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Oil prices are down, in no small part because oil demand has dropped.

Yeah! Oops, maybe not.

Let us be clear, recession and depression do not represent good energy policy.

And, recession and depression do not — unless we act sensibly and seriously — set a path toward long-term change toward good energy policy.

Clearly, there are reasons to be looking foward with hope. Barack Obama’s energy and environmental advisors range from very good to incredibly high quality. Polling, even with energy price fall backs, shows Americans ready to support changed energy policies and desiring clean energy. The political environment, amid $trillions (it seems) being dumped into bailouts, seems to be embracing green stimulus. Okay, maybe a bit of a Yeah!

But, what is achievable? What is meaningful? If we’re at 20 million barrels per day of oil use, how fast can we cut into this and how?

A spark to a diary

Earlier today, Joe Trippi put out Letter from a friend: Cars, Oil, Entombing the Future, and Reform. Amid much good material pointing to the ‘end of cheap oil’ and the need to use the current economic crisis as an opportunity to restructure the economy away from oil and resource devastation, is this comment:

Secondly, the majority of so-called Keynesian pump-priming, should be spent not on the parts of America’s present infrastructure that are unsustainable, but in transforming it to be much less energy and resource wasteful.

Absolutely!

Hear! HEAR! HEAR!!!!

Definitely agree that priming the pump should focus on creating tomorrow’s infrastructure, on turning the tide to something better rather than trying to protect dinosaurs.

But these are the words that follow:

America should make a goal of cutting its oil use by 50% in five years …

With that, my mind felt like it hit a brick wall. Huh? While I might laud this in my fantasy dreams, the only paths that I see to achieving such a reduction within five years all involve scenarios that I would prefer for you, me, my and your children not to live through. How about peak oil really hitting hard, with production levels falling off the chart leading to massive disruption in global trade, agricultural processes, etc …? No, “50% in five years”? Laudable but laughable.

What comes next?

spending money to evolve more walkable, bikeable, and transit oriented communities.

“Evolve …” Does anyone think that we can “evolve” our communities over a five-year period to achieve any serious element of a 50 percent reduction?

Even with a great deal of focus on energy issues, I simply am not sure how we can get down to fifty percent of today’s oil use within five years.

Off the top of the head, let’s do some thinking about what is possible as this issue is about how much of a cut is possible, within reason, in that five-year time period not on the path that we should follow.

A rough cut at the near term …

So, if we are going to be serious about reducing our oil dependencies, what are some elements that could have impact in the near term that would contribute meaningfully to reduced oil use within that five years.

Here are some thoughts / items:

There are other things to help achieve oil reduction that might not be so easy or might not be worth the same near-term emphasis, such as increased ‘renewable fuels’ (but do we really want to be talking about ethanol) and imposing the double-nickel (55 mph speed limit) which would be a massive political battle.

But, let’s recap where we are with the points above: roughtly 4.5 million barrels / day in reduced US oil demand (or between 20 and 25 percent) by 2014. Cost to taxpayer: perhaps $66 billion total over five years. Whoa, horsey, that’s a huge number.

Note that we’ve done this before, as we had about a 25 percent drop in oil consumption from 1979 through 1982. This time around, we shouldn’t stop with 25 percent and we can’t afford (on so many levels) to allow the usage curve to go back the wrong way.

Let’s look at this another way: 4.5 million barrels / day at $50 per barrel translate to $225 million per day not leaving the United States to buy imported oil. That is $82 billion per year in money that stays in the United States … per year. Thus, at an annualized cost of $13 billion, US imports would drop by $82 billion. And, of course, the $13 billion and the savings would spark economic activity that would create jobs and otherwise lead to tax revenues that would quite possibly directly pay back that $13 billion in subsidy.

Oh, yeah, these savings would continue and mount with each passing year.

But, 50%? Okay, that 4.5 million barrels/day represents a little less than 25 percent of US oil use. Can we achieve everything on my list? Yes, with some leadership and investment. Can we achieve it in five years? Yes, with determination. Can we achieve more? Almost certainly, but hard to see how that is another 5.5 million barrels/day in savings.

Going beyond 25%

The above seem to be things that could have major impact within the next several years. These serve to foster perhaps a 20-25% cut in US oil demand, without other conservation/technologies, within the coming 2-5 years. To get beyond these ‘relatively low hanging fruit’ options require more serious investment, from smart growth to more rail/public transport to higher fuel efficiency in vehicles/electrification of cars. That investment can start kicking in quickly but the impact is incremental and unlikely to have millions of barrels per day in impact.

For example, electrification of rail over the next decade will foster a direct reduction of oil use of 250,000 barrels per day due to conversion of diesel engines. It opens up the potential for 2+ million barrels per day of converting truck transport to rail and increased passenger movement on rail. But, the impact of electrification of rail on petroleum use in the next five years would be relatively neglible in the face of 50 percent reduction target.

Electrification also provides a path for getting much of America’s trucks, buses, cars off gasoline (or at least reducing that demand). (Please note, electification of transport can occur even as we break America’s coal addiction and eliminate coal from the electricity equation.) With just $50 million per year, we could spark Plug-In Hybrid Electric School Buses, starting immediately, as the new standard for school bus purchases, halving their use of liquid fuels and reducing the health impacts to America’s youth from school bus diesel fumes.

The Federal government should also take a leadership position. For example, Federal fleet vehicle purchases should be a minimum of 5% plug-in hybrid electric vehicle (PHEV) and electric vehicle (EV) starting in 2010, with a 5% increase each year that follows. And, as called for by Barack Obama, the Federal government should provide substantial tax credits for individuals and businesses for purchase of EVs and PHEVs. (As a detail, the tax credit should take account for capability with, for example, increases as the ‘all electric’ driving distance increases.)

A key element is funding of a Smart Grid, with V2G (vehicle to grid) research and development, which will enable this transportation electricity to come from the grid more efficiently and enable greater penetration of renewable power. (Note that this relates back to electrification of rail, as the rail right-of-ways can be used for a new HVDC backbone to move renewable electricity efficiently across the nation.)

Moving off fossil fuels is not only electricity. Electricity provides flexibility in options, but other options exist. Standards should mandate that all vehicles with liquid fuel be either GEM flex-fuel (100% of all gasoline like fuels (ethanol, methanol, gasoline) can be used) or diesel flex fuel (from 0% to 100% biodiesel).

For further fuel efficiency, there should be a near-term mandate that 100% of new vehicles (of all types) provide real time and longer term feedback to driver as to gallons per mile / fuel efficiency.

We should apply resources for improving traffic management throughout America to help reduce fuel demands.

Of course, we should be investing in the deployment of renewable energy resources.

For homes, something like Architecture2030 should be made national policy, a national standard, to drive down, on a constant basis, the energy requirement for America’s building infrastructure.

And, across the board, energy efficiency and renewable energy should receive greater research and development resources and prioritization.

And, we must move toward more sensible development concepts / practices (“smart growth”), integrating walkable lives and public transit/rail as a core part of that development so that the necessity for vehicle miles drops with each passing year.

And, so on … (For some great thinking on this, see: Winning the Oil Endgame.)

Now … there is “conservation” and the potential to go far beyond the type of things outlined above. But, I am highly skeptical that such strong measures are possible.

Back to 50%

Cutting US oil use by 50% is absolutely achievable, but not within five years.

By 2020? Possibly.

And, we should not stop with 50%.

NOTE: All of the figures above are off-the-top-of-the-head ballpark figures, but they are roughly in range of what is achievable.