US Senator Obama on Energy Independence
In this year's State of the Union address, President Bush told us that it was time to get serious about America's addiction to foreign oil. The next day, we found out that his idea didn't sit too well with the Saudi Royal Family. A few hours later, Energy Secretary Bodman backtracked and assured the world that even though the President said he planned to reduce the amount of oil we import from the Middle East, he actually didn't mean that literally.
If there's a single example out there that encapsulates the ability of unstable, undemocratic governments to wield undue influence over America's national security just because of our dependence on oil, this is it.
Now, I could stand up here and give you all plenty of reasons why it's a good idea for this country to move away from an oil-based economy. I could cite studies from scientists and experts and even our own State Department detailing the dangers of global warming - how it can destroy our coastal areas and generate more deadly storms. I could talk forever about the economic consequences of dependence - how it's decimating our auto industry and costing us jobs and emptying our wallets at the pump. And I could talk about the millions of new jobs and entire new industries we could create by transitioning to an alternative-fuel economy.
But all we really need to know about the danger of our oil addiction comes directly from the mouths of our enemies:
"[Oil] is the umbilical cord and lifeline of the crusader community." These are the words of Al Qaeda.
"Focus your operations on oil, especially in Iraq and the Gulf area, since this will cause them to die off [on their own]." These are the words Osama bin Laden.
More than anything else, these comments represent a realization of American weakness shared by the rest of the world. It's a realization that for all of our military might and economic dominance, the Achilles heel of the most powerful country on Earth is the oil we cannot live without.
Oil single-handedly fuels 96% of our transportation needs, and it's also critical to the manufacture of millions of goods and products in this country. As we saw during Hurricane Katrina, this kind of dependency means that the loss of even a small amount of oil and refining capacity for just a few days can cause economic panic and soaring prices. A serious embargo or permanent loss could cause untold disaster.
It would be nice if we could produce our way out of this problem, but it's just not possible. We only have 3% of the world's oil reserves. We could start drilling in ANWR today, and at its peak, which would be more than a decade from now, it would give us enough oil to take care of our transportation needs for about a month.
As a result, every single hour we spend $18 million on foreign oil. It doesn't matter if these countries are budding democracies, despotic regimes, or havens for the madrassas that plant the seeds of terror in young minds - they get our money because we need their oil.
One need only glance at headlines around the world to understand how dangerous this addictive arrangement truly is.
In Iran, Islamic fundamentalists are forging ahead with their nuclear program, knowing full well that the world's response to their actions will be influenced by our need for their oil. In fact, reports of a $100 billion oil deal between Iran and China were soon followed by China's refusal to press for sanctions against Iran over its nuclear intentions.
In Nigeria, militant rebels have been attacking the country's oil pipelines in recent weeks, sending prices soaring and calling into question the political stability of a country that represents America's fifth-largest source of oil imports.
In Saudi Arabia, Al Qaeda has been attempting attacks on that country's poorly defended oil refineries for years. On Friday, they almost succeeded as a truck full of explosives was detonated by the shots of security guards just before it entered the refinery. Even this minor damage caused oil prices to jump $2 in a single day. But a former CIA agent tells us that if terrorists ever succeeded in destroying an entire oil complex, it could take enough oil off the market to cause economic catastrophe in the United States.
Our enemies are fully aware that they can use oil as a weapon against America. And if we don't take this threat as seriously as the bombs they build or the guns they buy, we will be fighting the War on Terror with one hand tied behind our back.
Now, the good news about the President's decision to finally focus on energy independence after five years is that it helps build bipartisan consensus that our reliance on foreign oil is a problem and shows that he understands the potential of renewable fuels to make a difference.
The bad news is that the President's energy policy treats our dependence on oil as more of a nuisance than a serious threat.
Just one day after he told us in the State of the Union that renewable fuels were the key to an energy independent future, we learned that the President's budget cuts would force layoffs at the National Renewable Energy Laboratory. Last week, this made for a rather awkward situation when the President wanted to use the lab for a photo-op - so awkward that the White House actually re-hired the laid-off researchers just to avoid the embarrassment.
This is only one example, but it tells the story of a larger weakness in the President's energy policy: it's simply not commensurate to the challenge.
There's a reason that some have compared the quest for energy independence to the Manhattan Project or the Apollo moon landing. Like those historic efforts, moving away from an oil economy is a major challenge that will require a sustained national commitment.
During World War II, we had an entire country working around the clock to produce enough planes and tanks to beat the Axis powers. In the middle of the Cold War, we built a national highway system so we had a quick way to transport military equipment across the country. When we wanted to beat the Russians into space, we poured millions into a national education initiative that graduated thousands of new scientists and engineers.
If we hope to strengthen our security and control our own foreign policy, we can offer no less of a commitment to energy independence.
But so far, President Bush seems like he is offering less - much less.
His funding for renewable fuels is at the same level it was the day he took office.
He refuses to call for even a modest increase in fuel-efficiency standards for cars and trucks.
His latest budget funds less then half of the energy bill he himself signed into law - leaving hundreds of millions of dollars in under-funded energy proposals.
And while he cannot seem to find the funding for any of these energy proposals, he has no problem allowing the oil companies to stiff taxpayers $7 billion in royalties that they owe us for drilling on public lands. These are the same oil companies that are currently enjoying the highest profits on record.
Again, this is just not a serious commitment to energy independence. The solutions are too timid - the reforms too small. America's dependence on oil is a major threat to our national security, and the American people deserve a bold commitment that has the full force of their government behind it.
This isn't to lay the blame for our energy problems entirely at the feet of our President. This is an issue that politicians from both parties clamor about when gas prices are the headline of the month, only to fall back into a trance of inaction once things calm down. And so we all need to get serious here. Automakers need to get serious about shifting their technology to greater fuel-efficiency, consumers need to get serious about buying hybrid cars, and Washington needs to get serious about working together to find a real solution to our energy crisis.
Such a solution is not only possible, it's already being implemented in other places around the world. Countries like Japan are creating jobs and slowing oil consumption by churning out and buying millions of fuel-efficient cars. Brazil, a nation that once relied on foreign countries to import 80% of its crude oil, will now be entirely self-sufficient in a few years thanks to its investment in biofuels.
So why can't we do this? Why can't we make energy security one of the great American projects of the 21st century?
The answer is, we can. The President's energy proposal would reduce our oil imports by 4.5 million barrels per day by 2025. Not only can we do better than that, we must do better than that if we hope to make a real dent in our oil dependency. With technology we have on the shelves right now and fuels we can grow right here in America, by 2025 we can reduce our oil imports by over 7.5. million barrels per day - an amount greater than all the oil we are expected to import from the entire Middle East.
We can do this by focusing on two things: the cars we drive and the fuels we use.
First, the cars. For years, we've hesitated to raise fuel economy standards as a nation in part because of a very legitimate concern - the impact it would have on Detroit. The auto industry is right when they argue that transitioning to more hybrid and fuel-efficient cars would require massive investment at a time when they're struggling under the weight of rising health care costs, sagging profits, and stiff competition.
But it's precisely because of that competition that they don't have a choice. China now has a higher fuel economy standard than we do, and Japan's Toyota is doubling production of the popular Prius to sell 100,000 in the U.S. this year.
There is now no doubt that fuel-efficient cars represent the future of the auto industry. If American car companies hope to be a part of that future - if they hope to survive - they must start building more of these cars.
But that's not to say we should leave the industry to face these costs on its own. Yes, we should raise fuel economy standards by 3% a year over the next fifteen years, starting in 2008. With the technology they already have, this should be an achievable goal for automakers. But we can help them get there.
Right now, one of the biggest costs facing auto manufacturers isn't the cars they make, it's the health care they provide. Health care costs make up $1,500 of the price of every GM car that's made - more than the cost of steel. Retiree health care alone cost the Big 3 automakers nearly $6.7 billion just last year.
So here's the deal we can make with the auto companies. It's a piece of legislation I introduced called "Health Care for Hybrids," and it would allow the federal government to pick up part of the tab for the auto companies' retiree health care costs. In exchange, the auto companies would then use some of that savings to build and invest in more fuel-efficient cars. It's a win-win proposal for the industry - their retirees will be taken care of, they'll save money on health care, and they'll be free to invest in the kind of fuel-efficient cars that are the key to their competitive future.
Now, building cars that use less oil is only one side of the equation. The other involves replacing the oil we use with home-grown biofuels. The Governors in this room have long known about this potential, and all of you have been leading the way on ethanol in your own states.
This coalition also knows that corn-based ethanol is only the beginning. If we truly want to harness the power of these fuels and the promise of this market, we can and must generate more cellulosic ethanol from agricultural products like corn stocks, switch grass and other crops our farmers grow.
Already, there are hundreds of fueling stations that use a blend of ethanol and gasoline known as E85, and there are millions of cars on the road with the flexible-fuel tanks necessary to use this fuel - including my own.
But the challenge we face with these biofuels is getting them out of the labs, out of the farms, and onto the wider commercial market. Every scientific study in the world could sing the praises of biofuels, but you might still be hard-pressed to find an investor willing to take the risk on a cellulosic ethanol plant or a brand-name petroleum company willing to build an E85 fueling station.
The federal government can help in two ways here. First, we can reduce the risk of investing. We already do this in a number of ways by funding projects critical to our national security. Energy independence should be no different. By developing an Energy Technology Program at the Defense Department, we can provide loan guarantees and venture capital to those with the best plans to develop and sell biofuels on a commercial market. The Defense Department will also hold a competition where private corporations get funding to see who can build the best new alternative-fuel plant. The Department can then use these new technologies to improve the energy security of our own military.
Once we take the risk out of investing, the second thing the government can do is to let the private sector know that there will always be a market for renewable fuels. We can do this in a few ways.
First, we should ramp up the renewable fuel standard and create an alternative diesel standard in this country so that by 2025, 65 billion gallons of alternative fuels per year will be blended into the petroleum supply.
Second, Washington should lead the way on energy independency by making sure that every single automobile the government purchases is a flexible-fuel vehicle - starting today. When it becomes possible in the coming years, we should make sure that every government car is a plug-in hybrid as well.
Third, I'm supporting legislation that would make sure every single new car in America is a flexible-fuel vehicle within a decade. Currently it costs manufacturers just $100 to add these tanks to each car. But we can do them one better. If they install flexible-fuel tanks in their cars before the decade's up, the government should provide them a $100 tax credit to do it - so there's no excuse for delay.
Fourth, there are already millions of people driving flexible-fuel vehicles who don't know it. The auto companies shouldn't get CAF'E credit for making these cars if they don't let buyers know about them, so I'd like to ask the industry to follow GM's lead and put a yellow gas cap on all flexible fuel vehicles starting today. Also, they should send a letter to those people who already have flexible-fuel vehicles so they can start filling up their tank at the closest E85 station.
Finally, since there are only around 500 fueling stations that pump E85 in the country, we recently passed legislation that would provide tax credits of up to $30,000 for those who want to install E85 pumps at their station. But we should do even more - we should make sure that in the coming years, E85 stations are as easy to find as your gas station is now.
Make no mistake - none of these reforms will come easy, and they won't happen overnight. But we can't continue to settle for piecemeal, bite-sized solutions to our energy crisis. We need a national commitment to energy security, and to emphasize that commitment, we should install a Director of Energy Security to oversee all of our efforts. Like the Chairman of the Joint Chiefs and the National Intelligence Director, this person would be an advisor to the National Security Council and have the full authority to coordinate America's energy policy across all levels of government. He or she would approve all major budget decisions and provide a full report to Congress and the country every year detailing the progress we're making toward our 2025 goal.
In the days and months after September 11th, Americans were waiting to be called to something bigger than themselves. Just like their parents and grandparents of the Greatest Generation, they were willing to serve and defend their country - not only on the fields of war, but on the homefront too.
This is our chance to step up and serve. The war against international terrorism has pitted us against a new kind of enemy that wages terror in new and unconventional ways. At home, fighting that enemy won't require us to build the massive war machine that Franklin Roosevelt called for so many years ago, but it will require us to harness our own renewable forms of energy so that oil can never be used as a weapon against America. From farmers and scientists to entrepreneurs and governors, everyone has a role to play in this effort. In fact, this afternoon I'm sitting down with business and military leaders to discuss this very topic.
Now is the time for serious leadership to get us started down the path of energy independence. Now is the time for this call to arms. I hope some of the ideas I've laid out today can serve as a basis for this call, but I also hope that members of both parties and all levels of government can come together in the near future to launch this serious quest for energy independence. Thank you.
USSenate
If there's a single example out there that encapsulates the ability of unstable, undemocratic governments to wield undue influence over America's national security just because of our dependence on oil, this is it.
Now, I could stand up here and give you all plenty of reasons why it's a good idea for this country to move away from an oil-based economy. I could cite studies from scientists and experts and even our own State Department detailing the dangers of global warming - how it can destroy our coastal areas and generate more deadly storms. I could talk forever about the economic consequences of dependence - how it's decimating our auto industry and costing us jobs and emptying our wallets at the pump. And I could talk about the millions of new jobs and entire new industries we could create by transitioning to an alternative-fuel economy.
But all we really need to know about the danger of our oil addiction comes directly from the mouths of our enemies:
"[Oil] is the umbilical cord and lifeline of the crusader community." These are the words of Al Qaeda.
"Focus your operations on oil, especially in Iraq and the Gulf area, since this will cause them to die off [on their own]." These are the words Osama bin Laden.
More than anything else, these comments represent a realization of American weakness shared by the rest of the world. It's a realization that for all of our military might and economic dominance, the Achilles heel of the most powerful country on Earth is the oil we cannot live without.
Oil single-handedly fuels 96% of our transportation needs, and it's also critical to the manufacture of millions of goods and products in this country. As we saw during Hurricane Katrina, this kind of dependency means that the loss of even a small amount of oil and refining capacity for just a few days can cause economic panic and soaring prices. A serious embargo or permanent loss could cause untold disaster.
It would be nice if we could produce our way out of this problem, but it's just not possible. We only have 3% of the world's oil reserves. We could start drilling in ANWR today, and at its peak, which would be more than a decade from now, it would give us enough oil to take care of our transportation needs for about a month.
As a result, every single hour we spend $18 million on foreign oil. It doesn't matter if these countries are budding democracies, despotic regimes, or havens for the madrassas that plant the seeds of terror in young minds - they get our money because we need their oil.
One need only glance at headlines around the world to understand how dangerous this addictive arrangement truly is.
In Iran, Islamic fundamentalists are forging ahead with their nuclear program, knowing full well that the world's response to their actions will be influenced by our need for their oil. In fact, reports of a $100 billion oil deal between Iran and China were soon followed by China's refusal to press for sanctions against Iran over its nuclear intentions.
In Nigeria, militant rebels have been attacking the country's oil pipelines in recent weeks, sending prices soaring and calling into question the political stability of a country that represents America's fifth-largest source of oil imports.
In Saudi Arabia, Al Qaeda has been attempting attacks on that country's poorly defended oil refineries for years. On Friday, they almost succeeded as a truck full of explosives was detonated by the shots of security guards just before it entered the refinery. Even this minor damage caused oil prices to jump $2 in a single day. But a former CIA agent tells us that if terrorists ever succeeded in destroying an entire oil complex, it could take enough oil off the market to cause economic catastrophe in the United States.
Our enemies are fully aware that they can use oil as a weapon against America. And if we don't take this threat as seriously as the bombs they build or the guns they buy, we will be fighting the War on Terror with one hand tied behind our back.
Now, the good news about the President's decision to finally focus on energy independence after five years is that it helps build bipartisan consensus that our reliance on foreign oil is a problem and shows that he understands the potential of renewable fuels to make a difference.
The bad news is that the President's energy policy treats our dependence on oil as more of a nuisance than a serious threat.
Just one day after he told us in the State of the Union that renewable fuels were the key to an energy independent future, we learned that the President's budget cuts would force layoffs at the National Renewable Energy Laboratory. Last week, this made for a rather awkward situation when the President wanted to use the lab for a photo-op - so awkward that the White House actually re-hired the laid-off researchers just to avoid the embarrassment.
This is only one example, but it tells the story of a larger weakness in the President's energy policy: it's simply not commensurate to the challenge.
There's a reason that some have compared the quest for energy independence to the Manhattan Project or the Apollo moon landing. Like those historic efforts, moving away from an oil economy is a major challenge that will require a sustained national commitment.
During World War II, we had an entire country working around the clock to produce enough planes and tanks to beat the Axis powers. In the middle of the Cold War, we built a national highway system so we had a quick way to transport military equipment across the country. When we wanted to beat the Russians into space, we poured millions into a national education initiative that graduated thousands of new scientists and engineers.
If we hope to strengthen our security and control our own foreign policy, we can offer no less of a commitment to energy independence.
But so far, President Bush seems like he is offering less - much less.
His funding for renewable fuels is at the same level it was the day he took office.
He refuses to call for even a modest increase in fuel-efficiency standards for cars and trucks.
His latest budget funds less then half of the energy bill he himself signed into law - leaving hundreds of millions of dollars in under-funded energy proposals.
And while he cannot seem to find the funding for any of these energy proposals, he has no problem allowing the oil companies to stiff taxpayers $7 billion in royalties that they owe us for drilling on public lands. These are the same oil companies that are currently enjoying the highest profits on record.
Again, this is just not a serious commitment to energy independence. The solutions are too timid - the reforms too small. America's dependence on oil is a major threat to our national security, and the American people deserve a bold commitment that has the full force of their government behind it.
This isn't to lay the blame for our energy problems entirely at the feet of our President. This is an issue that politicians from both parties clamor about when gas prices are the headline of the month, only to fall back into a trance of inaction once things calm down. And so we all need to get serious here. Automakers need to get serious about shifting their technology to greater fuel-efficiency, consumers need to get serious about buying hybrid cars, and Washington needs to get serious about working together to find a real solution to our energy crisis.
Such a solution is not only possible, it's already being implemented in other places around the world. Countries like Japan are creating jobs and slowing oil consumption by churning out and buying millions of fuel-efficient cars. Brazil, a nation that once relied on foreign countries to import 80% of its crude oil, will now be entirely self-sufficient in a few years thanks to its investment in biofuels.
So why can't we do this? Why can't we make energy security one of the great American projects of the 21st century?
The answer is, we can. The President's energy proposal would reduce our oil imports by 4.5 million barrels per day by 2025. Not only can we do better than that, we must do better than that if we hope to make a real dent in our oil dependency. With technology we have on the shelves right now and fuels we can grow right here in America, by 2025 we can reduce our oil imports by over 7.5. million barrels per day - an amount greater than all the oil we are expected to import from the entire Middle East.
We can do this by focusing on two things: the cars we drive and the fuels we use.
First, the cars. For years, we've hesitated to raise fuel economy standards as a nation in part because of a very legitimate concern - the impact it would have on Detroit. The auto industry is right when they argue that transitioning to more hybrid and fuel-efficient cars would require massive investment at a time when they're struggling under the weight of rising health care costs, sagging profits, and stiff competition.
But it's precisely because of that competition that they don't have a choice. China now has a higher fuel economy standard than we do, and Japan's Toyota is doubling production of the popular Prius to sell 100,000 in the U.S. this year.
There is now no doubt that fuel-efficient cars represent the future of the auto industry. If American car companies hope to be a part of that future - if they hope to survive - they must start building more of these cars.
But that's not to say we should leave the industry to face these costs on its own. Yes, we should raise fuel economy standards by 3% a year over the next fifteen years, starting in 2008. With the technology they already have, this should be an achievable goal for automakers. But we can help them get there.
Right now, one of the biggest costs facing auto manufacturers isn't the cars they make, it's the health care they provide. Health care costs make up $1,500 of the price of every GM car that's made - more than the cost of steel. Retiree health care alone cost the Big 3 automakers nearly $6.7 billion just last year.
So here's the deal we can make with the auto companies. It's a piece of legislation I introduced called "Health Care for Hybrids," and it would allow the federal government to pick up part of the tab for the auto companies' retiree health care costs. In exchange, the auto companies would then use some of that savings to build and invest in more fuel-efficient cars. It's a win-win proposal for the industry - their retirees will be taken care of, they'll save money on health care, and they'll be free to invest in the kind of fuel-efficient cars that are the key to their competitive future.
Now, building cars that use less oil is only one side of the equation. The other involves replacing the oil we use with home-grown biofuels. The Governors in this room have long known about this potential, and all of you have been leading the way on ethanol in your own states.
This coalition also knows that corn-based ethanol is only the beginning. If we truly want to harness the power of these fuels and the promise of this market, we can and must generate more cellulosic ethanol from agricultural products like corn stocks, switch grass and other crops our farmers grow.
Already, there are hundreds of fueling stations that use a blend of ethanol and gasoline known as E85, and there are millions of cars on the road with the flexible-fuel tanks necessary to use this fuel - including my own.
But the challenge we face with these biofuels is getting them out of the labs, out of the farms, and onto the wider commercial market. Every scientific study in the world could sing the praises of biofuels, but you might still be hard-pressed to find an investor willing to take the risk on a cellulosic ethanol plant or a brand-name petroleum company willing to build an E85 fueling station.
The federal government can help in two ways here. First, we can reduce the risk of investing. We already do this in a number of ways by funding projects critical to our national security. Energy independence should be no different. By developing an Energy Technology Program at the Defense Department, we can provide loan guarantees and venture capital to those with the best plans to develop and sell biofuels on a commercial market. The Defense Department will also hold a competition where private corporations get funding to see who can build the best new alternative-fuel plant. The Department can then use these new technologies to improve the energy security of our own military.
Once we take the risk out of investing, the second thing the government can do is to let the private sector know that there will always be a market for renewable fuels. We can do this in a few ways.
First, we should ramp up the renewable fuel standard and create an alternative diesel standard in this country so that by 2025, 65 billion gallons of alternative fuels per year will be blended into the petroleum supply.
Second, Washington should lead the way on energy independency by making sure that every single automobile the government purchases is a flexible-fuel vehicle - starting today. When it becomes possible in the coming years, we should make sure that every government car is a plug-in hybrid as well.
Third, I'm supporting legislation that would make sure every single new car in America is a flexible-fuel vehicle within a decade. Currently it costs manufacturers just $100 to add these tanks to each car. But we can do them one better. If they install flexible-fuel tanks in their cars before the decade's up, the government should provide them a $100 tax credit to do it - so there's no excuse for delay.
Fourth, there are already millions of people driving flexible-fuel vehicles who don't know it. The auto companies shouldn't get CAF'E credit for making these cars if they don't let buyers know about them, so I'd like to ask the industry to follow GM's lead and put a yellow gas cap on all flexible fuel vehicles starting today. Also, they should send a letter to those people who already have flexible-fuel vehicles so they can start filling up their tank at the closest E85 station.
Finally, since there are only around 500 fueling stations that pump E85 in the country, we recently passed legislation that would provide tax credits of up to $30,000 for those who want to install E85 pumps at their station. But we should do even more - we should make sure that in the coming years, E85 stations are as easy to find as your gas station is now.
Make no mistake - none of these reforms will come easy, and they won't happen overnight. But we can't continue to settle for piecemeal, bite-sized solutions to our energy crisis. We need a national commitment to energy security, and to emphasize that commitment, we should install a Director of Energy Security to oversee all of our efforts. Like the Chairman of the Joint Chiefs and the National Intelligence Director, this person would be an advisor to the National Security Council and have the full authority to coordinate America's energy policy across all levels of government. He or she would approve all major budget decisions and provide a full report to Congress and the country every year detailing the progress we're making toward our 2025 goal.
In the days and months after September 11th, Americans were waiting to be called to something bigger than themselves. Just like their parents and grandparents of the Greatest Generation, they were willing to serve and defend their country - not only on the fields of war, but on the homefront too.
This is our chance to step up and serve. The war against international terrorism has pitted us against a new kind of enemy that wages terror in new and unconventional ways. At home, fighting that enemy won't require us to build the massive war machine that Franklin Roosevelt called for so many years ago, but it will require us to harness our own renewable forms of energy so that oil can never be used as a weapon against America. From farmers and scientists to entrepreneurs and governors, everyone has a role to play in this effort. In fact, this afternoon I'm sitting down with business and military leaders to discuss this very topic.
Now is the time for serious leadership to get us started down the path of energy independence. Now is the time for this call to arms. I hope some of the ideas I've laid out today can serve as a basis for this call, but I also hope that members of both parties and all levels of government can come together in the near future to launch this serious quest for energy independence. Thank you.
USSenate
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