Why You Should Support the Open Fuel Standard Even if You Are Against Mandates in Principle

Thursday, October 11, 2012

The Open Fuel Standard says that if you're going to sell a car that can burn gasoline, then it must be capable of burning methanol and ethanol as well. Cars will no longer be limited to burning gasoline only. It's not a big change to the car. GM says it adds about $70 to the production cost of a car (and they ought to know because they've made more flex fuel cars than any other American car company).

But this is a mandate. And for some people, that's a deal breaker. If it is for you, below is a list of reasons to reconsider. None of them are good enough to justify changing your mind on something as important as the mandate principle. But all of them together are more than enough to justify making an exception for the Open Fuel Standard. Here they are:

1. The United States is in a Catch-22. Automakers don't want to make cars for which there are no fuel stations. And fuel stations don't want to add pumps for a fuel cars can't use. The Open Fuel Standard gets around this impasse, and makes it happen quickly. As soon as the bill passes, the whole industry will be confident there will be a growing market for alternative fuels, and infrastructure will begin appearing within three years. When these new fuel stations appear, and people can see that there is fuel available for their car that is cheaper or that puts that money into the pockets of American workers, they will start converting their cars to flex fuel by the millions.

2. Our government has a legal responsibility to break up monopolies that harm its citizens. Certainly OPEC qualifies as such. We should sue them because what they're doing is illegal — a monopoly that harms the public good is against the law. If OPEC was an organization inside the United States, our government could and would break up that monopoly. But they are an organization outside our borders, so we can't. Even if we could, I don't know if we would because we need their oil.

And why do we need it so badly? Because 97 percent of all transportation relies on oil. So our entire economy rests on oil. We can't risk disrupting our fuel supply (OPEC would certainly retaliate with another oil embargo; their first one in 1973 devastated our economy).

However, our government could break up this monopoly in another way — with the Open Fuel Standard. Right now most of us, when we want to drive, have only one choice: gasoline. It's an artificially-induced monopoly. And the only reason we have no choice is that our cars can only burn one fuel.

3. Automakers are slowly shifting over to flex fuel vehicles already, and we should just let the market move at its own pace, but we are under a time pressure. Astonishing amounts of Saudi oil money is being used against America as Saudis buy up corporations, spend lavishly to gain influence in our media, universities, and government, and build mosques that insist upon Wahhabi Islam, an extremist, fundamentalist Islamic ideology. Because of Saudi billions, 90 percent of all Islamic institutions in the world are controlled by Saudis. It is not in America's best interest to allow this to continue as automakers take their time.

4. Taxpayers bailed out the car companies when they were in trouble. They owe us. And this is a very small thing for them to do. In fact, Ford and GM already make plenty of flex fuel cars which they sell to China and Brazil.

5. Brazil had a flex fuel mandate awhile ago and it has been good for their economy and made them significantly less vulnerable to the recessions caused by OPEC's destructive manipulaton of oil prices. And Brazil went from an oil importing country to an oil exporting country.

6. The purpose of preventing the government from interfering with business is so the free market can decide. But the free market is not deciding, because OPEC is functioning as a monopoly in two different ways: First, it is a large enough cartel that it can force (or mandate) the worldwide price of oil. It can make the whole world pay whatever price per barrel of oil it wishes. And second, at the pump there are no options. The reason there are no options (except oil) is because our cars cannot burn anything but gas.

So this Open Fuel Standard "mandate" is actually a counter-mandate. It introduces freedom by law where there is at present no freedom (if you want to drive, you have to use oil in most places and for most cars, and when you buy gas, you have to pay what OPEC decides).

What OPEC does is illegal and their monopoly should be broken up. This counter-mandate is the next best thing, and it won't cost taxpayers a dime.

7. Automakers are receiving subsidies already. Automakers get money from the government if they sell a fuel-efficient car, but not if they sell a flex-fuel vehicle. Without meaning to, we have set things up in a way that keeps us limited to gas-only fuel stations.

8. This bill would not take away anything you now have, and it will give us all something we now don't have. If you want to continue to use only gasoline in your car, you will be free to do so, and the higher-quality fuel lines and fuel sensors automakers install will not interfere with the normal operation of any cars, even if they burn only gasoline.

9. The next time OPEC decides to cut its production to raise global oil prices, as it did in 2007 (and as it has done many times) we will be ready and capable of responding in a way that will prevent a recession. We will have infrastructure in place and American industries ready to ramp up to meet the demand.

10. The principle that government should not interfere with the free market is important and valuable, but not absolute. Child labor is a good example. Government intervened because companies were taking advantage of children, exploiting them, to the detriment of the children's health.

And women's rights. There was a time when sexism ruled and when a woman walked into a drafting firm, for example, they didn't even look at her resume because, "We don't hire women." Government intervened, mandating that businesses are not allowed to discriminate against women. This was a good thing.

What about smog regulation? Los Angeles used to have terrible smog. Several times a year, the news would announce a "smog day" and everyone was warned to stay indoors because the air quality was so unhealthy. Government intervened and the air is much cleaner now. They don't have smog days any more.

The principle of being against mandates is important to maintain because it is a tendency of well-meaning (or not) elected officials to add more and more laws that limit freedom, but it is also true that some values are more important, or that exceptions should be made. I would say, for example, "You should never drive 100 miles per hour on a public road. It's dangerous." But if I'm in an ambulance, bleeding profusely, I would tell the driver to make an exception to my firm principle — to turn on the siren and step on it.

The U.S. economy is bleeding out its wealth. Should we stick by the principle no matter what? Or should we recognize where it should be overridden by an even more important principle: Self-preservation.

11. Anne Korin is a staunch defender of the free market. But she sees that an exception should be made in this specific case. In her testimony before the House Committee on Foreign Affairs, she said: "In a perfect world government would not need to intervene in the energy market, but...the United States is taking an unacceptable risk by leaving the problem to be solved by the invisible hand. This is especially true since the energy market is anything but free. It is manipulated by a cartel, heavily rigged in favor of the status quo, and, as the case of the ethanol tariff shows, riddled with protectionism.

"Every year that passes without Congressional action to ensure that new cars sold in America are flex fuel vehicles is another year in which 17 million gasoline-only cars start their 17-year life on U.S. roads, further binding us to foreign oil. On the grounds of national security and in the interest of stemming the hemorrhaging of our economy, Congress should take swift action to require that new vehicles sold in the United States are flexible fuel vehicles. Such an Open Fuel Standard would level the playing field and promote free competition among diverse energy suppliers. Choosing not to embrace an Open Fuel Standard is choosing to preserve oil’s monopoly in the transportation sector, and with it OPEC’s growing stranglehold over the global economy."

12. "What would it cost to require that all new cars should be GEM (gasoline, ethanol, and methanol) flexible — and to pay a $200 incentive payment back to the manufacturers to compensate them for this?" asks Paul J. Werbos. "If 15 million cars are sold each year in the U.S., this would work out to a cost of $3 billion per year — much less than the potential savings of oil at over $100 per barrel even when long-term national security benefits are not accounted for.

"Some lobbyists have labeled this idea a government mandate. But really, this is closer in spirit to the Open Standards for Digital Television that the U.S. Congress has ordered starting in 2009. The goal is not to mandate a choice of fuel, but to establish open fuel standards: open standards for competition in the fuel market.

"The new standards for the television industry are estimated to cost much more than the $3 billion, but it has been agreed that the value of open competition in the television industry is large enough to justify the cost and the standards.

"Is digital television really more important to national security and the U.S. economy than our dependence on oil from OPEC?"

Read more:

Does a Federal Open Fuel Standard Violate Free Market Principles?

Shouldn't We Keep Government Out of This and Let Market Forces Determine What Happens?


Kimberly November 16, 2011 at 3:34 PM  

Very intriguing argument. My interest is piqued.

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