DETROIT -- A former Central Intelligence Agency director, speaking in Detroit on Thursday, challenged two prevailing political arguments on energy policy and independence while emphasizing the importance of consumer choice at the fuel pump.
Some experts, lawmakers and analysts favor a "drill baby, drill" approach that targets domestic oil production as the way to achieve energy independence, while others prefer to cut dependence through federal fuel economy standards and other conservation efforts.
But James Woolsey, co-founder of the U.S. Energy Security Council, sees shortcomings with both strategies. The council seeks to diminish "the inordinate strategic importance of oil, which stems from its virtual monopoly over transportation fuel," according to its mission statement.
Woolsey, CIA director from 1993 to 1995, said the Organization of the Petroleum Exporting Countries, which controls 78 percent of the world's prudent oil reserves, can still keep oil prices around $100 a barrel either way.
Woolsey spoke during the Society of Automotive Analysts' "Future Fuels & Powertrains: A Reality Check" event Thursday in suburban Detroit.
Representatives from General Motors, Toyota Motor Corp., Ford Motor Co. and Chrysler Group also outlined their strategic plans for electrified vehicles and compressed natural gas.
Oil manipulation
Woolsey said that even if more oil is produced in America, OPEC would still control the oil market.
"The principal point is not where the oil comes from. The principal point is the price," Woolsey said.
As America cuts back on oil consumption because of CAFE and other conservation efforts, Woolsey said OPEC will simply withhold oil from the market. Instead of shipping 25 percent of the world's oil annually, it could drop output to force prices back up.
In the United States, around 96 percent of cars and trucks today use petroleum-based fuels, according to Daniel Frakes, GM's manager of advanced technology and vehicle fuels policy.
"There is no normal market, the way we think of it, in oil. Oil is run by a cartel," Woolsey said.
More options
The only way to counter oil price manipulation, Woolsey says, is to give American drivers the option to choose between gasoline and other alternatives such as ethanol and methanol.
He said maybe the United States will become as smart as Brazil one day, where ethanol is popular.
"The Brazilians' have something lucky. They have a double growing season for sugar cane and a huge amount of land appropriate for sugar cane, so their ethanol is much cheaper than ours. So when a Brazilian drives into a filling station, he decides if he wants to go to the ethanol pump or the gasoline pump, or half and half. It doesn't matter," Woolsey said.
"He fills his car up with what he wants. He affects the market. It's a regular market. Consumers buy what they want and that affects price and demand."
Ford maintains flexibility in product development and manufacturing to handle potential shifts in market demand, said John Viera, Ford's global director of sustainability and vehicle environmental matters.
Viera pointed out that the Focus compact is primarily a diesel vehicle in Europe; gas powered in North America, and ethanol based in Brazil.
"Rather then trying to guess and be right, I want to be flexible," Viera said.
Rethinking energy policy
One of the challenges for automakers is trying to optimize vehicles with competing regulatory requirements on tailpipe emissions and fuel economy, Viera said.
Viera said he favors a comprehensive energy policy and cited an example:
"If I take a flex-fuel vehicle that runs on E85 and gasoline. One of the big challenges that we have is that if we're trying to optimize our engines to run on two different fuels for fuel economy, … trying to deliver that same vehicle with two different fuels to meet the emissions requirements sometimes is a disconnect."
