by David Fessler, Energy and Infrastructure Expert
Friday, April 2, 2010: Issue #1230
Why isn’t the U.S. government doing more to get us off foreign oil?
Great question. It’s one I ask myself all the time.
It was clearly on the minds of many attendees at the Investment U Conference in San Diego a couple of weeks ago, too. I lost count of the number of times people asked me about it – and what the United States should be doing to address the problem.
So I decided to see what it would take to drastically cut our oil dependence.
How could we get to the point where we could get by on the oil we have here? To get to the point where it wouldn’t be necessary to import it from anyone. Not even Canada…
Getting America Off Foreign Oil… Now
Let’s start with a few “crude” facts:
Now, here’s the crux of it…
The Mandate That Could Solve America’s Oil Dependence Problem
When you think about the U.S. Congress, “energy” isn’t the first thing that springs to mind.
And when it comes to the energy sector, our elected officials in Washington are in a collective slumber.
But let’s assume for a crazy second that in a stroke of simplicity and common sense, Congress issues a mandate to all vehicle manufacturers.
In 10 Years, America’s Oil Imports Could Be Dramatically Reduced
The total U.S. vehicle fleet is roughly 254 million. Of that, 135 million are cars, 99 million are SUVs and/or pickup trucks and roughly nine million are larger trucks.
And with that mandate in place, 10 years from now, vehicles that run on natural gas will have replaced 76% of all the gasoline and diesel vehicles.
And what about the $10 billion in incentives that the government would shell out to auto companies?
We could phase in a progressive “legacy fuel” tax on gasoline and diesel to offset the tax incentives. It could either be phased out after five years, or left in place to continue to discourage gasoline and diesel use. That would hasten the switch to natural gas.
Of course, with all these natural gas vehicles, we’ll need places to refuel them. So the 167,000 gas stations across the United States will need natural gas pumps alongside the gasoline ones.
In that regard, the government would offer incentives to gas station operators, right along with the ones to auto companies.
That means companies like Clean Energy Fuels (Nasdaq: CLNE) can step up right now and begin installing their refueling stations around the country.
It’s Time for “Somebody” to Get Going…
As the old saying goes, “This ain’t rocket science.”
Perhaps now that the focus on healthcare reform is behind us, we can get back to the business of addressing the rest of America’s crucial issues. And undoubtedly, increasing our energy independence is one of them.
The crude oil import problem reminds me of the old joke about “Everybody, Somebody, Anybody and Nobody.”
The U.S. government needs to step up and be that Somebody.
My scenario is a simple way to solve it… right now. But we’ll never get there if we don’t get started.
C’mon, Congress… wake up.
Investment U… Extra: Why Natural Gas?
Unlike crude oil, the United States is awash in natural gas. We have nearly 2,100 tcf (Trillion Cubic Feet), which equates to a 100-year supply. That’s 33% higher than just three years ago.
And you can bet that figure will rise further. In fact, with technological improvements, I fully expect that estimate to double over the next three to five years.
So how much gas do we need? One trillion cubic feet is enough to run 12 million cars per year. Replace 75% of the U.S. vehicle fleet (190 million vehicles) and we’re still only talking 15 tcf per year.
While electric cars might be the ultimate alternative to fossil fuels, switching to natural gas-powered vehicles gets us a long way down the road towards energy independence.
More importantly, it buys America valuable time to replace power generation with alternatives, further reducing our dependence on fossil fuels.