Lawmakers seem to forget the laws of market economics and that U.S. oil producing firms are “price takers,” not “price makers” in a global market. They are not members of the price-fixing body, OPEC, whose oil production decisions are made, at least in part, collectively, and heavily influence the world market supply.

Oil and gas companies are already investing in identifying and producing new energy sources, spending hundreds of billions over the last 25 years on new supplies of oil and natural gas. These investments are outpacing earnings by these companies. Rising oil prices encourage companies to invest more in finding new reserves and to increase production from existing fields. Yet, lawmakers still want to punish them by removing the deductions that many other sectors of the economy enjoy. Increasing taxes on oil company revenues will only reduce the desire and ability of firms to find and produce more oil. One of the axioms of public finance scholars is that if you tax something, you get less of it. The auto industry is already making great strides in making autos more fuel efficient without mandated MPG standards from EPA. New technology for gasoline powered vehicles has substantially increased to 35 to 40 mpg for many smaller vehicles, without a government mandate. Federal subsidies to induce consumers to purchase plug-in electric vehicles(PEVs) are not a good use of taxpayer dollars due to their short driving range, high cost and the expense of installing fast charging systems for residences and commercial areas. Fuel efficient gasoline powered vehicles and even hybrids are a better bet at this stage to slow growth in demand for gasoline.

This week, many of National Journal’s energy experts contributed to a lively discussion on gas prices, fuel efficiency, oil dependence and U.S. security, and electric vehicles. Thank you to all who participated in this online forum, as you raised many important points that must be part of the public debate as we move forward.

Consumers across America are looking to public officials and corporations to develop and implement solutions that insulate them from unpredictable spikes in the price of gas because for most of them, using an automobile will continue to be part of their daily lives. With new fuel efficiency standards being shaped, proposals to help accelerate electric vehicles under consideration in Congress, and leaders in the military leading the way in reducing dependence on oil, I am confident that America’s energy future will be sustainable and self-determined.

Good evening Governor Granholm,

I will be brief and to the point this evening. We do not need a charging infrastructure. We need to get beyond that sort of linear thinking. What we need are charging networks, such as those developing through something like what “Better Place” is doing: http://www.betterplace.com/the-solution-switch-stations

We don’t need charging stations all over the place. Charging takes a long time. We need battery switching networks. These could be rather easily retrofitted into even gas stations, in restaurant islands on long distance highways, and the like.

Networks and systems within systems are the keys, not static stations.

You ask want is realistic. I remember watching the moon landing with my brothers and the neighborhood children on the roof of our cottage on an island off of New England when I was very young. (Who could forget that?) Now, who could have guessed in 1945 or even 1955 that this would have happened.

What we might think as unrealistic today could be mundane in 50 years.

It will take time to replace the sort of cars we have now with the mixture of electric, CNG, and other cars that will be needed as a part of the portfolio of auto options needed for the future. Again, we need to get beyond the linear thinking of replacing one type of car with just one type of car.

Then, of course, we have other electric transport options in our increasingly urbanizing country, like efficient tramways and intra-city and intercity train options. Other countries have done this or are looking into this. (Note: UAE has done this for Dubai. Why can’t we do this for Washington?)

Moving from what we have now to what we might have in the future will involve at least 4-5 decades and lots of economic and social change at the same time, but not imposed from without, but wanted from within. The future truly could be a fascinating, challenging, and inspiring place – if we want it to be so.

Thank you, Governor Granholm, for sparking a lively discussion about electric drive vehicles. Your latest questions focus on what is “realistic” in terms of deployment, battery costs and charging infrastructure. Nearly every day, we hear about new vehicle developments, improvements in battery technology, research projections for industry growth (note the Accenture report released this week) and charging infrastructure. Just today there is an interesting feature in USA Today that examines the outlook for EVs. What this all highlights is that there is a trifecta of industry, policy and public drivers working to accelerate the deployment of electric drive vehicles and infrastructure across America.

All the major vehicle manufacturers, and many innovative new companies, have launched - or plan to launch - plug-in electric vehicles. Technology improvements and economies of scale will bring battery prices down significantly in the next couple of years. While the cars are becoming more accessible to consumers, charging options are also expanding and becoming more convenient. Although the majority of drivers can recharge their vehicles at home, companies and cities are installing tens of thousands of charging stations at parking lots, employer sites, retailers and even hotels.

There is strong bipartisan policy support in Congress – and at the state and local levels – for electric drive because of its potential to reduce our foreign oil imports, increase our energy dollars spent domestically and lessen the environmental impact of emissions. With meaningful policy support reinforcing the industry’s investments and consumer interest, we see a bright future for broad deployment of electric vehicles in the U.S.

Whether or not electric vehicles (EVs) take off will ultimately depend on consumer acceptance of new technology. But public policy and technological progress are just as important, as we highlight in our new report on the transportation sector.

Indeed, electric drive vehicles powered by batteries or hydrogen fuel cells could revolutionize transportation in the United States, saving considerable amounts of oil while also reducing the sector’s impact on our global climate. And the EVs on the market now are off to a great start, winning national and international awards.

Nearly all major automakers are planning to introduce these vehicles in the coming years, and I applaud automakers like Ford that have committed to building alternative drivetrains in significant number for the long haul. Companies like Ford understand climate change and the need to reduce our impact on our global environment while not sacrificing our mobility. For EVs to achieve that goal, we need policies like a clean energy standard that aim to decarbonize our electrical grid. I’m sure Ford is also investing in this space because they see a market opportunity.

The private sector has invested billions of dollars in developing, manufacturing, promoting, and distributing EVs in the last decade. From a map on our website, you can see that policymakers across the country are supporting EVs because they want their region to benefit from this burgeoning market.

Policymakers should rely on private capital as much as possible to build out the EV charging infrastructure so we can balance the desire to support alternative vehicles while also tackling our nation’s budget deficit. To that end, we should coordinate policy related to EV purchase and home charging nationwide so private players can enter new markets more easily. The most efficient way to “refuel” these vehicles is not yet clear, and we should use policy to help provide the foundation to let the market work.

Another element that is critical to the success of these vehicles is its most expensive component – the battery. Not only do we need aggressive R&D to develop batteries with much higher energy density, we also need to figure out what to do with these batteries at the vehicle’s end-of-life. About 80 percent of the battery’s capacity is still usable at this point, resulting in the largest untapped resource in this space today.

If we achieve the right mix of policy, technological progress, and consumer acceptance, there’s little reason to doubt that alternative vehicles will have a significant impact on the car market in this decade. It appears that it will be tough to kill the electric car this time.

With over a dozen major mass-market plug-in vehicles being introduced into the American market over the next two years, the technology to fundamentally break our dependence on oil has arrived. Electric vehicles give all Americans hope for a brighter future, where we are no longer subject to Big Oil’s tyranny at the pump, our beaches and coastline are safe from dangerous drilling, and our air is free of smog, toxic chemicals and dangerous global warming pollution.

The challenges are: how do we create the infrastructure to support electric vehicles, and how do we get enough of them manufactured to reduce initial battery costs so that these vehicles will be competitive with combustion-based vehicles on cost and convenience. It’s a classic chicken and egg problem: we need people to buy the vehicles in order to create the charging stations that will support them, and we need the charging stations to exist in order to make plug in vehicles convenient enough to be an effective strategy for consumers.

The bipartisan legislation recently proposed by Senators Merkley and Alexander would be a major step in the right direction: by focusing our energies on specific ‘deployment communities’ that have intensive plans to create a charging infrastructure, we can push plug in vehicles past a cultural tipping point that makes them mainstream within local communities. The Merkley-Alexander legislation supplements that investment with R&D grants to reduce battery costs and increase charging speed.

In addition, we should explore alternative ownership and financing options for electric vehicles. Plug in vehicles are extremely cheap to operate, costing less than three pennies per mile – less than a fifth of the cost of operating combustion based vehicles at today’s prices. If we can find a way to put more of the cost-savings up front – for example, by allowing consumers to lease the battery rather than purchase outright – it can reduce initial costs even further.

While any plan to deploy electric vehicles requires government intervention into the economy, it is important to remember that the government currently heavily subsidizes the oil industry. The $4.5 billion per year in direct subsidies to oil companies is just the tip of the iceberg. In addition to that money, the Department of Defense spends almost a hundred billion per year protecting shipping lanes for the transportation of oil. We are currently involved in wars in two countries whose primary geopolitical importance is oil exports, at a cost to taxpayers in the trillions. And the list goes on from there: we spend billions in added health care costs because of oil’s pollution, oil is categorically exempted from sales taxes in almost all states, oil companies are shielded from full liability for their spills and other environmental impacts, federal transportation spending has prioritized oil-based transportation over alternatives for over fifty years, and so forth. The investments we make in plug in vehicles today will mean billions in reduced expenditures in the future.

Thanks to Governor Granholm for an excellent question, as well as for your work making Michigan a leader in producing these vehicles. Our environment, economy and the people of Michigan will long remember your work to help make electric vehicles a reality.

The answer to Governor Granholm’s question is abundantly clear: lower gas prices, cleaner air, and reduced pollution will be achieved by investing in hybrid and electric vehicles that increase fuel efficiency and reduce oil consumption. Indeed, we can even go one step further by promoting smarter choices in commuting, including public transportation, high-speed rail, and increased opportunities for walking and biking.

This September, the President has a critical opportunity in setting fuel efficiency and carbon pollution standards for cars, pickup trucks, and SUVs through 2025. We strongly encourage him to move ahead with the strongest possible standard -- at least 60 miles-per-gallon -- for the next generation of automobiles. Across the country, Americans resoundingly support improving fuel efficiency standards. A recent poll conducted by the Mellman Group found that 83% of likely voters favored a 60 miles-per-gallon standard. Automobile manufactures can meet this demand by using existing technology, including more efficient conventional engines, hybrid-electric drivetrains, smarter transmissions, high-strength materials, and electric drive technology.

The economic benefits and cost savings will be substantial. While fuel prices continue to hover around $4 per gallon, at that price drivers would save as much as $9,000 over the life of a new vehicle. As prices continue to rise, fuel savings will more than offset the additional cost of technology, putting $370 billion back in the pockets of American consumers through 2030, instead of in the hands of foreign nations that are often hostile to our interests. And the demand is there; in March alone sales of hybrid cars jumped nearly 50% compared to the previous year.

Improving cars is a critical step but Congress must also take an active role in rebuilding our nation’s crumbling infrastructure. The transportation reauthorization bill provides Congress with the opportunity to increase access to clean, affordable transportation options, like transit, high-speed rail, and biking and walking that will cut oil use, save consumers’ money, and put Americans back to work.

As Governor Granholm points out, it is clear that we cannot drill our way to lower gas prices. It is up to our government to lead the way by improving fuel efficiency standards, partnering with manufacturers to promote technological innovation, increasing clean transportation choices, and making the right investments in our energy future.

Economic growth around the world is increasing demand for energy and for cars. This increased demand will continue to drive up fuel prices, even with more fuel efficient cars. So along with higher mileage standards, we need alternative energy sources that can meet the increased demand, and biofuels are a necessary part of the mix. Detroit needs to support not only effective CAFE standards but also more Flex Fuel Vehicles that can use a variety of biofuels blends.

The Renewable Fuel Standard is the key policy for increasing production of advanced biofuels to meet added demand for transportation fuels, not just in cars and trucks, but also aviation. It incentivizes innovation within the biofuels industry, ensuring that biofuels will be cost competitive with current petroleum fuels. Maintaining the RFS is vital to our energy future, and our transportation policy should reflect that.

While increasing mileage standards for cars, we should also encourage production of flex fuel technology and encourage deployment of flex fuel capability in hybrids.

Gov. Granholm's follow up question focuses too much on electric vehicles and figuring out how to create an infrastructure. The National Academy of Sciences did an extensive review of battery technology a few years ago and did not paint an near term optimistic picture. No technology breakthroughs were seen to drive the cost from over $1000 KWH to the $300 KWH needed to make electric vehicles competitive.

A focus on just electric vehicles runs the risk of excluding other options such as natural gas, biofuels, advanced diesels, and further improvements in the internal combustion system. Further it assumes that new knowledge about climate change will reaffirm the theory that human activity is the major cause of warming over the last century. That is a hypothesis not an established fact.

Supporting a broad R&D portfolio of vehicle options and showing more trust in market forces is likely to produce the kind of improvements that are cost-effective, lower in emissions, and which do not require transferring tax dollars from one group of tax payers to those who buy vehicles that have a high cost relative to their gasoline counterparts.

First of all, it is great to see so many contributions to this discussion. Over the past few days we have received comments from experts in the automotive industry, environmental stakeholders, and policy organizations. Some comments cite the importance of increasing domestic production of oil and gas while others note the effect of rising demand in developing nations on global oil prices. Still others have commented on the benefits that electric, hybrid, and diesel vehicles contribute to reduced pollution and in spurring innovative manufacturing activity in the auto industry.

I’d like to consider points made on electric vehicles. Some believe that electric vehicles are a critical solution to reducing dependence on foreign oil, limiting pollution, and attracting investment in new technologies like lithium ion batteries. Others have advised that electric vehicles will not make a significant impact on America’s oil dependence for several decades and that subsidies to promote them are wasteful.

From my recent experience as the governor of Michigan, I know that when the policy framework is right the automobile industry can make significant investments in research and development and the production of advanced technology vehicles. On Tuesday, Bill Ford stated in a Fortune magazine article that he believes about 25 percent of Ford's fleet will be electrified by 2020, up from just a couple percent today. So I ask: What IS realistic if we are to continue working toward broad deployment of electric vehicles in the United States? Will new investments bring down the cost of batteries so that consumers will purchase them without tax incentives? Will the appropriate charging infrastructure be available to ensure that consumers, who average almost 40 miles of driving per day, are able to fuel their vehicles on electricity?

It is a nice coincidence that this question comes the very week that Progress Energy Carolinas received six Chevrolet Volt extended-range electric vehicles to include in our test fleet. Our Carolinas utility is actively paving the way for electric vehicles, so I thought it might be good to let Lloyd Yates, president and CEO of Progress Energy Carolinas, have the opportunity to respond to this question. So, if you’ll allow me to share my space on this forum, what follows is Lloyd’s response to Governor Granholm’s question:

Anxiety at the pump is driven by the fact that the cost displays on the pumps just keep spinning upward, faster and faster. What better way to get rid of this pump anxiety than never, or hardly ever, visiting it in the first place?

At Progress Energy Carolinas, we firmly believe that plug-in electric vehicles (PEVs) of all shapes and sizes will not only help our customers save money, but also protect the environment and reduce our dependence on foreign oil. As a transportation fuel, electricity is 50 percent to 75 percent less expensive than the equivalent cost of a gallon of gasoline. Switching from the pump to the plug is a no brainer from that perspective.

But we are realistic and understand there are challenges to achieving widespread adoption of PEVs, including in the need to reduce technology costs, increase consumer awareness and ensure a positive customer experience when it comes to charging their vehicle. That’s why we are collaborating with industry partners and our communities to advance the technology and establish safe and convenient charging solutions for early adopters. For example, we are partnering with the City of Raleigh to install a solar-powered EV charging station in a public parking lot. Later this summer, we will launch a research program to install around 200 public and private charging stations in our Carolinas service territory using a Department of Energy grant. The lessons we learn will help guide future station installations and allow us to better manage the impact on the grid in a world when filling up at the plug is as common as the pump.

We’re getting more and questions from customers about potential plug-in vehicle rate structures, incentives and the processes for getting charging stations. This early interest before the vehicles are even in local showrooms bodes well for the future of PEVs and demonstrates strong consumer interest.

One sign that PEVs are moving from being a niche product in parts of the West Coast to a more mainstream acceptance is the fact that the national Plug-In 2011 conference on PEVs is coming to Raleigh, N.C., this summer. This major industry conference chose our service territory in North Carolina as its first location outside of California to acknowledge that the East Coast is emerging as a ripe market for this technology and in recognition of the local EV efforts.

As both our industry and our customers face rising costs, it becomes clear that electric vehicles must play an important role in a more efficient transportation future.

-Lloyd Yates

(These comments were submitted by Ann Mesnikoff, the Sierra Club's Green Transportation Director.)

With the summer driving season just around the corner, Americans are struggling once again to cope with $4 a gallon gas. Volatility in the Middle East, oil speculation and growing demand for oil continue to jack up gas prices beyond our control, making it clear that we have to cut our addiction to oil in order to relieve Americans’ pain at the pump.

This September, President Obama has a key opportunity to save Americans money on gas by setting strong fuel efficiency and carbon pollution standards for cars and trucks through 2025. The administration’s analysis has already shown that we can cost-effectively cut carbon pollution from cars and light trucks between the years 2017-2025 by 3 to 6% per year and hit a fuel efficiency standard of 47 to 62 mpg.

It is critical that the administration follow through with the highest possible standards of at least 60 miles per gallon. The technology exists today to get there and we cannot afford to do less. Just last week, one engine technology demonstrated in a Nissan Sentra cut fuel consumption by 36%. With advanced gasoline engines, hybrids and plug-in vehicles (that don't need oil at all), and better materials we can have a full range of cars that don't guzzle gas.

This isn’t a matter of splitting hairs. The strongest standards would yield a net savings of $370 billion at the pump more than the weakest standards through 2030. The bulk of this money would otherwise go overseas to pay for foreign oil.

Strong standards of at least 60 mpg put that money back in Americans’ pockets by cutting U.S. oil consumption by 2.5 million barrels per day in 2030 – almost 50 percent more oil than we imported last year from the Persian Gulf. The strongest standards also protect our health and environment by cutting twice as much carbon pollution as the weakest standards under consideration.

Despite the fact that 83% of Americans support 60 mpg cars, the auto industry continues to push the Obama administration to ignore the promise of American ingenuity and issue the weakest possible standards. They keep coming back with the same false argument – that making cleaner, more efficient vehicles costs too much. The auto industry should be more confident of their ingenuity and their ability to produce cars in 2025 that aren’t guzzlers.

A consumer who buys a new car in 2025 could save $7,500 at the pump even after accounting for the costs of fuel saving technology (and that’s at $3.50 per gallon!). The industry likes to emphasize how much it will cost, but the savings tell the story.

We send $1 billion overseas every day to fuel our addiction to oil, not to mention the cost to our environment and our health from spewing billions of tons of pollution into our air. If we’re serious about moving beyond oil, President Obama must build on the progress his administration has already made by increasing pollution cuts from 5% per year through 2016 to 6% per year starting in 2017 and getting cars to at least 60 mpg by 2025. We cannot afford for him to fall short.

America is sending more than $1 billion overseas every day to support our oil habit. That money could be better spent here at home, producing cars that go farther on less gasoline. This fall, President Obama has the single greatest opportunity to unleash this kind of investment: he can raise the clean car standards to 60 miles per gallon by 2020.

These new standards could cut drivers’ costs the pump in half. With gas at $4.00 a gallon, a car that gets 60 mpg would save the average American $513 this summer and $8,900 over the life of the vehicle. Meanwhile, producing these cars would generate jobs and protect vital ecosystems like the Gulf of Mexico from drilling.

A 60 miles per gallon standard would also help us confront the climate crisis: it would cut at least 400 million metric tons of carbon pollution by the year 2030—that’s the equivalent of taking over 100 coal-fired power plants off line.

Hybrid and electric cars will play a critical role in achieving the 60 mpg standard. Already 31 different models have hit the road, and more than 100 more are expected to follow within four years. With gas prices hovering above $3.50 per gallon in March, hybrid sales shot up 46 percent compared to a year ago—about three times faster than market average.

This rising demand has translated into jobs. Across the Midwest, more than 20 factories have opened or expanded in the past two years in order to make advanced lithium car batteries and electric vehicle components.

Americans across the political spectrum overwhelmingly support stronger standards. A recent poll conducted by the Mellman Group found that 83 percent of respondents supported a 60-miles-per-gallon standard, even if it added $3,000 to the price of a new car.

People know they will recoup that initial investment, typically in just four years. Indeed, drivers would see a net savings of more than $7,500 over the life of their vehicles when gas prices average $3.50. At today’s prices, the savings would be even greater.

And with technological breakthrough happening right now, the initial investment could be substantially smaller. Several models of 2011 hybrids now use something called P2—a simple, elegant, next generation hybrid system that has two clutches, one for the gas engine and one for the electric motor. This innovation could provide 95 percent of the efficiency benefits while at the same time cutting the cost by one-third or more compared to traditional hybrids like the Toyota Prius.

Now is the time to set the 60 mpg standard that will make fuel-efficiency innovations like the P2 system as ordinary as seat belts and air bags.

With the environmental and economic costs of oil dependence growing out of control, the future of American automobiles is in cleaner cars that consume less fuel, cost commuters less money, and help ensure clean air and clean water for all Americans.

We simply cannot continue to depend on an energy source that is devastating to our environment and undermines our economic and geopolitical strength. Oil is our largest single source of global warming pollution. Oil consumption pumps millions of tons of toxic chemicals in our air, which cause millions of asthma attacks and kill tens of thousands of people every year. With conventional oil supplies waning, these risks are growing more severe. Looking fifteen years down the road, if we do not take serious steps to get off oil, our oil will come increasingly from sources such as deepwater drilling, which means that our beaches and oceans are one accident away from a devastating accident impacting thousands of miles of coastline. Alternately, our oil may come from the development of a domestic oil shale industry, which would be catastrophic for air and water quality for millions of people in arid Western states.

The price spike that we’ve seen over the past six months – the second in the past three years - is a symptom of big problems in international oil markets. Rising international demand for automobiles in places like China and India combined with instability in Middle Eastern countries are putting more and more pressure on stagnating oil supplies. The “drill baby drill” program proposed by Big Oil would yield supplies far too trivial to make any noticeable difference in the price Americans pay at the pump – with tragic consequences for our environment and public health.

The only real solution is to get off oil, and the single most important step that the Obama administration can take is to set a 60-mpg fuel standard for passenger vehicles. The 60-mpg standard would save 44 billion gallons of oil per year while reducing dangerous global warming pollution by 465 million metric tons per year – the largest single policy ever enacted to reduce global warming pollution. In the process, a 60-mpg standard would save consumers over $100 billion per year at the gas pump – at today’s prices. By 2025, the savings could be far higher.

In addition to being critical as policy, setting a 60-mpg standard for cars will be good politics for the Obama administration. Overwhelming majorities of the public support 60-mpg cars. According to one poll, 83% of Americans support a 60-mpg standard – even if it raised the initial price of an automobile by $3,000 - as long as the investment would be paid back within 4 years. Americans know that cleaner cars are better cars, and that in the long run the money that we invest for new technologies will be money saved in fuel costs over the life of the vehicle.

Sensing the tide of public opinion turning against them, the automakers have resorted to their standard tactics – cooking up industry-funded studies that exaggerate the costs of investing in new fuel-efficient technologies and ignore the benefits. It is important to remember the history here. American automobile companies have claimed the sky was falling in response to every proposed regulation of their industry over the past 50 years, from seat belts to air bags to the first CAFÉ standard to the Clean Air Act. For example, in 1973 GM claimed that a requirement that auto companies install catalytic converters would create a “risk of business catastrophe” with “complete stoppage of the entire production.” When the converters were finally installed in all cars, they reduced over 95% of the local pollution emitted, while making the cars run smoother and more efficiently.

In fact, when the autos did go bankrupt, it was not because of environmental or public safety regulations. It was because they had failed to invest in the new technologies that make cars run more efficiently, and as a result, they were getting beat by foreign competitors. The auto industry will continue fighting new fuel economy standards behind the scenes until the day they become law. The next day, they will find that the best way to meet these standards is to invest in technologies that will make their cars run better. Ultimately, these are the investments that will also make our auto companies more competitive in the international market for automobiles, and build the clean manufacturing economy that we need to compete in the 21^st century.

What's the definition of "immediately?" as in to blunt the effects of higher gasoline prices? Will quickly establishing fuel economy goals for vehicle manufacturers to increase fuel economy starting 6 years from now reduce gas prices today, next year? WIll getting approval for developing more domestic oil sources bring relief at the pumps "soon"? The obvious answer in both cases is no. Both are important strategies that will diversify energy sources and reduce demand somewhere in the future. But we need to be realistic about timeframes and technologies and using less barrels more efficiently is really our goal. Which technologies can deliver those benefits at the near term -- meaning they have an established infrastructure, vehicles are available and being acquired and resulting fuel and emissions benefits are being accrued?.

As for "what role "hybrids and electric vehicles" can play in reducing emissions and improving transportation efficiencies? The expanded use of hybrid powertrains is already having a measurable impact at reducing consumption and emissions, and hybridization is a natural technology evolution to be seeing in many places (medium duty commercial trucks, off-road machines and equipment).

Is it realistic to think that electric vehicles will have a measurable and significant impact on reducing oil consumption in less than a few decades? MIT and other CAFE panels have looked at all these technologies and point towards 2030-2050 timeframes for scaled use of alternative technologies like EVs. Especially in the near term, those who choose electric vehicles would most likely not have been major fuel consumers to start with given the range constraints of EVs,

The technology not mentioned but most associated with transportation efficiency is diesel. Today the diesel engine delivers 30 percent greater fuel efficiency than a comparable gasoline engine no matter the range or type of driving-- city or cross-country. It is competitive with hybrids, the fueling infrastructure is well established, and diesel is the most flexible renewable fuel platform, with the ability to use first and second generation renewable biodiesel fuels.

Michigan is home to the makers of one of the greatest fuel saving technologies on the road today -- clean diesel in heavy-duty pickup trucks. Diesel engine options for heavy-duty pick-up trucks are offered only by GM, Chrysler (Ram) and Ford. Customers that choose these trucks have work to do -- as small businesses, contractors, landscapers, or recreational activities that involve a vehicle. According to research by the Martec Group for the Diesel Technology Forum, heavy-duty pick-up trucks put on the road between 1994 and 2007 will save the US 48 Billion gallons of fuel over their useful lives. These cumulative fuel savings exceed those of all hybrids put on the road between 2004-2007.

Using less barrels of oil more efficiently is best achieved by diversifying sources of energy (foreign and domestic) and diversifying the array of technologies to use that energy more efficiently; hybrids, EVs and clean diesel technology.

Energy choices facing policymakers call to mind a Frost poem. There are two approaches to address pain caused by high gas prices, and reason should compel us to take the one less traveled.

The first path, one well travelled since the first embargo in 1973, involves government planning and subsidies. If this worked, we wouldn’t be facing our current problem -- at least it wouldn’t be as severe.

The second, far less warn path is to put more emphasis on market forces and energy realities.

Ratcheting up CAFE standards as well as subsidies for electric and hybrid vehicles and biofuels have failed to reduce our country’s use of gasoline. What they have done, however, is raised the price of personal vehicles and take taxpayer dollars and transfer them to rent-seekers and special interests. The current CAFE standards are estimated to raise the average price of a vehicle by $1,000 or more. Additional mileage is not cheap and the higher mileage vehicles tend not to be the ones that American families prefer.

Every serious study of energy and transportation concludes that oil will continue to be the dominant transportation fuel for decades to come. That is a result of its abundance, versatility, energy content, and cost. Even at today’s high crude oil prices, traditional fuels remain cheaper than alternatives.

An energy policy based on energy realities would be far more effective than one based on wishful thinking.

Among the number of reasons for the recent spike in crude oil prices, the dominant one is demand from China, India, and other Asian nations. The price of crude oil is set globally, so strong demand outside of the OECD puts pressure on prices.

Though they act otherwise, there are limits to what politicians can do -- especially in the short run. The recent drop of crude prices below $100 was directly related to the strengthening of the U.S. dollar and further evidence that our recovery is anemic. More robust economic growth will put upward pressure on prices unless we decide to produce more.

Ten years ago, the Bush Administration introduced a number of energy proposals, most of which were ignored. If serious action had been taken at that time to increase our domestic production, we could possibly be producing almost 2 million additional barrels daily. Though that would represent less than 3% of global production, it would have a damping effect on prices.

If there was a serious attempt to deal with our debt and deficit problems, investing in companies that provide goods and services might look more attractive than speculating in commodities like crude oil.

Certainly the current proposal for discriminatory tax treatment of oil companies will do nothing to encourage more domestic investment. Indeed, if those proposals were enacted, prices would be higher, less domestic oil would be produced and the hand of national oil companies strengthened.

That makes no sense.

Proponents of electric vehicles and hybrids turn a blind eye to the fact that these vehicles are not ready for the commercial market without subsidies and sustained high prices for gasoline. The subsidies make even less sense at a time of large deficits.

The solution to our oil problem, which is not a foreign oil problem, is fairly straightforward. Produce more at home, encourage R&D into alternative fuels and vehicle systems, discontinue market distorting subsidies, and place more trust in market forces.

In short, electric vehicles must play not just any role, but the central role in ending our dependence on petroleum. No other alternative offers the same fundamental advantages of electricity: it is diverse, it is domestic, its prices are stable, and the backbone of the infrastructure already exists.

There are other critical interim policies. For example, we can and should continue to improve fuel economy standards for conventional vehicles. No matter which alternative to oil we eventually adopt, it will take decades to get there, and as long as our cars run on petroleum, it is best if they use as little of it as is practical. That said, increased fuel economy is not in and of itself a long-term solution. After all, a mobile economy that uses less oil but still can’t run on anything else is still vulnerable to price spikes and supply disruptions.

Similarly, we should increase domestic oil production. Producing more oil at home probably will not affect the global price of oil to any great extent. But that does not mean that it does not have significant benefits, particularly when it comes to our balance of trade and economic strength and stability. Again, this is not a stand-alone long-term solution. But it represents an important way to protect ourselves as we transition to a post-oil transportation sector.

The threats posed by oil dependence are very real. Would Iran be as close as it is now to developing a nuclear weapon if it was not a major oil-producing nation? Our dependence has shackled us long enough. Electric vehicles represent a future in which we are no longer at the mercy of those who wish us well, and increased fuel economy and domestic production represent ways to protect ourselves as we make our way towards that future. All are important, and all should be pursued with determination and vigor.

It may surprise you to know that automakers agree that fuel economy standards should be set at the “maximum feasible” level, which Congress defined as a level that balances technological feasibility with economic practicability. A national standard is good for our national security and for the environment – we can all agree on that. The challenge right now is determining what that standard is.

Choosing our targets before adequately evaluating the data would not only circumvent the rulemaking process to which we’ve all agreed; it would undermine the ongoing collaborative effort to set sound standards balancing all of the factors that influence consumers and the industry.

The current rulemaking process represents an attempt to find that balance. Automakers are working constructively with the Environmental Protection Agency, the National Highway Traffic Safety Administration and the California Air Resources Board to determine what standards will be technically and economically feasible nearly 15 years into the future. It’s clearly a difficult task involving significant assumptions and uncertainties.

Key areas we’re looking at include:

• Affordability: We know that “pocketbook” considerations often drive vehicle buying decisions. We need to be sure that new standards are aggressive, but don’t result in vehicles that consumers can’t afford. After all, fuel standards don’t measure what automakers produce, they measure what consumers buy.

• Jobs: Preserving auto jobs is critical. With 1.7 million direct jobs from auto manufacturing and many more jobs supported by the auto sector, protecting this employment is important – not just to industry but to the communities across the country that depend on these jobs. Just last month the U.S. Energy Information Administration released an energy forecast projecting that setting CAFE at the level of 62 MPG in 2025 would reduce sales by 14 percent. A 14 percent loss of jobs from today’s 1.7 million job base represents a loss of almost a quarter million auto jobs.

• Safety: Overly aggressive fuel economy standards could affect vehicle designs in ways that could impact auto safety. We’ve seen an historic drop in auto fatalities – it’s now at a 60-year low. As we improve future vehicle fuel economy, we need to do it in a way that preserves the safety gains we’ve made – which consumers have come to depend on.

• Vehicle Choice: While improving fuel economy, we must preserve vehicle choice for small businesses, trades people, farmers, families and others who depend on vehicles for their livelihoods, and who require the functionality of larger vehicles like pickup and utilities.

All of these factors impact what’s feasible, and until we have more analyses and data it’s inappropriate to promote any specific numbers as fuel economy/GHG targets.

We continue to support a single national standard – it’s the best way to balance the nation’s need for higher fuel economy with feasibility, affordability, jobs, auto safety and the range of vehicle sizes that keeps America working.

But at the same time, we also must understand that the automotive sector’s ability to contribute to the U.S. economy’s health depends on reasonable regulations. These regulations must provide clarity and certainty, without pricing our customers out of the market or preventing them from choosing vehicles that can meet their diverse needs.

Working together, and basing our decisions on science and data rather than numbers that simply “sound good,” we can meet our shared goal.

John T. Whatley

Interim CEO

Alliance of Automobile Manufacturers

Here is an XCEL file of gasoline prices (including taxes, which are a lot higher in the EU) for Belgium, France, Germany, Italy, The Netherlands, the UK and the U.S.:” http://www.eia.doe.gov/emeu/international/gas1.xls .

As you can see our gasoline prices are certainly not high relative to these countries’ gas prices.

This gives you a sense of what determines gasoline prices in the US: http://www.eia.doe.gov/oog/info/gdu/gasdiesel.asp.

Please note the graphics of the gas pump showing how much of the price of gasoline is determined by the price of crude oil, refining, distribution, marketing and taxes. Our gasoline taxes are much smaller than those in the EU, for example.

If we were to look at the prices of gasoline in the EU without taxes we would see things are not so different from here recently: http://www.eia.gov/emeu/international/Gas0.xls

This also gives you a sense of how much more expensive fuels are in the EU: http://www.iea.org/stats/surveys/mps.pdf

It is also important to look at real prices of gasoline adjusting for inflation. We have been close to here before in 1980-81 and 2008: http://eia.doe.gov/EMEU/steo/realprices/index.cfm . Just click along the timeline to see the realities of real gasoline prices. Yes, $4.17, what I paid yesterday, seems very high, but is it really in global and real historical prices? It is higher in real terms than in previous years for us, but it is not nearly what the Europeans, Turks and others pay. (So why is it that the EU is more efficient with its fuels? Ahah! Do you think taxes might have something to do with that? Indeed.)

Surely, $4 plus a gallon is a shocker for many people. However, given the price of a cup of coffee at some coffee shops is well over $4, a gallon of bottled water can be far more expensive than a gallon of gasoline, and a gallon of some soft drinks are way over the top, one could wonder why there is not more fuss about profiteering from bottled water companies, soft drinks companies and gourmet coffee shops. But, yes, that is yet another story.

Markets are forward-looking, and are pricing in not the high-level of domestic production made possible by policy decisions years ago, but the impending collapse in domestic production driven by the unlawful de facto moratoria in the Gulf of Mexico and Alaska, the reimposition of a moratorium in the Outer Continental Shelf, the cancelation of leases onshore, massive impending land-lockups, and the stunning array of new regulations from the EPA designed to cripple domestic production.
These disastrous energy policies are only part of the picture. Out-of-control federal spending and deficits, facilitated by Federal Reserve money creation, are driving up the prices for all commodities, including gasoline.
Stopping the dollar's declining and reversing our anti-energy policies would have a major impact on market psychology and bring prices down quickly.

Yet another round of wasteful subsidies and expensive mandates -- like the outrageous fuel-mileage standards that Governor Granholm should know have badly disadvantaged American manufacturers versus European competitors who simply pay the fine -- would make the situation worse, not better. There is no 62 mpg car worth driving.
We need real solutions, not wasteful policies that are good for green PR and not much else. We need to get government out of the way and let energy markets work.

Good afternoon Governor Granholm,

I will take each paragraph separately and then make some general recommendations at the end

Statement:

With gasoline prices high, federal policymakers are actively debating how to protect consumers from climbing costs and reduce our dependence on foreign oil. The challenge is significant, as transportation accounts for 70 percent of the nation's petroleum use.

Reply:

Our gasoline prices are quite low compared with of the rest of the developed world, especially in the OECD. Federal policy makers can debate all they want, but oil prices are often determined by global events that are well beyond the control of Washington policy makers.

Transportation is indeed the key to reducing our dependence on oil entirely, and not just on imported oil, which mostly comes from the Western Hemisphere and our largest source of imported oil, is Canada. I want to clarify these two points because most people think that most of our imported oil comes from the Middle East. It does not. However, events and fragilities in the Middle East and North Africa can affect our oil prices and our gasoline prices profoundly – even if the Middle East is a source of a relatively small percentage of our overall oil use.

The war in Libya and the risks, actual and perceived, from the Arab Spring have helped run up oil prices. However the really big risks have not come about yet. Those would be increased instability in Saudi Arabia, Iran, Iraq, or other much larger oil exporters than Libya, which would also include Algeria, which is right in the firing line of the Arab Spring. Then there are the astonishingly centralized and risky oil facilities in the region, such as Ab Qaiq, Ras Tanura, ABOT, KABOT, and the many pipelines and refineries in the MENA. About 30 percent of liquid fuels produced in the world are produced in the Middle East and North Africa. About 70 percent of the known commercially available unconventional oil reserves are found in the Persian Gulf alone.

Then we have oil price risks coming out of Mexico, Nigeria, Venezuela and others. We need to carry a lot of risk when we rely so much on a fuel that is mostly found in fairly volatile areas, our stable, peaceful, friendly neighbors to the north, Canada, excluded.

Although legislators may want their publics to think they can do something in the short run about these external risks they are sadly mistaken. We have little control over the political and social whirlwinds sweeping across the Middle East and North Africa and other parts of the world where most of the globe’s oil comes from. Oil markets are global markets. And we are part of these often volatile global markets.

Statement:

Some policymakers propose ending tax incentives for petroleum companies that are reporting record profits and investing in advanced vehicle technologies and fuels. Others believe increasing production of domestic oil sources is the best way to combat unstable prices. Unfortunately, even with national production increasing 11 percent in the past two years (making the United States a net exporter); gas prices are hovering around $4 per gallon.

Reply:

Getting rid of the tax incentives for petroleum companies may sound like good policy to those who don’t like oil and would like to see it go away. However, it is very bad policy to keep gasoline prices low. It will make the prices higher most likely. The petroleum companies would tend to invest less in exploration and production if their costs go up, which is what will result when subsidies are cut. So this policy contradicts the policy of wanting more domestic production. This is basic Oil Economics 101.

Investing more in exploration and production in domestic resources is not a quick fix. There is something big missing in that argument. It could take 8-15 years from discovery to production for the typical oil field. It usually takes longer offshore than onshore. It will take longer for those fields that are farther away from pipeline and processing infrastructure than those closer in. For the leases already out there and with “sitting“ discoveries it is not like we can just drill and send the oil to a refinery and into our cars and trucks tomorrow. This could take years. Asking for more drilling domestically to reduce gas prices might be good rhetoric, but it is bad short run economics. In the long run this might make a difference, but your wording is “immediate” and immediate solutions are simply not there.

We also have gigantic unconventional sources of oil in the US in oil shale, shale oil, and so forth. Developing these further could take years as well. Then we have a pipeline that could be built from the Canadian tar sands to our refineries in 2 years, yet it is stalled in debate. This pipeline could increase supply to the US by over 1 million barrels a day in 2-3 year. This is hardly an immediate answer to the problem of gas prices. However, it is a real no brainer to help alleviate longer run price and supply pressures on the US.

And, by the way, don’t buy the argument that this oil will go to foreign refineries run by Hugo Chavez and the Saudis. This is patent nonsense. 95% of the refinery capacity that would be used for this oil from Canada is owned by US companies like Exxon, Valer0, ConocoPhillips, etc. There is a lot of nonsense out there about refinery systems. Also, about 90 percent plus of this refined oil will likely end up in US cars, trucks, ships and planes, so don’t buy the argument that the refined products would be exported to others when we are in need. There is a lot of nonsense out there. There is also a lot of twisting of the truth for personal and lobby gain.

Statement:

As the former governor of Michigan, I know firsthand the negative effect higher gas prices can have on citizens and the nation's auto industry. What is clear is that the only way to immediately blunt the effects of rising fuel costs is to consume less.

Reply:

We cannot do much immediately, so please let’s get beyond that objective, unless you want to drop the speed limit to 45 or 50 and then mess up the trucking logistics systems. It is important to really start planning out the longer run answers to our transport and oil dependency problems. This may involve light-weighting cars and trucks. It could also include making them more aerodynamic. It could include making their drive trains and braking systems more efficient and self-correcting. It may also involve moving toward other methods of propulsion, including the electric cars, hydrogen fuel cells, compressed air, CNG, and maybe some ideas that have not even been born yet in the laboratories or in someone’s garage in LA. Who knows what the future will bring with invention and innovation, but one of the key solutions is to give significant and proper incentives to inventors and innovators to really start pushing the envelope on transport technologies. But this will take time. If we focus on the immediate we could lose sight of the real goal: creating new transport and energy systems that could benefit us for a very long time, not only in energy costs, but also environmentally and more.

Statement:

By September, the Environmental Protection Agency and the National Highway Traffic Safety Administration, with the California Air Resources Board, will release the proposed rule for mile-per-gallon standards for auto fleets, model years 2017-2025. They are considering a range of 47-62 mpg, reflecting an annual fuel efficiency increase of 3-6 percent.

Reply:

Those are too meek. We need to go for 100 plus mpg and soon. And it can be done. There are technologies out there to do this. It will take time to get enough of these more efficient cars and trucks on the road to make a difference, but we have to start somewhere. 100-150 mpg by 2025 for new cars is quite attainable given the inventive capacity of the automobile companies globally to push for this. Also, we will see the EU, China, Japan and others push for much less meek standards and our auto companies could be once more left in the cold.

With lighter cars, better drive trains, increasing electrification, increasing use of CNG and methanol, etc. there is no reason why the US should be left behind. But if we continue to be meek and mild on the way our transport systems change we will be left behind.

We also need to put far more efforts toward tram systems, high speed trains, and more mass transit options, including the health-improving bicycles in urban areas. And we are a country that is 80 percent urban.

Statement:

If the easiest way to diminish anxiety at the pump is to make cars go farther on a tank of gas, shouldn't we pursue the highest possible standard? What role can hybrids and electric vehicles play in reducing emissions and improving transportation efficiencies?

Reply:

These standards are the pedestrian way of changing things. We as a country need to be bold, inventive, innovative risk takers and move on to completely new ways of transporting things and people within the next decades. (Again, this will take time.)

If we do not we will see our economy degenerate further as the costs for transport here erode our competitive advantages as others move ahead faster.

Electric cars are possible in the portfolio mix needed for the future, but there is no single answer to this problem.

We also need to look at transport fuel, transport technology, and transport vehicle changes in shipping, aircraft, trucking, rail, and more.

We could also look more into why we transport things and people and how our culture could change, while at the same time improving life styles and quality of life, while also spending less on transport and transport fuels. We are still in the 19^th and 20^th century modes of thinking on transportation. It is time to start thinking about what we can do in the 21rst and 22^nd centuries. Why not? The past is over. Sunk costs are sunk costs. We need to move on and away from our inertial thinking. The future is upon us. And we have the future of our children and grandchildren (and more) to consider.

We will also need to look far more at the private sector and the profit motive to make these changes happen. There could be trillions in profits to investors and auto companies here over the next few decades. Now this should really get them interested.

Congress is likely to continue to be pretty much dysfunctional on this.

Fluctuating gas prices that leave consumers facing tough spending choices have become as symbolic of spring and summer as cookouts and baseball.

With gas prices hovering at $4 per gallon, consumers are feeling the pinch at the pump and looking for options to use less gas. And the pain of high gas prices spreads throughout the economy. It is estimated that a $1.00 increase in the cost of a gallon of gas leads to a 10 percent reduction in discretionary spending.

Electric drive vehicles are on the road today and offer consumers a way to reduce fueling costs, dependence on foreign oil and emissions that threaten our health and environment. Electric drive vehicles can be battery electric, plug-in hybrid, hybrid or fuel cell. They all displace oil with electricity. Some generate this electricity though on-board power, like a hybrid. Others are powered by the grid like a battery electric vehicle.

Hybrid vehicles are widely available, efficient and cost -effective alternatives to gas powered vehicles. Nine of the top ten vehicles in the Environmental Protection Agency’s 2010 fuel economy rakings are hybrids and additional models are coming to market every year. At the cost of $4 per gallon, the driver of a hybrid that gets 45 miles per gallon saves $958 per year over the driver of a conventional car that gets 25 miles per gallon.

Plug-in vehicles, which are coming to the marketplace now, offer additional choices. Electricity costs about 2-3 cents per mile as compared to about 14-16 cents for gasoline at $4 per gallon. More than twenty of these efficient and economical battery electric and plug-in hybrid vehicles will be available by 2013.

In addition, zero-emission, zero-petroleum fuel cell vehicles are already being demonstrated on the roads and are operating in public transportation. For example, at least 15 fuel cell buses are in operation in public transit systems from Connecticut to California.

An electrified fleet is not only more efficient, it is also cleaner. According to The Road to Clean Air, a report released Tuesday by the American Lung Association in California, a 70 percent reduction in asthma attacks, respiratory emergency room visits and lost work and school days could be achieved if the current fleet of vehicles on California roads were replaced with zero and near-zero-emission vehicles, such as battery electric, plug-in electric and fuel cell vehicles by 2025.

According to the Electric Power Research Institute and the Natural Resources Defense Council, plug-in electric vehicles, even if charged by electricity from coal-fired plants, emit about 30 percent less greenhouse gas emissions versus gas-powered vehicles. If charged from nuclear, hydro and renewable energy (already 30 percent of our grid), their electric operation has no emissions.

As a nation, we need to end our addiction to oil. It is imperative for our national security, economic viability and our environmental health. Electric drive technologies are critical to this effort. To achieve an electrified U.S. vehicle fleet, we need a comprehensive and cooperative effort that engages industry, government and consumers in advancing technology, growing markets and increasing education about electric drive choices. With this coordinated effort, we can welcome the return of baseball in the spring without the return of the gas price spike.