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Robert Rapier

Robert Rapier

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New Fuel Efficiency Rules Could Boost Oil Consumption

Last month, the Trump Administration announced that it would replace fuel efficiency standards enacted by the Obama Administration in order to make cars safer and more affordable.

The new proposal unveiled by the Environmental Protection Agency and the Department of Transportation would freeze Corporate Average Fuel Economy (CAFE) rules from 2020 through 2026. Under the Obama plan the targets were set to rise each year.

The Trump Administration estimated that the new rules could prevent 1,000 fatalities each year and reduce the cost of a vehicle by more than $2,300. They also claimed that the new rules would have a minimal relative impact on carbon dioxide emissions (probably true), but they acknowledged that the change would result in 2-3 percent higher oil consumption.

The administration downplayed the impact of increasing oil consumption by an estimated 0.5 million barrels per day, stating in the proposal:

“The U.S. is currently producing enough oil to satisfy nearly all of its energy needs and is projected to continue to do so or become a net energy exporter. This has added new stable supply to the global oil market and reduced the urgency of the U.S. to conserve energy.”

I strongly disagree with this argument. While it is certainly true that U.S. oil production has soared, and our net imports of petroleum and petroleum products have fallen sharply, they still amount to ~2.7 million Bpd.

We import around 10 million Bpd of crude oil and products, with about 30 percent of that originating from OPEC countries. But we also now export a significant amount of petroleum products, as well as around 2 million Bpd of crude oil (which is why our net imports are much lower than our crude oil imports).

It isn’t certain that the U.S. will become a net exporter of petroleum and petroleum products, but in any case, that’s not a reason to forego conservation. There are economic reasons, national security reasons, and environmental reasons for conserving oil.

Reductions in discretionary oil consumption will either reduce oil imports or increase net exports. Either scenario will result in an improved overall trade deficit for the U.S. For individual consumers, reducing discretionary oil consumption will keep a little more money in the family budget. Related: Hurricane Danger Lifts Oil Prices

It is also unlikely that the U.S. will be a net exporter long-term. Thus, reductions to consumption will improve long-range energy security, and they will better insulate consumers against oil price shocks.

There are also the environmental issues to consider. Oil is one of the major contributors to rising carbon dioxide concentrations in the atmosphere. Reducing oil consumption is a step we can take toward reining in these emissions.

Further, the production and transport of oil poses a risk of leaks and spills. As a society, we agree to accept these risks when we consume oil but lowering our oil consumption would reduce the risks.

Finally, it goes without saying that oil is a finite resource. In many applications, there are no economical substitutes. Conserving oil will increase the lifetime of the resource and allow us more time to develop economic substitutes.

So do what you can to conserve oil, despite what the President says.

By Robert Rapier

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Leave a comment
  • Tom Blazek on September 11 2018 said:
    Robert Rapier, you finally wrote something I agree with, thank you for this article!

    I am afraid we are looking backwards, trying to “Make America Great Again”

    I am afraid that throwing conservation to the wind, is more like “Making America Dumb Again.”

    I don’t want to go back to the limited energy supplies and price spikes of the 70’s.

    The API and the Oil Lobby are steering the Trump Administration in the Wrong Direction.

    All of us will suffer from it.
  • David Jones on September 12 2018 said:
    I'm not sure we can call these "fuel efficiency" rules. More like a fuel inefficiency corporate oil industry gift. That's basically what this change is, nothing more than an attempt to secure oil consumption in the 20s.

    If Republicans are concerned about overreach and corruption, they should consider this a blatant case of the above since the Environmental Protection Agency under this administration is implementing oil industry preferences instead of protecting the environment, the latter being it's job. Not to mention that this move will make the US car industry uncompetitive if they decide to play along with it instead of investing heavily into electric transportation, the implementation of which would easily have reached and exceeded the previous administration EPA fleet targets.

    With this trajectory, the US might find itself driving substantial quantities of Chinese cars in a couple of decades because they lack the infrastructure to produce enough EVs for their market. Other than Tesla, nobody in that country has the capacity to build electric at volume. Even the German car industry, notorious petrol heads, have started some serious development in this field now. Are the republicans going to whine about this in a decade if it becomes clear that yet another blue collar industry has fallen seriously behind due to it's unwillingness to adopt new technologies and improved efficiency? If so, at least recognize that the reason for such an eventuality is once again due to politically driven Republican fossil fuel industry gifts, place the blame where it belongs.
  • Rachel on September 12 2018 said:
    Oil is not a finite resource. The earth's core is made of iron carbide. Carbon is perpetually oozing to the surface at discontinuities in the earth's crust.

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