Despite energy abundance, US should curb oil dependence: DOE's Moniz

Washington (Platts)--24Oct2013/603 pm EDT/2203 GMT

America's abundance of oil and natural gas should not distract policymakers from the long-term goal of reducing our total dependence on oil, especially in the transportation sector, Energy Secretary Ernest Moniz said Thursday.

Moniz said increasing vehicle efficiency and supporting the development and deployment of alternative fuels must remain a focus of US energy policy.

"A key political and policy objective has to be continuing reduction in our oil dependence," Moniz said in a speech at the Center for Strategic and International Studies. "So even as we produce more oil, we still need to be focused on reducing our oil dependence."

Moniz, speaking about the changes in the energy landscape in the 40 years since the Arab oil embargo, said increased US energy production does not insulate the country from global oil disruptions today.

"The geopolitics of natural resources and the supply-demand balance does remain an important security concern," he said. "It would be a misconception to think because of our increased domestic production that somehow we have become free of the global oil market, the global oil price and global oil price volatility."

Moniz said that the development of next-generation biofuels as well as electric vehicles remains a priority for the DOE and that progress in both areas is greater than many suspect.

"We continue to push on the technology pathway toward the next generation biofuels," Moniz said.

He said that biorefinery projects funded through the DOE and other basic research efforts lead him to believe that cellulosic ethanol could become commercially available for between $2/gal and $2.15/gal toward the end of this decade. Cellulosic fuels are made from non-food sources, such as corn stover, grasses and municipal waste.

Moniz noted that the cellulosic price is not on a gasoline equivalent basis. Biofuels have a lower energy density than gasoline.

"So, with the energy density, we still have a way to go, but we're getting into the ballpark ... of being able to provide biofuels at a reasonably competitive cost," he said.

Moniz said that recent announcements of the availability of bi-fuel vehicles in the US, capable of running on both gasoline and natural gas, give new incentive for the development of natural gas-powered transportation.

He also said that advances in battery technology are bringing down the costs of plug-in electric and hybrid vehicles. New business models, such as the one employed by automaker Tesla in marketing high performance electric vehicles rather than trying to crack the broader consumer market, bode well for that technology as well.

"Electrification of vehicles remains something we are strongly committed to and frankly, pretty bullish about," Moniz said. "The cost obviously is still way too high for pure electric vehicles to have large market penetration, but with another reduction by a factor of two, certainly for plug-in hybrids, this will be very interesting.

"We think these technologies are not as far out as people think in terms of becoming material," he said.

--Gary Gentile, gary.gentile@platts.com --Edited by Derek Sands, derek.sands@platts.com

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