transportation energy

8/7/2019 Transportation Energy

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Reid L. Jones

Transportation Energy Transition

2010


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Reid L. Jones February, 2010 - 2 -

Table of Contents

Transportation Energy Transition ................................................................................................. 3

Oil in America ........................................................................................................................... 4 Original Domestic Discovery ................................................................................................ 4 Modern Oil Industry Born .................................................................................................. 4 California Oil ....................................................................................................................... 4 Standard Oil ........................................................................................................................ 4 U.S. Oil Production, Imports, Exports & Consumption ....................................................... 6 U.S. Peak Oil ....................................................................................................................... 7 U.S. Oil Prices ................................................................................................................... 10 Transfer of Wealth to the Persian Gulf and OPEC ........................................................... 12 And, the Transfer of Wealth Continues & Will Continue for Many Years ....................... 13 Energy Outlook (Crude Oil) .............................................................................................. 14 Indirect U.S. Oil Costs from the Persian Gulf and OPEC ................................................. 15

U.S. Transportation Sector ................................................................................................. 18 Overview ............................................................................................................................. 18 Heavy-Duty Trucks .......................................................................................................... 23 Diesel Retail Price Volatility ............................................................................................ 26 Diesel Use and Cost by Sector ............................................................................................ 27

Energy Outlook (Diesel) .................................................................................................... 29 Oil and the Environment ..................................................................................................... 31

National Annual Diesel Fine Particle Health Impacts .................................................... 32 EPA Diesel Emission Regulations ..................................................................................... 33

Current U.S. Economic Crisis ........................................................................................... 34


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Transportation Energy Transition

The transformation of energy use, its technologies, and fuels from:

Solid and liquids sources to gaseous sources Dirty fuels to clean fuels Largely carbon-based to largely hydrogen-based fuels Chemically complex to chemically simple Inefficient technologies to highly efficient technologies Nineteenth and twentieth century energy systems to twenty first century energy systems Low-tech dumb systems to high-tech smart systems Finite fuels to virtually infinite fuels

*Robert A. Hefner III, The GHK Company

Low to No Carbon Age, 2010 - Future

Natural Gas, Wind, Solar, Hydrogen, Fusion

Low to No Carbon Age, 1850 - Present

Natural Gas, Wind, Solar, Hydrogen, Fusion

Medium Carbon Age, 1800 - Present

Whale and Petroleum Oil

High Carbon Age, 1500 - Present

Wood, Coal, Grasses, Dung


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Oil in America

Original domestic discovery

1859 by "Colonel" Edwin Drake in Titusville, Pennsylvania.

Modern Oil Industry Born

"Black Gold" erupted from a well near Beaumont, Texas to a height greater than 150 feet(nearly 50 meters) on January 10th, 1901. It was not brought under control for 9 days,losing one million barrels of oil in the process. A device now called a "Christmas Tree" wasinvented on the spot to control the flow of oil. Christmas trees are now commonplace in theindustry to prevent just such an occurrence. An estimated 850,000 barrels of oil was lost.By today's standards, that's a loss of about $17,000,000. Of course, given the huge amountof oil which glutted the market after this discovery, the price of oil dropped from $2 to $.03per barrel.

California Oil

Signal Hill was the biggest field the Southern California region had ever seen. In 1923,Signal Hill produced 244,000 barrels, alongside Huntington Beach (discovered in 1920) at113,000 and Santa Fe (1921) at 32,000. This made California the nation's number-oneproducing state, and in 1923, California was the source of one-quarter of the world's entireoutput of oil! Even so, fears of shortage were still very much in the air. "The supply of crude petroleum in this country is being rapidly depleted," the Federal Trade Commissionwarned in 1923. But in that same year, American crude oil production exceeded domesticdemand for the first time in a decade.

Standard Oil

Standard Oil was a predominant American integrated oil producing, transporting,refining, and marketing company. Established in 1870 as an Ohio corporation, it was thelargest oil refiner in the world and operated as a major company trust and was one of theworld's first and largest multinational corporations until it was broken up by the UnitedStates Supreme Court in 1911. John D. Rockefeller was a founder, chairman and majorshareholder, and the compa billionaire and eventually the richest man in modern history.Major successor companies after breakup in 1911:

Standard Oil of New Jersey - renamed Exxon, now part of ExxonMobil. Standard Oil of New York - merged with Vacuum renamed Mobil, now part of

ExxonMobil. Standard Oil of California renamed Chevron, became ChevronTexaco, but returned

to Chevron. Standard Oil of Indiana - renamed Amoco (American Oil Co.) now part of BP.
http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/1870http://en.wikipedia.org/wiki/Ohiohttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Supreme_Court_of_the_United_Stateshttp://en.wikipedia.org/wiki/John_D._Rockefellerhttp://en.wikipedia.org/wiki/Standard_Oil_of_New_Jerseyhttp://en.wikipedia.org/wiki/Standard_Oil_of_New_Jerseyhttp://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/ExxonMobilhttp://en.wikipedia.org/wiki/Standard_Oil_of_New_Yorkhttp://en.wikipedia.org/wiki/Standard_Oil_of_New_Yorkhttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/ExxonMobilhttp://en.wikipedia.org/wiki/Standard_Oil_of_Californiahttp://en.wikipedia.org/wiki/Standard_Oil_of_Californiahttp://en.wikipedia.org/wiki/Chevron_Corporationhttp://en.wikipedia.org/wiki/ChevronTexacohttp://en.wikipedia.org/wiki/Standard_Oil_of_Indianahttp://en.wikipedia.org/wiki/Standard_Oil_of_Indianahttp://en.wikipedia.org/wiki/Amocohttp://en.wikipedia.org/wiki/BPhttp://en.wikipedia.org/wiki/BPhttp://en.wikipedia.org/wiki/Amocohttp://en.wikipedia.org/wiki/Standard_Oil_of_Indianahttp://en.wikipedia.org/wiki/ChevronTexacohttp://en.wikipedia.org/wiki/Chevron_Corporationhttp://en.wikipedia.org/wiki/Standard_Oil_of_Californiahttp://en.wikipedia.org/wiki/ExxonMobilhttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Standard_Oil_of_New_Yorkhttp://en.wikipedia.org/wiki/ExxonMobilhttp://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Standard_Oil_of_New_Jerseyhttp://en.wikipedia.org/wiki/John_D._Rockefellerhttp://en.wikipedia.org/wiki/Supreme_Court_of_the_United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Ohiohttp://en.wikipedia.org/wiki/1870http://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/United_States


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Standard's Atlantic and the independent company Richfield merged to form AtlanticRichfield or ARCO, now part of BP. Atlantic operations were spun off and bought bySunoco.

Standard Oil of Kentucky was acquired by Standard Oil of California - currentlyChevron.

Continental Oil Company or Conoco now part of ConocoPhillips.

Standard Oil of Ohio or Sohio, acquired by BP in 1987. The Ohio Oil Company or The Ohio, and marketed gasoline under the Marathonname. The company is now known as Marathon Oil Company, and was often a rivalwith the in-state Standard spinoff, Sohio.
http://en.wikipedia.org/wiki/Atlantic_Petroleumhttp://en.wikipedia.org/wiki/Atlantic_Petroleumhttp://en.wikipedia.org/wiki/ARCOhttp://en.wikipedia.org/wiki/BPhttp://en.wikipedia.org/wiki/Sunocohttp://en.wikipedia.org/wiki/Standard_Oil_of_Kentuckyhttp://en.wikipedia.org/wiki/Standard_Oil_of_Kentuckyhttp://en.wikipedia.org/wiki/Standard_Oil_of_Californiahttp://en.wikipedia.org/wiki/Chevron_Corporationhttp://en.wikipedia.org/wiki/Continental_Oil_Companyhttp://en.wikipedia.org/wiki/Continental_Oil_Companyhttp://en.wikipedia.org/wiki/Conocohttp://en.wikipedia.org/wiki/ConocoPhillipshttp://en.wikipedia.org/wiki/Standard_Oil_of_Ohiohttp://en.wikipedia.org/wiki/Standard_Oil_of_Ohiohttp://en.wikipedia.org/wiki/Sohiohttp://en.wikipedia.org/wiki/BPhttp://en.wikipedia.org/wiki/The_Ohio_Oil_Companyhttp://en.wikipedia.org/wiki/The_Ohio_Oil_Companyhttp://en.wikipedia.org/wiki/Marathon_Oil_Companyhttp://en.wikipedia.org/wiki/Marathon_Oil_Companyhttp://en.wikipedia.org/wiki/The_Ohio_Oil_Companyhttp://en.wikipedia.org/wiki/BPhttp://en.wikipedia.org/wiki/Sohiohttp://en.wikipedia.org/wiki/Standard_Oil_of_Ohiohttp://en.wikipedia.org/wiki/ConocoPhillipshttp://en.wikipedia.org/wiki/Conocohttp://en.wikipedia.org/wiki/Continental_Oil_Companyhttp://en.wikipedia.org/wiki/Chevron_Corporationhttp://en.wikipedia.org/wiki/Standard_Oil_of_Californiahttp://en.wikipedia.org/wiki/Standard_Oil_of_Kentuckyhttp://en.wikipedia.org/wiki/Sunocohttp://en.wikipedia.org/wiki/BPhttp://en.wikipedia.org/wiki/ARCOhttp://en.wikipedia.org/wiki/Atlantic_Petroleum


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U.S. Oil Production, Imports, Exports & Consumption

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World Petroleum Production Per DayOPEC Persian Gulf United States

18% 8%

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World Petroleum Production ShareOPEC Persian Gulf United States

45%

This chart presents world petroleum production per day millions of barrels. In 2008, the Unitproduced per day 6.7 million barrels down from 10 million in 1975; the Persian Gulf producebarrels up from 19.2 million in 1975; and OPEC produced 36.6 million up from 27.5 million United States petroleum production share of world production dropped from 18% in 1975 to

This chart presents world petroleum production share. In 2008, the United States produPersian Gulf produced 30%, and OPEC produced 45% of total world petroleum.


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U.S. Peak Oil

In 1923, California was the source of one-quarter of the world's entire output of oil!Moving forward 50 years, the UnitedStates hit peak oil in 1970 which is thepoint in time when maximum rate of petroleum extraction is reached, afterwhich the rate of production entersterminal decline.

The United States demand for petroleumdid not slow down because of domesticpeak oil; in fact, the U.S. consumed 25%of total world petroleum consumption for

the next several decades.

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Millions bbl / day

U.S. Petroleum Consumption to ProductionConsumption Imports Production

66%

U. S. Peak Oil

This chart presents U.S. petroleum consumption to domestic production in barrels per daydecades, the U.S. consumed at least 25% of world petroleum consumption. During this samproduction went down from 18% of world petroleum production in 1975 to 8% in 2008 reincrease of petroleum imports. In fact, the U.S. imported 66% of petroleum in 2008.


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Millions bbl / year

U.S. Petroleum ImportsOPEC Persian Gulf

This chart shows the amount of barrels of oil per day the U.S. imports from the Persian GulIn 2008 per day, the U.S. imported 6 million bbl from OPEC and 2.4 million bbl from the P

This chart shows the amount of barrels of oil per year the U.S. imports from the Persian GuIn 2008, the U.S. imported 2.2 billion bbl from OPEC and 876 million bbl from the Persian


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U. S. Oil Prices

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Percent of Total

U.S. Petroleum of Total Imports & ExportsImports Exports

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Petroleum ($/bbl)

Oil Price VolatilityNYMEX LS Crude

This chart shows the price of NYMEX oil from 1984 to 2009. In July 2008, the price peakCommentators attributed these price increases to many factors, including reports from the Uof Energy and others showing decline in petroleum reserves, worries over peak oil, Middle E

oil price speculation.

This chart presents total U.S. petroleum imports and exports to total U.S. imports and exposervices) from 1995 to 2008. In 1995, U.S. petroleum exports were 1% of total U.S. expoU.S. petroleum exports were 3% of total U.S. exports. In 1995, U.S. petroleum imports wU.S. imports, and in 2008 U.S. petroleum imports were 18% of total U.S. imports. In 1exports and imports, the U.S. exported $794 billion and imported $890 billion, and in 2exports and imports the U.S. exported $1.8 trillion and imported $2.5 trillion. Of the $2.U.S. imports, $443 billion was for petroleum imports (18%).

$147.30


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Crude oil prices are determined by worldwide supply and demand. On the demand side of the equation, world economic growth is the biggest factor. Growing economies requireenergy, and oil accounts for over 35% of the worlds total energy consumption.

One of the major factors on the supply side is the Organization of the Petroleum ExportingCountries (OPEC), which can have significant influence on prices by setting production

limits on its members, who together produce more than 40% of the worlds crude oil. OPECcount ries have essentially all of the worlds spare oil production capacity, and possessabout two- thirds of the worlds estimated crude oil reserves.

Disruptions in supply caused by natural and political events can also significantly affectprices. When the difference between production capacity and demand is very small, eventhe possibility of a supply disruption can cause oil prices to increase. Rapid and large oilprice increases occurred in response to crude oil shortages caused by the Arab oil embargoin 1973, the Iranian revolution in 1979, the Iran/Iraq war in 1980, and the Persian Gulf conflict in 1990. Hurricanes in the Gulf of Mexico have also caused oil prices to spike.Despite the recent economic downturn, growing demand for energy particularly inChina, India, and other developing countries and efforts by many countries to limitaccess to oil resources in their territories that are relatively easy to develop is projected tolead to rising oil prices over the long term.

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U.S. Petroleum Imports & ExportsImports Exports Balance

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

$443 billion

-$381 billion

This chart shows the amount of U.S. petroleum exports, imports, and balance from 1995 to 22008, the U.S. exported $62 billion of petroleum and imported $443 billion of petroleum (-$3petroleum balance).


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Transfer of Wealth to the Persian Gulf and OPEC

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Thousands of Dollars

U.S. Petroleum Imports Per HourTotal Imports OPEC Persian Gulf

$101 million

$47 million

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Millions of Dollars

U.S. Petroleum Imports Per DayTotal Imports OPEC Persian Gulf

$1.2 billion

This chart shows the amount of dollars per day transferred to the Persian Gulf, OPEC, andcountries from petroleum trade. In 2008 per day, the U.S. transferred $559 million to OPEmillion to the Persian Gulf for petroleum. And, the U.S. transferred $1.2 billion for totimports per day.

This chart shows the amount of dollars per hour transferred to the Persian Gulf, OPEC, andcountries from petroleum trade. In 2008 per hour, the U.S. transferred $47 million to OPmillion to the Persian Gulf for petroleum. And, the U.S. transferred $101 million for toimports per hour. Per minute, U.S. paid $778 thousand to OPEC, $309 thousand to the Pand $1.7 million for total petroleum imports per minute.


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And, the Transfer of Wealth Continues & Will Continue for Many Years...

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Millions of Dollars

U.S. Petroleum Imports Per YearTotal Imports OPEC Persian Gulf

$443 billion

2%

69%

29%

Reserve ShareUnited States OPEC Rest of World

24%

9%67%

Consumption ShareUnited States OPEC Rest of World

This chart shows the amount of dollars per year transferred to the Persian Gulf, OPEC, andcountries from petroleum trade. In 2008 alone, the U.S. transferred $204 billion to OPEbillion to the Persian Gulf for petroleum. The U.S. spent $443 billion on all petroleum impo


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Energy Outlook (Crude Oil)

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$ / bbl

Crude Oil Price OutlookCrude Oil

$95$110

$135$120

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Crude Oil Consumption(4.2% Average Annual Increase 1960-2008)Crude Oil

This chart presents the estimated cost of a barrel of crude oil from 2010 to 2035. Every fiveestimate an increase of $5 per barrel of oil. By 2035, $135 a barrel is estimated for petroleu

This chart presents the estimated U.S. crude oil consumption. U.S. consumption increased 4.2% per year from 1960 to 2008. This projection estimates annual U.S. consumption to4.2% per year from 2010 to 2035. By 2035 the U.S. is estimated to consume 54 million day compared to 2010 consumption of 19 million.


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Indirect U.S. Oil Costs from the Persian Gulf and OPEC

(1990-1991) Persian Gulf War: The cost of the war to the United States was calculated bythe United States Congress to be $61.1 billion. Approximately 35,000 casualties.

(2003-Present) Iraq War: The total cost of the war to the United States is around $850billion and the total cost to the U.S. economy estimated at $3 trillion. Over 1 million totalexcess deaths.

Other factors to take in consideration for energy forecasts include China and Indiaeconomic growth. In 2009, China's GDP grew by 8.7% and India's GDP grew by 6.4%; and,the U.S. GDP fell by 1.3%.

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Crude Oil Import CostCrude Oil Cost

$1.7 trillion

This chart presents the estimated U.S. crude oil cost from 2010 to 2035. Using the estimprice and U.S. consumption, the U.S. will spend $750 billion in 2020, $980 billion in 202trillion in 2035 for crude oil.


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-5%

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Growth Y/Y

GDP GrowthChina GDP Growth US GDP Growth India GDP Growth

8.7%

6.7%

-1.3%

$14.4 trillion

$4.9 trillion

$1.3 trillion

This chart presents China, U.S., and India GDP from 1980 to 2009. In 2009, the only econdid not grow was the U.S. at -1.3%. China grew at 8.7% and India grew at 6.7%.

This chart presents China, U.S., and India GDP from 1960 to 2009. In 2009, U.S. GDP wtrillion, China $4.9 trillion, and India $1.3 trillion.


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Millions of People

PopulationUS India China

China is home to the most people in the world with 1.34 billion (19.64% of total population2nd with 1.18 billion (17.3%); and the U.S. is 3rd with 308 million (4.5%).


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U.S. Transportation Sector

Overview

Transportation accounts for 28% of total U.S. energy consumption. Nearly all of theenergy consumed in this sector is petroleum at 95%, with small amounts of renewable

fuels (3%) and natural gas (2%).

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U.S. Transportation of Total Petroleum ConsumptionTransportation Consumption Total Consumption

This chart presents U.S. petroleum used for transportation compared to total U.S.consumption. There is a direct correlation between transportation petroleum consumppetroleum consumption.


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U.S. Transportation of Total Petroleum ConsumptionTransportation of Total Consumption

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U.S. Transportation ConsumptionTransportation OPEC Persian Gulf

This chart presents U.S. petroleum used for transportation as a percentage of total U.S. consumption. In 2008, U.S. transportation consumed 69% of total petroleum consumed in

This chart presents U.S. consumption of barrels of petroleum per year in the transportation chart compares U.S. transportation petroleum consumed from OPEC and the Persian Gulfimports to total U.S. transportation petroleum consumption. In 2008, the U.S. transportatconsumed 1.5 billion OPEC barrels of petroleum and 593 million Persian Gulf barrels of pe


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Light vehicles consume 76% of the energy used bythe transportation sector on-road. Heavy truckscomprise the majority of the remaining quarter,with medium trucks and buses consuming arelatively small fraction.

Class 8 trucks comprise only 42% of the heavy andmedium truck fleet, but they account for 78% of the fuel consumed by medium and heavy trucks.Class 8 trucks carry the largest loads, whichrequire the greatest energy expenditure per mile.Additionally, class 8 trucks, on average, tend totravel the longest distance: nearly 100,000 milesannually.

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Millions of Dollars

U.S. Transportation Petroleum CostTransportation OPEC Persian Gulf

$458 billion

This chart presents U.S. transportation petroleum cost comparing total cost of petroleumtransportation to the cost of Persian Gulf and OPEC petroleum imports for transportation. the U.S. spent $458 billion for transportation petroleum and transferred $139 billion to O$55 billion to the Persian Gulf just for transportation petroleum. Per day, foreign countrieseconomies received $1.3 billion; OPEC received $381 million; and the Persian Gulf receivfor U.S. transportation petroleum consumption.


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Sales of heavy-trucks have been thehardest hit in the recent economic crisis.Beginning in 2007, heavy-truck salesplummeted: Total sales of Class 8 heavy-trucks in 2007 were less than half of theprevious year. Class 7 heavy-trucks

experienced a less dramatic, but stillsharp, decline. Sales of heavy-trucks,medium-truck sales continued to increaseslightly in 2007 from their 2006 volumes,but declined drastically beginning in2008. Class 5 trucks appear to be anexception, but 2008 sales are still notablylow compared to the prior three years.The sales volume in 2004 - the yearagainst which the five-year comparison is

made - is unusually low, making the five-year change appear optimistic. Class 8 trucksare the largest trucks (GVW > 33,000 lbs). The major manufacturers of these trucks havebeen consistent for the past five years.


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This chart presents Class 1 through Class 8 diesel truck sales to total Class 1 through Classfrom 2004 to 2008. In 2008, 99.7% of heavy- duty trucks were diesel trucks.


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Heavy-Duty Trucks

Heavy-duty long-haul trucks currentlyconsume about 10% of the U.S. oil.While heavy-duty vehicles make uponly 4% of the vehicles on the road,

they account for more than 20% of thefuel consumed in the U.S. BecauseClass 8 heavy trucks have a high per-vehicle fuel use, rapid fleet turnoversand strong market incentives toimplement new efficiency technologies,RD&D activities have very high returnon investments for both the truckoperator and the Federal Government.

The heavy-duty truck fleets turns overtwice as fast as the light-dutyautomotive fleet, with the trucks withthe highest annual use (Class 8 long-haul) turning over in about threeyears. These newest trucks travelbetween 150,000 and 200,000 miles peryear, making their energy demand asignificant portion of the totalcommercial truck fuel use. In fact 50%of the trucks in the Class 8 segmentuse 80% of the fuel.

Truck fuel cost is a key driver for adopting new technology. The lifetime fuel cost for anaverage passenger car is similar to the vehicle's original purchase price. This is in greatcontrast to the Class 8 truck, where lifetime fuel costs are around five times that of theoriginal purchase price for the vehicle. Fuel is often the number one expense for truckfleets: annual fuel cost for Class 8 long-haul trucks can be in the range of $70,000 to$125,000. Because fleets operate on razor thin 1-2% profit margins, increased truck fuel

economy increases the company's profits, and dramatically improves their chances of survival in tough business climates. For example, a 20% improvement in fuel economycan save $14,000 to $25,000 per year. With these large annual savings, paybacks forenergy efficient technologies in Class 8 trucks can often be less than new technologies inpassenger vehicles.


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The return on investment on the Federal government's funding of heavy vehicle researchhas been excellent. The Federal return on investment is greater than 60 to 1 ($7.7 billionin fuel savings from $125 million in research funding) for technologies developed fromFederal research between 1999 and 2007. This dramatic return on Federal investmentresulted in a national payback of approximately two months. In addition, because of thedirect relationship between fuel saved and greenhouse gases avoided, these investmentsresult in significant greenhouse gas emissions reductions of 25 million metric tons of CO 2.Vehicle operators have a negative cost of avoiding greenhouse gases: they save about $256for each ton of CO 2 reduced.

Implementing energy efficient technologies for heavy vehicles will have a significantimpact on the nation's petroleum consumption. According to the DOE Energy InformationAdministration's Annual Energy Outlook, U.S. heavy truck fuel consumption will increase

23% between 2009 and 2020 (because of economic growth drivers for freighttransportation), while fuel use of light-duty vehicles will increase only 1% over the sameperiod (because of corporate average fuel economy regulations and other factors drivinglight-duty vehicle fuel efficiency gains). This will make heavy trucks a more significantportion of the total transportation fuel use picture, and will mean that heavy truck fuelefficiency will be even more important in the future.

Class 8 Trucks Cars

Vehicle Cost $110,000 $30,000Fuel Cost $533,000 $25,000

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Total Cost of Ownership

Relative Fuel and Vehicle Cost

800,000 miles at $4.00/gallon

This chart presents the relative fuel and vehicle cost for Class 8 trucks and cars. Average Ccost $110,000 and total cost for diesel fuel over a trucks life-span (7-10 years) is over $$4.00 / gallon.


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Trucking is critical to the domestic economy. Trucks haul 69 percent of all freighttonnage, and collect 84 cents of every dollar spent on domestic freight transportation.There are almost 9 million people in trucking-related jobs, including over 3 million truckdrivers. Many of these drivers are not part of large fleets, but are independent owner-operators (87% of fleets operate less than 6 trucks). About 15% of trucking jobs are inmanufacturing in plants across North America. Lastly, most trucks used in the U.S. are

designed for the North American market, in contrast to the light-duty market. At present,there is very little competition from imported vehicles because of differing regulations andcustomer needs.

A critical issue with regard to truck fuelefficiency is the metric used to measure it.Miles per gallon is the most commonmeasure for fuel economy: it is very commonfor light-duty vehicles. When measuringthe fuel economy of heavy duty trucks it is amore meaningful measure to consider howmuch freight is moved per gallon of fuel.

This fuel efficiency metric is known as"freight efficiency" and is most commonlyexpressed on a weight basis (ton miles pergallon). Freight efficiency is a superiormetric because it recognizes thecontribution of "avoided trips" to fuelsavings (more freight per vehicle meansfewer vehicles overall, typically resulting in


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fuel saved). Some sample freight efficiencies (in ton miles per gallon) are shown in thefigure. Note than a light-duty truck, despite its significantly higher miles per gallon thana Class 8 truck, achieves much lower freight efficiency because of its limited cargo capacityrelative to the Class 8 truck. Heavy-duty long-haul trucks currently consume about 10%of the U.S. oil. While heavy-duty vehicles make up only 4% of the vehicles on the road,they account for more than 20% of the fuel consumed in the U.S.

Diesel Retail Price Volatility

Since September 2004, the price of diesel fuel has beengenerally higher than the price of regular gasoline all yearround for several reasons. Worldwide demand for dieselfuel and other distillate fuel oils has been increasingsteadily, with strong demand in China, Europe, and theUnited States, putting more pressure on the tight globalrefining capacity. In the United States, the transition toultra-low sulfur diesel (ULSD) fuel has affected diesel fuelproduction and distribution costs. Also, the Federal excisetax on diesel fuel is 6 higher per gallon (24.4 per gallon)than the tax on gasoline.

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R

etail Sales (cents / gallon)

U.S. Diesel Average Retail Price Volatility

Diesel Price $4.71/gallon

This chart presents the retail price of diesel from 1994 to 2009. When crude oil hits $147.30 per barrel in July 2008, the U.S. retail price of diesel hit its peak at $4.71/gallon Uand $4.96/gallon in California.


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Diesel Use and Cost by Sector

0

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illions of Gallons

U.S. Diesel ConsumptionOn-Highway Farm Off-Highway Military

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$1.11 $1.24 $1.20 $1.04 $1.12 $1.49 $1.40 $1.32 $1.51 $1.81 $2.40 $2.71 $2.89 $3.80

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Millions of Dollars

U.S. Diesel CostOn-Highway Farm Off-Highway Military

This chart presents the amount of diesel gallons used for on-highway, farm, off-highway, anIn 2008, on-highway used the most diesel gallons at 38 billion.

This chart presents the annual cost of diesel fuel for on-highway, farm, off-highway, andfrom 1995 to 2008. In 2008, the on-highway sector spent $144 billion on diesel fuel.

$144 billion


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0

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Millions of Dollars & Gallons

U.S. Diesel Cost & ConsumptionCost Consumption

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Millions of Dollars

Heavy-Duty Trucks Imports Per DayTotal Persian Gulf OPEC

$121 Million

This chart presents the cost of petroleum imports consumed by heavy-duty trucks per dayper day, the U.S. heavy-duty trucks were responsible for $121 million in total petroleum immillion in OPEC imports; and $22 million in Persian Gulf petroleum imports. Per hour, for total petroleum imports; $3 million for OPEC imports; and $1 million for Persian Gulf

This chart compares U.S. diesel cost to consumption. As diesel consumption goes down, not follow path. Instead in 2008, as diesel consumption went down 40 billion in 2007 toin 2008 diesel cost went up $115 billion (average $2.89/gallon) to $144 billion in 20$3.80/gallon).


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Energy Outlook (Diesel)

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$10,000

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Millions of Dollars

Heavy-Duty Trucks Imports Per YearTotal Persian Gulf OPEC

$44 billion

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cents / gallon

Diesel Retail Price OutlookDiesel $4-plus/gallon

This chart presents the cost of petroleum imports consumed by heavy-duty trucks per yeper year, the U.S. heavy-duty trucks were responsible for $44 billion in total petroleum imbillion in OPEC petroleum imports; and $8 billion in Persian Gulf petroleum imports.

This chart presents the estimated retail price of diesel in the United States from 2010 to 22015, experts estimate the price to be higher than $3.00/gallon. And by 2035, the price of gallon will be over $4.00.


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0

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U.S. On-Highway Diesel Consumption(Average 3% Increase 1995-2008)Diesel

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Millions of Dollars

U.S. On-Highway Diesel CostDiesel

$326 billion

This chart presents the estimated U.S. on-highway diesel consumption from 2010 to 2035.to 2008, on-highway increased consumption on average 3% annually. Estimating a 3%consumption growth, on-highway will consume 51 billion gallons in 2020 and 79 billiondiesel in 2035.

This chart presents the estimated U.S. diesel cost from 2010 to 2035. Using the estimatprice and U.S. consumption, the U.S. on-highway will spend $178 billion in 2020, $22025, and $326 billion in 2035 for diesel. In 2008, U.S. on-highway spent $144 billion on

$178 billion


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Oil and the Environment

Petroleum products give off the following emissions when they are burned as fuel:

Carbon dioxide (CO 2) Carbon monoxide (CO)

Sulfur dioxide (SO 2) Nitrogen oxides (NO X) and Volatile Organic Compounds (VOC) Particulate matter (PM) Lead and various air toxics such as benzene, formaldehyde, acetaldehyde, and 1,3-

butadiene may be emitted when some types of petroleum are burned

Global Warming Potential:

Carbon dioxide (CO 2) - has an atmosphericlifetime of 10,000-plus years.

Methane - has an atmospheric lifetime of 12 - 15 years.

Nitrogen oxide - has an atmospheric

lifetime of 114 years.Nearly all of these byproducts have negativeimpacts on the environment and humanhealth:

Carbon dioxide is a greenhouse gas and asource of global warming.


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SO2 causes acid rain, which is harmful to plants and to animals that live in water,and it worsens or causes respiratory illnesses and heart diseases, particularly inchildren and the elderly.

NOX and VOCs contribute to ground-level ozone, which irritates and damages thelungs.

PM results in hazy conditions in cites and scenic areas, and, along with ozone,

contributes to asthma and chronic bronchitis, especially in children and the elderly.Very small, or fine PM is also thought to cause emphysema and lung cancer. Lead can have severe health impacts, especially for children, and air toxics are known

or probable carcinogens.

Reducing diesel fine particleemissions 50% by 2010, 75% by2015, and 85% by 2020 would save100,000 lives between now and2030.

Fine particle pollution from dieselsshortens the lives of 21,000 peopleeach year. This includes 3,000early deaths from lung cancer.

400,000 people suffer from asthmaattacks and 27,000 from heartattacks due to fine particles fromdiesel vehicles.

Health damages from diesel fineparticles will total $139 billion in2010.

Diesel exhaust poses a cancer risk that is 7.5 times higher than the combined totalcancer risk from all other air toxics.

Residents from more than 2/3 of all U. S. counties face a cancer risk from dieselexhaust greater than 100 deaths per million population. People living in elevenurban counties face diesel cancer risks greater than 1,000 in a million - 1,000 timesthe level EPA says is acceptable.

The risk of lung cancer from diesel exhaust for people living in urban areas is 3 timesthat for those living in rural areas.

National Annual Diesel Fine Particle Health Impacts: Annual Cases in the U. S., 2010

Premature Deaths 21,000Lung Cancer Deaths 3,000Hospital Admissions 15,000Emergency Room Visits for Asthmas 15,000Non-fatal Heart Attacks 27,000Asthma Attacks 410,000Chronic Bronchitis 12,000Work Loss Days 2,400,000


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Restricted Activity Days 14,000,000

Pollutant (tons x 1,000) CO NOx SO2 VOC PM10 PM2.5On-road diesel 1,016 3,395 105 208 113 99Non-road diesel 872 1,600 198 789 169 155Marine diesel 133 1,011 160 32 44 40

Railroad 88 889 47 35 22 20

EPA Diesel Emission Regulations

Medium and heavy truck emissions havedeclined significantly to meet new standardsimposed by EPA. In 2002, PM was regulatedat 0.1 grams per horsepower-hour (g/HP-hr, aunit that describes the grams of pollutant asa result of the use of the energy equivalent of 1 horsepower for one hour); NOx wasregulated at 2.5 g/HP-hr. In 2007, theseregulations were made much more stringent:NOx emissions were cut in half (to 1.2 g/HP-hr) and PM emissions were cut by 90% (to0.01 g/HP-hr). In 2010, NOx is set for 0.20g/bhp-hr, PM 0.01 g/bhp, and NMHC 0.14g/bhp-hr.


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Current U.S. Economic Crisis

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M

illions of Dollars

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U. S. Trade Deficit 1984 - 2008

Exports Imports Balance

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Billions of Dollars

Gross DebtGross Debt

This chart presents the U.S. trade deficit from 1984 to 2008. In 1991 for total exports anthe U.S. exported $578 billion and imported $609 billion (-$31 billion balance), and in 20exports and imports the U.S. exported $1.8 trillion and imported $2.5 trillion (-$695 billion

This chart presents the U.S. gross debt from 1910 to 2014 (est.). After 2009, the U.S. gmore than $12 trillion. And, the 2014 estimated U.S. gross debt will be more than $18 trill

$18.3 trillion

$2.5 trillio


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Unemployment % & Crude Oil $/bbl

Crude Oil & U.S. Unemployment Rate

Crude Oil Unemployment Rate

This chart presents the U.S. unemployment rate from 1970 to 2009. In 2009, U.S. unemhit 10.1%. The highest ever U.S. unemployment rates from 1948-2010 (62 years) were 1983 (10.4%), and 2009 (10.1%).

This chart presents the U.S. unemployment rate and crude oil prices from 1970 to 2009. presents a direct correlation with high crude oil prices and high U.S. unemployment ratesexamples include: In 1981, crude oil hit its highest price ever at an average $31.77 bbl/ye1982 unemployment hitting its highest ever at 10.8%; and in 2008 crude oil hit its highesat an average $94.04 bbl/year and in 2009 unemployment hit 10.1%. Historical data showcrude oil prices rise the next year U.S. unemployment rises.

transportation energy

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