September 12, 2008

Consumer Group Challenges Proposed Policies on Gas Prices


Contact: Roxanna Smith, +1-415-453-0430, for Consumer Federation of America

Issues New Report In Advance of Senate Energy Summit

WASHINGTON, Sept. 12 /PRNewswire-USNewswire/ -- Today, as the U.S. Senate rushes to appease consumer anger over gas prices, the Consumer Federation of America (CFA) released an analysis of the policies being put forward to solve the nations oil problem and finds that fuel economy, conservation, and alternative fuels deliver over 50 times as much oil savings as expanded drilling can produce with far greater impact on the price of gasoline.

The new report entitled A Boom for Big Oil - A Bust for Consumers assembles and analyzes federal data from a variety of agencies, providing a first time comparison of four different policies on a consistent basis in the next two decades: 1) Expanding Drilling on the Outer Continental Shelf (OCS), 2) Raising Fuel Economy Standards; 3) Increasing Alternative Fuels; 4) Fuel Conservation Measures.

While much of the recent debate over how to ease consumer pain at the pump has been focused on expanding drilling for oil, this analysis shows that it is only salt on the wound, said report author Mark Cooper, CFA Director of Research. Drilling wont bring gas prices down or lessen our dependence on oil, short or long term. It will only fatten oil company coffers. And, it diverts attention, support, and resources from policies that can produce much bigger results for consumers and the nation.

Combining recent analyses from the Energy Information Administration (EIA) and the National Highway Traffic Safety Administration (NHTSA), as well as oil company financial statements, the report findings include the following:

-- Efficiency, conservation, and alternative fuels deliver over 50 times as much oil savings as expanded drilling can produce.

-- Expanded drilling on the OCS would increase domestic production

by a scant 1.6 percent (the equivalent of about 23 billion

gallons) between 2010-2030, which would have little to no

influence on the world price of oil, and therefore have little

to no impact on domestic gasoline prices.

-- Expanded drilling provides greater profits for domestic oil

companies with no benefits to the consumer. In the first six

months of 2008, the net income of domestic oil producers was 50

percent higher on U.S. production than on international

production because oil is sold at the world price and domestic

production costs are far less than international productions

costs for domestic producers.

-- Raising fuel economy standards to maximum feasible levels

based on todays market can deliver 609 billion gallons of

gasoline over the same 20 year period, which is over

twenty-five times the amount that could be produced from OCS


-- The difference between the National Highway Traffic Safety

Administrations proposed fuel economy rule and a maximum

feasible fuel economy standard is 280 billion gallons of

gasoline, over ten times the amount OCS could deliver.

-- A full range of mechanical and behavioral steps including

getting regular tune ups, slowing down, properly inflating your

tires, avoiding idling, and using the air conditioning

sparingly could lower gasoline consumption by 13 percent.

-- Demand-side measures (efficiency and conservation) combined

with alternative fuels can save over 1.3 trillion gallons of

gasoline over a 20 year period.

-- Reductions in demand and increases in alternatives in the past

year have kept prices from rising even more than they have and

these policies can lower prices in the future.

The report blames political hype for the rush to open the OCS. Calling the Energy Independence and Security Act (EISA) the single most important step to reduce oil consumption and consumer pain, the report says responsibility for action on the current energy crisis now rests squarely with the Administration, who must rigorously execute the law, including raising fuel economy standards to maximum feasible levels. NHTSAs latest proposed rulemaking, according to the report, falls well short of what is maximum feasible due to flawed assumptions (like $2.45 a gallon of gas in 2015), clearly inaccurate and out of sync with todays market and consumer behavior.

Congress did its job last year by passing higher fuel economy standards. The Administration has dropped the ball and left consumers holding the bag, said Cooper. Policy makers should be focusing on the options that can actually solve the problem. Expanded drilling makes little contribution even in the long term. The OCS bandwagon will only pad the wallets of oil companies, not consumers, said Cooper.

The CFA report is available at system/files/ Analysis+of+Policies+to+Meet+America%27s+Eenrgy+Needs.pdf

CFA is a national non-profit group that seeks to advance the consumer interest through research, education, and advocacy. Founded in 1968, the federation has more than 300 organizational members.

SOURCE Consumer Federation of America

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