No “one-size-fits-all” solution for high gasoline prices

At the Senate Energy and Natural Resources Committee hearing on reducing gasoline demand, Chairman Jeff Bingaman (D-N.M.) said that fuel prices are harming the American economy and causing serious problems for many consumers. He said that there are a number of ways consumers can reduce their demand for gasoline and save money for other necessary expenses, such as increasing fuel economy and making advances in battery development to enable quicker electrification in the transportation system. Steven Chalk, the Deputy Assistant Energy Secretary for Renewable Energy, said that reducing petroleum dependency can help “improve national prosperity, energy security, and environmental stewardship.” He said that new technologies must meet criteria for cost competitiveness, performance and reliability.

Chalk explained that developing and introducing high-efficiency combustion engines in conventional, hybrid electric and plug-in hybrid electric vehicles is the most effective way to improve fuel economy in the near future. Chalk also explained that there are more than six million flexible-fuel vehicles on American roads that can utilize ethanol blended gasoline up to 85 percent ethanol and 15 percent gasoline, yet those six million are only 2.7 percent of the 222 million total cars.

David Greene, a corporate fellow at the Center of Transportation Analysis, said that there are many things consumers can do themselves to improve the fuel economy of their vehicles, and there are also things Congress can do to help. Greene explained that the driver can have the greatest influence on a vehicle’s fuel economy, saying that typical drivers can increase their miles per gallon by about ten percent by curbing aggressive driving, observing speed limits, removing unnecessary weight from cargo compartments, planning ahead, and avoiding unnecessary idling. Greene also said that gasoline prices at $4/gallon provides a strong economic incentive to increase fuel economy for both car makers and car buyers, and by extending and simplifying incentives for hybrid vehicles new vehicle fuel economy would be raised and the transition to more efficient electric drive systems would be encouraged.

Steve Winkelman, the director of transportation and adaptation programs at the Center for Clean Air Policy (CCAP), explained that CCAP helps governments at all levels design and implement energy and climate policy solutions that balance economic and environmental concerns. He also explained that with limited travel choices, Americans are “left vulnerable” to high fuel prices and are “hit hard in the pocketbook” while the national economy suffers. Winkelman said that smart growth policies that encourage infill and transit-oriented development will be critical to reducing future gasoline demand, because “what we build now will last for a century” -- and will determine whether the next generation will have viable alternatives to paying high oil prices. However, Winkelman said that there is no “one-size-fits-all approach,” and that solutions must be developed locally and not dictated by the federal government.

IMF offers mixed outlook on global economy

The Brookings Institution held a discussion this afternoon regarding perspectives on the global economic landscape. The panel addressed concerns over the declining value of the dollar, rising inflation, the role of the International Monetary Fund (IMF) and what these factors mean for the future of the global economy.

According to John Lipsky, first deputy managing director of the IMF said that the Fund predicts global economic growth will drop an entire percentage point to 4 percent this upcoming year. In addition, Lipsky stated that a primary concern for the upcoming year should be increased inflation, particularly in developing economies.

Lipsky also expressed concern over the continued decline in the value of the dollar. While the United States has seen increased exports as a result of this decline, the drop has been one of the largest sustained episodes of dollar decline in the last 50 years. However, Lipsky said that despite drops in the value of the dollar, he believes it will retain its role as the dominant international currency in the long term, though perhaps sharing it with other powerful currencies like the euro.

Lipsky also predicted an economic slowdown in the EU. He said that this could potentially be more devastating than economic issues in the United States, due to a lack of coordination of financial markets within the EU.

Domenico Lombardi, nonresident senior fellow of the Brookings Institution and president of the Oxford Institute for Economic Policy expressed concern over IMF attempts to regulate currency imbalances. While the organization has been particularly useful with developing economies, Lombardi worries that highly developed nations like the U.S. may be less forthcoming with financial information, and less cooperative with policies and oversight from the Fund.

Bernanke asks congress to do more for the economy

Ben Bernanke, Chairman of the Federal Reserve, testified before the House Financial
Services Committee on monetary policy and the state of the US economy. He stated that
despite rising oil and commodity prices and a mortgage crisis facing the United States,
our economy continues to grow, though at a subdued pace. These issues all require action from the US congress.

Of particular concern to Bernanke is the effect our economy is having on the job market and
housing sector. He stated that while all sectors have seen a decline in job availability, the construction sector has been particularly hard hit. This problem is made worse by
declining housing starts and a slowdown in the purchase of new homes. Currently, the
unemployment rate in the United States has risen to 5 percent.

Bernanke also addressed concerns over the rising cost of oil. He attributes this rise to an
increased demand from developing nations, as many of these economies have seen large
amounts of growth. This has caused both the global demand for oil and its price to rise. In
addition, Bernanke stated that the long term predictions of available oil supplies are
low, which could mean that higher oil prices will continue to plague Americans at the
pump.

The Chairman concluded by stating that he would like to see government do more to deal with our nation's housing crisis and rising rate of foreclosures. While in this last week the federal reserve authorized more lending to assist both Fannie Mae and Freddie Mac, who control trillions of dollars in the US mortgage market, congress has not done nearly enough to control the effects this crisis has on Americans.

McCain at NAACP

Republican presidential candidate Sen. John McCain discussed education, government spending, and the economy at the National Association for the Advancement of Colored People (NAACP) Conference in Cincinnati, Ohio. In his remarks, McCain said his opponent democratic candidate Sen. Barack Obama “an impressive fellow,” saying Obama has been able to inspire many Americans and that Obama has made historical strides for the United States.

McCain defended school voucher programs, asking where failing schools leave families and children in need of a good education. He said no bureaucracy should deny a child’s right to an education and that Americans are of dangerous schools with unqualified teachers. McCain also proposed aiding study outside of school by putting $500 million towards virtual schools and the expansion of online courses. He noted educational reform has been a goal of the NAACP, saying that despite the best efforts of teachers, blacks are among the most likely to drop out of high school. He criticized Obama’s opposition to educational programs in lower class neighborhoods and Obama’s decision to ignore public support for private school vouchers.

McCain said government spending has increased 60 percent in the last eight years, advocating reduced taxation as a method to ease Americans’ struggles with a hard economy. If elected, McCain told the conference he would double tax breaks for dependents and build 45 new nuclear plants as a method to develop alternative energy sources and to provide Americans 700,000 additional jobs. McCain closed by saying he needs counsel and goodwill from the NAACP to effectively help the United States.

Bush Administartion is diverting attention from failed policies

House Majority Leader Steny Hoyer (Md.) spoke today at his pen and pad briefing about the state of the economy and gas prices. Hoyer said the the economy is in real trouble, and that the policies of the Bush Administration of economic growth have not been realized. Hoyer said that the president’s recent opening up of the outer continental shelf is an “attempt to divert attention from his failed energy policy.”

America is a nation of winners, but winners need good leadership and honest policies and the Bush Administration is not providing that, Hoyer said. Despite the President’s assurances that a second stimulus package is not necessary, Hoyer said he is hopeful that Congress can move forward in a bipartisan way on another stimulus package.

The housing bill that is currently going through Congress is currently being worked on to add in Secretary of the Treasury Henry Paulson’s recommendations for the bill. Hoyer said the House is working with the Administration and hopes to hold hearing this week or next before voting on the legislation.