gas-pumpsA report, “Fuel Choice for American Prosperity,” recently published by the United States Energy Security Council (USESC), a group within the Institute for the Analysis of Global Security (IAGS), identifies challenges facing the United States’ pursuit of energy security. Despite oil imports expected to fall to their lowest level since 1987 (EIA), the total amount of money the U.S. spends on oil imports has increased. If energy security is defined as “reliable supply at an affordable price,” as the report’s authors define, the U.S. has improved the former, but failed to impact global oil prices, which have risen more than six-fold in the past 15 years (EIA). The report presents a comprehensive approach to energy security:

“If we are to achieve true energy security and insulate ourselves from countries that whether by design or by inertia effectively use oil as an economic weapon against us and our allies, America must adopt a new paradigm – one that places oil in competition with other energy commodities in the sector from which its strategic importance stems: the transportation fuel market.”

In order to achieve this, the report’s authors make a number of policy recommendations:

  • Abandon the miles-per-gallon CAFE performance measurement since energy density differs across fuels.
  • Deregulate the secondary vehicle, conversion kit market to enable vehicles to convert to safe and low-cost substitute fuels.
  • Expand the EPA’s process of certifying higher octane fuel in the Tier 3 rulemaking to include alcohol fuels and the broadest range of blends.
  • Fuels should be taxed (at the federal, state and local level) on an energy content basis rather than volume basis.
  • EPA should not include upstream emissions for non-petroleum fuels since it does not do so for gasoline.

What is your view on these recommended steps to address energy security? If accepted, how would these policy recommendations impact fuel markets and the transportation sector?