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I have viewed ``renewable'' or ``alternative'' forms of energy with hope but also reservations. While sometimes viable on a small scale, most of them are not capable of supplying the large-scale energy needs of our vast and complex society and our economy. That is why the percentage of U.S. energy consumption from renewable sources has remained essentially the same for the last 40 years. In 1960, renewable provided 6.6 percent; and in the year 2000, renewable energy provided 6.9 percent of our country's total energy consumption. Why, despite their promise, despite the encouragement and the financial assistance they have received, has the usage of renewable energy sources
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It is because none of them can compete in price, supply, or public acceptance with the traditional energy sources of oil, natural gas, coal, and nuclear energy. As long as sufficient supplies of these fuels remain reliably available at current, stable prices, they will be preferred over the alternatives. They cost less per BTU; they can be supplied in the quantities necessary for our large and diverse economy; and their production, transportation, and distribution systems are all well established.
Thus, our Nation's de facto energy policy has been for many years and continues to be to maintain the status quo. Despite all the warnings and dire predictions, despite the occasional, but so far short-lived crises, the status quo has been the right short-term policy during the last 30 years. However, the question before us now is: Will these primary fuels
continue to be as less expensive, as available, and as reliable during the next 10 years, 20 years, or 30 years? If there is sufficient doubt, are we willing to design and implement a transition willing to design and implement a transition over the next 10 or 20 years to include a viable alternative? That is what a national energy policy should do.
From my personal and professional experience, I know that the so-called ``bio-fuels'' or ``renewable fuels,'' such as ethanol, soy-diesel, and other fuels derived from agricultural commodities could be used in this country today to replace 10 percent, 20 percent, or soon 50 percent or more of the gasoline used on our Nation's roads and highways.
Presently, the United States consumers 25 percent of the world's entire oil production. About 44 percent of it is produced domestically, and 56 percent is imported from other countries.
Although the United States is currently the second largest producer of oil, our domestic production, either with or without ANWR, will not be able to supply even half the amount we consume. Since most of our remaining oil supplies are more costly to extract, it will be less expensive for us to buy more of our oil from other countries. That equation means we will continue to become more dependent upon imported oil. The only way to reduce significantly the amount of foreign oil we need is to reduce the amount of oil we consume.
Seventy percent of the oil we produce or import is used in our transportation and most of that goes into our cars, SUVs, trucks, and other motor vehicles. In fact, about 1 of every 7 barrels of oil produced in the entire world goes into an American gas tank. So, if we are ever going to reduce the amount of oil we consume, motor fuel consumption is the place to start.
Unfortunately, as I said earlier, we are going in the other direction. As a Nation, we are using more gasoline, not less. More people are driving more vehicles greater distances than even before. And more of their vehicles are less fuel efficient. In fact, last year the total fleet fuel efficiency in this country dropped below that in 1980.
What are we doing about it? Nothing. Government-mandated fuel efficiency standards have not changed since 1985, and an amendment to increase them in this bill was defeated by a two-thirds majority. Then light trucks were removed entirely from future mileage standards review. Light trucks and SUVs, are the fastest growing segments of the U.S. market, and they are among the least fuel efficient vehicles.
Some people advocate a significant increase in Federal or State gasoline taxes, to reduce fuel consumption to encourage the purchase of more fuel -efficient vehicles, and to increase the amount of money going into the Highway Trust Fund. How many Members of Congress who voted for a 10 cent per gallon, of 20 or 30 cent per gallon tax increase, would survive their next election?
So, barring a severe jolt to the world market, barring a large and lasting jump in gasoline
prices, everything points toward increased gasoline consumption, which means increased oil consumption above the 25 percent of all the world's oil supply production that we now consume.
Everything points in that direction except for ethanol and other biofuels. Ethanol is now made mostly from corn, although other commodities such as sugar beets, sugar cane, wheat, and even wood chips have been converted into ethanol. Ethanol has been around for many years. Many Minnesota farmers have distilled some of their grains, drank the best of it, and refined the rest into ethanol, which they put in their trucks, tractors, and even cars. With a few adjustments to the carburetors, they worked just fine. Until recently, however, ethanol could not be used in most conventional American engines, because it burned too cleanly and acted as a solvent which dislodged the grime attached to the walls of engines.
Finally, the combustion process in modern engines improved so that ethanol could be blended with gasoline. That is how it has been used, and that is how it is viewed in the debates this week and last week--as an additive to gasoline.
In fact, ethanol's potential goes far beyond that. It is not just an additive to gasoline; it is an alternative to gasoline. An alternative which today could be substituted for 20 percent of all the gasoline consumed in the United States, and with the near-term potential to substitute for over 50 percent of the oil-based gasoline used in this country. Imagine reducing the motor consumption of gasoline in this country by more than half, with no change in the types of cars, SUV's, and light trucks on the road. It would require only slight engine modifications which have been made to 2 million vehicles already sold in the United States.
How do I know this? I know it because 5 years ago, the Minnesota Legislature passed a law which mandated that every gallon of gasoline sold in our state be comprised of at least 10 percent ethanol. It was very controversial then, and opponents used the same scare tactics we have witnessed in this debate: Prices would increase; supplies would be inadequate and unreliable; engines would be damaged; lives would be disrupted. Today, in Minnesota, it is a total non-issue. Most people have forgotten it is even in every gallon of gas they buy. Last week, the price of a gallon of regular, unleaded gasoline in Minnesota was 20 cents less than in California, a penny more than in New York, two cents less than in Wisconsin, and almost a nickel less than in Illinois.
We have heard of a study, referred to here, which is misunderstood and has been presented as predicting that this legislation would cause a 4-cent to 9-cent increase in the cost of a gallon of gasoline. That study by the Energy Information Administration, isolating the effect of ethanol, the ethanol mandate in the legislation, actually found the price of a gallon of gasoline would go up by less than 1 cent.
But let us set aside the study and conflicting opinions about what that study says because that is projecting into the future. I am talking about current reality. What I am talking about is the price of 10 percent blended ethanol in today's gasoline in Minnesota compared to other parts of the country. Again, that is just 10 percent ethanol blended with 90 percent gasoline.
I lease a Chrysler Town & Country, which has the ``flexible fuel'' modification to the regular engine, and it travels throughout most of Minnesota on E85 fuel . E85 is a blend of 85 percent ethanol and 15 percent gasoline. It has now been driven over 20,000 miles, in all kinds of weather, through all four seasons, and we have had no trouble with it whatsoever.
The price of a gallon of E85 in Minnesota last week was $1.24, 21 cents less than a gallon of regular unleaded in Minnesota--forty-two cents less than a gallon of regular unleaded gasoline in California; 20 cents less than in New York; and 26 cents less than in Illinois.
That price differential is not as good as it seems. First, a gallon of ethanol contains fewer BTUs than a gallon of gasoline. Second, ethanol benefits from a federal subsidy. As I said earlier, no alternative fuel is less expensive per equivalent BTU as our traditional energy supplies. But ethanol is already close. And at higher levels of production, the price will go down. As car and truck manufacturers better adapt their engine to ethanol, fuel efficiency will improve. And, trust me, we have plenty of corn, beets, and sugar cane, and other agricultural commodities suitable for ethanol conversion all across this country.
However, for ethanol production and consumption to increase enough to
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Opponents have made much of the fact that one company--Archer Daniels Midland--produces 41 percent of this country's ethanol. What they don't tell you is that 25 years ago ADM produced almost 100 percent of this country's ethanol. ADM's market share has gone down every year for the last 25 years, and it will continue to go down as more companies, and farm Coops, make it possible and profitable to produce ethanol. For unlike gasoline, ethanol's raw products are
available all over this country. They can be grown in most parts of this country. Where there are large markets, like California or New York, refineries will locate there. Just as California, as it population grew, declined to depend on milk and cheese from Minnesota and Wisconsin, and developed its own instate industry which supplies, actually oversupplies, its State's entire need.
If ethanol must be transported by truck, or tanker, or rail from one part of this country to another, it is far shorter and thus less expensive than importing oil, gasoline, and MTBE from all over the world. Seventy-five percent of California MTBE currently arrives by barge, the majority of it from Saudi Arabia. That is why the price per gallon increases which have been used on this floor defy common sense. And they are wrong.
The alternative to doing nothing with ethanol is doing nothing at all--nothing except increasing our national consumption of gasoline and oil. If world prices remain the same as today, and if world and domestic supplies can reliably satisfy our nation's ever-growing demand, then that ``continue the status quo'' strategy will continue to be less expensive than a transition to 10 percent or 20 percent or 50 percent ethanol.
But those who live by the sword, die by the sword. Those who want to bet this Nation's entire transportation sector on the status quo continuing indefinitely are taking a big gamble. Anyone who believes the United States can continue to get 25 percent of the world's entire oil production at today's prices are making a hugely optimistic assumption.
Yes. There will likely be an incremental cost to a transition to ethanol nationwide. There is always a short-term cost to diversification. A business that has one produce line incurs a cost to developing a second or a third product. As long as the first product continues to sell, overall profits will be slightly down. But when that product falters, and the others come on line, the company will prosper and grow, rather than decline.
Someone who owns only one stock incurs a short-term cost diversification. But someone who is betting their entire future on that one stock is a foolish person to do so. For the United States to bet our country's entire energy future on uninterrupted consumption of our ever more traditional energy sources is to make a very unwise bet.
We can afford the small incremental costs of transition if they lead to really substantial alternatives. That is what ethanol and biodiesel would do--replace 20 percent of today's diesel fuel over this entire country.
I am a Senator from a corn- and soybean-producing State. Is ethanol production an economic boon to many Minnesota farmers? Yes; it is. I hope it will continue to raise market prices for these agricultural commodities, which will reduce the need for and the amount of taxpayer subsidies. However, I would not stand on the floor of the Senate today and advocate ethanol as an alternative fuel for the entire country if I did not believe--if I were not certain--that it would be good for the entire country.
It will take the decade which this bill uses to increase ethanol production to an amount where it can be used as a consistent 10 percent blend nationwide. That is what Minnesota uses today. That would be 10 percent less oil-based gasoline. And that is twice as much oil alternative as ANWR would produce at that point in time.
It will take another decade to increase ethanol production to replace up to 50 percent of our current gasoline consumption. We should hope we have that long as a nation before a significant increase in the price of gasoline or a lack of supply causes a serious disruption in our economy and in our lives. If, however, at that point in time we are using 50 percent less gasoline, we will have a real alternative fuel at a lower cost and a more reliable supply based right here in the United States.
If we don't undertake this transition, then we will have nothing--nothing that we can do. That is what the amendment that strips this bill of any fuel alternative will leave this country in the future--nothing, no alternative. That is a very bleak future.
Thank you. I yield the floor.
(The remarks of Mr. McConnell and Mrs. FEINSTEIN pertaining to the introduction of S. 2194 are located in today's RECORD under ``Statements on Introduced Bills and Joint Resolutions.'')
Mrs. FEINSTEIN. I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. NELSON of Florida). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. NELSON of Florida. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. BINGAMAN). Without objection, it is so ordered.
Mr. NELSON of Florida. Mr. President, may I be recognized as in morning business?
The PRESIDING OFFICER. Without objection, it is so ordered. The Senator from Florida.
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