What the Fact Sheet Says

Saturday, May 21, 2011

This is a fact sheet for the last session's OFS bill (for the 2013 version, click here):

Open Fuel Standard Act: Fuel Competition at the Pump

The Open Fuel Standard Act (OFS), lead in the House by Reps. Shimkus (R-IL), Engel (D-NY), Bartlett (R-MD), and Israel (D-NY), is a technology neutral bill that would ensure most new vehicles sold in the U.S. enable fuel competition starting in 2014.

• The economic and security vulnerabilities associated with petroleum dependence stem from oil’s status as a strategic commodity, which in turn stems from its virtual monopoly over transportation fuel.

The purpose of OFS is to break this monopoly in order to turn oil from a strategic commodity — as salt once was, due to its virtual monopoly over food preservation — to just another commodity, as salt is today.

• Oil’s domination over transportation fuel provides the oil cartel OPEC unacceptable leverage over the global economy. OPEC holds 78% of world oil reserves and yet, due to a policy of constraining supply, produces less oil today than it did 38 years ago even as global oil consumption and non-OPEC production have doubled over the same period.

• Competition and consumer choice in the transportation fuel market would, by enabling drivers to choose to purchase a different fuel on the fly should it be less expensive on a per mile basis, serve to dampen the impact of oil price volatility, and OPEC supply manipulation, on our economy.

• A variety of existing technologies enable vehicles to run on other fuels in addition to or instead of petroleum based fuels. For example, vehicles capable of operating on gasoline as well as alcohol fuels such as ethanol and methanol, or any combination of such fuels, cost about $100 more to manufacture than gasoline only cars.

• The ratio of flex fuel vehicles in Brazil increased from zero to 70% of new cars within three years, and thus as oil prices fluctuate consumers in Brazil can choose the least expensive of a variety of fuels.

• Alcohol fuels can be made from a wide variety of domestic energy resources including natural gas, coal, agricultural waste, energy crops, and trash.

Bill Summary 
• The CEOs of the Big Three auto companies have repeatedly stated their willingness to commit to making 50% of new cars flex fuel vehicles or warranted to operate on biodiesel by 2012.
• The Open Fuel Standard Act (OFS) would buttress this commitment with law, thus providing certainty for investors in a variety of alternative fuels to ramp up production and fuel station owners to install pumps. 
• Specifically, OFS requires that starting in 2014, 50% of new automobiles, starting in 2016, 80% of new automobiles, and starting in 2017, 95% of new automobiles are warranted to operated on non- petroleum fuels in addition to or instead of petroleum based fuels. Compliance possibilities include the full array of existing technologies as well as a catch-all for new technologies.


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