Wednesday, December 19, 2007

Energy Bill Doesn't Hit On All Cylinders

An 800-page energy bill is going to be signed into law by President Bush today, and while most of the ink will be spilled over the first increase in the corporate average fuel economy standards in 32 years, the bill does little to actually improve American energy independence from foreign sources.
In addition to the 40 percent increase in fuel efficiency for new cars and light trucks by 2020, for a fleetwide average of 35 mpg, the bill requires a fivefold increase -- to 36 billion gallons -- in the amount of alternative home-grown fuels, such as ethanol, that must be added to the nation's gasoline supply by 2022.

Rep. John D. Dingell, D-Mich., chairman of the House Energy and Commerce Committee, said the bill would improve the energy efficiency of "almost every significant product and tool and appliance that we use, from light bulbs to light trucks."

The American Council for an Energy-Efficient Economy has projected that the bill will reduce energy use by 7 percent and carbon dioxide emissions by 9 percent in 2030.

The Washington think tank has estimated it will save consumers and businesses more than $400 billion between now and 2030, "accounting for both energy cost savings and the moderately higher price of energy-efficient products."

Energy analysts project that, although the tougher miles-per-gallon rules will increase the price of a vehicle an estimated $1,500, consumers will save $5,000 in fuel costs over the life of the vehicle, once the new standards are fully implemented.

Not everyone agrees about the benefits to consumers.
The crux of the bill is to improve fuel efficiency in vehicles, which means that we're likely to see a return to the econoboxes of yore and vehicles that consumers simply aren't interested in having. When given the choice between fuel economy or horsepower, you'll nearly always find consumers go for horsepower.

It's also expected that the cost for such vehicles will be at least $1,500 higher than current prices.

More important is the ongoing push to use food products as fuel sources. Ethanol is a horrendous choice for fuel - not only does one get worse gas mileage using ethanol as a fuel, but increased demand for corn based ethanol causes the prices of all manner of food to increase. Everything from corn syrup to beef will see price increases and none of the benefit.

Little is done to deal with renewable resources like wind and tidal power, especially in parts of the country where such projects could actually be successful but for the NIMBY-ots like Sen. Ted Kennedy who preach about using alternative energy sources, only as long as they don't spoil his prime watering holes.

The bill will also eliminate the incandescent bulb from the landscape, after 100+ years of lighting up the night. This too will cause increases in costs to consumers, who have to purchase more expensive options like CFLs and LED systems.

The crux of the bill is not that it increases energy independence from foreign sources, but that it puts the onus of energy conservation on consumers.

I don't have a problem with the government seeking to improve energy efficiencies, but the inability to produce more petroleum domestically is once again a major failing of Congress. The inability to pursue new nuclear power projects in the US means that the nation has to rely on fossil fuels for an increasingly large percentage of its power generation needs, especially as the nation's aging nuclear power plants have to be decommissioned as they come to the end of their safe useful lives.

Let me clarify a bit on the CFL issue. I don't like the idea of mandating the bulb elimination. The market can take care of that quite well - no law was required to phase out vinyl records or VHS or betamax.

When an item comes to market that surpasses incandescents and it catches on with the public, those bulbs will become obsolete. The government will not have to phase out the product. Companies can determine when making such products are no longer feasible or worthwhile.

Meddling in the market is a bad idea.

No comments: