U.s. Energy Independence: An Assessment Of Mechanisms To Help Promote Domestic Energy Security

The two primary objectives of recent energy initiatives and/or policies are the reducing of both domestic emissions of greenhouse gases (GHG) and our dependence on foreign oil commodities. Republican senators Richard Lugar, Lindsay Graham, and Lisa Murkowski introduced the “Primary Energy Plan Act of 2011” with plans of: (1) reducing U.S. dependency on foreign oil; (2) increasing investment in more diverse, cleaner energy producing technologies; and (3) better utilizing domestic fossil fuel resources. The bill hoped to accomplish such goals through increases in existing fuel economy standards for light-duty vehicles and improvements in the energy efficiency standards for residential, commercial, and federal buildings. It also established incentives for the production. President Obama in that same year expressed plans for a clean energy standard (CES) requiring 80% of total produced electricity to be generated from a select group of clean energy sources (e.g. coal with carbon capture and storage (CCS), nuclear, solar, wind, etc.). He later proposed a tightening of current Corporate Average Fuel Economy (CAFE) regulations, doubling the average fuel efficiency of the light-duty fleet. These initiatives highlight our nations’ efforts to curb our dependency on non-domestic energy sources. Increases in energy independence refer to reductions in domestic need for foreign oil products. In 1975, U.S. oil imports composted roughly 37% of total domestic oil consumption – rising to 57% in 2008. In a little over thirty years, we have witnessed a 20% increase in oil imports, indicative of our growing addiction for foreign oil. Severe volatility in oil prices, not to mention that several reserves are located within politically unstable nations, drive policymakers’ concerns that our increasing reliance on foreign is becoming ever more dangerous. Petroleum in 2010 composed almost 37% percent of overall energy consumption here in the U.S. Almost 70% of that came from the transportation sector alone. Thus, there lies a direct correlation between the growing consumption of oil by the transportation sector and our rising need for imported oil. There are existing mechanisms in place targeting transportation emissions and energy usage. The CAFE standard was initially developed under the Energy Policy and Conservation Act of 1975 (EPACT) as a direct result of the 1973 Arab oil embargo. It reduced sector emissions and fuel demands through improvements in the fuel economy of cars and light-duty trucks. Market-based fuel taxes like gasoline and diesel taxes are other alternatives that dampen the appeal of using dirtier, conventional fuels. The federal excise tax on gasoline today is 18.4 cents per gallon and 24.4 cents per gallon of diesel. State and local taxes average 30.5 cents and 29.4 cents per gallon for gasoline and diesel, respectively. Considering both the federal and state level taxes, the average U.S. fuel taxes are roughly 49 cents per gallon of gasoline and 54 cents per gallon of diesel. Relative to other nations, U.S. fuel tax levels are more on the lower end. Our work builds upon previous studies which have taken a look at the impacts of different transportation-based policies geared towards lowering GHG emissions and curbing our country’s appetite for foreign oil. The policies analyzed will be compared based on their ability to strengthen domestic energy independence and reduce GHG emissions. We use the recent 2010 US EPA MARKAL dynamic, partial equilibrium model, which uses a detailed structure of the US energy system, to model and observe each policy. In addition, we will observe how these mechanisms stand to affect the largest contributor to our country’s energy security problem, the transportation sector.