Let’s Make A Deal On National Energy Policy

When you read the federal fuel efficiency standards , known as CAFE, to an average 35.5 mpg by 2016. Recently, they announced they are raising CAFÉ again for model year 2025, the average fuel economy for cars and light-duty trucks will be set at 54.5 mpg. This will mean a nearly doubling of fuel efficiency compared to cars that are on the road today.

The US Department of Transportation (DOT) and Environmental Protection Agency (EPA) claim it will cut US oil consumption by 12 billion barrels and save over $1.7 trillion at the pump over the life of the program. So let’s give the President credit for pressing hard to improve fuel efficiency.

“These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil,” said President Obama. “This historic agreement builds on the progress we’ve already made to save families money at the pump and cut our oil consumption. By the middle of the next decade our cars will get nearly 55 miles per gallon, almost double what they get today. It’ll strengthen our nation’s energy security, it’s good for middle class families and it will help create an economy built to last.”

The quid pro quo in our hypothetical compromise is that the President will modify his "all of the above strategy" for power generation to accept Mitt Romney’s market-based energy strategy of forcing fuels and technologies to compete for a place in the supply stack. This means calling off the EPA hounds and their war on coal and let coal and natural gas fight it out for the least cost, best fit place on the podium along with wind and solar and other renewable energy technologies.

NOx and SOx regulations are retained and coal plants that lack scrubbers are required to install them. But CO2 emissions regulations are held in abeyance in the belief that the market will re-balance the share of coal and natural gas generation to achieve a substantial reduction in CO2 emissions from, burning clear natural gas for as long as natural gas prices stay low.

But given the long lead time for permitting and building a coal power plant, if natural gas prices rise to the point coal is again competitive on the margin there will be plenty of time to reconsider the policy balance. In exchange, Governor Romney agrees to renew wind and solar production tax credits to 2025 but the President agrees to end loan guarantees, Treasury tax grants and his winners and losers strategy.

There you have it, a compromise that advanced America’s energy and environmental goals, created more policy and regulatory certainty, and facilitates job growth and GDP growth in the economy with a low energy price foundation.

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Is this a great country or what?!#$!

Written By: Gary Hunt