Huntsman: "we need to break oil's monopoly as a transportation fuel"

-Cross-posted from ASP's Flashpoint Blog -

Yesterday, Jon Huntsman gave a major speech on energy policy in New Hampshire. The former Governor of Utah and Ambassador China - and currently low-polling Republican Presidential candidate - laid out a vision for America's energy future. Much of it is standard Republican objectives (reducing regulations, producing more at home, etc), but I wanted to flag an important component that he brings up: "breaking oil's monopoly as a transportation fuel".

Unlike many other candidates in the Republican primaries, he is not of the "Drill, Baby, Drill" crowd, saying "we cannot simply drill our way to energy security". That is a key point to this. Even if we produced 100% of the oil we consumed, the U.S. economy would still be stuck with the global market for oil, and all the price fluctuations that go along with that.

So - to reduce that dependence, Huntsman proposes to open up we need to open up the transportation fuels market to competition. I will quote from his speech at length:

America's prosperity has always flowed from competition, and I believe it's time to let creative destruction loose in our energy sector.  Energy security, as Winston Churchill said, "lies in variety and variety alone."

Yet the current system of transportation fuels is essentially closed to competition because of gasoline's de facto monopoly for light-duty vehicles and diesel's near-monopoly for heavy-duty vehicles.

The concentration of distribution ownership is similar to the broadcast network domination in the early 1970s, which triggered market-opening FCC rules and an antitrust consent decree.

Accordingly, the Federal Trade Commission and Senate Judiciary Committee must commence an expedited review of the fuel distribution network.

Breaking oil’s monopoly will also require the repeal of regulations that prevent a truly open and fair market.

This proposal is broadly in line with a problem I identified in the ASP white paper "America's Energy Choices". Because oil is 92% of our total transportation energy, American consumers are at the mercy of broad fluctuations in the oil market. With competition, they could choose which fuel or mode of transportation offers the best combination of value, cost, and time.

This is an energy plan that is thoughtful, and Gov. Huntsman deserves credit for it. You can see the speech in full after the jump: