Tightening the Noose
The Nation Hasn't shown much energy in curbing its fuel fix
Then there's the " NIMBY"--not in my backyard--problem. No one, it seems, except residents of Louisiana and Texas, wants a refinery as a neighbor. The industry also maintains that part of the reason for its low profit margins (thereby crimping investment in new capacity) is that it had to spend $47 billion in the past 10 years on new clean-fuel requirements and expects to spend an additional $20 billion. "It's just running in place," says John Felmy of the American Petroleum Institute. Unable to find any U.S. partners to build a new refinery here, the Saudis instead are partnering with Exxon Mobil on a $3.5 billion refinery in south China. If U.S. demand remains strong, Exxon Mobil may end up shipping refined gasoline from China to the United States--at higher prices, of course, to U.S. consumers. "I don't think we like to make hard choices," says Frank Verrastro, director of the energy program at the Center for Strategic and International Studies.
Of course, the hardest choice of all would be to reduce U.S. demand for gasoline, which, until the hurricanes, had been reliably charting in at 2.5 percent above last year, despite historically high prices. But the automakers haven't gotten the message. Ford Motor Co. has been hoping a new Explorer SUV--its cash cow for over a decade--will help reverse the company's sliding fortunes when it debuts this fall. The big hauler averages less than 20 miles per gallon. General Motors also has an entire line of large SUV s coming next year--also averaging less than 20 mpg--while its first full hybrid is still two years away. But consumers are choosing hybrids over heavyweight vehicles. Detroit belatedly has come around: Ford has announced plans to increase the number of hybrids it sells to 250,000 by 2010--up from 24,000 today--and CEO Bill Ford is pushing for a national energy summit.
Misers. Detroit's posture stands in stark contrast to that of the Japanese automakers. Nissan is going to begin selling a small car called the Versa in the United States next summer for about $12,000, with an average of about 38 mpg. Honda will soon sell a sub-Civic-size car here too, derived from gas misers sold in Japan and Europe. "Whether it's going to be lasting, it's too soon to say," says Nissan CEO Carlos Ghosn. "But the consumer psychology will be lasting, and people will stay interested in more-fuel-efficient cars."
Consumers are going to hear more about efficiency. This week, the Department of Energy will launch a public-service ad campaign. The message: "Energy efficiency is the cheapest, quickest, cleanest way to extend our nation's energy supplies and to tackle high prices," says Kateri Callahan, president of the Alliance to Save Energy, the government's partner in the program.
But Clapp of the National Environmental Trust points out that if Washington had acted aggressively in 2001 to raise fuel economy standards to 40 mpg over the next decade--an ambitious goal but possible with hybrid technology--the nation already would have saved 1.5 million barrels of oil a day, the equivalent of the total amount produced in the Gulf of Mexico and lost during the hurricanes.