Air Date: Week of April 28, 2006

Despite pain at the pumps and profits for oil companies, fuel efficiency standards for cars have been stuck in political gridlock for nearly 20 years. Washington correspondent Jeff Young reports on alternative routes to efficiency, including an idea called "feebates" that might be coming to your state.

Transcript

CURWOOD: From the Jennifer and Ted Stanley Studios in Somerville, Massachusetts, this is Living on Earth. I’m Steve Curwood.

Big profits for oil companies and high prices at gas stations have pumped up the rhetoric on energy policy in Washington. As a gallon of gas rose to more than three dollars in many areas, profits for oil companies accelerated. Valero Refining soared 60 percent. And Exxon Mobil banked nearly $8.5 billion in profits for the first quarter of 2006.

This latest round of record profits recorded by oil and refinery companies has some folks scratching their heads at a seeming contradiction: If oil supplies are so tight, how come the profit margins are so huge?

House Democratic leader Nancy Pelosi was quick to point to the finger at Republicans.

PELOSI: Record prices for the American people, record giveaways, record profits for big oil companies. That's the Republican energy policy and Americans can no longer afford it.

CURWOOD: Democrats want to tax big oil profits and make sure companies aren’t gouging consumers. President Bush says he’ll investigate allegations of price fixing and ease environmental regulation on some blends of gas. Other than that, the President says we should stay the course set by last year’s Energy Act—which many Democrats, including Illinois Senator Dick Durbin opposed.

DURBIN: Since that bill was signed what's happened to the price of energy and gasoline? It's gone up dramatically across America. That bill was a failure.

BUSH: I think we need to follow suit on what we have been emphasizing, particularly through the energy bill, and that is to encourage conservation, to expand domestic production, and to develop alternative sources of energy like ethanol. [APPLAUSE]

CURWOOD: This is the second time in less than a year that gas prices have rocketed. Still, the movement to raise fuel economy standards for autos remains stuck in park on Capitol Hill. Most energy analysts say higher standards for the Corporate Average Fuel Economy, called CAFÉ could cut oil consumption.

The Bush administration modestly increased CAFÉ standards for light trucks this year. But car standards date back two decades. Now, there’s a new route being tried around this political roadblock. Living on Earth's Jeff Young reports.

YOUNG: CAFÉ standards have a proven track record for saving oil. In an eight year span, the U.S. cut oil consumption by nearly a fifth, oil imports fell by half – all while the economy grew. But David Friedman with the Union of Concerned Scientists says that’s all in the rear view mirror of our energy history.

FRIEDMAN: For about 20 years those standards really haven’t gone anywhere. The political will just hasn’t been there.

YOUNG: But some politicians are exploring other ideas. One bill with bipartisan support in Congress would set a target for oil reduction, but leave open details on how to meet the target. That bill and others would also expand existing tax breaks for buying hybrid cars. Still others would offset health insurance costs for automakers if those companies make more fuel efficient cars. Energy conservation guru Amory Lovins traveled from his Rocky Mountain Institute to Capitol Hill to push another idea, called “feebates.”

LOVINS: I think if we had a good feebate system the CAFÉ argument would become irrelevant.

[CARS PASSING AT CAR LOT]

YOUNG [AT CAR LOT]: The feebate idea is pretty simple: a mix of fees and rebates for each class of vehicle, according to fuel efficiency. So, if I walk onto this car lot and buy a gas guzzler, I pay a hefty fee. If I pick a gas sipper – say this one here, it’s rated at 34 miles per gallon– well, then I get a rebate. Lovins and other proponents say if the fees and rebates are big enough to get my attention, that puts the lifetime cost of fuel for that car right up front in my decision on what car to buy, and that would harness the market in a ways that current incentives don’t.

[SOUND FROM CAR LOT SEQUES TO PEOPLE MILLING ABOUT IN CONFERENCE ROOM]

YOUNG: After a recent Congressional hearing, Lovins found an unlikely ally in his feebate argument – former CIA director Jim Woolsey. Woolsey worries that oil dependence harms national security. The two teamed up on Ford executive Sue Cischke, who was bemoaning the cost of making hybrids.

CISCHKE: We are basically subsidizing the Ford Escape even though right now we’re charging $3,400 more. And there are tax incentives to help the consumers. It’s still costing us far more than that. So, we do have to drive the cost of that down

WOOLSEY: The feebates would be so much more effective than CAFÉ.

CISCHKE: There are problems with that in terms of who is paying whom and all that…

LOVINS: Are you the right person to talk to about starting a private dialogue on feebates?....

YOUNG: It’s informal huddles like these in the halls of Congress that can give proposals political traction on Capitol Hill. And though Cischke was non-committal, Lovins was happy to have planted the germ of the idea with yet another auto executive.

LOVINS: It turns out automakers, as well as consumers, will make more money this way, as some of the automakers are starting to figure out.

YOUNG: Rebates, after all, give consumers money to buy cars. But then there are those fees.

SHOSTECK: Feebates are discriminatory against people who require large vehicles either for work or family purposes or both.

YOUNG: Eron Shosteck is spokesperson for the Alliance of Automobile Manufacturers, representing nine major car companies on three continents.

SHOSTECK: A rancher who requires a heavy duty pickup truck has to go over rutted terrain, has to be able to haul heavy loads, understands that there’s a trade-off with fuel economy but requires that vehicle to do his job. That is an unfair tax on that person.

YOUNG: That kind of message from industry helped sidetrack previous attempts at feebate programs in California and Maryland and also makes it unlikely the federal government will act. But Friedman, of the Union of Concerned Scientists, says half a dozen states are again considering feebates.

FRIEDMAN: At the federal level there really is no political will to honestly tackle global warming or to honestly tackle oil dependence. But at the state level that is happening. So part of the advantage is you could create a groundswell at the states by getting these feebates out there, and then eventually maybe Washington will wake up.

YOUNG: There are questions about the details. Just how much energy would be saved? And what level of fee or rebate will change consumer behavior? Steve Nadel with the American Council for an Energy Efficient Economy says he’s not looking for perfection from such a program. He’s looking for action.

NADEL: I think the key point is we’ve been stuck in the mud for almost a couple decades now. We need to do something, we need to get this ball rolling. It’s less important the exact policy or the perfect policy. But let’s start to make progress.

YOUNG: Conservation activists say high gas prices should bring more than just pain at the pumps – they could provide the political gas to get the U.S. serious about fuel efficiency. For Living on Earth, I’m Jeff Young in Washington.

 

Links

David Friedman, Union of Concerned Scientists, on Pres. Bush Speech on Gas Prices

Amory Lovins’ “Winning the Oil Endgame” articles

The Alliance of Automobile Manufacturers

National Petrochemical & Refiners Association