Alternative fuels can also help create jobs and provide business opportunities for automotive manufacturers, parts suppliers, vehicle conversion companies, and fuel suppliers. Finally, alternative fuels can reduce air pollution leading to a cleaner environment. According to projections by the Energy Information Administration, the U.S. will import 11.8 million barrels of crude oil and refined petroleum products per day by the year 2010 or 57 percent of the nation's petroleum supply. If Michigan were to achieve a proportional share of this national goal, we would displace 1.8 million gallons of oil with alternative fuels. Aside from planned increases in vehicle MPG, the greatest gains in displacing oil imports are expected to occur by replacing gasoline with domestically-produced alternative fuels.
Risk reduction refers to the vulnerability of Michigan's economy to oil price shocks.
Oil price increases that occurred due to the 1973 Arab oil embargo, the 1979 Iranian revolution, and the 1990 invasion of Kuwait by Iraq all led to serious economic downturns which hit Michigan very hard. Past price shocks have triggered economic recessions and unemployment that have effected Michigan more severely than most other states. The reduction in discretionary spending that results from oil price increases leaves less money for spending on durable goods like cars, office furniture and appliances. In addition to our durable goods manufacturers, our tourism and agriculture are effected as people change their driving habits and stay closer to home and farmers incur higher fuel costs which hurts their competitive position. Michigan used 5.5 billion gallons of petroleum products in the transportation sector in 1995.