Potential long-term impacts of changes in US vehicle fuel efficiency standards

Changes in corporate average fuel economy (CAFE) standards have not been made due, in part, to concerns over their negative impact on the economy and jobs. This paper simulates the effects of enhanced CAFE standards through 2030 and finds that such changes could increase GDP and create 300,000 jobs distributed widely across states, industries, and occupations. In addition, enhanced CAFE standards could, each year, reduce US oil consumption by 30 billion gallons, save drivers $40 billion, and reduce US greenhouse gas emissions by 100 million tons. However, there is no free lunch. There would be widespread job displacement within many industries, occupations, and states, and increased CAFE standards require that fuel economy be given priority over other vehicle improvements, increase the purchase price of vehicles, require manufacturers to produce vehicles that they otherwise would not, and require consumers to purchase vehicles that would not exist except for CAFE.     

The water needs for LDV transportation in the United States

Concern over increased demand for petroleum, reliable fuel supply, and global climate change has resulted in the US government passing new Corporate Average Fuel Economy standards and a Renewable Fuels Standard. Consequently, the fuel mix for light duty vehicle (LDV) travel in the United States will change over the coming years. This paper explores the embodied water consumption and withdrawal associated with two projections for future fuel use in the US LDV sector. This analysis encompasses conventional and unconventional fossil fuels, corn ethanol, cellulosic ethanol, soy biodiesel, electricity, and hydrogen. The existing mandate in the US to blend ethanol into gasoline had effectively committed 3300 billion liters of irrigation water in 2005 (approximately 2.4% of US 2005 fresh water consumption) for producing fuel for LDVs. With current irrigation practices, fuel processing, and electricity generation, it is estimated that by 2030, approximately 14,000 billion liters of water per year will be consumed and 23,000–27,000 billion liters withdrawn to produce fuels used in LDVs. Irrigation for biofuels dominates projected water usage for LDV travel, but other fuels (coal to liquids, oil shale, and electricity via plug-in hybrid vehicles) will also contribute appreciably to future water consumption and withdrawal, especially on a regional basis.     

Reducing greenhouse gas emissions by inducing energy conservation and distributed generation from elimination of electric utility customer charges

This paper quantifies the increased greenhouse gas emissions and negative effect on energy conservation (or “efficiency penalty”) due to electric rate structures that employ an unavoidable customer charge. First, the extent of customer charges was determined from a nationwide survey of US electric tariffs. To eliminate the customer charge nationally while maintaining a fixed sum for electric companies for a given amount of electricity, an increase of 7.12% in the residential electrical rate was found to be necessary. If enacted, this increase in the electric rate would result in a 6.4% reduction in overall electricity consumption, conserving 73 billion kW h, eliminating 44.3 million metric tons of carbon dioxide, and saving the entire US residential sector over $8 billion per year. As shown here, these reductions would come from increased avoidable costs, thus leveraging an increased rate of return on investments in energy efficiency, energy conservation behavior, distributed energy generation, and fuel choices. Finally, limitations of this study and analysis are discussed and conclusions are drawn for proposed energy policy changes.     

A synfuels era for the United States?

This article surveys the liquid fuels picture for the year 2000 and concludes that transportation fuels will represent the critical domestic energy resource for the future. The United States must develop a synthetic fuels industry if it is to meet its transportation fuel needs while seeking to reduce its dependence on foreign crude oil. Synthetic fuels from coal and oil shale (methanol, gasoline, and diesel fuel) and methanol from biomass are depicted as the emerging options of the future. Within these options, methanol-from-coal is highlighted as providing the most technically versatile, economically viable, and environmentally sound choice. Based largely on transportation needs, the article presents a methanol market demand forecast calling for the consumption of 25 billion gal/y by the year 2000—enough to supply a fleet of 25 million methanol cars and provide for considerable methanol usage in the industrial, utility, and chemical sectors. Thus, about one out of every six cars in the automobile fleet would be operating on methanol if this forecast holds true. A survey of the cost estimates for producing alternative transportation fuels in the future shows, that methanol-from-coal could prove to be least expensive motor fuel: roughly two-thirds of the price of gasoline from crude oil and one-half the price of methanol from biomass. The article also poses some of the challenges facing the synfuels industry if it is going to overcome the entry barriers facing the establishment of a new fuel in the liquid fuels market place.     

Electric power required in the world by 2050 with hydrogen fuel production—Revised

Since estimation of electric power requirement for large-scale production of hydrogen fuel for the world vehicle fleet based on data through 1995 in 2001, a large increase in available travel data has become available, sufficient to revise the estimates with greater confidence. It is apparent that much more energy will be required, as worldwide demand for electrification and substitution of hydrogen for fossil fuel in transportation grows over the next 50 years. Published forecasts for electricity demand over the next 30 years show mean annual growth rates ranging from 1.7 to 3.4%/a, which when extrapolated from the present consumption of 16 PWh in 2002 to the year 2050 suggests an annual electricity demand in the range of 36–82 PWh. In addition to the business-as-usual growth in demand, estimation of the growth of the world automotive vehicle fleet from about 900 million vehicles in 2010, consuming about 360 billion gallons of petrol, to about 1.5 billion vehicles in 2050, which could be operated with about 260 billion kilogram of hydrogen fuel, would result in additional electricity demand of about 10 PWh annually for replacement of fossil fuels in transportation. With approximately 175 PW of solar power reaching earth and world fossil fuel reserves of 50–200 years remaining at present consumption rates, the question arises of how much of the world's future electric energy supply will be required (if any) from nuclear fuels.     

US military expenditures to protect the use of Persian Gulf oil for motor vehicles

Analyses of the full social cost of motor vehicle use in the US often estimate an “oil import premium” that includes the military cost of defending oil supplies from the Persian Gulf. Estimates of this cost have ranged from essentially zero to upwards of a $1 per gallon (about Analyses of the full social cost of motor vehicle use in the US often estimate an “oil import premium” that includes the military cost of defending oil supplies from the Persian Gulf. Estimates of this cost have ranged from essentially zero to upwards of a $1 per gallon (about $0.25 per liter). In this paper, we attempt to narrow this range, by carefully answering the question: “If the US highway transportation sector did not use oil, how much would the US federal government reduce its military commitment in the Persian Gulf?” We work towards our answer in five steps, accounting for interests not related to oil, the interests of other oil-consuming countries, the interests of producers apart from the interests of consumers, and the interests of non-highway users of oil. We estimate that were there no oil in the Persian Gulf, then US combined peacetime and wartime defense expenditures might be reduced in the long run by roughly $27–$73 billion per year (in 2004 dollars), of which roughly $6–$25 billion annually ($0.03–$0.15 per gallon or $0.01–$0.04 per liter) is attributable to motor-vehicle use.     

Utilization of biomass in the U.S. for the production of ethanol fuel as a gasoline replacement—I terrestrial resource potential

With relatively minor adjustments in the agricultural sector, large additional amounts of starch derived from feed corn, surplus and distressed grain, and set-aside land could presently be used for ethanol production. The quantity of ethanol that could be produced would be sufficient to replace anywhere from 5 to 27 per cent (5.5–30 billion gallons) of present gasoline requirements. Thus, the ethanol requirement for total gasohol use (10 per cent) in the U.S. could be met in the short period of time required for facility construction with no evident impact on food production. Increased supplies of ethanol will make feasible the introduction of ethanol fueled engines. High-yield sugar crops planted on new acreage could provide an additional 10 billion gal. of ethanol by the year 2000; conversion of the waste biomass from this crop to ethanol could also add substantially to this amount. Utilization of novel cellulose conversion technology can provide fermentable sugars from municipal wastes, agricultural and forest wastes, and ultimately, highly productive silvicultural operations. The wastes alone could yield over 36 billion gal. of 192° PR ethanol-fuel by the year 2000. Fast-growing woody species from silviculture are expected to yield a conservative average of 10 over-dry tons per acre per yr, convertible to 710 gal. of ethanol in a process that has 37 per cent yield. Advantages over sugar/starch crops include year-round harvesting, and use of marginal acreage. Commercial forest land presently suitable for silviculture is about 100 million acres in large tracts plus 200 million acres in small private tracts. The potential additional yield of ethanol from lignocellulosic biomass appears to be well in excess of liquid fuel requirements of an enhanced efficiency transport sector in the U.S. at present mileage demands. No conflict with food production would be necessary.     

Btu tax as a revenue option: Its impact on agriculture in the USA

The paper investigates the impact of the imposition of a broadly based energy tax on the US economy in general and the agricultural sectors in particular. The analytical approach used in the analysis consisted of a general equilibrium model composed of 12 producing sectors, 13 consuming sectors, six household categories, classified by income, and the government. The effects of a 10 cents per million Btu tax on energy on prices and quantities are examined. The results are revealing. For example, a 10 cents per million Btu tax on energy imposed at the point of production would result in lower output by the producing sectors (by about $9.154 billion), an increase in the consumption of goods and services (by about $20.292 billion), and a reduction in welfare (by about $4.30 billion). The government would realize an increase in revenue of about $6.356 billion. If the Btu tax were imposed at the point of consumption, there would be lower output by the producing sectors (by about $5.88 billion), an expansion in the consumption of goods and services (by about $19.830 billion), and a reduction in welfare (by about $7.066 billion). The government would realize an increase in revenue of $6.688 billion. The agricultural sectors would be minimally impacted. For example, if a 10 cents per million Btu tax were imposed at the point of production, output in the program crops sector would rise (by $8.3 million), output in the livestock sector would decline (by $83 million), output in the all-other-agriculture-commodities sector would be reduced (by $118 million), and output in the forestry sector would rise (by $34.7 million). If the Btu tax were imposed at the point of consumption, output in the program crops sector would fall (by $38 million), output in the livestock sector would decline (by $42 million), output in the all other agriculture commodities sector would be reduced (by $94 million), and output in the forestry sector would rise (by $221 million).     

Utilization of biomass in the U.S. for the production of ethanol fuel as a gasoline replacement—II Energy requirements, with emphasis on lignocellulosic conversion

With relatively minor adjustments in the agricultural sector, large additional amounts of starch derived from feed corn, surplus and distressed grain, and set-aside land could presently be used for ethanol production. The quantity of ethanol that could be produced would be sufficient to replace anywhere from 5 to 27 per cent (5.5–30 billion gallons) of present gasoline requirements. Thus, the ethanol requirement for total gasohol use (10 per cent) in the U.S. could be met in the short period of time required for facility construction with no evident impact on food production. Increased supplies of ethanol will make feasible the introduction of ethanol fueled engines. High-yield sugar crops planted on new acreage could provide an additional 10 billion gal. of ethanol by the year 2000; conversion of the waste biomass from this crop to ethanol could also add substantially to this amount. Utilization of novel cellulose conversion technology can provide fermentable sugars from municipal wastes, agricultural and forest wastes, and ultimately, highly productive silvicultural operations. The wastes alone could yield over 36 billion gal. of 192° PR ethanol-fuel by the year 2000. Fast-growing woody species from silviculture are expected to yield a conservative average of 10 over-dry tons per acre per yr, convertible to 710 gal. of ethanol in a process that has 37 per cent yield. Advantages over sugar/starch crops include year-round harvesting, and use of marginal acreage. Commercial forest land presently suitable for silviculture is about 100 million acres in large tracts plus 200 million acres in small private tracts. The potential additional yield of ethanol from lignocellulosic biomass appears to be well in excess of liquid fuel requirements of an enhanced efficiency transport sector in the U.S. at present mileage demands. No conflict with food production would be necessary.     

Renewable-Energy paradox in paradise: A case stuty of Hawaii

Hawaii is committed to replacing imported oil with indigenous, renewable energy resources to enhance the economic and environmental security of the state's citizens. A case study of Hawaii's fuel-energy balance by the end of the 21st century which features two scenarios, a ‘Business-as-Usual’ energy system, based on imported fossil fuels, and a ‘Renewable-Energy’ scenario, based on an alternative energy system consisting entirely of indigenous, renewable energy resources, is presented.

In the year 2100, a projected total energy consumption of approximately 335 million gigajoules would be provided from a hypothetical renewable-energy system of approximately 13 gigawatts-electric of installed capacity. This system would feature methanol-from-biomass to meet liquid fuel requirements for surface transportation, industrial, commercial, and residential sectors; hydrogen via electrolysis in liquid form for air transportation and as a gaseous fuel for industrial purposes; and electricity generated from geothermal, ocean thermal, wind, and photovoltaic sources for all power applications.

A comprehensive economic analysis, including capital costs, operating and maintenance costs, air pollution costs for the total fuel cycle of each energy system, and a local multiplier effect factor of 3·75 per dollar, indicates that between the years of 1987 and 2100 the ‘Business-as-Usual’ scenario will have expended approximately $600 billion (1986 US dollars), and the ‘Renewable-Energy’ scenario will have cost approximately $400 billion. By switching from imported fossil fuels to indigenous, renewable energy resources during this time period, Hawaii's citizens could save approximately $200 billion to help preserve paradise.     

Price and prospects for oil : Carrying the burden of excess capacity in the 1980s and beyond

The continuing decline in world oil prices will not be halted in the short term, and prospects for the long run are not encouraging. There is a problem of unprecedented gravity in the surplus capacity of the oil industry. A glut of 10 million bbl/day of crude oil remains unsold, the cohesion of the OPEC cartel is becoming more strained, and a sizeable proportion of refinery plant has been taken off-stream. The basic difficulty is that high interest rates have curbed international capital formation and depressed demand. Upward pressures on the US dollar have been created by the deficit on US domestic and external accounts, and have retarded the recovery of the global economy. Today the cost of money exceeds the factor price of oil, and the market is highly unstable. The devastating costs of carrying surplus capacity are likely to survive through the 1980s.     

Assessing the impact of the windfall profits tax on the US economy

The paper focuses on the effect that the elimination of the windfall profits tax (WPT) on crude oil would have on the various producing sectors, consuming sectors and household categories in the USA, where the interrelationships between these entities are explicitly considered. Special attention is given to the agricultural sectors of the economy. Thus, in the context of a general equilibrium model, the effect of the elimination of the WPT on the producing sectors in general and the three agricultural sectors plus forestry in particular, on the consuming sectors, on households and on the Government is calculated. Over the period 1984–1990, such a policy initiative would result in higher output by the non-crude-oil producing sectors (by about $1.783 billion), higher consumption of goods and services (by about $1.651 billion), and an increase in welfare (by about $1.625 billion). The Government will realize a decrease in revenue of about $1.362 billion while the domestic crude oil industry will experience an increase in output of approximately $1.217 billion. For the agricultural sectors, output overall will fall. Specifically, for the programme crops sector, output will decline by $39 million, for the livestock sector, output will fall by $14 million, for all other agricultural commodities, output will decline by $36 million and for forestry, output will be reduced by $29 million. Attendant on these reductions in output will be lower prices for the respective commodities.     

Challenges of rapid economic growth in China: Reconciling sustainable energy use,environmental stewardship and social development

China aims at quadrupling per-capita GDP by 2020 compared to the year 2000. Without any energy and environmental policy measures, this tremendous economic growth would be associated with a quadrupling of primary energy consumption up to 6.3 billion tons of standard coal equivalents (sce) and energy-related CO₂-emissions of 13.9 billion tons Against this background, this paper is to set China's need to implement its sustainable development strategy into the quantitative context of the countries economic development and subsequent economic growth-related environmental problems. China is urgently searching for a way to ease the negative implications of economic growth and has committed itself to achieve a level of 3.0 billion ton sce primary energy consumption in 2020. As a consequence, the macro-economic energy intensity has to be reduced by 53% by 2020. A reduction of 53% by 2020 would lead to an energy intensity level 30% points below the year-2000 level of developed countries. As for natural resources, the expected economic growth will lead to an increase of crude oil net-imports up to 455 million ton sce in 2020 and 650 million ton sce in 2030. As for regional income distribution, economic growth helped to decrease existing inequities.     

Should we drill in the Arctic National Wildlife Refuge? An economic perspective

This paper provides model-based estimates of the value of oil in Alaska's Arctic National Wildlife Refuge (ANWR). The best estimate of economically recoverable oil in the federal portion of ANWR is 7.06 billion barrels of oil, a quantity roughly equal to US consumption in 2005. The oil is worth $374 billion ($2005), but would cost $123 billion to extract and bring to market. The difference, $251 billion, would generate social benefits through industry rents of $90 billion as well as state and federal tax revenues of $37 billion and $124 billion, respectively. A contribution of the paper is the decomposition of the benefits between industry rents and tax revenue for a range of price and quantity scenarios. But drilling and development in ANWR would also bring about environmental costs. These costs would consist largely of lost nonuse values for the protected status of ANWR's natural environment. Rather than estimate these costs and conduct a benefit–cost analysis, we calculate the costs that would generate a breakeven result. We find that the average breakeven willingness to accept compensation to allow drilling in ANWR ranges from $582 to $1782 per person, with a mean estimate of $1141.     

Hybrid modeling of China’s vehicle ownership and projection through 2050

As representative for emerging vehicle market, China has one of the fastest growing rates of automobile ownership in the world. The huge and increasing vehicle stock has significantly contributed to the fast growing of China’s energy demand and GHG emissions. It is an important issue to project China’s vehicle ownership, which to a large extent determines China’s oil demand and GHG emissions from road transportation sector in the future. In this study, we established a hybrid model with three sub models to simulate the growth patterns of China’s private passenger vehicles, urban public transport vehicles and economic utility vehicles. By using this model, we projected that China’s vehicle population would reach 184.8, 363.8 and 606.7 million by 2020, 2030 and 2050 respectively. The fast increase of urban private passenger vehicles is the main driving force for vehicle population growth. Population of urban private passenger vehicles would account for 70.1%, 81.1% and 86.1% of total vehicle population in 2020, 2030 and 2050 respectively. It was demonstrated by sensitivity analysis that vehicle population was quite sensitive to household income and vehicle price, implying an effective lever for regulating the growth of vehicle population.     

The US dollar and the world oil market

Due to the increasing value of the dollar, world oil prices rose rather than fell relative to the price of OECD exports between 1980 and 1984. The real crude oil price of OECD countries increased by approximately 30% more than its counterpart for the USA. This paper calculates that if OECD oil prices had not risen but followed the trend for US prices, world oil demand in 1984 would have been about 3 million barrels per day — 6.6% higher than otherwise. Two plausible scenarios which assume the same nominal oil price, US inflation rate and OECD growth rate but different values for the dollar are considered. World oil consumption by 1990 could vary by 4 million barrels per day, depending upon shifts in the exchange rates and the value of the dollar. This variation is comparable to the range associated with significant differences in the economic growth rate between now and 1990. The paper shows that shifts in exchange rates could produce changes in oil prices in 1990 comparable to the effects of gradually removing 5 million barrels per day from total oil production by 1990.     

Scenario analysis on alternative fuel/vehicle for China’s future road transport: Life-cycle energy demand and GHG emissions

The rapid growth of vehicles has resulted in continuing growth in China’s oil demand. This paper analyzes future trends of both direct and life cycle energy demand (ED) and greenhouse gas (GHG) emissions in China’s road transport sector, and assesses the effectiveness of possible reduction measures by using alternative vehicles/fuels. A model is developed to derive a historical trend and to project future trends. The government is assumed to do nothing additional in the future to influence the long-term trends in the business as usual (BAU) scenario. Four specific scenarios are used to describe the future cases where different alternative fuel/vehicles are applied. The best case scenario is set to represent the most optimized case. Direct ED and GHG emissions would reach 734 million tonnes of oil equivalent and 2384 million tonnes carbon dioxide equivalent by 2050 in the BAU case, respectively, more than 5.6 times of 2007 levels. Compared with the BAU case, the relative reductions achieved in the best case would be 15.8% and 27.6% for life cycle ED and GHG emissions, respectively. It is suggested for future policy implementation to support sustainable biofuel and high efficient electric-vehicles, and the deployment of coal-based fuels accompanied with low-carbon technology.     

An oil import fee and drilling activity in the USA : A comment

Edward F. Renshaw's [5] recent analysis of the impact of a $5/bbl oil import fee on drilling activity in the USA is re-examined. Specifically, this comment shows: (i) the initial stimulus to the US rotary rig count of 420 new rigs would not completely disappear over the next five years, but last much longer; (ii) the initial employment impact would be more than twice as large as Renshaw suggested (39 060 rather than 18 480); and (iii) the relevant social cost per new job (excluding transfers) could be as small as $19 200, more than 80 times smaller than Renshaw's estimate of $1.6 million.     

Break-even price for upstream activities in Brazil: Evaluation of the opportunity cost of oil production delay in a non-mature sedimentary production region

Some Latin American policy-makers and analysts state that it would be better to hold oil reserves in place than to produce and cash it now, given the recent oil prices spikes and the fear related to future oil supply disruptions. This article evaluates the strategy of delaying the start-up of oil production in a discovered field with proved reserves. A Reference Discounted Cash Flow (FCD-R) for a typical 350 million barrel Brazilian oil field was simulated. The study estimated which future oil price may render the project insensitive to a delay of 5, 10, 15 or 20 years in its production beginning. Additionally, the value of the in situ oil stock was calculated, providing the opportunity cost for delaying oil production in a frontier area, such as Brazil. It is an application of the Hotelling Principle. Findings indicate that progressive delays of 5 years in the start-up of operation of a typical oil field reduce its revenues by a factor of 2. A delay of 10 years would be justifiable at international oil prices higher than US $15/bbl. Delays higher than 10 years lead this break-even price to values between US $200 and 350/bbl.     

Feasibility study on hydrogen refueling infrastructure for fuel cell vehicles using the off-peak power in Japan

It is examined that the technical feasibility, economics of hydrogen, improvement of the load factor and reduction of the carbon dioxide emission in the case where a hydrogen-refueling infrastructure is developed using the off-peak power in the existing electrical power grid in Japan. Hydrogen could be supplied to the fuel cell vehicles, of which cost would be almost the same as the current retail cost of gasoline exclusive of tax. Annual average load factor of 0.72% could be increased in 2020 to meet the hydrogen demand for the fuel cell vehicles in Japan by water electrolysis. The infrastructure cost of 0.12 trillion yen/year in 2020 would be necessary to be invested, which is almost the same as the reduction of annual expenses in the case where the increase of 1% in load factor could attain. Fuel cell vehicles using the electrolysis, hydrogen generated by the off-peak electricity could attain the 37% reduction of carbon dioxide emission compared with middle-sized internal gasoline combustion passenger cars.