percen o 6 percen annu-

ally beginning in 2017. Tese echnological advances include:

High srengh, lighweigh maerials Beter aerodynamics and more uel-efcien ires More efcien engines and ransmissions Adding sar/sop echnologies o reduce uel use More hybrids, plug-in hybrids, and elecric vehicles

Tese and oher echnologies would coninue o provide consumers wih a wide range

o vehicle choices.

By seting he 60-mpg sandard or 2025 now, he auo indusry would have ample

imea dozen yearso mee i. Seting a lower sandard, as some advocae, would

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coninue unnecessary oil use, and orce consumers spend billions o dollars more on

uel. In addiion, American auo companies would miss an opporuniy o ou-innovae

heir oreign compeiors.

Reduce fuel use by medium and heavy duty vehicles

Medium- and heavy-duy vehicles use approximaely12 percen o all crude oil con-

sumed in he Unied Saesmore han wo million barrels per day. Presiden Obamahas ordered he Deparmen o ransporaion and Environmenal Proecion Agency

o develop:

[Te] rst-ever program to reduce greenhouse gas emissions and improve uel e-

ciency o medium- and heavy-duty vehicles, such as the largest pickup trucks and vans,

semi-trucks, and all types and sizes o work trucks and buses in between. Tese vehicles

make up the transportation segments second largest contributor to oil consumption

and GHG emissions.

Te new uel-efciency and emissions rules will be nal in July 2011, and implemenedor vehicles buil in model years 2014-2018. Tis will save 500 million barrels o oil over

he lie o hese vehicles.

Tese sandards mus be complemened wih sandards or he van railers ha reigh

rucks/racors pull o reduce uel consumpion by anoher 10 percen. Once hese rules

are nished, he Deparmen o ransporaion and EPA should begin anoher round o

uel efciency and emissions improvemens or rucks buil beween 2019-2025.

Other steps to reduce oil use from vehicles

Improving auomobile uel economy by 70 percen in 15 years will signicanly reduceoil use. Tere are oher seps ha would urher reduce oil use. Shiing rom oil-based

moor uels o elecriciy whenever possible would cu oil impors. aking cars o he

gas pump and plugging hem ino he grid would uilize domesic elecriciy ha will

also become cleaner as we ransiion rom diry coal o cleaner naural gas and emission-

ree wind and solar power. We should also deploy domesic naural gas as a ranspora-

ion uel or heavy-duy vehicles such as delivery ees, buses, and heavy rucks.

Encourage the purchase of electric vehicles

Plug-in hybrid elecric cars and all-elecric vehicles, including he Chevrole Vol and

he Nissan Lea, are arriving a Americas auo showrooms. Te rs Vol users repor

uel economy onearly 170 miles per gallon aer 1,000 miles o driving. And he Lea

and oher all elecric vehicles use no gasoline a all.

Presiden Obama proposed o have 1 million elecric vehicles on he road by 2015. We

mus add a second goal o his arge by seeking o pu an addiional 1.5 million elec-

ric vehicles on he road by 2020. Tis will require he expansion o exising incenives

or individuals o purchase hem and communiies o build recharging inrasrucure.

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Buyers o hese and oher elecric vehicles are eligible or a $7,500 ax credi o ose

some o he purchase price. Convering his inducemen ino a ax rebae a he poin

o purchase or lease would increase he incenive o purchase an elecric vehicle. Tis

enicemen should coninue unil 2015. Addiionally, Congress should adop he Whie

House proposal o increase he corporae ax credi eligibiliy rom 200,000 o 500,000

elecric vehicles sold per company.

Te presidens proposed scal year 2012 budge would und a race o he op or

communiies ha plan o build recharging inrasrucure. Te program mus expand as

he use o elecric vehicles increases so he 20 larges meropolian areas have adequae

recharging inrasrucure o suppor hese gasoline-ree vehicles by 2020. In addiion,

we should coninue o inves in advanced batery research and developmenand provide

incenives or domesic manuacurers o his vial 21s cenury echnology. Te Indiana

Universiyrepor Plug-in Elecric Vehicles: A Pracical Plan or Progress includes all o

hese recommendaions as par o a sraegy o reach he 1 million EVs goal.

Alas, he House-passed FY 2011 budge would eliminae unding o help domesicauo plans conver o build signicanly more uel-efcien vehicles, including elecric

vehicles. Te nal FY 2011 spending plan should resore his cu so American acories

will produce he cars o he uure. And his loan program should coninue in FY 2012

and beyond as he demand and producion o elecric vehicles expand.

Invest in natural gas trucks

Heavy-duy vehicles use 12 percen o Americas oil so he issuance o he rs uel-

efciency and polluion sandards or hese vehicles is very imely. Like cars, rucks mus

use oil-based uels more efcienly as well as replace hem wih a domesic, cleaner uel.

Elecriciy is an excellen alernaive uel or passenger vehicles bu i won work or

some medium and heavier rucks and buses. Te large amouns o energy needed o

power hese heavier vehicles requenly requires oo many bateries ha would add oo

much weigh and ake up oo much space. Insead, naural gasin he orm o liqueed

naural gas, or LNG, or compressed naural gas, or CNGis he bes available aler-

naive uel or hese vehicles. Because many o hese vehicles are shor-haul, cenrally

ueled vehicles, only a limied number o naural gas reueling saions are necessary.

Carbon dioxide polluion rom boh peroleum- and naural-gas-based uels vary widely

depending on he source and he specic echnology deployed. Bu because a Briish

Termal Unian energy measureo naural gas conains one-quarer less carbon

han a BU o peroleum, naural-gas-based uels enjoy a naural, and in many cases

subsanial, advanage over peroleum. And given he curren supply siuaion, mar-

ginal uses o naural gas will be me by domesic producion and will displace marginal

impors o oreign oil.

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Analysis by he Cener or American Progress shows ha, by 2035, naural-gas-powered

heavy rucks could reduce oil use by1.2 million barrels per day, or 45 percen o he pro-

jeced oil consumpion o heavy rucks by 2035. Tese uels are cheaper per mile com-

pared o diesel uel as well as any oil price higher han $31 per barrel. Naural gas has been

as low as one-quarer o he price o diesel uel on a dollar per uni o energy basis.

We mus se a arge o have 1 million each o naural-gas-powered medium and heavyrucks on he road by 2020. Tis is a quarer and a h, respecively, o he exising ees.

Tese arges could save a oal o a leas a hal-million barrels o oil per day. o mee his

arge, he ederal governmen mus creae incenives o buy naural gas rucks. In addi-

ion, i should also inves in he consrucion o naural-gas reueling inrasrucure.

Recen echnological breakhroughs made i possible o produce shale gas rom deep

below he Earhs surace. Tis dramaically increases esimaes o he U.S. supply o na-

ural gas, making i possible or i o replace oil or ransporaion and coal or elecriciy.

I is essenial, however, ha all naural gas producion occurs while proecing publichealh and he environmen. Federal and sae governmens mus esablish and enorce

rigorous saeguards o proec air and surace and ground waers rom polluion rom

he procedures used o produce shale gas, including hydraulic racking. Tis is a ech-

nique or producing naural gas rapped in shale rock deep under he Earhs surace.

Congress mus close he exising exempions or he oil-and-gas indusry rom he Sae

Drinking Waer Ac and oher laws.

A small ee on gas producion should provide revenue or polluion monioring and

enorcemen o ederal and sae saeguards. Producers o his gas mus also publicly repor

on he oxic chemicals used in racking. Finally, gas producers mus be required o capureugiive mehane rom racking o preven emission o his poen greenhouse gas.

Invest in modern, efficient transportation choices

Millions o Americans are locked ino using heir cars because o limied ransporaion

choices. Teir communiies lack aordable, convenien buses; subways; or oher means

o ransi. Some communiies lack sae biking and walking areas. Workers mus spend

hours in congesed driving nighmares. People mus drive a car o ge a gallon o milk

where housing is separaed rom services and ameniies. Seniors ace he loss o heir

reedom when hey are no longer able o drive a car.

Businesses are also consrained by limied choices, which have real economic coss.

Shipping goods is more expensive because curren railroad botlenecks orce hem

ono rucks, which increases oil dependence and polluion. More ruck reigh adds o

highway congesion and road wear and ear. oo much o our reigh moves on rucks

because we have invesed oo litle in our rail sysem. Inrasrucure and planning

improvemens are necessary o provide genuine ransporaion alernaives or boh pas-

sengers and reigh.

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In addiion, Congress should creae an Inrasrucure Bank ha would lend money

or large-scale inrasrucure projecs, including unds or he repair and rehabiliaion

o highways, ransi, and railroads. Tese unds would be paid back over ime by olls or

local dedicaed axes. Te ederal governmen would spur invesmen in hese modes by

puting in he rs dollars and atracing privae parners. Every ederal dollar loaned o a

projec will be mached by as many as six privae dollars.

End tax breaks and tax loopholes for Big Oil

A a ime o grea economic upheaval or mos Americans, Big Oil companies coninue

o prosper. While many Americans los heir jobs and small businesses wen bankrup in

2009 and 2010, he larges oil companies sill made money hand over s. Te Big Five

companiesBriish Peroleum, or BP; Chevron; ConocoPhilips; ExxonMobil; and

Royal Duch Shellmade a combined pro o $65 billion and $76 billion (he 2010

BP Deepwaer Horizon disaser cos BP a leas $20 billion, so overall Big Five pros

would have been much higher wihou i) in 2009 and 2010, respecively (calculaed in2011 dollars).

Ye over he coming decade, Big Oil companies will receive more han $40 billion in

oally unnecessary ax breaks or an indusry where he ve larges companiesmade

nearly $1 rillion in pros over he pas 10 years. Big Oil companies have an eecive ax

rae o only 10 percen compared o he average American wih an eecive ax rae o

20 percen. Tese axpayer handous include benes rom measures designed o assis

oher indusries.

Te Obama adminisraion has called on Congress o reduce hese subsidies by $40 bil-lion over he nex 10 years. In he las wo Congresses, he House passed such measures

on several occasions bu hey salled in he Senae. Is also popular wih voers. Te

recen Wall Street Journal/NBC poll ound 74 percen o he American people suppor

an end o oil-indusry welare and 47 percen srongly suppor i.

Ye he House o Represenaives his year jus rejeced a proposal o eliminae hese sub-

sidies or some o he riches companies in he world. On March 1, 2011, he Republican-

led House deeaed a moion o recommi oered by Rep. William Keaing (D-MA)

ha would have eliminaed many o hese ax subsidies. I ailed by a voe o 176 o 249,

wih all Republicans and 13 Democras voing o keep hese ax loopholes.

Big Oil companies desperaely wan o keep hese ax breaks ha hey don need or

deserve. And despie heir claims, hese handous have litle impac on he amoun o

oil hey produce or is price. AJoin Economic Commitee repor conrmed ha he

removal or modicaion o [one o hese subsidies] is unlikely o have any eec on

consumer prices or oil and gas. Te commitee also ound ha subsidies do no aec

producion decisions in he near erm.

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Unorunaely, i ailed in he House by a voe o 174 o 251. Congress should pass such

a proposal o begin collecing money owed o he axpayers or he privae removal and

sale o our valuable oil-and-gas resources rom ederal waers. I would generae$1.5

billion in 2011 alone.

One way o produce more oil and generae more royaly revenue would be o require

large oil-and-gas companies o use or lose heir exising leases. Te Deparmen oInerior jus released a repor ha ound more han 70 percen o he ens o millions

o oshore acres under lease are inacive, meaning hey are no producing oil or do no

have pending exploraion or developmen plans. Tis includes abou 24 million inacive

bu leased acres in he Gul o Mexico ha could have more han 11 billion barrels o oil.

Tis is a huge sore o oil ha could displace oil impors.

Presiden Obamas budge would place a $4-per-acre annual ee on energy leases in he

Gul o Mexico ha are designaed as nonproducing. Te budge proposal projecs he

ee would generae $1.2 billion rom 2010 o 2019. A similar bill was inroduced by

Sens. Rober Menendez (D-NJ) and Bill Nelson (D-FL) and Reps. Ed Markey (D-MA)and Rush Hol (D-NJ). Te Senae plan would generae nearly $900 million.

Use money from loopholes and royalties for transportation investments and deficit reduction

Closing he ax loopholes and paying a air royaly rom axpayer-owned oil aken

rom ederal waers could provide $4 billion in 2011 and more unds in laer years.

Tis money should be invesed in oil-efcien ransporaion neworks and reduce he

ederal budge deci. Te ransporaion neworks would reduce oil demand and assis

middle- and low-income amilies acing higher prices by making buses, subways, sree

cars, and oher public ransporaion as well as in uel-efcien shipping ransporaion

or businesses o cu he cos o ruck hauling. Tis is criical since many o hese ransisysems ace nancial sress due o seep cubacks in governmen unding.

I ha weren difcul enough, many ransi sysems are orced o urn away cusomers

when here is an oil-and-uel price spike. For insance, he American Public ransporaion

Associaion deermined ha in he mids o he 2008 record gasoline prices more han

hal [o ransi agencies] repor hey are allowing crowding beyond local service, and our

ou o en (39 percen) repor hey are now urning away passengers.

Te inabiliy o local ransi sysems o cope wih rising demand when gasoline prices

spike urher reduces he abiliy o our counry o reduce consumpion and bring down

demand and price when oil ges expensive. Tis ype o program could ose pending

are increases and help ransi sysems mainain ull service by avoiding layos, hereby

mainaining or increasing oil savings.

One soluion o hese problems was proposed in 2010 by hen-Sen. Chris Dodd

(D-C) and 11 colleagues. Tey inroduced a bill o help such ransi sysems cope wih

sae and local unding cus. I would have auhorized up o $2 billion o assis public

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ransi sysems suering rom reducions. Te Public ransporaion Preservaion Ac

o 2010 (S. 3412) would have provided resources o help resore and preven service

reducions and layos, or are increases ha occurred due o decreased sae and local

unding. Te revenue generaed by closing loopholes and recovering royalies should be

pu o his purpose.

Use a tiny part of huge profits to invest in f uture oil-reduction technologiesTe pro moive is a criical elemen in he drive or improvemens and innovaion in

every secor o he economy. Oil producion is a dangerous, diry, and expensive busi-

ness, and hose companies ha produce he oil ha uels our economy deserve o make

a pro.

A he same ime, many o hese companies earn huge addiional pros wihou

addiional eor due o evens beyond heir conrol. For insance, oil prices jumped by

$20 per barrel over he las monh due o insabiliy in he Persian Gul, even hough

producion coss have deviaed very litle. Tese pros come rom money aken ou o

Americans purses and walles. Is ime Big Oil reurn a small amoun o hese price-spike bonus paymens.

We propose ha he Big Oil companies diver a iny porion o heir prosone

penny on he dollarino a Fuure Oil Reducion echnologies und. Tis FOR und

would deend Americans rom oil dependence by nancing research, developmen, and

deploymen o innovaive vehicle and uel echnologies ha reduce oil use. Tis could

include invesmens in advanced elecric-vehicle bateries, ulra-efcien inernal com-

busion engines, advanced biouels, recharging inrasrucure, and oher oil-reducion

echnologies. I could be overseen by he Deparmen o Energys Advanced Research

Projecs AgencyEnergyas par o is eors o help develop ransormaional cleanenergy echnologies.

I he FOR und exised during he previous decade when he Big Five oil companies

made $900 billion in pros (in 2011 dollars), hey would have conribued $9 bil-

lion o inves in oil-reducion echnologies. In comparison, he American Recovery

and Reinvesmen Ac o 2009, which jumpsared advanced batery producion in he

Unied Saes, had only $3.3 billion or clean vehicles.

Stop speculation from driving up oil prices

Speculaive money seeks volaile invesmens. Oil has become such an invesmen.As oil prices rose $20 per barrel over he pas six weeks, here are emerging signs ha

speculaors are playing a par in driving up prices. Bloomberg repors ha

Large speculators and unds increased net-long positions, or wagers on higher prices,

by 2 percent in the seven days ended March 8 to 311,632 utures and options, the most

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in records dating back to June 2006, according to the Commodity Futures rading

Commissions weekly Commitments o raders report. Te total has jumped 68 per-

cent since Feb. 15.

New daa released by Bar Chilon, a commissioner o he Commodiy Fuures rading

Commission, or CFC, shows ha speculaors increased heir number o energy uures

conracs by 64 percen since June 2008, accouning or a oal 1 million conracs as oJanuary 2011. Tis is he highes level on record and an indicaion ha speculaors are

buying oil uures a relaively low prices, and hen hoping o drive up he price o make

money rom he sale o hese uures in a ew weeks or monhs.

Presiden Obama noed ha i we see any eors o ake advanage o hese price spikes

hrough price gouging, were going o go aer ha. Te CFC has he responsibil-

iy o police commodiies markes, including oil. Te CFC mus crack down on

speculaors by using he new ools provided under he Dodd-Frank Wall Sree Reorm

and Consumer Proecion Ac o 2010. Tis includes limiing he number o uure oil

conracs speculaors can buy, or increasing he amoun o money hey mus provide obuy hem. Finally, he CFC needs enough invesigaors o police oil rades and preven

marke manipulaion designed o drive up prices.

Unorunaely, he House-passed FY 2011 coninuing resoluion, H.R. 1, does he exac

opposie. I would cu more han a hird o he CFCs unding rom FY 2010 levels,

leading o massive layos o invesigaors, and crippling is abiliy o police oil rades and

preven marke manipulaion o prices.

Anoher way o limi he poenial or speculaors o manipulae he marke would be o

charge a small ransacion ee or oil speculaors. People who need oil mus buy iandhedge ilong erm. Only speculaors churn conracs daily, someimes hourly. Te ee

per conrac should increase as he speculaors volume o uures conracs increases.

Oil end users, such as airlines, should be exemp. Te unds levied could pay or more

oil-marke cops o police rades and preven he marke manipulaion o prices ha can

devasae middle- and low-income Americans, and oil-dependen businesses.

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http://www.businessweek.com/news/2011-03-15/energy-speculation-highest-on-record-cftc-s-chilton-says.htmlhttp://www.businessweek.com/news/2011-03-15/energy-speculation-highest-on-record-cftc-s-chilton-says.htmlhttp://www.whitehouse.gov/the-press-office/2011/03/11/news-conference-presidenthttp://www.cftc.gov/http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Acthttp://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Acthttp://menendez.senate.gov/newsroom/press/release/?id=cdba5cc1-07a9-4d2c-af5c-c3200228d520http://menendez.senate.gov/newsroom/press/release/?id=cdba5cc1-07a9-4d2c-af5c-c3200228d520http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Acthttp://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Acthttp://www.cftc.gov/http://www.whitehouse.gov/the-press-office/2011/03/11/news-conference-presidenthttp://www.businessweek.com/news/2011-03-15/energy-speculation-highest-on-record-cftc-s-chilton-says.htmlhttp://www.businessweek.com/news/2011-03-15/energy-speculation-highest-on-record-cftc-s-chilton-says.html


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Conclusion

Our Cleaner Cars, Less Foreign Oil plan has our key elemens: cuting oil impors;

building 21s cenury vehicles and creaing more ransporaion neworks; ending ax

loopholes or Big Oil; and cracking down on oil speculaors. Te combinaion o hese

bold proposals would grow he economy, enhance our securiy, help he middle class,

and proec public healh.

We invie hose wih beter ideas o mee hese challenges o lay hem ou. Te approach

oulined here will boos American innovaion, securiy, and solvency by making unda-

menal changes o move o o oil.

Tis is no easy bu i is also no as dauning or impossible as many voices would have

us believe. And across our naion, Americans in all regions and o all persuasions would

suppor hese measures. Tey would urge our eleced ofcials o ake he leadership pah

ha goes beyond oilhe pah o naional independence.

Aer all, one o he very rs exercises o American naionalism was a decision ha we

would no longer impor a produc ha economically enslaved usin 1773 i was ea,

oday i is oil. Adopion o our plan would increase our economic reedom while grow-

ing our economy and proecing our childrens healh. On his one challenge, perhaps,

he ea Pary and he Obama adminisraion can agree.

John Podesta is President and CEO o the Center or American Progress. Carl Pope is the

Chairman o Sierra Club. Gene Karpinski is the President o the League o ConservationVoters.

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