Both Houses Now Have an Open Fuel Standard Bill

Friday, September 23, 2011

WASHINGTON, D.C. – U.S. Senator Maria Cantwell (D-WA) joined Senator Dick Lugar (R-IN) in introducing a bill to break oil’s monopoly over the U.S. transportation fuel industry by ensuring that most new vehicles in the United States are capable of running on a range of domestically produced alternative fuels starting in 2015.

By introducing competition among fuels, the Open Fuels Standard (OFS) Act aims to bring about significant reductions in fuel prices paid by U.S. consumers. Transportation fuel choice could also sharply reduce U.S. dependence on foreign oil and reduce the $200 billion “monopoly premium” the Department of Energy calculates U.S. consumers currently pay to OPEC (Organization of the Petroleum Exporting Countries) and other foreign oil producers each year through excessive petroleum prices. Keeping this money within U.S. borders would sharply cut the U.S. trade deficit, safeguard U.S household income, and provide capital and market incentive for investment in new U.S. energy infrastructure.

“For too long oil has had a monopoly over transportation fuel and American drivers have had no choice but to pay volatile and elevated prices at the pump,” said Cantwell. “Phasing in vehicles that can run on fuels other than petroleum will allow a whole host of new domestic sources of transportation fuel to come online, which should reduce our dangerous overdependence on foreign oil and help keep American dollars here at home. I am encouraged by the broad bipartisan and stakeholder support for the Open Fuels Standard Act which I believe is a recognition that this approach will really help diversify our nation’s energy supply and spur investment and job creation.”

The Open Fuels Standard Act requires that starting in 2015, 50 percent of new vehicles manufactured or sold in the United States be flex fuel capable – meaning able to run on non-petroleum fuels such as domestically-produced ethanol or methanol or other alcohols in addition to, or instead of, petroleum-based fuels. In 2018, 80 percent of new vehicles would need to be flex fuel capable. According to a recent report by the Massachusetts Institute of Technology, adding this capability to new vehicles would cost manufacturers between $100 and $210 upfront using technologies already widely available, and consumers could recoup this additional cost through fuel savings within one year of purchasing a new vehicle.

Adoption of an Open Fuels Standard would spur the development and use of alcohol fuels such as ethanol and methanol that can be made from a wide variety of domestic energy resources including agricultural waste, energy crops, natural gas, and even trash. By increasing the share of these abundant domestic fuels in the U.S. market, the Open Fuels Standard Act has the potential to transform a key drag on the American economy, creating new jobs, strengthening our national security, and addressing challenging environmental concerns such as climate change.

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The introduction of the Open Fuel Standard Act into the Senate coincides with the launch of the United States Energy Security Council, whose members include former National Security Advisor Robert C. McFarlane and former Director of Central Intelligence R. James Woolsey who authored a New York Times op-ed today entitled, “How to Weaken the Power of Foreign Oil.” The op-ed stresses the need for Congress to enact an Open Fuels Standard-like requirement in order to end oil’s monopoly as the lynchpin of U.S. energy security. The new Council’s purpose is to focus on reducing U.S. energy vulnerability and enhancing national security by finding alternatives to foreign oil. According to today’s op-ed, the new Council’s members include former Secretary of State George P. Shultz and two former secretaries of defense, William Perry and Harold Brown, as well as three former national security advisers, a former C.I.A. director, two former senators, a Nobel laureate, a former Federal Reserve chairman, and several Fortune-50 chief executives including a former president of Shell Oil North America, John Hofmeister.

Read more about the US Energy Security Council here.

Read more about why the Open Fuel Standard Act is so important here.

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