Thursday, September 08, 2005

John Dowd gets it!

Thanks to GreenCarCongress for pointing out the Senate hearing on global oil demand and gasoline prices, and highlighting the testimony of John Dowd. I would encourage everybody to read John's testimony, but here are some excerpts and comments.:’s important to recognize that U.S. consumers and policymakers have far more control over long-term demand than they do over long-term supply. The demand side of the equation is where we have the most leverage and where we must focus our effort and resources.
We all know that oil production is US has been declining since 1970s and will continue to decline further. US may or may not be able to influence what goes on in Russia, Venezuala and other oil producing countries, but it can influence its own consumption habits.
...Meanwhile, a lively debate about whether we are, in fact, beginning to “run out” of oil has recently been picked up even by the mainstream press. My first response to that debate is to say that no one really knows. My second response is to say that I’m not sure it really matters. The question is not whether global oil production has begun to reach a peak. The question is whether the growth rate of supply can continue to keep pace with the growth rate of demand.
This quote very nicely puts in to perspective the debate about peak oil. It is not whether the world as we know it will end, but whether there will be increasing amount of volatility and supply shocks that may await us if we fail to moderate our consumption.
...I would recommend a stronger call for conservation. If, as a country, we were to obey speed limits for the next two months, we would probably conserve more fuel than will be lost by the refinery outages. Reducing speeds from 70 mph to 60 mph, for example, improves fuel efficiency by 15 percent. If Americans want to know what they can do to limit gasoline price inflation, the answer is simple: slow down. I don’t think this is generally known, or believed, by the U.S. public, and it should be. That may be all we can do in the weeks and months ahead.
This is a very poignant paragraph. Several months ago, I noted IEA report titled saving oil in a hurry. What Americans can do immediately to live with Three dollar gasoline is precisely what that report advocated. Most of us are not going to like it, but we can either do it or shut up.
...Our current predicament, simply put, is rooted in the near-total dependence of our transportation sector on petroleum fuels. Our nation possesses only 3 percent of the world’s estimated oil reserves but accounts for as much as 25 percent of global oil demand, the great bulk of it for use in our cars and trucks. When you look at these numbers it’s obvious that controlling our destiny in terms of oil security comes down to controlling the relentlessly growing demand of our transportation sector for gasoline and diesel fuel. Fortunately, the potential for efficiency improvements in this sector is also substantial if the political obstacles can be overcome. The National Commission on Energy Policy found, for example, that a concerted effort to increase fuel economy standards, and promoting hybrid and advanced diesel vehicles, could substantially reduce future petroleum consumption by the U.S. transportation sector. We estimate that improving the average fuel efficiency of the entire U.S. vehicle fleet by 2 miles per gallon—an objective that can be readily achieved using already available, conventional vehicle technologies—would reduce total U.S. gasoline demand by roughly 1 million barrels per day. This amount is equivalent to all of the growth in U.S. gasoline consumption over the past eight years.
This is an aside, but it seems like the National Commission on Energy Policy (NCEP) is slowly, but steadily drumming the beat for increasing CAFE standards. John Dowd works for Sanford Bernstein, which was responsible for playing out the Oil Shockwave Simulation on behalf of the NCEP and Securing America's Future Energy (SAFE).
... Gradually improving vehicle fuel economy through a combination of higher standards, manufacturer and consumer incentives, and other initiatives would essentially “buy us time” to develop the more advanced vehicle technologies and alternative fuels that will someday allow for a more decisive shift away from our current petroleum dependence. Even in the short run, moreover, the benefits of any efficiency improvements introduced in the U.S. vehicle market would likely be amplified as a result of their diffusion to markets in other countries, most of which have as keen an interest as we do in slowing demand growth and blunting their exposure to future oil shocks.
This is a two paths forward strategy advocated by many including this blog. Doing whatever we can to reduce the fuel use NOW is as important, if not more, as working on advanced technology vehicles such as fuel cell vehicles or battery electric vehicles running on hydrogen or electricty generated from renewable sources.
...What we can do is limit our future dependence on oil and our exposure to these risks through thoughtful, long-term policies aimed at promoting a greater supply and diversity of fuel options while at the same time significantly improving the efficiency of our nation’s vehicle fleet. Something good will have come of the current crisis if it impels us to take the long view. We should try to control what we can control. And we should start doing that now.
The key thought here is that the time for action is NOW. I think that John has hit on most of the important points, and I must applaud John Dowd's testimony. If we can make all our congressmen/women to read and understand this testimony, I (somewhat naively) believe that we would be able to move forward.


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