They wrote:  “Few areas of American governance have been as incoherent in recent decades as energy policy, which is saying something. But lately, we keep seeing reasons for optimism.

Almost miraculously, the U.S. is both reducing its greenhouse-gas emissions and becoming increasingly energy independent. As Bloomberg News recently reported, the share of U.S. energy demand met by domestic sources increased to 81 percent through the first 10 months of 2011 — the highest level in 20 years — and emissions are expected to decline 12 percent by 2020.”

Bloomberg correctly identifies one of the main drivers in this, along with overall reduced demand and higher efficiency:

A major factor in both trends is increased use of natural gas, a cleaner-burning fossil fuel now being extracted in abundance across the country. Hydraulic fracturing, a new production technology also known as fracking, has helped push prices for the fuel to a decade low, and has created plenty of jobs in the process.

Then Bloomberg points to an end-use incentive program that holds promise of easing our transition to electrified vehicles — that will be increasingly powered by electricity generation fueled by natural gas:

President Barack Obama’s small-scale National Community Deployment Challenge – which would help a dozen or so communities become “real-world laboratories” by funding infrastructure for a variety of alternative-fuel vehicles — is on the right track. The government could conduct similar limited experiments using parts of its own fleet of vehicles.

Some misguided opponents of vehicle electrification decry “cars running on coal.”  The fact is that our natural gas bonanza is reshaping the electricity sector.  The EIA recently reported that coal’s share of monthly power generation in the United States dropped below 40% for the first time since 1978, with the lion’s share of the 60% coming from natural gas and nuclear.  Electricity is increasingly cleaner and shifting our transportation sector to it will transform transportation-related energy into something both clean and secure as well.

Some hoped that the House would take up the version passed by the Senate two weeks ago, although critics argue that as a two year bill, it is not much more than an extension itself. The Senate’s version included a number of provisions we praised—the first being establishment of a national strategy  of which one of the objectives would  include a reduction of  transportation-related fuel consumption. The others being provisions that authorize electric vehicle charging stations and programs that shift traffic demand to non-peak hours to be eligible for funding.

There has been predictable finger pointing on which party is to blame. Politico reports that although Democrats—who attempted to block the extension multiple times this week—are criticizing Republicans for “kicking the can down the road,” the GOP counters that Democrats have been perfectly happy to pass extensions in the past. It has been 912 days since Congress last passed a long-term surface transportation authorization, according to E&E. Politico also speculates we can expect another short-term extension in 90 days, due not only to the size and scope of transportation legislation, but recent lack of agreement within the House, and that within the next three months the House will be in session for only 31 legislative days, the Senate for 45.

In other news this week; yesterday Senator Lisa Murkowski (R-AK) invited the President and First Lady for a “milkshake summit” to discuss tapping Arctic National Wildlife Refuge (ANWR) petroleum resources through horizontal drilling techniques. The milkshake references a scene in the 2007 academy award winning drama, There Will Be Blood, in which eccentric oilman Daniel Plainview explains to a landowner than he “drank his milkshake” (tapped the property’s oil resources through adjacent wells). The directional drilling endorsed by Murkowski (and SAFE in a policy statement from November of last year) would enable the United States to access ANWR’s oil without establishing a surface presence within the wildlife refuge.

The Senate version is a two year, $109 billion reauthorization bill which would support mass transit, bridge and road projects. Two provisions were of particular interest to energy security. The first is the establishment of a national policy which would include an objective of reducing transportation-related fuel consumption, and the second was an electric vehicle charging station program designed to shift traffic demand to nonpeak hours. If the House does decide to start fresh on their own version, we strongly support inclusion of these items. The highway bill expires at the end of this month.

Also this week, the International Energy Agency warned on Wednesday that oil markets are in danger as global supply fell by 200,000 barrels a day in February. The supply decrease is largely a result of the sanctions imposed on Iran’s central bank. Some—but not all—of the loss of supply from Iran can likely be offset by production increases from the remainder of OPEC, and Saudi Arabia has already begin increasing production. Additional supply can be provided by Iraq, Libya, and Nigeria, a “trio of unstable countries” according to Samuel Ciszuk of Energy Economics. Consequently, consumers can expect a continued high risk premium.

We hope reporters are paying attention, particularly those who have been writing that Senate procedure “requires” 60 votes.  No, 60 votes are required to invoke cloture and shut off a filibuster.  In recent years, cloture has been used as a tool by the Senate majority to limit debate and prevent debate and voting on difficult amendments.  To be sure, the Senate minority has also often threatened filibuster to force a supermajority, but when was the last time we really saw a filibuster?  Instead, cloture has become the norm because it serves the political purposes of both parties — the minority gets to enhance its strength by forcing supermajorities, and the majority party gets to protect its vulnerable members from controversial votes.

But enough about that.  The good news is that there is now a path forward, and there will be votes and debate on a series of amendments, some directly related to the transportation bill and some less so.  In the less so category — but not so less so as might first appear — is an amendent from Senator Jim DeMint (R-SC).  Senator DeMint filed, and the leaders agreed to allow debate on, an amendment to end all energy-related subsidies.  An important issue, worthy of extended and thoughtful debate — as well as committee hearings and a full legislative process — which is among the reasons opponents will give for killing it.

What makes that amendment so interesting is that it brings energy security into the transportation debate, something that rarely happens but should always be a dominant theme.  Why?  Because our transportation sector is 95%+ dependent on oil and 2/3ds of all the oil we use in America goes to the transportation sector.  In other words, you can’t talk about energy security without talking about transportation.  Kudos to Senator DeMint for recognizing that.

And that linkage is precisely why another DeMint amendment to be debated is equally problematic.  Senator DeMint proposes to “devolve federal highway and mass transit projects and their funding sources to states, allowing each state to determine their own transportation priorities.”

That’s an interesting idea, but misguided.   States do determine their own transportation priorities today, except when Congress earmarks — DeMint and others are right in their opposition to that practice.  But in general, construction priorities aren’t dictated to the states — but national needs and priorities are given additional national funding that the states then spend in accordance with those needs.  And while Senator DeMint is correct when he says that the system “is plagued by thousands of wasteful earmarks, bureaucratic red tape, and outdated funding formulas that pick winners and losers,” that’s a good reason to reform the system, not throw up our hands and just let individual states decide our national transportation policy through 50+ disparate and uncoordinated efforts.

This is especially the case given the huge macro and microeconomic toll inflicted by our transportation-driven dependence on petroleum.  While there are others, that’s reason enough for a national transportation policy and reason enough to be wary of seductive calls for devolution.

Once gas prices spike, there are little to no immediate options available to policymakers. Furthermore, rising gas prices have serious economic implications. Every economic recession within the past four decades has been preceded by or occurred concurrently with an oil price spike. The current spike has effectively consumed the entire stimulus intended by the payroll tax cut. As SAFE CEO Robbie Diamond said on Wednesday, “The payroll tax cut enacted by Congress and the President gave American families an extra $108.6 billion in take-home pay in 2011 compared to 2010. However, increased gasoline prices cost U.S. households $104.4 billion in 2011. Consumers were essentially given a tax cut that was put into one pocket, but then taken from another to pay for higher gas prices instead of spurring economic activity.”

These economic threats—in addition to the constraints on foreign policy due to oil geopolitics—are well known and established. The solutions are clear: increase domestic supply, reduce oil demand, and diversify the nation’s energy portfolio. However, despite the consensus on the rhetoric, there has been a continued lack of progress. “The President and bipartisan members of Congress both have called for an all-of-the-above energy strategy,” said Diamond. “Rising gas prices and the geopolitical threats in the Middle East have once again created a wake-up call to improve our energy security for the long-term. All that is needed now is action.”

Meanwhile, the House GOP are back to the drawing board with the transportation and infrastructure reauthorization bill. The original bill—threatened by veto, and unpopular with both transit advocates and fiscal conservatives alike—will be revised to cover a shorter duration (two years), cost less, and reverse the plan to separate federal transit funding from the Highway Trust Fund. Speaker Boehner’s spokesman Michael Steel has stated that the vision of linking infrastructure developments to expanded American energy production will remain.

The 17 hour markup, which included over 90 amendments, was described as “record-breaking” by Chairman John Mica (R-FL), who also “praised the committee for persevering and passing the bill, which he said would create jobs and keep the transportation system solvent for several more years,” E&E news reports.

Emotions were running high on this particular markup. Secretary of Transportation Ray LaHood has called the bill “the worst transportation bill” he has seen in decades, a sentiment echoed by T&I committee member, Rep. Corrine Brown (D-FL) who also added that the markup itself was “the worst day of [her] life.” Not all conservatives are pleased either; the conservative Club for Growth issued a Key Vote Alert to vote “no” on the legislation due to lack of spending cuts.  Representative Steve LaTourette (R-OH) described the bill as containing “divisive” provisions such as anti-labor provisions, and ending the Transportation Enhancement program which supports infrastructure development for bikers and pedestrians.

General P.X. Kelley of SAFE’s Energy Security Leadership council urged members to incorporate language into the bill based on SAFE’s February 2011 report, Transportation Policies for America’s Future. The amendment, offered by Representative Steve Cohen (D-TN), which was voted down, would have required the Secretary of Transportation to:

• Use the reduction of transportation related oil consumption as a criterion  for selecting projects to be included in the national transportation strategy;
• Encourage states and metropolitan planning organizations to prioritize oil reduction projects in transportation improvement programs in order to enhance our national and economic security by reducing our dependence on petroleum; and
• Encourage metropolitan planning organizations to develop a strategic oil savings plan that includes a target for reduction of surface transportation related oil consumption.

It is disappointing that the committee failed to take this opportunity to include bipartisan oil-saving metrics. Representative Cohen will seek to pass the amendment on the house floor. The full bill is set to see floor action the week of February 13^th.

Energy has played a prominent role in politics during the Obama presidency, and as notable as what he mentioned is what he omitted: Keystone and Solyndra. Conservatives have already responded with criticisms of Obama’s record on oil and gas drilling, continuing to push for the Keystone XL Pipeline, and it is safe to assume these issues will remain forefront as the race for the White House continues. Today is the perfect opportunity to look back at the major energy stories of Obama’s Presidency, and what some of their implications might be for his reelection campaign.

5) Cap and Trade

On Obama’s election night, he famously said “this was the moment when the rise of the oceans began to slow and our planet began to heal,” raising environmentalists’ hopes that a domestic cap and trade policy would be passed. In 2010, with Democrats holding the executive branch as well as both chambers of Congress, proponents of the environmental policy hoped the carbon mitigation mechanism they had been promoting for  more than a decade would finally come to fruition. However, with the growth of the Tea Party movement, worries about excessive government spending, sluggish economic growth in the wake of the financial crisis, strong industry opposition and the complexity of the policy mechanism itself, cap and trade slowly died.

Campaign liability: Very low. Environmental economists disagree about the best implementation of cap and trade, not to mention inconclusive levels of public support for government action to reduce carbon emissions in general.

4) The Macondo Well Explosion

The catastrophic oil spill which lasted from April through July of 2010 was the worst open-water oil spill in American history, and devastated the Gulf coast region in addition to killing a number of oil field workers. The spill was a huge wake-up call to the potentially devastating consequences of reckless drilling practices, and caused a temporary moratorium on drilling in the Gulf.

Campaign liability: Low. The Obama Administration took a number of steps to restore confidence that the cleanup was effective, most notably by Obama himself taking a dip on the Florida coast with his daughter Malia. Although the spill caused a temporary moratorium on drilling in the Gulf, the White House claims overall oil and gas production has increased during Obama’s presidency. That said, oil and gas leasing on federal land is likely to be subject of extensive debate.

3) CAFE Standards

In summer of 2011, the Obama Administration announced it was increasing the fuel economy standards announced by the Bush Administration in the Energy Independence and Security Act of 2007. By 2025, cars and (for the first time) light duty trucks will have to reach an average of 54.4 miles per gallon (mpg). The rules will account for 90 percent of all vehicles sold within the United States, and was a substantial increase over the 35 mpg by 2020 established by Bush.

Campaign liability: Negligible. The New York Times reported this week that the proposed rules are a win across virtually all stakeholders, as they “create jobs, reduce oil consumption, create cleaner air and save drivers money, all while helping automakers increase their profits.”

2) Keystone XL

Obama rejected TransCanada’s application to build the Keystone XL pipeline earlier this week. The long-awaited decision was a divisive one: protests waged outside the White House for weeks, Congressional Republicans forced Obama to expedite his decision with language attached to the tax bill at the end of 2011, and the American Petroleum Institute (API) launched a national ad campaign in support of the pipeline earlier this month, just to name a few events from the drawn out pipeline battle (which, according to some sources, is far from over).

Campaign liability: Unclear. The Keystone issue is a touchy one, as it has been perceived as a polarizing decision between jobs and the environment. For some, the decision was in direct conflict with the recommendations of the Presidential Jobs Council, and Republicans are unified in opposition against rejecting the opportunity to create domestic construction jobs. However, in the words of one expert, “No one who was planning on voting against the president would have been won over simply because of the approval of Keystone.”

1) Solyndra

Solyndra, the solar panel manufacturer and recipient of a $500 million Department of Energy loan, went bankrupt in fall of 2011. Occurring in the immediate wake of the last-minute debt ceiling negotiations, when government spending was front and center, what was at first a source of pride for the Obama Administration has become a PR nightmare, as well as sparking a debate over the legitimacy of the Department of Energy’s entire Loan Guarantee Program.

Campaign liability: Potentially high. The first Obama 2012 ad released by the reelection campaign has focused on green energy, and some are speculating it’s a preemptive strike against Solyndra-based attacks. Critics have argued that DOE’s loans are an example of “government playing venture capitalist,” while others argue it’s important for the federal government to encourage technologies in support of the public good. We fully expect this issue to be used as a symbol for Republican’s opposition to the Obama “Green Jobs” agenda, and it will remain on the opposition’s talking points throughout the campaign cycle.

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

The proposed regulations were formulated jointly between the Environmental Protection Agency and the Department of Transportation, and the Obama administration is praising them as a move which will save consumers thousands of dollars at the pump.  Of even greater importance, it is a huge step for our national and energy security, weakening our dependence on foreign oil.

SAFE has long advocated for increasing fuel economy standards, which can be reached through technology improvements and alternative fuels such as hybrid and electric vehicles.  SAFE President and CEO Robbie Diamond remarked, “Improving fuel efficiency standards is an essential component to address the threats posed by the nation’s oil dependence, the administration should be commended for publishing the proposed rule so they can progress through the rulemaking process as quickly as possible.

“As the proposed standards are debated between now and the expected publication of a final rule next summer, it is critical to recognize that cars and trucks, which use the majority of our oil to power our economy, are almost completely dependent on oil,” continued Diamond. “Improving fuel efficiency standards will have a direct and immediate impact on our energy security. These improvements in efficiency will strengthen our economy and our national security by reducing substantially our oil consumption and its attendant risks.”  SAFE’s complete analysis of the oil savings from the proposed fuel economy standards can be found here.

In other energy policy news this week, Energy Secretary Stephen Chu testified before lawmakers on Thursday about the bankruptcy of Solyndra.  Some Republicans suggested that Dr. Chu should resign, however, Dr. Chu expressed that the incident was “extremely unfortunate” but remained unapologetic.  He explained that the two main reasons Solyndra failed could not have been foreseen, specifically a softened market for solar panels due to Europe’s debt woes, and an unanticipated emergence of less expensive solar panels from China and elsewhere.  Photovoltaic solar panel prices have dropped 70 percent in the past two and a half years.  Dr. Chu also remarked that the company attracted over half a billion dollars of private investment.  The lesson, he argues, is that “When it comes to the clean energy race, America faces a simple choice: compete or accept defeat.  I believe we can and must compete.”

Finally, Speaker of the House John Boehner made an announcement yesterday about a proposed bill to pay for improvements to the nation’s transportation system through revenues from expanded drilling.  He said his proposal “removes government barriers to long-term job growth.”  Called the American Initiative and Energy Act, the bill would authorize transportation funding for five years, and calls for projects some would consider controversial, such as opening the Arctic National Wildlife Refuge in Alaska for drilling and shale oil exploration.  House Democrats have expressed that the plan lacks details, and may draw insufficient revenues.  SAFE strongly supports expanded access to domestic energy resources, as well as development of transportation infrastructure focused on long term oil savings.  However, given that the amounts generated from expanded production are likely to be relatively small compared to the significant costs associated with our country’s transportation infrastructure projects, SAFE views that these revenues would be more effectively utilized on targeted efforts to broaden the use of electric vehicles.

The program is coordinated by the Transportation and Climate initiative, and the states involved are Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont, as well as the District of Columbia.  The Department of Energy (DOE) is supporting the project with a $1 million grant, in keeping with President Obama’s plan to see 1 million plug-in vehicles on the road by 2015.  The region is hoping to account for at least 200,000 of those.

Marc Geller of Plug In America said that this initiative is just one of many efforts nationwide to facilitate public EV infrastructure.  He argues that as 90 percent of charging currently occurs at home, this will help people see EVs “out in the wild,” giving motorists the confidence to drive their cars further and reminding others to consider EVs for their next purchase.

Other energy news this week: Alaska Senator Lisa Murkowski is pushing for DOE loans to continue, expressing concern that they will be discontinued due to the ongoing Solyndra controversy.  The top Republican on the Senate Energy Committee, she has been critical of Solyndra, calling it a “horrible failure,” but maintains that the federal government should have a loan guarantee program that works to enable energy industries such as nuclear and renewable promote innovation and growth.

Also in the Senate this week, Rand Paul (R-KY) has lifted his filibuster of the pipeline safety bill, which was approved Monday, updating safety regulations on natural gas and oil pipelines as well as increasing fines on violators.  A similar measure won unanimous approval from the House Energy Committee last month.  House Democrats are continuing to push the supercommittee to cut oil subsidies, the most recent effort was a letter from 38 members arguing that the United States can no longer afford to give billions of dollars every year to corporations which earn billions of dollars in profits.  A variety of industry incentives and subsides are under consideration.