Fuel Price Reality Leads to Low Carbon Fuel Standard

Fox & Hounds Daily, 2/23/10.

By David Crane, Special Advisor to Governor Schwarzenegger for Jobs & Economic Growth

In his February 8, 2010 column, Joel Fox wrote, “we have to be realistic about pricing [of alternative fuels].” Is that because we’re so realistic about the pricing of incumbent fuels?

On the day Joel wrote that column, oil was trading at $71 per barrel. One year before, it was at $40. Today it hovers near $80, more than 10% higher than it was when he wrote that column less than three weeks ago.

On America’s so-called “Independence Day” in 2008, oil hit $145, double what it was just the year before and nearly five times its price five years before. In response, our country showed its utter lack of independence by moving deeper into a recession. Indeed, forgotten in the current discussion about the current recession is the role played by volatile oil prices. With that commodity providing 97% of our transportation fuels and the state dependent on transportation for economic growth, a doubling in price in twelve months and a near quintupling in five years was catastrophic.

As every airline knows, this is no way to run a business, and that is why businesses and households are desperate for alternatives. Alternatives arise from competition, and that’s why capitalism must finally invade the transportation fuel sector.

Governor Schwarzenegger’s Low Carbon Fuel Standard invites that competition, and does so without picking winners. It doesn’t matter whether it’s algae-to-oil, biofuels, electricity or some other product, or whether it’s Exxon, DuPont, Better Place or some other company. We just need competition, because when there is competition, consumers can thumb their noses when incumbents raise prices.

If you want realism, start by facing up to the fact that, so long as we don’t have alternatives, our economy and national security are hostage to the Middle East, Hugo Chavez and Iran. And if your realism about the pricing of oil leaves you so comfortable, sell me that guarantee!

Link to full article: http://www.foxandhoundsdaily.com/blog/david-crane/6483-fuel-price-reality-leads-low-carbon-fuel-standard