Sunday, January 28, 2007

Wagoner calls for U.S. to focus on alternative fuel

Wednesday, January 17, 2007
Wagoner calls for U.S. to focus on alternative fuel
Sharon Terlep and Bryce G. Hoffman / The Detroit News

DEARBORN -- General Motors Corp. Chairman and CEO Rick Wagoner said Washington should not slack off on efforts to develop alternative energy sources now that oil prices have fallen.

Wagoner pressed the issue during a speech Tuesday night at the Automotive News World Congress in Dearborn, where fuel economy and energy policy were hot topics.

"With the price of oil at its lowest level in 19 months, we run the risk of reverting back to our traditional energy policy," Wagoner said. "That is, relying heavily on the lowest-cost energy available on world markets, including imported oil, without providing adequate support for developing alternative sources.

"I hope oil prices stay low, but I also hope that our nation stays committed to energy security through energy diversity."

Wagoner's comments came after the University of Michigan had earlier in the day released a study showing auto executives and other experts believe gasoline prices and government fuel economy standards will increase dramatically in the next decade.

Also Tuesday at the annual industry event, an outspoken auto supplier executive called for imposing a steep tax on gasoline to help fund the transition to alternative energy sources, especially hydrogen.

Focusing on fuel

Wagoner has made alternative fuel a focal point for GM in recent months. At the North American International Auto Show, GM is showing off a concept plug-in hybrid called the Chevrolet Volt that can travel 40 miles on battery power.

The CEOs of Detroit's Big Three automakers have been pushing the Bush administration to help with efforts to develop alternative fuels such as ethanol-based E85 and biodiesel. The automakers also want federal help in developing batteries sufficient to power vehicles.

Wagoner, along with Ford Motor Co. CEO Alan Mulally and Tom LaSorda, CEO of DaimlerChrysler AG's Chrysler Group, met with Bush in November and pushed him on alternative energy, although they came away with no promises.

Last June, the three CEOs said they would double their production of alternative fuel vehicles by 2010.

The Bush administration, meanwhile, has sought authority to raise fuel economy requirements for passenger cars. The Big Three have strongly opposed efforts by some in Congress to mandate a fuel economy requirement.

"One of the things that government has to do to really promote energy diversity is proactively support the development of alternative fuel technology," Wagoner said. "And incentivize consumers through tax credits, fuel subsidies and so on to adopt these exciting new technologies."

While oil prices have been moderating, and gas prices along with them, a new survey released Tuesday by the University of Michigan Transportation Research Institute predicted that fuel prices and fuel economy standards will rise substantially in coming years.

Gas prices will average slightly more than $4 a gallon by 2015 and just over $5 a gallon by 2020, according to the survey of automakers, suppliers and other experts.

The study also found that Corporate Average Fuel Economy standards for cars are expected to increase to 33 mpg in 2015 and 38 mpg in 2020, a 38 percent jump from today's 27.5 mpg standard. For trucks, CAFE standards are expected to rise to 27 mpg in 2015 and 31 mpg in 2020, a 44 percent increase from 21.6 mpg today.

"Our research reveals surprising agreement among all stakeholders in the automobile industry that fuel prices are on a steep upward trajectory," said U-M researcher Bruce Belzowski.

Supplier speaks out

Touching on many of the same topics Tuesday was Tim Leuliette, chairman and CEO of Plymouth-based auto parts supplier Metaldyne Corp. He has been outspoken on the issue of shifting the nation away from its dependence on oil. In a speech at the world congress, he called for a dramatic increase in the federal gasoline tax, saying the move was needed to fund the nation's transition to a hydrogen economy.

He pointed out that drivers in the United States pay 30 percent to 40 percent of what motorists in other industrialized countries pay at the pump. He advocated raising U.S. gas prices to match those in other developed nations, where consumers pay $5 or more a gallon.

"Gasoline is too cheap in America," Leuliette said.

"When fuel prices are low, there is little interest on Wall Street, Main Street or 1600 Pennsylvania Avenue."

A dramatic hike in gas prices would not only put this issue at the forefront of the national agenda, but provide the cash needed to fund the development of hydrogen fuel cell technology and a hydrogen infrastructure.

He said the federal government has only committed $1.2 billion to fund hydrogen fuel research and development for the next five years -- a figure he said was $800,000 less than it spends in one week on the war in Iraq. His proposed tax on gasoline would rise and fall with oil prices to guarantee stability at the pump and allow automakers to better meet consumer needs.

Other auto industry executives reacted coolly to Leuliette's proposal, but agreed that more needs to be done to develop hydrogen and other alternative powertrain technologies.

"If we're ever going to get there, we better start. That much I agree with," said Don Altermatt, senior manager of diesel engineering for DaimlerChrysler AG.

However, Altermatt said clean diesel is a far more promising near-term option.

National policy needed

"Is there a need for a national energy policy? Absolutely," said Nancy Gioia, director of sustainable mobility technologies and hybrid vehicle programs at Ford. "We have not got the kind of collaboration yet that we need."

While Ford favors a broad approach to new propulsion technologies, Gioia told The Detroit News that hydrogen is one of the most promising long-term solutions -- one that she said will require a national commitment comparable to the one required to put a man on the moon.

At the same time, Gioia pointed out that hydrogen is not a panacea. She said it takes a great deal of energy to extract hydrogen -- energy that might be better utilized by other technologies like plug-in hybrids.

Leuliette has called for a gas tax to fund hydrogen research and development in the past, though never one of this magnitude.

But the veteran auto industry executive said America's dependence on petroleum is a threat to national security, the environment and the economy, and one the nation is running out of time to address.

Leuliette also acknowledged that his proposal would be a hard sell in Washington, but he said it will be a lot harder to develop a national energy policy in the midst of an energy crisis.

"If Nigeria falls, if there is an Iranian crisis, if Venezuela goes off the deep end and we stand in line again for fuel, then it will happen in (a) nanosecond," he told The News. "The longer we wait, the harder the transformation will be -- and the more it will cost."

Moreover, he said the switch from gasoline to hydrogen would also jumpstart the domestic auto industry and revive Detroit.

You can reach Sharon Terlep at (313) 223-4686 or

© Copyright 2007 The Detroit News. All rights reserved.


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