No Heir Apparent to Crude Oil but Lots of Alternatives
Role of Government Policy
Where’s the Policy-Driven Demand?
Whether it’s more drilling or renewables, U.S. energy policy rarely changes meaningfully without mandates.
Consider fuel economy standards for cars and trucks.
It took the 1970s oil shock for Congress to finally push U.S. automakers to comply with fuel efficiency standards. In 2009, the Obama administration raised the federal Corporate Average Fuel Economy, or CAFÉ, standards to a combined average of 27.3 miles a gallon for new cars and trucks for the 2011 model year. The modest 2-mpg increase was the first in passenger standards since 1985.
Renewable energy sources also have made gains in electric power generation, but, again, only because of government intervention.
Lacking federal action, 29 states — plus the District of Columbia and Puerto Rico — require utilities to deliver specified minimum amounts of electricity from renewables including wind and solar power. California has adopted the most stringent standard, requiring 33 percent of its electricity from renewable sources by 2020.
But select mandates that aren't part of a cohesive national energy strategy won't get America to energy independence.
Lutz says it’s a mistake to think of alternative energy as a liberal climate-change issue. A diversified energy strategy is crucial to our national security, the former GM executive said on CNBC's “Squawk Box.”
Lutz and Frederick Smith, chairman of FedEx, are members of the Securing America's Future Energy or SAFE council. They want to raise U.S. oil and gas production, electrify short-haul and light-duty transportation, move toward natural gas for heavy-duty vehicles, institute fuel-efficiency standards and promote biofuels.
“This is not about liberal programs and changing society,” said Lutz. “This is about energy conservation and national security by getting us off of the imported oil.”