Execs & military leaders urge big changes to transportation sector

A group of former military leaders and business executives, including the CEOs of Waste Management Inc. and FedEx Corp., on Monday said the United States’ dependence on oil for fueling its cars and trucks makes the country too vulnerable to supply disruptions and price shocks.

The organization, known as Securing America’s Future Energy, said in a report and forum that if the U.S. diversifies its transportation sector, the country would go a long way to insulating itself from such turmoil.

Even with major gains in domestic oil and natural gas production, “we are still importing an enormous amount of petroleum” to power cars and trucks, noted FedEx CEO Frederick Smith, the co-chairman of SAFE’s Energy Security Leadership Council. And even if the United States becomes a net exporter of oil and gas, it still would be connected to a world market, where prices are partially dictated by national oil companies and OPEC, Smith added.

“The fact that we may reduce the amount of oil we produce does not decouple us from the oil market,” Smith said. “If you want to reduce the United States’ dependence on imported petroleum and the related geopolitical issues . . . you have to recognize transportation has to be diversified away from petroleum where prices are set on the world market.”

In a report issued Monday, SAFE said the United States’ biggest energy security challenge is its “dangerous” dependence on petroleum fuels for transportation. The U.S. transportation sector consumes more gasoline, diesel and other petroleum fuels each year than any other national economy in the world, the group noted.

Petroleum fuels also accounted for more than a third of the United States’ primary energy demand in 2011, and America’s cars, trucks, planes and ships now depend on petroleum for 93 percent of delivered energy.

The group concludes:

“Oil dependence can only be addressed by developing a transportation system that is no longer predominantly beholden to the high and volatile prices characteristic of the global oil market.”

SAFE recommends a novel approach to transforming the transportation sector: by tapping six communities to aggressively promote the adoption of alternative fuel vehicles. These “deployment communities (would) serve as laboratories, showing what works well and what works better,” the group said in its report. The communities, which would be competitively chosen, also be a model for other regions and motorists, showing that alternative fuel vehicles can be accepted “and indeed coveted” by consumers.

Sen. Roy Blunt, R-Mo., noted that those communities would likely be a breeding ground for success stories about how easy it is to have an electric car or one powered by natural gas.

Sen. Lamar Alexander, R-Tenn., who owns a Chevrolet Volt, an electric car, said this is one area where government can foster acceptance of novel transportation technologies.

“Government can do a lot on the regulatory side to slow things down,” Alexander said. “But it can do a lot on the project side to find something that works. That community … becomes a model. You don’t have do these everywhere if you can show in one or two locations that they really do work.”

SAFE also recommends:

  • creating incentives for medium- and heavy-duty alternative fuel vehicle purchases.
  • reorienting the Energy Department’s research and development programs to catalyze innovations most likely to improve U.S. energy security.
  • Increase federal investment in research and development for automative-grade batteries and natural gas storage tanks.
  • reinstating and reforming incentives for alternative fuel infrastructure.

David Steiner, the CEO of Houston-based Waste Management, said the lack of refueling infrastructure to support alternative vehicles is a major challenge, particularly for commercial fleets, like his company’s garbage trucks. Waste Management is pursuing compressed natural gas as a fuel and is building its own fueling facilities to support that, Steiner noted.

“We happen to be doing it on our own,” he said, but “we could use some help in building out infrastructure to make it more economic to build those in other places.”

Steiner said federal funding also could be used to slash the risk associated with trying to take a promising technology commercial.

“You have a lot of technologies that absolutely work,” he said, but there’s a lot of build-out risk in buying and building expensive plants to see if they are scalable. Even with a promising technology in hand, “we have to risk 100 million dollars to see if it works at scale.”

SAFE also is urging U.S. leaders to promote more domestic oil and gas production, including asking the Obama administration to immediately begin developing a new five-year plan for leasing coastal waters for energy development from 2015 to 2020.

The group also recommends Congress give all coastal states a share of the revenue produced from oil and gas drilling off their shores and that the U.S. allow “limited development” of the Arctic National Wildlife Refuge in Alaska.

At the same time, the organization is urging the government to boost funding for research and development of advanced biofuels that are produced using non-edible plant material and empower the Pentagon to purchase advanced fuels and technologies.