so that the level of outlays would match receipts in each year. Another alternative would be to require that the expenditures from the fund be subject to appropriations. Since the nature of the projects to be supported by the fund are similar in characteristics to other on-going discretionary DOE energy R&D projects, this would not pose any programmatic problems. The attached is in response to a question from Senator Seymour to Secretary Watkins (DOE) at the February 21 hearing on the National Energy Security Act of 1991. (See page 569 of printed hearing #102-5 (pt. 1)). This information was not available at the time the hearing went to press. We have requested $16 million for activities related to alternative fuels utilization in the Transportation Sector. These activities are focused on three main areas: (1) implementation of the Alternative Motor Fuels Act of 1988, (2) engine optimizations, and (3) emissions characterizations. Additionally, in the Solar Energy budget request (under Biofuels Energy Systems Transportation Sector-Biomass Fuels), $44 million ($29 million for DOE and $15 million for USDA) is included for alternative fuels development in three main areas: (1) biochemical conversion, (2) thermochemical conversion, and (3) feedstock development. Furthermore, $84 million is requested in FY 92 for R&D in vehicle propulsion systems, such as gas turbines and fuel cells, and in electric/hybrid vehicle. Appendix II-Additional Material Submitted for the Record Statement of Air Transport Association of America Before the Senate Committee on Energy and Natural Resources Mr. Chairman, the Air Transport Association of America welcomes the opportunity to submit this statement in conjunction with your hearings concerning establishment of a National Energy Policy. ATA member airlines collectively account for approximately 97 percent of the revenue passenger miles flown in the United States and about the same percentage of the freight ton miles. The airlines, having learned from the energy crises of 1973-1974 and 1979-1980, would like to offer some comments on eur experience, our response to those crises, and the adverse Consequences we feel yet today. Since the last oil crisis and especially since airline diegulation, carriers have introduced a number of fuel saving etepa. Overall, we estimate that the industry has improved fuel criciency by 47% since 1974. Had we not implemented these fuel waving measures, the United States would need to produce or import more than 1,000,000 additional barrels per day of jet fuel, a quantity not currently available on the world market. Some of the things airlines have done include the following: • Cruise speed has been reduced. The reduction of a jet's speed from 520 to 500 miles-per hour results in a 7 % fuel saving on a 500 mile flight. Flight simulators have been used far more extensively in pilet training to eliminate fuel consuming training flights. hands of extra flights annually have been eliminated saving millions of gallons of fuel and yet still providing the level of training needed to carry the public safely. • Computerized flight planning has resulted in the selection HP altitudes that yield the minimum consumption of fuel. • Fuel conservation measures are also employed today before an airplane takes off and after an airplane lands. Aircraft are wing held at departure gates, with engines shut down, when there i likely to be a delay on takeoff. often one or more engines is whut down as the aircraft taxis to the arrival gate upon landing, further improving fuel efficiency. • Airlines have invested substantial sums, in the tens of Millions of dollars, to purchase newer fuel efficient airplanes. Airlines have also significantly increased equipment Hbilisation, conserving millions of gallons of fuel by taking Advantage of new, more efficient jets to carry more people per Al+Hart, Because the industry has worked so diligently on improving efficiency there is virtually no more room for fuel efficiency improvements in the current crisis. We continue to preach the gospel of fuel conservation both here and abroad. The U.S. carriers have launched another major push to change the international jet fuel standard from Jet A-1, to Jet A, the fuel we use in the United States. Jet A-1 has a lower freezing point and must be used on some routes, but those routes are the exception, not the rule. Refiners have indicated that at least a 5% increase in jet fuel availability would be forthcoming were the international standard changed to match the practices of the U.S. carriers. And if the laws of supply and demand are valid, there should be a reduction in fuel costs commensurate with the increase in supply. Additional fuel conservation measures can be implemented, but these issues require government action. Immediately after the Iraq invasion of Kuwait, the Secretary of Transportation established an Aviation Industry Energy Conservation Task Force to review aircraft operations, airport practices, and air traffic control procedures which could be taken to reduce consumption. The airlines and airports reviewed and implemented several initiatives and are taking additional measures which were not adopted as common industry practices after the 1973 shortages. There are some operations areas being pursued which will also require assistance from FAA in the form of regulatory accommodation in areas such as dispatch and fuel reserve requirements and acceptance of high gross landing weights. Air traffic control is another matter. The air traffic controller work force has been extremely cooperative with pilots in efforts to reduce fuel consumption, and the government has begun to adopt policy changes to put into effect air traffic control fuel efficiency measures. Those are steps that can and should be taken under any circumstances irrespective of the outbreak of hostilities. The current economic environment in which the airlines operate is extremely hostile. Even with all of the fuel efficiency measures we have adopted, we are hemorrhaging due to the combined impact of a recession, drastically increased fuel costs, and fears of terrorism brought on by the war in the Middle East. Fuel represents our second largest item of expense amounting on average to about 18 % of total operating costs. Some carriers have instituted fare increases in an attempt to cover the soaring fuel cost. But the economy is so weak they have had to offer a number of discounts in order to stimulate demand for air transportation, seriously undermining the effectiveness of these fare based efforts to recover the fuel cost increase. 43-268 91 - 5 The seriousness of this situation can be seen from a few relevant facts. Two major air carriers have filed for chapter 11 bankruptcy protection within the past two months. One major carrier with six decades of service to the public is now being liquidated. For the first time in its modern history, the industry had a substantial net loss in the heretofore always profitable third quarter. Compared to 1989, third quarter losses represented a net change of a half billion dollars; compared to 1988 a net change of over $ 1 billion. We anticipate industry net losses will total $ 2 billion for the full year 1990. And for the six months consisting of the fourth quarter 1990 and first quarter 1991 we anticipate losses of nearly $ 2.5 billion, not taking into account changes in fuel supply, costs, and revenues which have occurred since the beginning of hostilities in January. Even before the week ending August 3 was over, we were faced not only with fuel price increases, (we consume almost 10% of the daily domestic refinery throughput) but also calls to provide lift to fulfill national defense needs. Since that time we have been through everything from a multi billion dollar increase in the cost of doing business to the activation, for the first time in its history, of the Civil Reserve Air Fleet. (Our members have carried more than 62 % of the troops and 22 % of the cargo in Operation Desert Shield.) Now with the war underway reports of traffic dropping from terrorism fears indicate that our revenues will suffer even more than they have from the economic downturn. Previous fuel shocks pale by comparison to the magnitude and suddenness of the 1990 crisis. In 1979 jet fuel was 57 cents per gallon, and it took two years to reach over $ 1.00 per gallon. In 1990, it took two months! In August our fuel was 63 cents per gallon and by the middle of October it was $ 1.39. Unfortunately, this run up is in spite of an abundance of crude oil and relatively large inventories of jet fuel. Prices for jet fuel skyrocketed far in excess of prices for other refined petroleum products and far in excess of what one would anticipate from the orderly working of a marketplace governed by supply and demand. Let me cite a few figures to demonstrate this point. For consistency, we have used weekly averages of spot petroleum prices obtained from the Department of Energy. We realize that the cost to any individual purchaser of petroleum products may vary as a result of contractual arrangements, however, this is the way data is presented by the Department through the Energy Information Administration. |