President Bush in his State of the Union address last night proposed reducing the nation’s gasoline consumption by 20% in a decade. His two-pronged strategy to achieve this involves boosting car and light truck fuel economy standards and mandating greater use of alternative fuels.

“For too long our nation has been dependent on foreign oil,” the President said. “And this dependence leaves us more vulnerable to hostile regimes, and to terrorists– who could cause huge disruptions of oil shipments, raise the price of oil and do great harm to our economy.”

Bush said it is important to diversify America’s energy supply away from foreign oil by boosting domestically produced alternative fuels. He proposed to set a mandatory fuel standard to require 35 billion gallons of renewable and alternative fuels in 2017.

“We need to press on with battery research for plug-in and hybrid vehicles, and expand the use of clean diesel vehicles and biodiesel fuel,” Bush said. “We must continue investing in new methods of producing ethanol – using everything from wood chips, to grasses, to agricultural wastes.”

At the same time, Bush wants to reduce gasoline usage in the U.S. by 20% in the next ten years. Such a cut would slash our total imports by the equivalent of three-quarters of all the oil we now import from the Middle East, he said. That reduction will come in part by reforming fuel economy standards for cars, which Bush said would conserve up to 8.5 billion more gallons of gasoline by 2017.

Bush also proposed to boost domestic oil production by pushing Congress to authorize a portion of the Arctic National Wildlife Refuge to be opened for oil and gas exploration— a measure that has failed to gain political traction. He also pledged to work with Congress to encourage investments in refinery capacity.

The President proposed to double the capacity of the Strategic Petroleum Reserve to 1.5 billion barrels by 2027 to increase the nation’s supply of emergency oil reserves.

Highway congestion fell under the radar of last night’s Address as another method of reducing fuel consumption. But a news release from the White House stated that the Administration’s budget calls for a new $175 million initiative that would direct federal transportation funds to state and local governments that demonstrate congestion solutions.