ACEEE NEWS RELEASE
BACK
OFF OIL DEMAND TO BRING DOWN GASOLINE PRICES
FOR IMMEDIATE
RELEASE
May 2, 2006
Washington, D.C.-- Criticizing recent proposals to reduce
gasoline prices as too weak and one-sided, the American Council
for an Energy-Efficient Economy (ACEEE) today called on government
and business leaders to launch a vigorous public awareness and policy
effort aimed at cutting pump prices by easing America's gasoline
consumption.
"With energy supply markets tied in a straitjacket, moderating
demand is our only real choice for the near term," said Steven Nadel,
ACEEE's Executive Director. He blamed today's high energy prices
primarily on rising energy demand; since the U.S. continues to lead
the world in oil consumption, using about 25% of total global production,
we can exert stronger leverage on world markets than any other nation.
"While new energy resources will be needed, these take time to develop;
in the interim, reducing demand is the only viable strategy for
taking pressure off of energy markets," continued Nadel. He also
noted that reducing demand should be a key component of longer-term
strategies to keep markets in balance and energy prices down.
Basic economics teaches that in tight markets, where demand is
pushing market capacity, small changes in demand or supply can strongly
affect prices. Because new energy supply options are years away,
reducing demand is the only practical option for the next several
years. According to ACEEE, cost-effective efficiency resources are
available in all energy markets (see http://aceee.org/energy/eeassess.htm
and http://www.aceee.org/press/e061pr.htm),
but persistent market barriers and other factors chronically limit
investment in these technologies. ACEEE recommends a concerted policy
initiative to reduce energy demand to stabilize our energy markets.
For the near term:
- A national
media campaign on energy efficiency. This would provide consumers
with information on how to reduce fuel consumption through better
driving habits, better maintenance, and other tips. It would also
address home energy use, which is an equally important concern
to most Americans. This campaign was authorized in the 2005 energy
bill, but has not yet received funding. It could be added to the
current supplemental appropriations bill. When California faced
an electricity shortfall in 2001 that drove prices up, the state
responded with a major media campaign and other energy efficiency
programs. According to a comprehensive evaluation, these efforts
reduced electricity use by 6%, moderating California's electricity
crisis.
- Extending
tax incentives for hybrid vehicles. The 2005 federal energy
bill includes tax incentives for hybrid vehicles but caps these
incentives at 60,000 vehicles per manufacturer. At least one manufacturer
will reach this cap later this year. ACEEE recommends raising
or changing the cap, such as applying the cap per manufacturer
per vehicle class in order to make more vehicles eligible and
to encourage manufacturers to produce and market hybrid vehicles
in many vehicle classes.
- Reversing
the decline in federal energy efficiency funding. The Administration's
2007 budget request would represent a 27% after-inflation drop
in efficiency funding since it took office, while energy prices
have skyrocketed, imposing hundreds of billions of dollars per
year in a de facto "energy tax" on the economy. Funding increases
should target deployment programs such as ENERGY STAR®,
which can save energy in the near term, as well as longer-term
research and development. The 2005 federal energy bill authorized
substantial increases in efficiency research, development, and
deployment; the 2007 budget should include a significant amount
of this new funding.
For the longer term:
- Increasing
vehicle fuel economy standards.
Fuel economy standards for cars drove large increases in fuel
economy from 1975–1987. Unfortunately the car efficiency standard
has not changed since 1990. Congress should take this opportunity
to call for an increase in fuel economy standards that will produce
oil savings of one million barrels per day by 2015. This level
of performance can be achieved through cost-effective vehicle
efficiency technologies now becoming common in vehicle markets.
- Setting
serious national targets for saving oil, electricity, and natural
gas. Legislation has already been introduced in Congress by
a bipartisan group of Senators and Representatives to set these
kinds of targets for oil. Current and future administrations would
be required to implement policies to save increasing amounts of
oil. Legislation is also being developed to require electric and
gas utilities to meet energy savings targets, building on state
legislation now in place in Texas, Pennsylvania, Connecticut,
and Hawaii. Such targets can save moderate amounts of energy within
a year, with savings steadily growing over time.
"Actions such as oil company investigations or cutting taxpayers
$100 checks will have little if any impact on gasoline prices. Only
by significantly reducing demand can we rebalance markets and drive
prices down," Nadel concluded.
Reducing Oil Use Through Energy Efficiency: Opportunities Beyond
Cars and Light Trucks, by R. Neal Elliott, Therese Langer and
Steven Nadel, is available for free download at http://www.aceee.org/pubs/e061.htm
or a hard copy can be purchased for $20 plus $5 postage and handling
from ACEEE Publications, 1001 Connecticut Avenue, N.W., Suite 801,
Washington, D.C. 20036-5525, phone: 202-429-0063, fax: 202-429-0193,
e-mail: aceee_publications@aceee.org.
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About ACEEE: The American Council for an Energy-Efficient Economy is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting economic prosperity, energy security, and environmental protection. For information about ACEEE and its programs, publications, and conferences, contact ACEEE, 529 14th Street N.W., Suite 600, Washington, D.C. 20045 or visit www.aceee.org.
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