I have suggested that a 10-year war will result in oil playing a very minor role in personal transportation if, by 2022, 80 percent of all new cars are electric-only PIVs (plug-in vehicles).
Currently, we use about 20 million barrels of oil each day, about 20 percent of the world's production. About half is used by automobiles; the rest becomes airline fuel, diesel fuel for trains and vehicles, home heating oil, asphalt, and petrochemicals (plastics, etc.).
Interesting: We produce about half our total needs from domestic sources and biofuels (ethanol). If we succeed in becoming 80 percent electric, it would reduce our daily oil thirst by up to 10 million barrels and release us from the global market stranglehold. Whatever we need will be found in our own hemisphere and consumers would be relatively unconcerned with wild fluctuations in global gas prices.
Previous essays suggest that our more comfortable citizens take a lead role in expediting transition to electric cars by committing to delivery without waiting for the technology to reach perfection. We also saw the electric utilities taking a major PR role in selling the concept and working to make sure that every street corner sports an instant recharge station.
Of course, the automotive industry must be an enthusiastic participant. It goes without saying that the federal government plays a major role, but I'll say it anyway. The federal government must take the lead in designing and supporting the strategy. The state governments play a significant role, as do the auto retailers. The role of the oil and gas industry remains to be defined. This essay will consider the role of the Federal government.
The federal government has a major, but not necessarily expensive, role to play in the war on oil. They must endorse a specific strategy that goes beyond bankrolling every attractive experiment and saber-rattling whenever any belligerent, oil-rich poobah tries to intimidate us. It is commendable to financially back any promising technology that is judged too risky for private capital. High risk suggests failure and most high-risk strategies are bound to fail. That's the definition of high risk.
Unfortunately very little has shown exceptional promise and we must learn to walk away from disappointing experiments. Even ethanol has proven to be of marginal value. The fuel cost to convert corn to ethanol is exorbitant. We should phase out subsidies and not be fazed by backing away. We should gradually reduce import tariffs and let the market dictate the source — be it domestic corn or sugar cane ethanol from Brazil.
At some point corn should return to its time-honored role in feed, fritters, flakes and moonshine.
The energy policy must put full federal support behind workable strategies. We know that electricity will work. The Leaf, the Focus, the Mitsubishi i, the Volt and even the Prius have technology that can support maybe 60 million of our 200-plus million vehicles. Not perfected perhaps, but more than adequate as we put major efforts behind technological improvement with each model year. We must resist the temptation to wait for perfection.
The Energy Department web site doesn't spell out any specific strategy or solicit suggestions. At the very least there should be breaks for all citizens who purchase electrics, not just for those with $7,500 or more in tax liability.
Can an energy policy influence what cars we will purchase? Certainly, albeit indirectly. The president should simply call the players to the White House and tell them in dulcet Kennedy-esq tones, "In 2022, I want the MPG standard to be 100 MPG for all manufacturers' fleets. We found a way to get to the moon in 10 years. Can you win the war on oil by 2022?"
The president's current announced goal of 55MPG by 2025 is not adequate as a wartime target. Once they commit to the higher goal the auto companies can plan for mostly electric cars, some advanced hybrids and no gas-only vehicles. Once we reach critical mass, we will be able to acquire electric cars that cost no more than today's standard autos and cost little or nothing to drive. And we haven't even mentioned the very felicitous effect on our beleaguered environment.
Perry is a retired vice president of American Express Financial Advisors (now Ameriprise). Articles on electric cars and a complete analysis of Social Security and Medicare can be found at www.entitlementdilemma.com. His email address is George@entitlementdilemma.com.