MPG + Bio-Fuels = Consumer Savings, Energy Independence and Jobs!

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The United States annually imports approximately 4.3 billion barrels of oil. This is hurting our economy by crushing our balance of payments which is contributing to the devaluation of the dollar. And oil prices are crushing consumers at the gasoline pump.

Here’s some good news. We are importing about 14% less oil than just five years ago.

It isn’t hard to explain this drop in oil imports. First, the higher price at the pump is changing consumer behavior toward using less gasoline.

Second, there are a significant inventory of really good cars reasonably priced that offer higher miles per gallon fuel performance. And people are buying them. Recent sales reports show hybrid sales exploding.

But what has been accomplished is still not enough. Today’s average new car gets 21 miles per gallon on the road and over its useful life will consume 7,000 gallons of gasoline.

If we doubled this to 42 miles per gallon on the road the car owner would pocket over $7,700 over the life of this higher efficiency automobile even after deducting the higher cost of the car equipped with more expensive technologies! That is like buying $2.50 per gallon gasoline rather than today’s $3.50, or higher price, at the pump. And if the price of gasoline goes to $5 per gallon, and who doesn’t expect to pay this price someday, the savings to the car owner is over $12,000.

Adopting a higher MPG requirement for American cars will also promote job creation.

Citi in cooperation with Ceres and the Investor Network on Climate Risk along with the University of Michigan Transportation Research Institute, Baum and Associates, Meszler Engineering Services, and the Natural Resources Defense Council, evaluated the potential impact that changes to the U.S. Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) emissions program may have on the industry in 2020. Their findings are that U.S. automakers will have a competitive advantage in this type of car market which can mean more jobs for Americans.

The other path for reducing oil imports and reducing emissions is using bio-fuels.

Using sugar from a plant like sugarcane is a proven technology for displacing oil with a cleaner and increasingly price competitive fuel. Brazil’s cars use E75 with 75% of the fuel being sugar cane derived ethanol. They are Energy Independent from foreign oil! Plus, Shell has invested $12 billion and BP has invested $8 billion into sugar-based conglomerates in Brazil to produce ethanol, bio-butanol, drop-in fuels, and bio-based chemical products.

The U.S. commitment to ethanol is dominated by corn. 80 million acres of farmland is used to produce corn ethanol with 37% of  the U.S. corn crop being used to produce fuel. And this crop is heavily subsidized by taxpayers. In addition, no less than the President of Nestle has publicly questioned a policy of promoting the use of agriculture land for the production of fuel that is resulting in higher food prices.

What is encouraging is that their are bio-fuel technologies moving toward commercial scale that do not use agricultural land. These include using algae and seaweed as base feedstocks.

The bottom line is that there is a path toward Energy Independence, lower fuel costs for consumers and increased U.S. auto manufacturing jobs. This path consists of adopting public policy supportive of doubling our cars miles per gallon performance plus the use of bio-fuels.

Bill Roth is the founder of Earth 2017 that focuses upon the emerging smart, healthy and green economy. His book, The Secret Green Sauce, profiles best practices of businesses making money going green.

About Bill Roth

Bill Roth is the founder of Earth 2017, author of The Secret Green Sauce and a nationally-followed contributor to Entrepreneur.com, Triple Pundit, The Green Economy Post and Media Post on best business practices emerging from the smart, healthy and green global economy. He coaches entrepreneurs, business and community leaders on how to grow revenues, profits and jobs by going smart and green.
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