US President George W. Bush is substituting politics for perspective on energy.
He's throwing tax credits at fuel preferences in service to the overwrought goal of reducing US dependence on foreign oil.
In a May 16 speech at the Virginia BioDiesel Refinery in West Point, Va., he said, "By developing biodiesel, you're making this country less dependent on foreign sources of oil."
The plant has capacity of 65 b/d.
It's not the only biodiesel plant in the US, of course. Total US biodiesel output, in fact, has scored "a 60-fold increase in 5 years," the president said.
Last year's total: 30 million gal. That's less than 2,000 b/d in a 2.4-million b/d highway-diesel market.
Bush deserves no fault for blandishing an audience. It's what politicians do.
But he went on to regret that less than 1% of US cars burn diesel, unlike in Europe, where nearly half of all new passenger cars run on the fuel. And he promoted tax credits for owners "clean-diesel vehicles."
The president said the US would "save 350,000 b/d of oil" if diesel vehicles made up 20% of our fleet in 15 years.
Where, though, would all that diesel come from? Not from US refineries or biodiesel plants.
And Europe can't supplement US supplies of diesel the way it does gasoline. European refineries, unlike those in the US, produce more diesel than gasoline. If demand projections come true, however, they'll have little diesel for export.
The Atlantic Basin products market increasingly favors diesel on its east flank and gasoline on its west. That won't change, except at unbearable cost, just because the US government decides to prefer diesel.
This is no time to flog US diesel demand. Stocks are low. Prices of diesel are staying above those of gasoline in a pattern unusual for this time of year. Next year, ultralow-sulfur specifications begin taking effect. This is a time to worry about supplysupply in meaningful volumes.
Dependency on foreign oil in an interdependent world isn't the crisis politicians make it out to be. It's certainly no excuse for a government to lose its energy bearings.
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