In his State of the Union address last month, President Bush announced a grand objective of reducing gasoline use in the U.S. by 20% by 2017. In an effort to keep the spotlight on the issue, the President yesterday visited a plant in North Carolina that’s researching the science of alternative fuels. He’s been making tech/energy media trips lately, playing up the notion that America can R&D its way out of its growing reliance on foreign oil.
The sky’s the limit for alternative fuels, the President advised on Wednesday. “Someday you’re going to be able to get in your car, particularly if you’re a big city person, and drive 40 miles on a battery,” he said via The Guardian. “And by the way, your car doesn’t have to look like a golf cart. It could be a pickup truck.”
The notion of using corn and other domestic supplies of home-grown materials to produce fuel is an optimist’s dream. The stakes are certainly high. If the United States could reduce imports of foreign oil, the savings would be huge, delivering a massive windfall on the economy.

But this rosy scenario isn’t imminent. That’s the message in Energy Information Administration’s recently published update on the long-term outlook for U.S. energy use. Looking out to 2030, EIA projects that that consumption of so-called liquid fuels (primarily gasoline) will grow by an average of 1.1% a year (see chart below). Even if gasoline prices rose sharply, the EIA still expects that demand will rise by 0.9% a year. What’s the source of the demand? Transportation, which is to say cars and light trucks. Collectively, transportation accounts for 94% of liquids consumption, EIA reports. The bottom line: consumption of liquid fuel in America will continue to dominate the country’s energy profile.
It’s worth noting that liquid fuel is expected to remain a staple despite the overall trend of increasing energy efficiency in the U.S. Energy use per dollar of GDP will continue to fall in the years ahead, EIA projects, as the graph below illustrates. Nonetheless, energy use per capita will rise by 0.3% in the future, and consumption of gasoline will increase three times as fast. Why the difference? The population keeps growing, as do consumers’ energy demand for powering computers, appliances and, of course, cars. Consumption, conspicuous or otherwise, requires energy. In the aggregate, higher energy efficiency is offset and then some by such trends.
All of which leads to the odd profile of a country that’s becoming more energy efficient while it relies more and more on foreign sources of oil. As the EIA explains, “Although the Nation’s reliance on imported fuel has been growing, the economy is becoming less dependent on energy in general.”
The bottom line: the enhanced energy efficiency in all its various forms will have little impact on the country’s energy profile for the foreseeable future. All the talk of alternative fuels and technology-based improvements that push gasoline mileage higher will bring s-l-o-w progress on the energy front. There’ll be reports of astonishing advances, but there’ll be precious little progress in terms of noticeable results on a macro scale.
That doesn’t mean America should give up. On the contrary, the nation needs to work harder to solve its long-term energy challenge. But one must also be realistic.
Technically, it’s possible to create practical solutions to gasoline. A large share of Brazil’s cars (roughly one-fifth as of 2005) runs on alternative fuels. Of course, Brazil is relatively small economy compared to the U.S. In addition, Brazil’s move to alternative fuels has been years in the making. The U.S., by comparison, has barely begun to explore alternative fuels. Even a modest goal of running 20% of U.S. cars and light trucks on alternative energy is a decade or more away. Assuming, of course, we start in earnest now, today, this minute.
And then there’s the money. Retrofitting gasoline stations and selling alternative-fuel-based vehicles requires someone to put up the investment now for an expected (but not guaranteed) payoff down the road, perhaps way down the road. That probably requires a government-led initiative of considerable size, which also means considerable political risk.
Don’t hold your breath. The status quo prevails in the United States when it comes to energy. Short of some massive realignment in political backbone, that will continue until and if the pain of higher and sustained energy prices creates grass-roots momentum for change. Weighing the odds of each, the latter looks more likely to unfold. Progress, in other words, is coming, eventually, but the transition could be rough.