Bush wants to cut U.S. gasoline use by 20 percent

WASHINGTON (Reuters) - President George W. Bush on Tuesday called for Americans to cut their gasoline use by 20 percent over a decade, mostly through a nearly five-fold increase in use of home-grown fuels such as ethanol by 2017.

In his annual State of the Union address to Congress, Bush also called for tighter vehicle fuel efficiency standards and doubling the Strategic Petroleum Reserve's capacity to 1.5 billion barrels by 2027.

Bush asked U.S. lawmakers to "join me in pursuing a great goal" of reducing gasoline consumption by 20 percent -- the equivalent of 75 percent of current oil imports from the Middle East.

Most of that reduction comes from a massive increase in ethanol made from both corn and unconventional sources such as wood chips and farm cast-offs.

"We must continue investing in new methods of producing ethanol - using everything from wood chips, to grasses, to agricultural wastes," Bush said.

Bush's "Twenty by Ten" strategy furthers a theme he has tried to drive home in his annual speeches since 2001 to cut U.S. dependence on crude oil imports. In a surprise pronouncement a year ago, Bush said the United States was addicted to crude oil.

Bush steered clear of calling for mandatory caps on U.S. emissions of carbon dioxide, despite a concerted push by big U.S. companies like General Electric Co. to cut heat-trapping emissions. In his speech, Bush called global climate change a "serious challenge" that should be addressed through technology.

Bush also called for more use of hybrid vehicles and electricity produced from carbon-free sources like wind, solar and nuclear power plants.

A rising focus on "energy security" by both the Bush administration and Congress has added momentum to efforts to employ home-grown fuel sources like ethanol to reduce U.S. dependency on oil imports.

About 60 percent of U.S. petroleum supplies currently come from imports.

Specifically, Bush called for Congress to raise a mandatory federal renewable fuels standard to 35 billion gallons by 2017, and increase the scope of the program to include fuels like cellulosic ethanol, biodiesel and methanol. That alone would displace about 15 percent of annual U.S. gasoline use, the White House said.

The rest of the reduction would come from reforming U.S. automobile fuel efficiency standards, which could save about 8.5 billion gallons of gasoline in 2017, the White House said.

Big automakers, DaimlerChrysler AG, parent of U.S.-based Chrysler Group, and Ford Motor Co., said overhauling standards as Bush proposes is preferable to new mandates using the current formula of fleet-wide averages, which some Democrats seek.

Current U.S. law requires 7.5 billion gallons of renewable fuels to be mixed with gasoline supplies by 2012. U.S. renewable fuel consumption will likely reach that target ahead of schedule -- biorefineries produced about 5 billion gallons of ethanol last year.

The U.S. corn-growing lobby applauded the proposal, but crude oil refiners and livestock producers warned it could lead to higher prices at the gas pump and the supermarket.

U.S. corn prices have nearly doubled since last fall, mostly due to soaring demand for ethanol, which has replaced the water-polluting methyl tertiary butyl ether as the additive of choice for refiners to comply with federal clean air rules.

"There's no question that the production of corn is going to have to increase," said Ron Litterer, first vice president at the National Corn Growers Association, saying 15 billion gallons of ethanol could come from corn by 2015.

Charles Drevna, executive vice president at the National Petrochemical and Refiners Association, warned that a higher ethanol requirement could boost U.S. gasoline prices by making refiners use more expensive additives.

"You can't legislate technology," Drevna said. "Mandates are anathema to market-based realities."

It's unclear how U.S. lawmakers will treat Bush's proposals.

Ethanol incentives have gained wide-spread acceptance, while vehicle fuel standards are a divisive issue, said Eric Burgeson, a vice president at Barbour, Griffith and Rogers LLC and Energy Secretary Sam Bodman's former chief of staff.

(Additional reporting by Steve Holland and John Crawley)