Bush seeks lower gasoline use, expands SPR

Feb. 5, 2007
US President George W. Bush has set ambitious goals for displacing gasoline with renewable fuels and has announced plans to double capacity of the Strategic Petroleum Reserve (SPR).

US President George W. Bush has set ambitious goals for displacing gasoline with renewable fuels and has announced plans to double capacity of the Strategic Petroleum Reserve (SPR).

In his state-of-the-union address Jan. 23, Bush called for a 20% reduction in gasoline use against projected levels by 2017.

According to a fact sheet accompanying his address, 15 percentage points of the reduction would come from an increase in the federal mandate for use of renewable fuels to 35 billion gal/year by 2017.

A renewable-fuels mandate imposed by the Energy Policy Act of 2005 will reach 7.5 billion gal/year by 2012. The mandate has stimulated an expansion in the US capacity to produce fuel ethanol from corn. Fuel ethanol and corn both receive federal tax subsidies.

Bush proposed to broaden the mandate to include other renewable energy sources, including cellulosic ethanol, biodiesel, methanol, butanol, and hydrogen, plus unspecified “alternative fuels.”

He said the other 5 percentage points to be shaved off projected gasoline consumption would come from changes to the corporate average fuel economy (CAFE) program for new vehicles. His plan would give the secretary of transportation authority to set CAFE standards.

Under Bush’s SPR expansion, US capacity to store crude oil as a buffer against supply disruptions will reach 1.5 billion bbl by 2027. The SPR currently holds 691 million bbl of crude.

“For too long our nation has been dependent on foreign oil,” the president said. “And this dependence leaves us more vulnerable to hostile regimes and to terrorists-who could cause huge disruptions of oil shipments and raise the price of oil and do great harm to our economy.”

Industry reaction

Among industry responses to the energy portions of Bush’s address, Mike Linn, chairman of the Independent Petroleum Association of America, said, “Our best defense against foreign oil dependency is the vast oil and natural gas resources we have here in America. This energy is our true strategic petroleum reserve, and government policies should encourage its development.

Linn, who also is chairman, president, and chief executive of Linn Energy, expressed regret that “the majority of the nation’s oil and natural gas remains off-limits” and said, “Any discussion of federal research and development should also include new technologies that help us recover more American oil and natural gas.”

While the US “must embrace conservation, efficiency, and all forms of American energy for the future,” he said, “The fact remains that for the foreseeable future, oil and natural gas will be our main fuel source.”

Charles T. Drevna, executive vice-president of the National Petrochemical & Refiners Association, also stressed the continuing contributions of oil and gas to US energy supply.

“US energy policy must continue to encourage domestic production of petroleum products and natural gas supplies and the efficient usage of these fuels while maintaining environmental progress,” Drevna said. “It is also important that mandates, price controls, and other punitive measures not be adopted as energy policy.”

He said biofuels “are not a panacea for America’s supply problems, nor can they deliver on the much-touted promise of energy independence.” NPRA doesn’t oppose ethanol or other alternative fuels, he said, “provided their use is based upon market pricing and not mandates and subsidies, which we do not support.”

In a statement, the American Petroleum Institute said ethanol and other biofuels “have an important role in our nation’s present and future energy mix.” It added, “Attaining the full volumes included in the administration’s proposal will require additional technological breakthroughs.”