Congestion in America highlights inefficiency in the surface transportation system, and particularly the challenge of urban congestion, as a growing cause of wasted time and fuel. Total fuel wasted from urban congestion has fallen between 100,000 and 150,000 barrels of oil per day over the past ten years, and in 2010 alone drivers in U.S. metropolitan areas wasted over 1.9 billion gallons of fuel. Furthermore, in 20 of the nation’s largest cities, annual costs of congestion exceed $1 billion. In the absence of substantial policy intervention, estimates suggest that these costs in fuel waste and travel delays will increase by 30 percent by 2015 and 65 percent by 2030.

Source: Texas Transportation Institute

Source: Texas Transportation Institute

SAFE urges a comprehensive and balanced approach to increasing traveler mobility and reducing congestion related fuel waste. The report outlines the range of options available to policymakers to alleviate the costs of congestion, grouped into the following categories:

• Pricing and other flow management techniques to reduce or eliminate recurring congestion
• Accident/Incident management for mitigating the likelihood and effect of non-recurring congestion
• Improved public transit service and other alternatives to single-occupancy vehicle travel
• Strengthened long-term urban planning and development initiatives

Current federal surface transportation legislation, funding over $50 billion annually in highway and transit programs, expires on March 31 of this year. The policies outlined in Congestion in America present market-based mechanisms to cut oil consumption and increase the efficiency of surface transportation infrastructure while improving energy security. As Congress seeks to pass long-term transportation legislation, it is imperative that these instruments are incorporated, and energy security remains forefront as a key policy priority.

Click Here to Read the Full Report

According to a new Intelligence Report published today by SAFE, Iran is likely to intensify its threats toward oil supplies moving thorough the Persian Gulf over the course of 2012 as part of an unconventional method of conflict that uses oil as a strategic weapon to keep the West from continuing its trend of hard-hitting sanctions.

Unfortunately, there is no elegant way for the U.S. and its allies in the short-term to put a stop to Iran’s behavior. The United States has lacked good policy options against the Iranian regime for decades because the U.S. transportation sector is heavily dependent on oil. In the short and medium-term, additional sanctions and better strategic oil stockpile management may help alleviate some of the risk posed by a cut-off in oil shipments by Iran. In the long-term, however, the key to any effective strategy that will reduce U.S. dependence will likely only be found by shifting America’s transportation sector toward non-petroleum fuels like electricity and natural gas.

Click here to read the full Intelligence Report.

To update: In addition to a threat last week to close the Strait, yesterday (Tuesday, January 3^rd), Iranian armed forces commander General Ataollah Salehi delivered a series of provocative statements to the USS John C. Stennis aircraft carrier that recently left the Persian Gulf’s waters, saying “We warn this ship, which is considered a threat to us, not to come back, and we do not repeat our words twice.”  The Islamic Republic  is known for its exaggerated military rhetoric (Iranian Naval Commander Admiral Habibollah Sayari is quoted as saying that closing the Strait would be “as easy as drinking a glass of water”), yet oil prices still jumped 4% in response, and U.S. officials note that Iran’s increasingly bellicose tone is likely a result of economic desperation, the Washington Post reports.

The Wall Street Journal’s Editorial Staff has taken a rather hawkish approach to the situation in their piece, “Iranian Strait Talk: A Carrier response to Tehran’s threats.” They point out that Iran fits all potential categories for regime gone rogue, with violations ranging from taking hostages and repressing their own citizens to test-firing ballistic and cruise missiles during naval exercises. In their assessment, Iran can’t do much more than bluff, considering “The “American warship” that Tehran is now threatening, the USS John C. Stennis, is a Nimitz-class carrier whose air wing alone is more capable than the entire Iranian air force.”  They conclude, “the best response to Iran’s threats would be to send an American aircraft carrier back through the Strait of Hormuz as soon as possible, with flags waving and guns at the ready. If it can’t be the Stennis, the USS Eisenhower would drive home the message.”

The companion piece to this OpEd, “Iran Won’t Close the Strait of Hormuz” was written by Bradley Russell—a Navy captain—and Max Boot, visiting and senior fellows at the Council on Foreign Relations, respectively. Their argument: while it remains true that Iran’s conventional forces are little match for American military might, they have ample asymmetrical resources at their disposal to cause severe and prolonged disruptions to global oil markets. In 1984 during the Iran-Iraq war, Iran avoided direct attacks on U.S. forces, but scattered mines throughout the Strait and used small, maneuverable patrol boats to fire a variety of missiles at tankers. A fleet of aircraft carriers is not necessary to inflict sustained damage to the Strait’s daily flow of 17 million barrels of oil, or worse, to injure or kill American military personnel.

Analysts believe oil prices have already increased by $5 to $10 a barrel due to the uncertainty, with the capability to grow much larger in coming weeks depending upon how events unfold. Both of Wall Street Journal’s articles raise several key points, but there is also a greater force at work: if it were not for our dependence on the foreign oil being transported through this strategic waterway, the Strait of Hormuz wouldn’t be considered strategic in the first place. But since the world has no other options for its primary transportation fuel, we can expect prolonged oil price spikes and continued threats as Iran flexes the only weapon it really has.

Although the Strait currently remains navigable, Tehran is not leaving its intentions open to interpretation.  The Tehran Times reported today that “Iran’s threat of closing the Strait of Hormuz is a response to the United States’ threats against the Islamic Republic.” The article suggested that future practice sessions are likely, and in the words of Iranian Parliamentarian Parviz Sorouri, “If the world wants to make the region insecure, we will make the world insecure.” Under the United Nations Convention on the Law of the Sea (UNCLOS) Iran has the right to close the Strait if its interests in the waterway are threatened.

It is unclear how the United States will respond to these drills, amid ongoing debates regarding sanctioning Iran for its continued development of nuclear technologies. The Iran Threat Reduction Act, H.R. 1905, which is expected to pass in the House shortly, would tighten sanctions against the state and sanction the Central Bank of Iran if investigations find that the bank has supported Iran’s terrorist activities. House Foreign Affairs Committee Ranking Member Howard Berman (D-CA) said yesterday evening that these measures could “roil the global oil markets, but that this was worth the risk in order to prevent Iran from developing nuclear weapons,” The Hill reports. Other representatives have argued against the bill on the grounds that oil prices will spike if it takes effect.

Further complicating the matter, it is reported that Saudi Arabia has pledged not to increase output to compensate for production shortages from Iran, despite the U.S.’s efforts to secure assurances of a supply cushion.  OPEC’s Vienna meeting concluded today with a compromise between the price-hawkish Iran and the more dovish Saudis, by setting the cartel’s total production levels at 30 million barrels, thus maintaining but not increasing current output.

Now, the United States finds itself in an uncomfortable situation.  With the economy still lagging under high oil prices, a spike in response to sanctions would be problematic, but prolonged blockage of one-sixth of the world’s oil supply would have catastrophic repercussions.  Conversely, the U.S. and the west must maintain credibility regarding threatened consequences for Iran’s emerging nuclear program.  This is a perfect example of foreign policy with one hand tied behind our backs: the inability to take necessary actions against enemy states due to our crippling dependence on foreign oil.

But that’s history, and the annual two-week negotiations over addressing global climate change did end on Sunday with what the WaPo called “a last-minute deal.”  The deal?  An agreement to potentially reach an agreement that would apply something called “an agreed outcome with legal force” to developing nations.  This is arguably an advance on the Kyoto Protocol, which did not require developing nations to commit to reduce their greenhouse gas emissions.   And that’s important because some “developing nations” — namely China and India — are leading the globe in aggregate emissions.  To be fair, their per capita emissions are far lower than developed nations, but that shouldn’t give them a free pass.  The key negotiating issue since the US pointed out the fundamental unworkability of the Kyoto Protocol has been  how to account for developing nations’ exploding emissions without unfairly impeding their economic growth — after all, the developed nations built their economies on cheap fossil fuels and only subsequently has the world (well, most of it) realized that there will be highly negative consequences because of it.

It remains to be seen whether this year’s climate confab really moved the ball on this point.  Host South African foreign Minister Maite Nkoana-Mashabane certainly thinks so, as the WaPo quotes him saying, “We have indeed saved tomorrow today.“  Veteran climate watcher Alden Meyer, of the Union of Concerned Scientists, had a different view, noting failure to achieve agreement on reducing the gap between expected emissions and those most scientists believe are the maximum that the climate can endure without expensive and life-threatening damage:  “There’s nothing [in the agreement] that’s going to get the world to lift its game and close that gap.”

Maybe more important news this weekend came from the Nuclear Regulatory Commission, where dysfunction apparently reigns.  Both the WaPo and the WSJ reported Saturday on four NRC Commissioners, two Democrats and two Republicans, writing to the White House accusing Chairman Greg Jaczko of  ”actions and behaviors [that] are causing serious damage to this institution.”  That quote is from the WSJ, which runs an unfortunate lead sentence (“Four of the five members . . .”) — if you didn’t already know that there are only four commissioners and a chairman, you don’t find that out until the end of the piece, so casual readers may have thought there was a hold-out.  The fact is that all four of these highly respected professionals, Democrat and Republican alike, took the trouble of airing their concerns about the NRC’s leadership to the White House.  House Oversight and Government Reform Committee Chairman Darrell Issa, not the fuming four, released the letter to the media.

The bipartisan nature of the criticism made Senator Harry Reid’s (D-NV) otherwise laudable defense of his former staffer ring a bit hollow.  As reported in the WaPo on Sunday, he called the complaints “a politically motivated witch hunt.”  We’re guessing Senator Reid meant that Chairman Issa was hunting witches, not labelling the letter such.  But since loyalty in Washington is often in short supply, we’ll give him a pass either way.  Not so the NRC as a whole, an organization too critical to our energy future to have it’s oversight confined to the weekend papers.  Oversight hearings, anyone?

1.  Ana Campoy and Stephanie Simon reported on a dispute in Oklahoma over a wind farm that may interfere with oil production.  The Osage Nation owns the mineral rights to nearly 1.5 million acres in Osage County, and has since the early 1900s. The Missouri-based Wind Capital Group has leased land to set up windmills from private parties on that same real estate.  The interesting legal question is whether building a wind farm will impair access to the land needed to develop the mineral rights.  And of course the wind farm side of the dispute is pleading urgency, as financing is “contingent on a government tax credit that is only available until the end of 2012.”

Here’s the problem with that:  Those tax credits are production tax credits that only make wind economical — if at all in the face of cheap natural gas — if they are extended every year, not just once.  And even if they are extended, long-range they are doomed.  In a time of abundant fuel for electricity contrasted with extremely expensive oil, the right answer in this dispute is to shelve the wind project and produce the oil, if that’s what it takes.

2.  Bravo to the EU, and specifically the French, for seeking to ban Iranian oil imports in an “unprecedented step against the world’s third-largest oil exporter over its alleged nuclear-bomb program,” according to reporters Laurence Norman, Max Colchester, and Benoit Faucon.  While it’s great to see the French pushing this, it would be nice to hear US policy-makers lending support.

3.  Sharon Terlep reported on the NHTSA investigation into the fire risk posed by the Chevy Volt after “crash tests caued fires in two instances, a development that could be a serious setback for electric vehicles.”  On one level, this makes sense, but should we really worry about brief fires “within hours or days” after “the agency intentionally damaged the battery compartment and ruptured the coolant line”?  Sounds like a bit more than a crash risk, and more like sabotaging a machine to cause a problem.  We’ll be following this story.

4.  And finally, the WSJ editorial page took another shot at the “green jobs” ideology, pointing out that “the real employment boom is taking place in oil and gas.”  Not surprisingly, our recent explosion in domestic oil and natural gas production has been good for workers.  We’ll end on the good news:

“(O)il and gas production . . . now employs some 440,000 workers, an 80% increase, or 200,000 more jobs, since 2003.  Oil and gas jobs account for more than one in five of all net new private jobs in that period.”

People who invest in hybrid cars are significantly less likely to be injured in an accident because their heavy batteries make the vehicles safer than traditional cars.

Ashley Haley’s piece, Hybrid cars found to offer extra safety in crashes, credits the extra battery weight, meaning the benefit should also hold for fully electric vehicles as well.

The average hybrid is 10 percent heavier than a traditional car of the same size, and the extra heft reduces the odds of being hurt in a crash by 25 percent, the report says.

Save money, enhance our nation’s energy security, and be safer — drive an EV!

Which is good news in light of the fact that oil prices touched $100 yesterday.  Here’s the WSJ on why:

The sale of an oil pipeline running from Oklahoma to Texas upended U.S. energy markets Wednesday, sending the price of crude surging above $100 a barrel as America copes with the promise and pitfalls of its new energy boom.

Over the past two years, the U.S. has started producing so much oil that existing pipelines have been unable to move it to refineries. That has led to a glut of oil in the center of the country, keeping the price of American crude far below that of petroleum traded overseas.

The change in direction for the pipeline could also derail the controversial Keystone XL pipeline planned to run from Canada to the Gulf, although TransCanada Corp. said Wednesday it still expected approval of its project.

And it will contribute to already declining U.S. imports of foreign oil. Since they will get more domestic oil from the pipeline, Gulf Coast refineries will have less need to buy oil abroad.

“It’s hard to overestimate the significance” of reversing the pipeline, said Antoine Halff, lead industry economist at the U.S. Energy Information Administration, an arm of the Energy Department.

Oil goes up in price because the future holds promise of slightly reduced dependence on foreign oil?  Just proves the old adage that the markets hate good news.  And this is good news:

“A Seaway reversal will provide capacity to move secure, reliable supply to Texas Gulf Coast refineries, offsetting supplies of imported crude,” Enbridge CEO Patrick D. Daniel said.

On Friday, the release of a new round of White House documents added more details, whosing concerns among senior advisers earlier this year that Solyndra might erupt into a political scandal requiring the replacement of Chu and his agency team.

Well, they were right about that.  Even worse, the piece quotes a former Obama campaign energy adviser, Oregon professor Dan Carol, in a February 2011 email declaring that the Energy Department had suffered a ‘deployment failure’ and urging Obama to ‘make major leadership changes as soon as possible.’ 

The WaPo piled on Sunday with a long Outlook piece by the normally on-target Steven Mufson, entitled Before Solyndra, a history of failures.  This piece details the familiar record of ‘failure’ on the Clinch River Breeder Reactor.  The Synthetic Fuels Coporation.  The hydrogen car.  Clean coal.

That’s actually a pretty cheap shot.  There’s been no failure on either hydrogen cars – fuel cell technology has been developing pretty much on schedule.  Same with clean coal.  DOE’s R&D on that front has been very valuable.  And a list of successes could include the Prius battery, gas turbines, and horizontal drilling techniques.  Solyndra was surely a mistake, but DOE’s R&D record is strong.

The other big energy news is the Administration’s punt on the Keystone XL oil sands pipeline.  Mufson had an important piece in Saturday’s WaPo:  With the Keystone XL pipeline on hold, the giant companies tapping Canada’s oil sands will turn to Plan B – existing pipelines to the United States.

That’s exactly right, and the WaPo made emminent good sense in Sunday’s editorial:  Canada’s oil will come out of the ground, and someone somewhere will refine it and burn it. . . . (T)he world will continue to use oil, with all the dirty realities that entails.  Rejecting Keystone XL would not change that fact.  But it would help China lock up more of the world’s oil production, cost infrastructure jobs in the United States and offend a reliable ally.  More delay after three years of review is insult enough.

Well put, WaPo.

And, yes, Mr. Kaiser apparently talked about the project with White House — but never “personally lobbied” for the guarantee.  Indeed, the piece in today’s WaPo by Joe Stephens and Carol Leonnig even portrays Kaiser as pushing back on a proposal to lobby the White House:  ”I question the assumption that the WH is the path to pursue when both of your issues are with the” DOE.  This isn’t a smoking gun; it’s not even a water pistol.

The real scandal we should be paying attention to got top treatment on the WaPo editorial page and a piece in yesterday’s WSJ.  That’s our inability to constrain Iran’s ambitions to build a nuclear weapon.  The reason for that is the reason that the DOE loan guarantee program should be focused on getting us off of oil — not trying to compete with cheap natural gas for electricity.

Imagine the late great Joe Frazier being forced to box with one hand tied behind his back and you’ll have a sense of US foreign policy in this long age of oil dependence.  The WSJ lead was chilling:

The United Nations’ nuclear agency said Iran has developed technologies needed to produce nuclear weapons, a finding that puts new pressure on the Obama administration to act more forcefully against Tehran.

And the money line later in the article was depressing:

While U.S. officials say Washington will try to use the report to bring new sanctions, the Obama administration has stepped back from one potential target—sanctioning Iran’s central bank, the principal conduit for Iran’s oil sales. Administration officials have voiced fears that blacklisting the bank could significantly drive up international oil prices and hurt the U.S. economy.

That’s right.  We are so terrified of spiking oil prices that we refrain from taking action that could prevent a nuclear confrontation in the Middle East.

When economists talk about the externalities of oil consumption, they are usually referring to environmental impacts and Defense Department costs of war-fighting in oil-rich regions or expenditures made to keep sea lanes open for oil-related commerce.

It’s impossible at this time to quantify the monetary value of a foreign policy tool like sanctioning Iran’s central bank.  It will be easy to quantify the costs of a new war in the Middle East that may be the consequence of our failure to prevent Iranian nuclearization.  And that failure will have been directly related to our addiction to imported oil.

Ms. Solomon’s lead:

“The White House has put itself squarely in the middle of a fight over a planned pipeline that promises much-needed jobs in a weak economy but upsets President Barack Obama’s environmental base.

White House Press Secretary Jay Carney said Wednesday about the Keystone XL pipeline, “You can expect that the decision that is reached will reflect [Mr. Obama's] views.

The comments signal a shift by the White House, which in the past has said the decision to approve or deny construction of the Canada-U.S. pipeline rested with the State Department.”

On one level, this shouldn’t really be news.  It is highly unlikely that any President would let his Secretary of State make an essentially domestic policy decision of this magnitude — construction of a pipeline crossing several states to transport a vital commodity  — without significant consultation throughout the Administration and ultimate sign-off by the Whtie House.

State’s Enviromental Impact Statement can — and should —  be read at http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf?Open, It well describes the extent of the project:

The proposed Keystone XL Project (click here for map) consists of a 1,700-mile crude oil pipeline and related facilities that would primarily be used to transport Western Canadian Sedimentary Basin crude oil from an oil supply hub in Alberta, Canada to delivery points in Oklahoma and Texas. The proposed Project would also be capable of transporting U.S. crude oil to those delivery points. The proposed project could transport up to 830,000 barrels per day and is estimated to cost $7 billion.

Keystone is a very big deal.  And passions run high in what is becoming the poster child for the “jobs versus environment” debate.  As Ms. Solomon writes:

A decision in favor of the pipeline would risk alienating environmentalists, a core Obama constituency, ahead of the 2012 election. But the political risks on the other side might be higher: Rejection of the pipeline would likely hand a 2012 issue to Republicans, who already argue the president’s policies are hindering job creation and hurting economic growth.

It would be great if, as folks enter into this debate, they actually take a look at the EIS as prepared by the State Department.  At the end of the day, regardless of the President’s decision, it needs to be grounded in facts and not just rhetoric.