A Real Solution for High Gas Prices

Senator Obama discusses the high price of gasoline and offers steps designed to lessen our dependence on foreign oil and bring down prices for good.

"By now, the only thing as predictable as rising gas prices are the short-term political solutions that come along with them. It seems like every year, as soon as headlines start announcing “Pain at the Pump” and Americans start emptying their wallets to fill up their tanks, politicians revert to their Rolodex of responses, from tax rebates and tax holidays to investigations into price gouging by oil companies."



Podcast Transcript

Hello, this is Senator Barack Obama and today is Thursday, May 11, 2006.

The other day I went to the gas station. Gas was $3.08 a gallon in the station where I stopped. It is rough on Americans across the country right now. Chicago has some of the highest gasoline prices in the country. I'm fortunate that I am able to afford spending $50 on a tank of gas; there are a lot of families out there that can't. People who have to drive to work long distances, people who don't have the money to buy more fuel-efficient cars right now and they've seen their standard of living drop substantially as a consequence of higher gas prices.

Now, the only thing as predictable as rising gas prices are the short-term political solutions that usually come along with them. Every year you had the same headlines, "Pain at the Pump" and then Americans start emptying their wallets to fill up their tanks and politicians go through the standard responses: tax rebates and tax holidays, investigating price-gauging bio-oil companies.

None of these proposals are going to do any harm. Some will provide Americans temporary relief at the pump, but, in the long term, we can't keep on relying solely on quick fixes designed to placate an anxious public. We need proactive solutions that are designed to lessen our dependence on foreign oil and bring down prices for good. Washington privately understands this but perhaps because of the influence of the oil companies, some of it having to do with ideology, Washington has just been unwilling to take the hard steps necessary to confront what I consider to be one of the most pressing economic and national security challenges in the 21st century. So, the time for excuses is over. Now's not the moment where we should be afraid of what is going to seem politically difficult or controversial. Now's the time to call for innovation and sacrifice from those institutions that can make a difference: the auto industry, the oil industry, the federal government.

The first place to start is with cars. We've got to build cars that use less gasoline. The auto industry hasn't been asked to raise fuel-economy standards in seventeen years and frankly, lately Republicans and Democrats seem to have stopped asking. Today, we've got no choice. Starting in 2008, we should raise CAFE standards (that's the fuel-efficiency standards on cars) a modest 3 percent a year. If we did that over the next 12 years, by 2020 passenger vehicles would average 40 miles per gallon, light trucks would average 32 miles per gallon. That's not a dramatic increase; it's easily achievable through existing technology and it can be done without compromising passenger safety.

Now, there are going to be transition costs involved in making more fuel-efficient automobiles, especially for Detroit, which has relied heavily on the sale of SUVs for its profits. So I've proposed what I call the "Healthcare for Hybrids" bill, where we'd strike a grand bargain with U.S. auto-makers. We tell them we're going to pickup part of the tab for the retiree healthcare costs, a tab which, by the way, ran 6.7 billion dollars last year but, in exchange, you've got to use the money to invest in transitioning to fuel-efficient cars. So that would be point number one.

Point number two: we should just replace the use of oil altogether as America's fuel of choice. This doesn't mean singing the praises of ethanol, and hoping that it finds its way into our fuel supply on its own. It means taking some serious steps now to put a national bio-fuel infrastructure into place. Already some cars on the road have flexible fuel tanks necessary for them to run on E85, which is a cheaper, cleaner blend of 85 percent ethanol and 15 percent gasoline. But millions upon millions of cars still don't have these tanks. So its time for auto-makers to install those tanks in every single car that they make and the government can help cover this small cost which currently runs at just around $100 per car. It's also time to start making E85 fueling stations more available to the American public. Currently only 681 out of the 170,000 fueling stations in America offer E85 pumps. That's not acceptable. Every American should have the choice when they pull up to fill up their car with E85. That should be true at any fueling station and the oil companies should stop standing in the way and join us in making this happen. If the big oil companies would devote just one percent of their first quarter profits this year to install E85 pumps, more than 7,000 service stations would be able to serve E85 to motorists who could use it.

Finally, we need to reduce the risk of investing in renewable fuels by providing loan guarantees and venture capital to those entrepreneurs with the best plans to develop cell-bio fuel and we should start creating a market for renewable fuels by ramping up the renewable fuel standard and creating an alternative diesel standard in this country, a national standard, that together would blend 65 billion gallons of renewable fuels into the petroleum supply every year.

If we had taken all these steps decades ago, like Brazil did when the call for energy independence was first issued, we'd be immune right now to the whims of oil-rich dictators and surging gas prices. If we don't take these steps now there's going to be a day when we look back at that $3.05 or $3.15 gasoline as the good old days. At some point there's not going to be a tax rebate that's big enough or a tax holiday that's long enough to solve these problems. The American people shouldn't have to wait for this day to come. When it comes to reducing our dependence of foreign oil, the resources are there, the technology is there, the demand is there. Now we just need a little bit of political will and I hope that you guys will help me provide it.

Thanks for downloading and listening to the podcast. I will talk to you soon. Bye-bye.





http://obama.senate.gov/podcast/060511-a_real_solution/