Executive Summary

America's oil dependence endangers our national security. America consumes a quarter of the world's total oil production, but has just 3 percent of its known reserves. We import more than half of our oil from some of the most unstable regions of the world. At the root of our heavy reliance on oil imports is the inefficiency of our cars, sport utility vehicles (SUVs), and other passenger vehicles.

This report presents practical solutions we can adopt now, using American technology and know-how, to cut the oil needed to power America's cars and light trucks. We can cut that oil demand in half by 2020 -- and provide American consumers with the best and safest driving choices in the world -- by building better vehicles and making better fuels. We can have better, cleaner transportation for less money while strengthening our safety, security, and freedom.

Fixing a Dangerous Addiction
The events of September 11 highlight the danger in continuing to turn a blind eye to our oil dependence. While oil prices are down for the moment, the instability of the Middle East makes for a situation that could change at any moment. New suppliers like Russia and the Caspian region are hardly more stable.

Sixty-five percent of the world's known reserves lie beneath the Persian Gulf states. That stark fact makes a supply-side strategy based on domestic drilling alone into a recipe for continued dependence on these unstable regions. Drilling in the Arctic National Wildlife Refuge would increase world reserves by less than one-third of one percent. To be sure, we can increase production from existing oil fields. But no matter how much we try to drill for new oil at home, Persian Gulf producers will gain more and more of the American oil market -- and limit our ability to conduct foreign policy in the best interests of the American people.

Our oil dependence threatens our environmental security as well. Smog and other toxic air pollutants, constant pressure to drill in pristine wilderness, and growing emissions of the heat-trapping global warming pollutant, carbon dioxide (CO2), all are effects tied directly to the amount of oil we burn.

The best way to turn that around is to reduce our reliance on imported oil by building better cars and making better fuels. The fastest, cheapest, most secure solution is a comprehensive energy security strategy combining near-term fuel-economy improvements in our cars and trucks with longer-term initiatives to develop the fuels of the future.

A Comprehensive Strategy for Cost-Effective Savings
This report offers a five-step solution to make better vehicles and better fuels that reduce our oil dependence with no reduction in safety, performance, or choice. Together, these measures could cut passenger vehicle oil use by nearly a quarter by 2012, by half in 2020, and by three-quarters over the next three decades, compared with business-as-usual projections. That translates into big savings at the gas pump: a person buying a 40 mpg car in 2012 would save a net of $2,200 over the life of the vehicle. Total consumer savings from these policies would equal nearly $13 billion per year in 2012, and almost $30 billion by 2020.

Our action plan to curb oil dependence includes:

• Improving the fuel economy of new vehicles powered by gasoline-engine technology. Congress should ramp up standards for the combined fleet of cars and light trucks in regular steps to 40 mpg by 2012 and 55 mpg in 2020.
  
  
• Mass-producing gasoline-electric hybrid vehicles, which get double the mileage of today's cars. Toyota and Honda already have hybrids on the road, and more are coming. Lawmakers should provide consumer tax credits to support the transition to new technology.
  
  
• Significantly expanding the use of renewable, non-petroleum fuels, such as ethanol made from crop wastes, by steadily increasing requirements for "renewable content" in gasoline.
  
  
• Putting hydrogen-powered fuel-cell vehicles onto the road using incentives and requirements to ramp up production to 100,000 vehicles by 2010 and 2.5 million by 2020. These vehicles will use one-third the energy of today's cars (none of it from oil) and produce near-zero harmful emissions.
  
  
• Encouraging "smart growth" instead of suburban sprawl, to increase our transportation choices and make communities more livable with less driving.

The first step alone -- raising fuel economy standards -- would save nearly 4 billion barrels of oil over the next dozen years. By 2012, we could save nearly 2 million barrels every day -- a savings of 18 percent below business-as-usual projections. That is slightly more oil than we imported from Saudi Arabia last year, and three times our imports from Iraq. By 2020, savings would grow to nearly 5 million barrels per day, almost twice as much as total current imports from the Persian Gulf.

Unlike the Freedom Car fuel-cell research exercise recently announced by the U.S. Department of Energy, this report offers a real plan for putting better cars and better fuels on the road before it's too late. Our plan calls for introducing vastly more efficient conventional and hybrid technologies that will significantly reduce oil demand during this decade, and putting real fuel-cell vehicles on the road within this decade.

These measures would cut heat-trapping CO2 and other global warming emissions by more than 400 million metric tons in 2012, and by almost a billion metric tons in 2020. By 2020 we could avoid 240,000 tons of cancer-causing pollution and more than 500,000 tons worth of smog-forming emissions each year.

The High Cost of Oil Imports
American drivers used more than 120 billion gallons of gasoline in 2000, costing $186 billion. If fuel economy does not improve, passenger-vehicle fuel use will increase more than 50 percent by 2020, to almost 190 billion gallons per year. Without serious action, the share of that oil that is imported will grow from one-half to nearly two-thirds.

The United States spent $106 billion -- about $380 per person -- importing crude oil and petroleum products in 2000. By 2020, oil-import spending is expected to hit $160 billion, according to the U.S. Department of Energy, an increase of more than 50 percent.

This results in a huge transfer of wealth to oil exporting nations. Over the past 30 years, U.S. consumers have transferred more than a trillion dollars to oil producing countries. And each of the three major oil price spikes of the last 30 years was followed by a recession in the United States.

The Environmental Price Tag
The environmental consequences of our oil demand are well known: cars and passenger trucks are the second largest U.S. source of carbon dioxide pollution -- emitting 1.3 billion tons of heat-trapping gases in 2000. Emissions of smog- and cancer-causing air pollutants are also a major problem, especially in urban areas.

Our oil addiction also creates constant pressure to drill unspoiled wilderness areas like the Arctic National Wildlife Refuge, Utah's Redrock canyon country, and lands in the vicinity of Yellowstone National Park. Most federal lands with potential oil resources are already available to oil exploration and development; in fact, federal lands account for 29 percent of U.S. crude oil production. Meanwhile oil spills pose a constant threat to the land, water, wildlife, and coastal livelihoods. Almost 1.5 million gallons of oil were spilled into U.S. waters in 2000.

We Can Do It
A safer, more secure energy future is well within the reach of America's industrial prowess. Studies by the National Academy of Sciences, the Union of Concerned Scientists, and other independent analysts have all demonstrated that a 40-mpg fleet average is achievable within a decade or so, using technology that is available today.

America has already proven that such strides are possible. Fuel economy for new passenger cars nearly doubled between 1975 -- when standards were first adopted -- and their peak in 1988. Fuel economy for new light trucks increased by 50 percent. But the rules haven't changed since 1985. Average mileage of our new cars and trucks today is at its lowest level in 20 years.

And today we have the know-how to turn crop wastes into fuel, replace the internal combustion engine with emission-free fuel cells, and practice smart-growth development that increases our transportation choices.

Together these proposals are the best way to curb our reliance on Middle East oil. We can regain control over our future by providing American consumers with the safest and best performing passengers vehicles in the world. This is the road to increase our national security, strengthen our economy, and protect our environment.

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