I'm late to comment, which of course means that the major substantive policy areas have been covered very effectively by my able colleagues at NRDC, Sierra Club, Pew and others. Nevertheless, with the Republicans in firm control of the House and unlikely to act on any major Presidential initiative, President Obama currently has fairly limited influence over policy. Instead, my advice to Obama would be to use the most powerful tools of his office - the bully pulpit and the ability of the President to focus attention on issues of national concern - to prepare Americans for an era in which oil will be considerably more expensive.

Every day, American families make decisions that impact the amount of oil they will consume for years to come. Choices like whether you buy a house near where you work, or near a good source of public transportation, are made once and then very difficult to undo. A person who buys a SUV when gas is $3 per gallon may find it very difficult to trade in for a fuel efficient compact when gas rises to $4 per gallon. Local and state transportation planning agencies are deciding now what the transportation and development patterns are going to look like for their communities over the next two decades. And so on; these factors make oil consumption notoriously inelastic - no matter what the price of oil is, you still have to get to work - which is part of the reason why middle class families are so vulnerable to increases in the price of oil.

To make smart decisions, people need to know that the era of cheap oil is over. While short-term oil prices are volitile and depend on highly unpredictable events in the Middle East, in the long run, there will be more cars on this planet consuming more oil, which will inevitably mean higher prices. Moreover, people need to know that neither expanded offshore driling, which according to the EIA would have an "insignificant" impact on world oil prices, nor drilling in the Arctic National Wildlife Refugee, which optimistically could take three pennies off the price of gas by 2027, would have an appreciable impact on this long term problem.

We can already see that the oil industry and their allies will be aggressively pushing the false story that high oil prices are caused by Obama's failure to issue permits in the Gulf of Mexico, or are an intentional strategy to reduce pollution through higher prices. To counter that message, Obama needs to be telling his own story, one that connects with the pain Americans are experiencing at the pump, and provides people with both concrete short-term solutions and a long term vision for how we reduce our dependence on oil. Making people aware of why this is happening, and what the long term future of oil looks like, is a critical first step.

How should President Obama react to the spike in oil prices? First and foremost, the United States needs to reduce its dangerous dependence on foreign oil. According to the Department of Energy, we import over 11.6 million barrels a day of oil. At today’s price of over $100 per barrel, that is more than $1 billion a day being sent abroad, much of it to politically unstable countries.

Rising worldwide demand for oil, especially in emerging economies like China and India, is overwhelming supplies, with increasing pressure on gasoline prices. It is likely that the easiest oil finds have already been tapped, so any located in the future will be in more challenging, less conventional and riskier areas.

Rising U.S. gas prices already reflect the current geopolitical turmoil in the Middle East. The national average price is nearly $3.50 a gallon, while prices in some states are approaching $4.

Not only does our dependence on oil disrupt national economic and security priorities, it also damages the environment. The words “Deepwater Horizon” cannot be uttered without cringing and thinking of the long, painful and costly cleanup and recovery process in the Gulf of Mexico. Further, every gallon of gasoline burned releases approximately 20 pounds of carbon dioxide into the air we all breathe.

President Obama must continue to champion clean energy options, including energy efficiency and renewable energy, to reduce energy costs, help lift our economy, improve air and water quality and protect human health and wellbeing and protect our energy security.

More specifically, he must continue improving fuel economy through stronger CAFE standards and advance the use of alternative vehicles, including electric vehicles. He should also support policies that reduce vehicle miles travelled such as telecommuting and public transportation. Public transportation, for example, saves the United States 4.2 billion gallons of gasoline annually, or more than 11 million gallons of gasoline per day.

A steep demand for oil + uncertain supply = unpredictable price spikes. But policies promoting energy efficiency can help us change the equation.

Deploying existing energy efficiency policies and investing wisely in new clean energy technologies will help our nation avoid being held over an energy barrel by foreign unrest. We will be rewarded with creation of new jobs, consumer savings on energy bills and bolstering of our long-term energy security.

It seems as though any disruption in the Middle East, or major spike in gas or oil prices, is often followed by a loud call for more drilling in the U.S., including in Alaska’s Arctic. But the Deepwater Horizon disaster demonstrated what can happen when we plunge ahead without adequate oversight. Now more than ever, we need a process that is thoughtful and the result of rational planning.

Currently, Norway’s problems with cleaning up an oil spill in its icy fjords are providing another lesson. As a fresh reminder, last week, a cargo ship ran aground near the country’s only marine park and spilled oil from a ruptured tank. There has been minimal coverage of the accident outside of Norway, but it could provide a window into what may lie ahead in Alaska’s Arctic Ocean.

Simply put, there is no effective way to clean up oil in icy waters. The Norwegian Coast Guard reports that thus far, it has been virtually impossible to identify how much oil has spilled or how much damage has occurred because much of the oil is trapped in and under the ice. Ice has clogged up the booms used to collect oil, rendering them useless. And this is just from a small spill in calm weather.

Imagine even a moderate-sized oil spill in Alaska’s Arctic Ocean. Shifting sea ice, sub-zero temperatures, extended periods of fog and frequent storms with strong winds could shut down spill response altogether. The U.S. Arctic Ocean has no resident Coast Guard vessels; additionally, the nearest air station is 950 air miles away. There are virtually no roads connecting remote villages to each other or to the rest of the state.

Instead of rushing ahead with new drilling, the Obama administration must keep our nation’s long-term energy security in mind by pushing forward with clean energy programs and incentives for electric vehicles. These types of programs will have a long and meaningful impact on our nation’s energy usage by significantly reducing the amount of oil we use.

Since the Gulf of Mexico spill, the Obama administration has taken a very careful approach to approving drilling permits, especially for those proposing drilling in challenging environments, such as deep water and the Arctic. If we are to avoid another catastrophic spill, speeding up the permitting process in the absence of adequate spill containment capacity and safety measures is not the right response just because prices are high. We need to be in this for the long-term by ensuring high drilling standards that are designed to prevent accidents. This is particularly important in the Arctic Ocean because—as the recent Norway spill proves—countries still are not capable of cleaning up spills in such extreme and fragile places.

There are certainly concrete steps that President Obama could take in order to lower oil prices, ensure long-term price stability, and reduce America’s dependence on the Middle East. Unfortunately, instead of taking those steps, the President is taking strides in the wrong direction.

U.S. energy policy, which has only taken a turn for the worse since President Obama assumed office, is directly responsible for our nation’s high oil imports from hostile nations. While the federal government embargoes 97% of taxpayer-owned lands capable of energy production, long run oil demand is increasing. That means that Americans are forced to find their oil elsewhere while the resources under their own two feet are left idle.

But what if, instead of depleting emergency reserves, President Obama simply allowed Americans to access the billions of barrels of American oil that are accessible today? Such actions would not only dramatically increase the supply of oil and lessen our dependence on Middle Eastern imports, but would also be a huge moneymaker for American workers and the federal government.

There is only one simple step that President Obama needs to take in order to bring about this domestic energy boon: demand that the members of his administration start issuing permits to drill. The Department of the Interior and the Environmental Protection Agency, both under the control of the executive office, have all but killed energy production in two of the most energy-rich areas of our country.

In the Gulf of Mexico, Secretary of the Interior, Ken Salazar, continues to refuse permits to companies that are bending over backwards to meet his ever-changing regulations. His issuance of one single permit this week pales in comparison to the zero that was issued over the past ten months. Salazar’s abuse of power has been so egregious that a federal judge found him in contempt of court after he continued his de-facto moratorium on energy production in the Gulf in the face of the judge’s ruling that such an action was unlawful. He has now been served with an injunction by the same judge, ordered to rule on five permits within thirty days so as to not further devastate the American workers whose livelihoods depend on this industry.

In Alaska, where billions of barrels of oil are recoverable, the Obama Administration is standing in the way of responsible energy production. The Trans Alaska Pipeline System could be transporting over two million barrels of oil per day to the lower 48. Unfortunately, because the federal government has placed such large roadblocks in the way of oil production in Alaska, that pipeline transports about one quarter of its capacity. EPA recently remanded the last of Shell’s 35 permits to explore for oil in Alaska, which killed any prospect of new energy production in Alaska.

The Obama Administration’s aggressive stance against domestic energy production is damaging the American economy. His policies are forcing Americans to needlessly depend on state-owned oil companies in unstable regions of the world for our energy. Instead, we could have American companies hiring American workers to produce this energy in our own backyard. All that President Obama has to do is get out of the way.

President Obama has put forth a sound plan to reduce America’s oil addiction, but the solutions won’t be found in the SPR; they are located in clean energy technologies, renewable fuels, and efficiency gains.

Turning back the clock and fast-tracking more drilling will do little to relieve U.S. oil dependence. America consumes 26 percent of the world’s oil, yet we are home to just 1.6 percent of the globe’s proven oil reserves. So much for “Drill, baby, drill.”

Even if we were to drill a hole everywhere in the country we know to have oil and drain out every drop, we'd have enough to last us 1,094 days—right at three years. Then our tank would be empty. That's not politics; it's geology. And no bumper sticker is ever going to change it.

Americans tend to think of oil as a free-trade commodity controlled by western companies that answer to markets and shareholders. It isn't. ExxonMobil, the largest private oil company in the world, controls just under 1 percent of the total global reserve. Nearly 90 percent of the world’s oil is controlled by state oil companies owned by national governments.

Given America’s limited influence on global oil dynamics, the only way for us to gain energy security is to find safer, more reliable ways to power our cars and trucks. Twenty years ago, passenger cars in the United States averaged 21.1 miles per gallon. In 2008, the last year for which the Department of Energy has data, the figure was 22.6 miles per gallon. We can do better.We can build cars in this country that do farther on less fuel. We can expand our use of hybrids and all-electric cars, which are vastly more efficient.

By putting millions of hybrid and all-electric cars on the road and increasing the fuel-efficiency of the rest of the fleet we could raise our passenger car fuel efficiency average to 60 miles per gallon by 2025, reducing our gasoline consumption by two thirds. That could cut our oil imports in half. Switching more freight from trucks to rails, promoting more mass transit, and offering commuters more transportation options will further cut our imports.

President Obama has proposed investing billions of dollars to promote research and development in clean energy technologies. He wants to help pay for these needed investments by closing oil and gas industry tax loopholes on track to cost taxpayers $46 billion over the coming decade. An industry that knocks down a cool trillion in profits over just 10 years doesn't need taxpayer subsidies anymore.

These investments are both prudent and vital. They can create private-sector jobs and set the table for decades of American success in the fast-growing global market for clean-energy technology. Those are goals Americans everywhere support. It's time to move ahead.

Listen very carefully and you can hear the faint cry of market manipulators saying, “SPR, feed me!”

It’s déjà vu all over again. Each time we fear surging gasoline prices, we hear the clamor of those seeking a “quick fix” for their addiction to low prices at the pump. Does anyone recall the reason for the establishment of the Strategic Petroleum Reserve (SPR)? It was largely conceived as a short term source of supply in the event that our overseas suppliers couldn’t – or wouldn’t – ship us oil at any cost. The level of the reserve was set so we would have enough stored energy to defend ourselves against invading forces. It was established to protect our country from only the direst of circumstances—not to prop up our reliance on vehicular transportation for non-essential trips to the mall and taking the family out to dinner. Presently, the markets are increasing the benchmark prices for crude and the perceived risk of an interruption in supply remains relatively high. The last time we found ourselves in this situation (in 2008), we limited our frequent car trips to McDonald’s and the malls, causing demand to decrease and, as a result, prices promptly dropped. This is the way that markets are supposed to work. Tapping into the SPR to create false prices via a very short term supply increase will not solve our longer term problems.

What will solve our longer term problems is a concerted effort to create alternatives to our reliance on a predominately single source energy supply strategy. As has been said previously within the confines of this blog, a policy that gives us alternatives, while easing our reliance on foreign sources of energy, is the prudent choice. Just because there is currently unrest in the Middle East, we do not have a free pass to forget the fundamental rules of our policy objectives. Those objectives are being clarified with every passing hour. So, what, if anything, should our leader do? He should get Congress to band together with the administration to enact laws that will provide incentives like investment tax credits – not subsidies – to encourage continued exploration of new ideas and technologies that can get us off of the fossil fuel diet that we all love so much.

So, unless we take the Hollywood celebrity-approach, and declare ourselves free of addiction without actually changing anything, we need to make some fundamental investments in technologies that help us pave a path forward. This, in time, is the only thing that will quiet the cries of the “short term fixers.”

If President Obama is serious about ending the ongoing gas crisis and setting this country on the path towards a safe, reliable clean energy future, he needs to follow through with the plan he laid out during the State of the Union: ending Big Oil’s massive subsidies and applying the considerable savings toward an increasing national investment in renewable energy sources.

Whether in the Middle East or our own Gulf of Mexico, the oil market is reflective of the industry that produces it: volatile, unreliable and dangerous. If what this country is looking for is stability, we’re going to have to make some changes.

To truly – and permanently – solve our oil problem, we must rapidly expand our investments in clean, renewable energy sources such as wind and solar. Renewable power from large-scale solar and wind farms can help to speed up the transition to a clean-energy future, as long as we also make sure that renewable development is done right, in the places that it makes the most sense.

Big Oil and its supporters in Congress know that opening more areas for drilling in the U.S. will not mean a thing when it comes to the prices at the pump – not in the coming years and certainly not in time for this summer’s driving season. They’re just using the higher prices as a vehicle to argue for their own profit-driven agendas. And the oil companies certainly don’t care about saving money for the typical American. If they did, they wouldn’t be urging their allies in Congress to continue the outrageous and unnecessary $5 billion in subsidies they receive every year, paid out of hard-earned taxpayer dollars.

It's time for Big Oil to get its dirty hands out of our pockets. We need to take back those billion-dollar giveaways and secure our energy independence by investing that money in clean, renewable energy, energy efficiency and the technologies needed to get our cars going further on a gallon of gas. In doing so, we also invest in our economy, putting Americans back to work in jobs that can’t be sent overseas.

The bottom line is that the cost of oil is always too high. Whether it is paid at the pump, through tax subsidies to billion-dollar corporations, in devastation to our environment or with human lives, Americans can no longer afford to depend on this dirty and dangerous fuel. If President Obama wants to help end our harmful addiction to oil and move us toward ending a constantly precarious and uncertain fuel fixation, he will see high gas prices not as a crisis, but as a wake-up call.

President Obama should remind Congress that American ethanol is the only clean-burning fuel currently available to replace and reduce oil imports.

Right now, many members of Congress are pursuing policies that seem designed to increase oil imports – and raise oil prices. Recently, members of the House voted to limit the availability and use of ethanol in gasoline. As oil prices keep climbing to over $100 a barrel, these members of Congress might as well be saying, “Bring it on!”

Instead of increasing our dependency on unfriendly governments in the dangerously unstable Middle East, Americans need to take charge of our energy future. That means manufacturing more efficient cars, making use of new technologies such as plug-in hybrids. That means responsible increases in US oil production. And that also means producing and using American renewable fuels, especially ethanol.

While some other energy sources are speculative, ethanol is already an American success story. Last year alone, the American ethanol industry produced more than 13 billion gallons of biofuels, replacing the gasoline refined from 445 million barrels of imported oil – more oil than the US imported from Saudi Arabia last year. By reducing imports, American ethanol saved the nation $34 billion and helped support more than 400,000 non-exportable green jobs.

The future is promising, if we continue to provide public investment and promote private investment. American farmers are producing a growing basket of feedstocks from which ethanol and other renewable fuels can be made. Current ethanol producers are constantly evolving, producing more fuel using fewer resources and developing new technologies to make use of these feedstocks. Advanced ethanol technologies that would use corn stalks, municipal solid wastes, grasses and even algae are being devised and deployed.

So, what are the next steps?

First, don’t move backwards. Policies like the Renewable Fuels Standard are building a domestic industry that is already displacing 10 percent of the nation’s gasoline. Don’t fix what’s working, not broken.

Second, get serious about commercializing advanced ethanol technology. Recent loan guarantees by the US Department of Agriculture are encouraging first steps. Let’s move forward and do more.

Third, have a serious debate about the future, with all our options on the table. Congress will debate tax incentives for ethanol this year, and that’s fine. But let’s also debate the $52 billion-a-year in subsidies for Big Oil. We need to prioritize and invest in the technologies that can provide long term energy security and generate jobs. Moving more renewable fuels into the market is as much about economics as it is about access

We don’t have to resign ourselves to soaring energy prices and a shrinking future. Nor should we base our energy policy on a wish list. While we cannot go back in time to proactively mitigate the impacts of the oil crisis we see today, we can seize this opportunity to address the unavoidable run up in oil prices we will see again in the future.

President Obama should act like a smart business – say like Southwest Airlines – and hedge our economy, security and environment against this – and future – oil price spikes. The current price spike has two components. First, there is speculation going on. You can’t avoid speculation in the face of uncertainty. But you don’t need to be bankrupted by it. Southwest demonstrated that a few years ago when they hedged against future oil price spikes – and made money while most airlines almost went under.

THE SPECULATIVE INGREDIENT

The US government is very well positioned to hedge against speculation. We own oil – lots of it – which we don’t have any immediate need for. All it takes is to sell high, then buy low. Right now oil is high. We should sell down the Strategic Petroleum Reserve until oil is low – and then refill our stockpile. The US government will make money. These profits should be invested at the front end in flushing the speculation out of the system – perhaps provide short term price discounts for mass transit riders, so that excess transit capacity is taken up by commuters who would otherwise be burning oil – making gasoline demand smaller, the oil imports bill cheaper, the price spike briefer and the return to lower oil prices faster. Once speculators learn that any price spike in oil will be greeted with effective profit taking by the US government, oil will cease to be such an attractive commodity for speculation – because the profits will flow to the Treasury, not the arbitrage investment firms.

THE SUPPLY-DEMAND PROBLEM

But long term, the oil supply situation is getting tighter. Demand growth in Asia alone is exceeding global supply growth at current prices. (What level of prices might be needed to meet current and anticipated demand growth doesn't matter -- because significantly higher prices will dampen demand by choking economic growth in the oil dependent industrial world.) So there is a long term imbalance, and it needs to be met on the demand side. We need to create an All American transportation system, a system not primarily dependent on oil. The three biggest single steps we can take are:

1) Enact standards and incentives so that all new vehicles -- cars, trucks, trains, planes -- get as many miles/gallon of fuel as makes economic sense AT PEAK PROBABLE OIL PRICES. That’s another form of hedging. If our vehicles are optimized for high oil prices, they will require less oil during the whole cycle, and the odds of a price spike will be diminished. And if one comes regardless, we will be less damaged by the volatility, just as the volatility of copper recently has not hurt the average American consumer, because we don’t use that many pounds per person. Right now, public policy assumes that markets will self hedge and demand sensible fuel efficiency for vehicles – but we know they don’t. Only Southwest among the major airlines hedged against high oil prices a few years ago. Markets respond to short term, point of purchase price signals – not long term, cost of operation efficiency. Setting 60 mph standards for passenger vehicles is probably the easiest thing we can do to avoid future price spikes – and weather them with less damage when they occur.

2) Invest in technology and supply chain deployment for non-petroleum fuels. The next biggest step we can make it to take our cars off the gas pump and put them on the grid. We have lots of potential domestic sources of electricity – wind, solar, geothermal, natural gas – so having cars run on electricity gives us many more low cost, low carbon options. And again, government is uniquely well positioned to support the pathways to innovation. The data shows that electric cars will be cheaper to run, but more expensive to buy. Government can provide incentives for consumers to purchase more expensive EV’s – and then recover its investment by taxing electricity used by these same EV drivers. The same principal might apply to natural gas as a fuel for fleet vehicles of trucks. Today, the cost of natural gas, per unit of energy, is only 25% the cost of oil. For fleet vehicles being driven 100,000 miles a year, it’s a very good deal to shift to gas – but the up front costs will slow down that transition. Government could provide incentives for CNG vehicles in fleets – and then recover those incentives by taxing the CNG itself. Revenue neutral feebates can serve as a major engine of transportation technology innovation.

3) Identify infrastructure bottlenecks – particularly in our rail systems – and invest in them. We ought to have a last mile trucking system, instead of forcing shippers to use trucks because of missing or choked rail connections. Again, having government provide the financial backing for these investments now can actually held reduce the long-term deficit. These are, at government costs of borrowing, very attractive investments, and the front end costs can be recovered through user fees and taxes.

So Obama needs a two part strategy. One set of steps to deal with the speculative element, and a second to hedge against future price spikes and increases, which will be driven by supply-demand fundamentals. Can he do it?

The most promising recent event that suggests that such a strategy might work even in today's Tea Party politica world was the joint appearance of AFL-CIO chief Richard Trumpka with US Chamber of Commerce CEO tom Donahue – calling for HIGHER FUEL TAXES to invest in transportation infrastructure. You wouldn’t know it from the rhetoric in Washingon or Arizona, but at the end of the day, we have a country to run here, and the business community may be getting a bit uncomfortable with running it into the ground.

Here is the dirty secret of oil dependence: there is nothing the president can do today to mitigate the pain caused by spiking oil prices. Our complete and utter dependence render us powerless: once the spike happens, there are no alternatives. We have to pay the price.

One of Securing America’s Future Energy’s most important educational tools is a fast paced wargame scenario exercise called Oil ShockWave. In it, former senior government officials come together to attempt to grapple with a series of geopolitical events leading to an oil price spike. Simulations have been held around the country and the world, including the 2006 World Economic Forum Annual Meeting in Davos, Switzerland, and the Aspen Strategy Group's 2007 Summer Session in Aspen, Colorado. With each event, the simulation scenarios are updated and refined to reflect the most current and realistic challenges. But through each Oil ShockWave, participants have remained consistent in their conclusions: once an oil price spike hits, it is too late. The cabinet always remarks “I wish they had this two 5-years ago.”

Thus, the question is not “what can we do about the current price spike.” The question is, “what can we do to protect ourselves against the next spike, and the one after that?”

There are solutions. First, in the short-term, we can work to continue to improve vehicle efficiency and produce more oil domestically. Neither of these are complete, long-term solutions, but they will help insulate us from the effects of future price spikes. Domestic production helps from a balance of payments perspective, while fuel economy makes our economy less oil intensive so we are getting the same amount of economic activity from less oil.

In the meantime, we should be working toward the only true solution: a transportation system no longer dependent on petroleum. Transportation has always been at the crux of our vulnerability. The transportation sector accounts for 70 percent of the total oil consumed by the United States. American cars, trucks, planes and ships rely on oil for 94 percent of their fuel, with no readily available substitutes. We believe that the best solution is an electrified transportation system, one that is powered by the vast diversity of domestic fuels that currently power our electric system. Just 1 percent of electric power generated in the U.S. in 2008 was derived from petroleum. By moving to electrification, no one fuel source—or producer—would be able to hold our transportation system and our economy hostage the way a single nation can disrupt the flow of petroleum today.

The truth is that short-, medium-, and long-term solutions all require the same thing: policy changes today whether it be for oil production, fuel efficiency, or electrification.

Thus, one thing is crystal clear: we simply cannot wait any longer. There is nothing we can do about the current price spike—but maybe we can put ourselves on the path toward never being in this vulnerable position again.

The price of oil has been steadily climbing toward $100 per barrel for more than a decade, despite its deceptively low price over the past few years. Competition for energy resources to fuel economic growth, led by rapid growth in China and India, is the constant underlying factor – price shocks due to political instability in oil producing regions are small by comparison.

Policymakers in Washington have heard the alarm bells and have passed short-term stopgap energy legislation for most of the past decade. But the volatility of oil prices and supplies now could undermine U.S. companies’ and consumers’ confidence and hamper the business expansion and spending needed for our economic recovery. It’s time policymakers recognized that continued reliance on petroleum threatens not only our economy, but also our energy and national security. New outside-the-box thinking is called for.

The U.S. needs a rational energy policy with the potential for long-term stability in prices. Even with domestic drilling, petroleum no longer holds that potential. However, using renewable biomass for energy and as raw material for biotechnology-enabled manufacturing processes, biofuels, biobased plastics and products and renewable chemicals – what we call the biobased economy – does offer that potential. We can’t replace all U.S. liquid transportation fuels with biofuels, but we can make up what we need to fill increased demand over the next three decades.

To realize that potential, Congress and the administration need to declare the equivalent of a war on energy and economic insecurity. We need visionary energy policy.

The advanced biofuels industry has made significant progress in developing the technology for large-scale production of transportation fuel alternatives. Technology for replacing other oil-derived products – chemicals, plastics, and even food ingredients – has also reached commercial readiness. The key missing ingredient has been the investor confidence required for large-scale deployment of this new technology, and that investment has been hampered by inconsistent policy and the recession.

What the United States needs right now is a forward-looking, consistent, long-term energy policy that seeks to ensure commercialization of new technologies and stable supplies and prices for transportation fuels and all of the other products that currently come from each barrel of oil. U.S. energy policy should expand the market for renewables and give clear signals to companies and investors that innovative technologies for alternatives will have every opportunity to succeed. The Obama administration must take decisive action now to help companies turn innovation into solid energy and economic achievements. We can let the marketplace do it, but it will take decades. We need to hurry the future.

The developments in Libya are riveting and may be part of a series of events that will dramatically alter world politics, but we need to look at oil prices with a longer perspective than the last few weeks. Yes, the price of crude jumped more than $8 per barrel in two days, but the new peak was only a few dollars higher than at the end of last April. Then, over the course of about a month, the price dropped about $20. So a 10-dollar change in price shouldn’t be the excuse for poor policies or a crisis mentality.

We need policies to increase the supply of petroleum—policies that make sense with or without unrest in the Middle East. The dip last May took the price per barrel below $75. Since then, the price hit $80 in June, $85 in August, almost $90 in November, and a little more than $90 in December and January. Oil was already on the $100-per-barrel trajectory. As the world economy grows, it will pull oil prices up until supply can match demand.

When oil prices spike, they stimulate exploration and development of new oil supplies. For instance, the 1970s energy crisis lead to a tripling of drilling rigs, which helped bring two decades of low petroleum prices. The price rise of the last decade also led to significantly increased orders for new drilling ships—too many of which are sitting idle in the Gulf of Mexico or are being sent to drill off the coasts of South America and Africa. Markets are producing more oil in other parts of the world, and they can do so at home as well. We need more than talk and token efforts on permitting so that we can resume development of our own oil reserves.

Further, we need to expedite the Keystone XL pipeline, which could add an additional 1 million barrels per day of Canadian petroleum to the U.S. market. This is oil from a reliable, friendly, and close supplier.

What we don’t need are new taxes on petroleum suppliers or price caps, both of which lead to lower production.

We also don’t need subsidies and mandates for overpriced energy sources that have virtually no impact on petroleum markets. To the extent that wind and solar produce energy, they produce electricity—not liquid fuel. Wind and solar power do not displace petroleum. Electric power generation uses less than 2 percent of our oil. The majority of our electricity comes from coal and natural gas—two fuels we have in great abundance in the U.S.

Talk of barrel equivalents for wind and solar power are, to be kind, grossly misleading. Pretending that these renewables will reduce dependence on oil may provide peace of mind for those without a mind, but it is an expensive false sense of security.

We shouldn’t be shocked if folks in agencies such as the EPA seem as reticent these days as James Franco at the Oscars. After all, the President-In-Re-Election-Mode has been cozying up to the U.S. Chamber of Commerce – a steadfast foe of tough environmental standards for decades – and has ordered agencies to take a fresh look at old regulations.

Just last week the EPA halved the cost of important toxic air pollution standards for industry, and said it was open to further changes (presumably, not to make the standards tougher).

But with the continuing turmoil in Libya and other states in the region – and the inevitable rise in oil prices – the President ought to send a clear signal that he expects the EPA and DOT to come up with the strongest possible greenhouse gas and fuel economy standards for future passenger vehicles and heavy trucks. Now isn’t the time to weenie out on this just because yet another election is around the corner and a newly emboldened car industry is starting to squeak.

No, this won’t solve the immediate problem, but do you really think the oil issue is a short-term thing?

A quick reminder: in a notice of intent released in October, the administration said it was studying ways to boost fuel economy by anywhere from 3 to 6 percent a year for vehicles in model years 2017 through 2025. A 6 percent increase would put the standards at about 62 mpg by 2025, while a 3 percent bump would raise the average to 47 mpg.

A 60 mpg standard would save at least 40 billion gallons a year by 2030 and could be met with current technology – according to one assessment, a new vehicle fleet composed of 30 percent advanced internal combustion engine vehicles, 55 percent hybrids, and 15 percent plug-in electric drive vehicles. http://www.go60mpg.org/learn-more

A related administration proposal would reduce fuel consumption from long-haul trucks by at least 35 percent by model year 2017. These inititives would save more oil than any other existing government program.

But the passenger vehicle standards now appear in jeopardy. The car companies are trying to put on the brakes and limit future fuel economy improvements – a dangerous game we saw played out for decades prior to the Obama administration’s historic agreement with the auto industry.

http://online.wsj.com/article/SB10001424052748704803604576078020305484178.html

Mr. President, give EPA and DOT a green light to do the right thing. And while we are waiting for the new standards to take effect, how about advocating a permanent and large consumer tax credit for those who purchase advanced technology vehicles?

There are several things I’d recommend that the President not do, though, given the winds of re-election politics, I am not optimistic.

First of all, let’s drop the fantasy about the wonders of “biofuels” and admit it’s become largely a corn-promotion policy.

In 2007, the Democrats in Congress got into a bidding war with the Republicans for the farm-state vote and ramped up “renewable fuel” mandates. Part of the cover story was that this would trigger a boom in “cellulosic” (non-corn) ethanol production that would be better for the environment. But that mythical boomtown is starting to look more and more like a mirage. As BNA Daily Environment Report noted Feb . 28:

The amount of cellulosic ethanol in the market is falling further and further behind targets set by Congress, according to federal officials.

Paul Bryan, manager of the Biomass Program of the Department of Energy, told the 2011 Agricultural Outlook Forum Feb. 25 that cellulosic ethanol is likely to amount to less than 5 percent of the federal mandate for U.S. transportation fuels in 2011.

So “biofuels” basically has become synonymous with corn. And if you think putting more corn in gasoline will somehow lower the price, consider this: corn prices have more than doubled in recent months and appear to be heading even higher: http://futures.tradingcharts.com/chart/CN/M

And our corn-happy energy policy isn’t just pumping up the cost of gas.

As USA Today recently noted, “get ready for higher food prices.” http://www.usatoday.com/money/industries/food/2011-02-09-corn-low_N.htm

Putting more ethanol in gasoline also causes more dirty air. We are encouraging the EPA to press ahead with tougher so-called Tier 3 tailpipe pollution limits for passenger vehicles (and these should ultimately dovetail with tougher carbon pollution/fuel economy requirements) partly to combat the ethanol smog.

One final bit of advice for the President: don’t be seduced into thinking that piping in more dirty oil from Canada is a solution. Canadian oil companies are seeking U.S. State Department approval to build a pipeline that would bring dirty tar sands oil from Alberta into the U.S. Tar sands extraction has not only been linked to water pollution problems in Canada http://issuu.com/thismagazine/docs/tar_sands_pollution , but now there are concerns that the proposed pipeline – carrying the corrosive fuel -- could leak and cause problems in the U.S. http://www.desmogblog.com/new-report-keystone-xl-pipeline-not-safe-0

There is, of course, another big problem with this dirty fuel: producing oil from tar sands releases far more greenhouse gas emissions than conventional oil production. http://www.guardian.co.uk/commentisfree/cifamerica/2009/feb/17/barack-obama-canada-climate-change The oil companies involved in this venture are spending a fortune on propaganda trying to knock down this argument, but so far they haven’t succeded.

Last week on the Fox Business channel, the CEO of one tar sands developer, Enerplus Corp., offered a pretty bad defense. The greenhouse gas “footprint” of tar sands oil, he argued, was only a little worse than that of “biofuels,” once you look at all aspects of production. Not exactly a ringing endorsement.

As the elected leaders of this country, President Obama and members of Congress have a responsibility to create policies aimed at reducing our long-term vulnerabilities to increasing fuel prices in addition to mitigating the harmful effects to the economy in the short term. Diversification must be at the heart of their reaction to the rising prices at the pump; as long as 94% of U.S. transportation is fueled by a single source, petroleum, we will be vulnerable to dramatic price changes. Reducing this vulnerability for the long-term while addressing short-term price concerns will likely require a grand bargain between the White House and Capitol Hill.

The Obama administration should consider granting Republican requests to open new offshore drilling permits, but only in exchange for guarantees that Congress will pass the president’s full budget requests that are aimed at the long-term energy input diversification that can build U.S. resilience to petroleum market swings. Obama’s proposed investments in innovation for renewable energy, high-speed rail expansion, efficiency measures, and other energy technologies can help foster the long-term diversification we truly need.

The policy goal in this grand bargain should be to hedge against crippling spikes this year and long into America’s future, not to keep petroleum prices artificially low. This means that Congress must also guarantee support for repealing the billions of dollars in subsidies and support for companies primarily in the business of petroleum production. Permits to operate in certain federal areas are the purview of government, but policies that treat some of the most profitable businesses in America as though they need government handouts are irresponsibly wasteful. Remember: as prices rise, so will profits for oil producers.

Of course, the administration previously offered flexibility on offshore drilling in exchange for support on energy legislation. With the disaster in the Gulf of Mexico and increasing clarity that energy/climate legislation would not advance in 2010, the deal crumbled. The administration must therefore explore additional policy options under the assumption that a grand bargain will not work.

As such, tapping the Strategic Petroleum Reserve is worth serious consideration – but not because it is a permanent solution to high prices. The Bush administration tapped the SPR when Hurricane Katrina disrupted supplies of refined gasoline. Today the primary concern with regard to high prices is the economic recovery, not a severe supply disruption. Could small-scale releases of product from the SPR at key times (e.g., holiday weekends) boost overall consumer confidence in a way that moderates the effects of high prices on the recovery? It is a question that economists should seriously think through, and on which pollsters should focus consumer confidence surveys on in the coming weeks. Releases from the country’s strategic reserves is not a real fix for any of the underlying causes of our economy’s vulnerability to petroleum price hikes, but it remains a potentially viable short-term policy option.

This is yet another opportunity for the Obama Administration to engage the public in a discussion around US energy policy and examine how we can best plan to protect our economy, our national security and the environment.

While tapping the strategic petroleum reserve could potentially provide some temporary relief, we need much more than temporary relief. There are many constructive steps President Obama has at his disposable to lay the groundwork for a stronger national energy policy that makes price spikes like the one we are experiencing now less likely. We have abundant resources at our disposal and they can make a difference and help moderate prices, and minimize the impact from international turmoil.

But the President’s first and best step in that direction should be to open a national discussion about how vulnerable our current energy policy has really made us. President Obama needs to remind the country that this is not an isolated incident: that we experienced a price shock just three years ago, and many other times in recent history, and that we will unfortunately continue to experience volatility until we make meaningful changes to our policy.

Those rising prices three years ago helped to contribute to the recession and prices really only recovered as a result of a significant economic downturn. And now here we are again. In the past three years the country has done nothing to create a balanced energy policy and ensure that we are properly utilizing our natural resources. In fact, this Administration is actually hindering our ability to develop oil and gas industry jobs and form a hedge to protect ourselves from international turmoil.

Todays economic recovery is facing a double dip thanks to rising energy prices due to international turmoil. It’s critical more than ever than we begin to look to our domestic energy sources to protect us.

Here we go again. The question is how many times more this will occur. Why is anyone surprised that the prices of oil and gas, which embody the definition of supply-strapped commodities, will fluctuate and continue to rise over the coming years?

The price of oil has been artificially low for decades: the amount of subsidies granted to the fossil fuel “industry” in terms of low extraction, transportation and royalty costs and fees, not to mention billion-dollar per day wars in the Middle East and elsewhere, have never been calculated into the cost of oil and gas for the American consumer. The market system for these goods has always been incredibly warped with all sorts of externalities stiff-armed away from Exxon and Chevron and BP’s excessive corporate profits. It would be logistically straight-forward to alter these arrangements, tax carbon at its true price and grant a dividend to every American who is part of the social security system. http://www.carbontax.org/blogarchives/2010/12/02/should-carbon-pricing-advocates-support-the-cap-and-dividend-bill/

What is not simple are the politics, which continue to be controlled by an oil-oligarchy that has tentacles in the Tea Party movement, the White House and the corporate media. It is easy to dismiss these price leveling proposals as somehow idealistic, but history will be an extremely harsh judge to those who continue to buy into the status quo. One further point: for those true conservatives who are rightfully concerned about dramatic change to our economy, these fees and dividends could (and probably should) be implemented gradually.

President Obama should aggressively implement his call for an end to Big Oil subsidies, and put money into every middle- and lower-class citizen’s pocket. Draw the line. Fight the fight. The time is now.

We encourage the President to take all the steps at his disposal to reduce our dependence on foreign oil. Every economic recession in this country has been preceded by high oil prices and the political unrest in the Middle East and North Africa has sent oil prices to two year peaks, raising prices at the pump, the supermarket and the retail store.

Peter Beutel, the President for energy risk management firm Cameron Hanover, stated on CNN last Friday that for every one cent increase in gas prices, $4 million is drained from Americans’ pockets. As long as next week’s predicted 30 cent gas price increase remains in place, $120 million will be taken each and every day out of American consumers’ pockets and into the coffers of foreign nations – many of which do not have America’s best interests at heart.

During our nation’s fragile economic recovery, when many Americans are still looking for work and just barely getting by, we cannot afford this continued reliance on foreign oil. The President has been a strong supporter of renewable fuel and recognizes that our nation needs to get off of foreign oil. That is why he should fight the efforts by those in the House of Representatives who, at the very moment that gas prices are skyrocketing, voted to block the increased use of renewable fuels in the House CR and voted to block any efforts to provide consumers choice at the pump that includes clean, renewable ethanol.

Ethanol is not a someday fuel; it is replacing foreign oil today, and if we lift the artificial hurdles blocking access to the fuels market, it can replace more.

In a landmark decision this year, the EPA had approved E15 for all vehicles built in the last decade – about 151 million cars, or 67 percent of the country’s vehicles, which together consume 75 percent of the country’s fuel.

A full move to E15 would create 136,000 American jobs, cut emissions equivalent to taking 1.35 million cars from the road, and displace as much as 7 billion gallons of gasoline refined from foreign oil.

Long term, an investment in blender pumps and Flex Fuel Vehicles would give consumers a choice at the pump that includes clean, renewable ethanol. That is why Growth Energy is proposing Fueling Freedom, an initiative that would put 200,000 blender pumps into the ground and 120 million Flex Fuel Vehicles on the road. By giving consumers an opportunity to choose their fuel – instead of having the choice made for them by multinational oil conglomerates – we could lower costs at the gas pump and spur the private investment necessary to commercialize cellulosic ethanol.

America’s ethanol industry has been an undeniable success at creating jobs and reducing our nation’s reliance on foreign oil. Removing the barriers that prevent motorists from having an alternative to oil at the pump, such as ethanol, is a policy change that will further strengthen our economic and national security.

Despite this, the House voted for measures that 1) save no money, and 2) prevent the U.S. Environmental Protection Agency from implementing its approved waiver for E15 ethanol blends in America’s fuel supply.

If our nation truly wants to achieve energy independence, Congress should oppose any effort to block the Administration from implementing policies – such as E15 – that reduce our dependence on foreign oil, create jobs and strengthen our national security. Ultimately, the President and Congress should be removing barriers to producing renewable energy produced right here in America, not erecting new ones promoted by the vested interests who want to keep our nation addicted to foreign oil.

Over the past year, crude oil prices have risen about 33%. In the last week, they have risen about 13% in response to the turmoil in Libya. It is becoming increasingly clear that unrest in North Africa and the Middle East is beginning to resemble Malcolm Gladwell’s Tipping Point. According to Gladwell, a Tipping Point is like an epidemic and has three characteristics--a contagiousness, little causes with big effects, and change takes place rapidly. What started in Tunisia is not likely to stop in Libya and that is good and bad news. Good news for freedom; bad news for consumers of oil products because of increased volatility.

No one should have expected President Obama to foresee the virus of freedom that is spreading in North Africa and the Middle East but it is spreading. The forces of change are now clear as is the fact that for too long, politicians kicked the energy policy can down the road, counting on prolonged stability of regimes that did not share our values.

As demand for crude oil from China, India, and other emerging nations pushed prices up from $70 a barrel, the President talked about green energy and clean energy. When crude oil prices spiked after the Libyan uprising, the President did nothing to counter it. Simply stating that he was prepared to release oil from the Strategic Petroleum Reserve would have had a dampening effect.

A cynic might conclude that the Administration is not bothered by high crude and fuel prices because they might cause a shift in the tastes of auto buyers to smaller cars, hybrids and plug-ins like the Volt. But, high energy prices put our recovery at risk. They might not derail it but they certainly will slow it by shaking consumer confidence and reducing spending on goods and services that is needed to bolster the recovery.

There is an immediate challenge caused by Libya and the next oil producing country to be confronted by a restive population, a near term challenge, and a long term challenge. The President and democrats in Congress talk about the long term one while ignoring the immediate and near term challenges.

There are over 250 million gasoline and diesel powered light duty vehicles on the road today. Their replacement with hybrids or electric vehicles will be measured in decades; not the next few years or even the next ten years.

As I have pointed out in previous blogs, every authoritative energy projection concludes that in 2035 we will be consuming at least as much oil as we do today, in spite of advances in efficiency technologies. Given that reality, politicians should focus on the most secure and cost-effective ways of meeting near term and longer term demand for oil while encouraging investments in new technologies.

No one truly believes that we can be energy independent and no thoughtful person believes that we should even try. But, we can improve our energy security and reduce the amount of oil we import from hostile and unstable countries. Since last year, and in spite of court rulings, the Obama Administration has been slow walking permits for renewed exploration and production in the Gulf of Mexico. It has also reversed itself on offshore exploration. Those decisions along with decisions limiting exploration in Alaska simply mean that imports will remain higher than they need to be and also that price volatility will be greater as well.

Showing a readiness to release oil from the Strategic Petroleum Reserve and aggressive domestic leasing would take some of the steam out of current prices and begin the process of reducing imports. Rationalizing our refining and transportation infrastructure could result in better utilization of West Texas Intermediate which could offset product imports from Europe which tend to be higher priced.

A rational and sustainable energy policy could lead to production on the order of 2 million barrels or more by the end of this decade. During this time, investments in technology could lead to more cost-effective biofuels and lower cost batteries for hybrids and electrics.

We are a mobile society and our economy runs on oil. The American people place a high value on mobility. Political posturing and unrealistic illusions do not contribute to the abundant and affordable energy need to support mobility or strong economic growth.