Power for Future Mobility

The tragic explosion that killed 11 people and led to millions of gallons of oil spilling into the Gulf of Mexico has many people, even die-hard auto enthusiasts, arguing that we should undertake a crash program to find alternatives to petroleum to fuel our transportation system. While it is nice to fantasize that some sort of “race-to-the-moon” research program will uncover magically new energy sources and technologies, realistically it isn’t going to happen.

Here is how the world works. You use the cheap resources first. The income you make from using those resources allows you to build up wealth. When resources start getting more expensive, you don’t hardly notice because you are wealthy enough that the higher-cost resources actually require a smaller share of your income than the low-cost resources once did. Eventually, you find new technologies and substitute resources that would have seemed prohibitively expensive when you were starting out, but now their adaptation causes barely a hiccup in the economy.

Oil critics will argue that, when the environmental costs are counted, oil is more expensive than first thought. That may be. But instead of trying to pay those costs from the outset, we first became a wealthy society, thanks in part to cheap oil, and then applied some of that wealth to reducing air pollution and solving other environmental problems. As bad as the Gulf oil spill may be, I suspect BP will eventually cap the well (update: looks like it has already happened) and, no matter how many billions it may cost, largely restore the ecosystems and compensate those who were harmed. This may add a few cents per gallon to the world price for gasoline, but consumers will absorb that just like they absorbed the cost of catalytic converters and other technologies aimed at reducing air pollution.

Right now, the outlook for alternative fuels at prices competitive with oil does not look all that great. While electrics and plug-in hybrids receive lots of media attention, these cars cost far more than gasoline-powered cars, and are sold at prices only barely made palatable thanks to tax rebates of as much as $7,500. The so-far limited range of these cars means they will be mainly for in-town use and can’t serve as an all-around car like so many internal-combustion vehicles.

Instead of trying to replace oil-powered vehicles all together, it makes more sense to encourage more fuel-efficient vehicles. We know that, when gas prices go up, people buy more fuel-efficient cars and, when they go down, they buy bigger cars. When these trends disguise is that, when prices are down, the bigger cars people buy are still getting more fuel-efficient in terms of ton-miles per gallon.

The results of this trend can be seen in the 2011 Ford Mustang, which is rated at 31 mpg on the highway even though it has a 305-horsepower engine. By comparison, my 1986 Mazda 626 gets about the same mpg with a 93-horsepower engine (turbo models had 120 horsepower). The 626 was built on the same platform and in the same factory as the Ford Probe, which was originally intended to be branded a Mustang.

Unlike General Motors, Nissan, and certain other manufacturers, Ford has effectively decided that its near-term future will be in more fuel-efficient gasoline-powered vehicles, such as its 40-mpg Fiesta, not electric power. Even after a $7,500 rebate, the Nissan Leaf costs almost twice as much as a Fiesta, and for the savings in fuel costs to cover that extra price, buyers will have to drive the Leaf nearly 200,000 miles — by which time battery replacements will have added to the Leaf’s cost. Add to that the inconvenience of a car that can only go about 100 miles on a charge and it is hard to see why anyone would want one for anything but the smugness factor.

Meanwhile, European manufacturers have further increased fuel economy by substituting Diesel for gasoline engines. As previously noted here, MIT economists expect that, by 2030, the average new Diesel-powered car can easily get more than 80 mph.

The foreign-oil bugaboo is mainly a way of saying that oil prices are geopolitically volatile. But even during temporary price peaks, gasoline remains less expensive than most of the alternatives. If prices ever permanently exceed $100 per barrel, America’s shale oils will be economically accessible. Due to the abundance of such fuel, I don’t think prices will permanently rise to $200 per barrel in the lifetimes of anyone reading this blog.

As a rule of thumb, gasoline costs about one-fortieth the price of a barrel of oil plus about 75 cents per gallon. This means that, even at $200 a barrel, gasoline will cost less than $6 a gallon, which is more than Americans are used to paying but a lot less than Europeans, who drive for almost 80 percent of their travel, pay. By switching from vehicles that get the current average of 20.6 mph to ones getting an average of a little over 40 mph, we can pay $6 a gallon without reducing the amount we drive.

Most of the environmental problems from auto exhaust have pretty much been solved. Auto manufacturers today are making many partial zero-emission vehicles today that pollute only about 1 percent as much as cars made 40 years ago. As these cars replace older cars on the highway, automotive-air pollution will virtually become a thing of the past. Similarly, almost all alternative fuels emit greenhouse gases, and making cars more fuel-efficient may still be the best way to deal with this problem.

Of course, the oil spill in the Gulf of Mexico is a tragedy. But it seems unlikely that the world will leave oil in the ground. The question is not whether to extract it, but at what rate it should be extracted. Government subsidies to electric and other alternative-fueled cars will have only a tiny influence on that rate.

In short, not only will autos remain the dominant form of travel, I suspect that oil will remain the dominant way to power such autos until at least 2100. By that time, better battery technologies, lighter-weight materials, and other technological advances may make electricity or some other alternative fuel feasible at not much greater cost than gasoline today.

I have no objection to private parties doing research in and bringing to market alternative-fueled vehicles. But the government should not favor these vehicles with special tax breaks, research programs, or other subsidies. Government agencies and politicians should pay more attention to promoting universal mobility than to getting people out of their cars or finding alternative ways to power those cars.

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28 thoughts on “Power for Future Mobility

  1. Dan

    I suspect BP will eventually cap the well and, no matter how many billions it may cost, largely restore the ecosystems and compensate those who were harmed.

    I guess there’s a first time for everything.

    And this ecology guy cannot picture how the ecosystems will be restored. No way anyone has that much money.

    DS

  2. stevenplunk

    One alternative to oil is natural gas. It will never replace but could easily supplement oil as a motor vehicle fuel. New drilling techniques have expanded our reserves and we have used this fuel in the past for fleet operations like buses and utility company vehicles. There are even kits available to convert the average car to natural gas.

  3. bennett

    “Here is how the world works.”

    This is what I call a red flag. I also find it interesting that you are basically stating that we shouldn’t pay for external costs at the outset, but wait until the externalities have damaged us so much that we have no choice. I’m not sure “build wealth at all costs, worry about the other stuff later,” is a wise approach.

  4. The Antiplanner Post author

    bennett,

    It is not “wait until the externalities have damaged us so much that we have no choice.” It is “wait until we are wealthy enough that fixing the externalities can be done without starving ourselves to death.” As I said, this is the way the world works, even if it is not the way we (who are already living in a wealthy society) would wish it to work.

  5. Dan

    Nice false premise: it is a requirement to pollute first , clean up later.

    Sounds stupid. What kind of approach is: ‘we’ve always done it that way, so why change?!?!?’

    Ridiculous. And such a view will be quaint soon, as the earth is just about done absorbing our wastes with no cost, and the debt crises are one indicator of that now in societal indicators, in addition to the myriad of natural science indicators.

    DS

  6. Scott

    Pollute first? How is that? The last major US oil rig spill was 41 years ago. Auto emissions pollutants have been cut by about 95% in the same time.

    Is it possible to drill or mine any type of material used for development without some risk?

    To vastly reduce externalities & risks, we need to go to hunting & gathering, as many enviro-wacko strategies lead to–not necessarily being the goal, but that’s the only option to eliminate the negatives.

    Much natural gas is extracted with drilling. What’s the advantage & for engines, it’s more expensive.

    Most public transit uses diesel, and the energy consumption per passenger-mile is not better than the most efficient gasoline-powered cars, w/just one passenger.

    To achieve a goal of pro-transit people–getting more riders–the energy cost per passenger-mile will increase, because there will be fewer riders per each vehicle trip, because the route frequencies (headways) will be more often, & the system coverage will widen.

  7. bennett

    Scott said: “Auto emissions pollutants have been cut by about 95% in the same time.”

    Yes, mainly as a result of tougher EPA regulation. That’s why the catalytic converter was produced (i.e. the government forcing the market to internalize costs).

    But let’s say Scott and O’Toole win this argument. When is the magical moment when we decide that we have accumulated enough wealth and we can start paying for things like pollution without encouragement from big bro? In an economy that has to grow infinitely, will we ever have enough?

  8. bbream

    Antiplanner,

    I would recommend some caution in declaring that BP has capped the well in a fully conclusive manner. From the link you provided: “Engineers have at least temporarily stopped the flow of oil and gas into the Gulf of Mexico from a gushing BP well, the federal government’s top oil-spill commander, U.S. Coast Guard Adm. Thad Allen, said Thursday morning. …. Allen said he was encouraged by the progress. ‘We’ll get this under control,’ he said.”

    So I wouldn’t declare it a done deal, and your optimism for BP’s willingness to restore the ecosystem is also somewhat surprising. I anticipate a long political battle between BP and environmental groups about the extent of the damage done to the ecosystem, especially now that the amount of oil spilled has been revised: http://www.washingtonpost.com/wp-dyn/content/article/2010/05/27/AR2010052701957.html?hpid=topnews

    While I agree with you that BP will eventually carry out some form of ecological repair, I’m not comfortable with the idea that because it WILL happen some day, there is nothing that we as citizens or the government itself should do to put additional pressure on BP. I don’t know if this is what you’re saying, but your confidence in its inevitability seems to imply that.

    As a result, I echo bennett’s concern about when the nation/those more directly responsible for generating externalities decide that they have sufficient wealth to start addressing the costs of those externalities. And simply mitigating the costs of those externalities does not mean that the problems have gone away. For example, it’s great that car companies are now making partial zero-emission vehicles and are helping to reduce the stream of pollutants from the air. But that doesn’t change the fact that people who have already been exposed to these pollutants are suffering from respiratory problems (http://eetd.lbl.gov/IE/pdf/LBNL-55586.pdf). So will they be compensated once the car companies have enough money, or are they simply an unfortunate casualty in the march of progress?

  9. Scott

    bennett,
    Yes it’s true that the EPA have lead to less pollution.
    Keep in mind that anarchy is not a goal.

    As far as externalities, all products & each person have those. Is it possible to manufacture goods, & to supply sufficient energy without externalities?

    Your goal is a fantasy, with current technology.

    Would you rather live in Africa without the development & its side effects? However, environmental & living conditions are far worse than here. What a plan.

    What price for prosperity? Any place that has prosperity without capitalism, & without a few externalities, & with oppressive governments?

  10. Jardinero1

    Even if every car in the world was electric and no electric power generating plants burned oil; we would still pump just as much oil out of the ground as we do today. Plastics and polymers are everywhere and society would not function without them.

    In the coastal Gulf of Mexico, every year, over 30 million gallons of tar and oil seep naturally into the seawater. Oil and tar are part of the natural ecosystem in the gulf. Granted, the amount that has spilled has doubled, very rapidly, the amount that normally leaks in a given year but the gulf is well adapted to absorbing oil and tar.

  11. Jardinero1

    There are 2.5 million cubic kilometers of water in the gulf or 643 quadrillion gallons. There are 20 million more gallons of oil in that same water than there would be in any given year. Scaled properly there is less than one part in a million difference between this year and any other year. There are relatively more hydrocarbons suspended in a plastic bottle of water than suspended in the Gulf of Mexico. When viewed in scale this is a non-event. The impact of this event is not on the ecology, the ecology will handle the spill and recover. As long as there is plankton in the Gulf the affected areas will bounce back.
    The lasting impact is on the people who benefit economically from that same ecology. The fisherman, shrimpers, oysterman and clam grabbers who would otherwise have killed the same animals which the spill will kill are impacted this year and maybe next year. Touristic business in beaches and wetlands are impacted. Beach and waterfront real estate developers in the impacted areas will be affected. I would submit it’s actually better for the ecology if those parties were allowed to fail and stay out of the Gulf for awhile.

  12. taconia

    For those who see this and other oil spills as enduring and vast environmental disasters with ecological consequences through many decades, perhaps one might tell us where we can see the consequences of the hundreds of millions of barrels of oil and other liquid fuels dumped into the oceans around the world during World War II. (Think of not only of warships and planes but of the many fuel tankers sunk.) That 5 year long, worldwide spill dwarfs the size and relatively small locale of the BP well leak.

    It’s an interesting but irrelevant argument to say that as a proportion of gulf water volume the oil is tiny, since most of the oil is concentrated in a locale where it is a much higher percent. And in particular places where it washes ashore, it will be an economic calamity, and it will devastate many parts of the natural environment. Both will recover, however, and relatively quickly.

    Ou sont les huiles d’antan?

  13. Dan

    By your statement I assume you have a basic ecological education and therefore I welcome a factual and logical critique from you.

    I have a grad-level ecology education with an advisor who was a postdoc in one of the titans of ecology’s lab. We would meet and have breakfast every week with the leaders in the field as they came to visit our program.

    The numerous indicators of decreased resilience in the Gulf – hypoxic zone areal increases, overfishing, eutrophication, rising water temps, wetland loss, decreasing species richness and diversity, to name just a few – give a higher likelihood of reduced medium-term recovery from this disturbance.

    The scale of the disturbance is beyond the level of adaptation to background.

    There is ~ a 50% chance of a hurricane in the Gulf this year, with a chance of driving oil farther inland. We know that oil spills reduce species richness and diversity across many benthic communities after the disturbance for generally more than a season (Exxon Valdez, Amoco Cadiz, Prestige come immediately to mind); combined with decreased resilience we expect a high likelihood of a non-full recovery in many benthic communities for at least a year, some taxa such as birds’ reduced densities* for at least the medium-term. Esp as this is nesting season.

    Not to mention the human socioeconomic impacts on those communities suffering decreased resilience as well.

    To assert or imply that 1) there will be no damage and 2) the spill is tiny compared to the entire Gulf is ignorant or mendacious.

    But surely your family is down there now buying land at risk, to enjoy the increased aesthetics from oiled sand and marshes.

    —————-

    As to arguments about ‘where is the evidence for old oil spills’, do you mean besides the Exxon Valdez, or mangroves still recovering after death from oil spills?

    DS

    (assuming 3 links is the max to avoid spam filter)

    * http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V6N-42RDMGJ-9&_user=10&_coverDate=04%2F30%2F2001&_alid=1351895334&_rdoc=14&_fmt=high&_orig=search&_cdi=5819&_sort=r&_docanchor=&view=c&_ct=3305&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=ca17a8d9f16c8f51fbd6b7ee1a40abc5

  14. Jardinero1

    Yes I live on the Gulf Coast, near a wetland area. What you have said is that it will take some time, without being specific(short term, medium term), to recover. I take it you feel it will recover. I say the same, it will take some non-specific amount of time to recover. First the producers, then primary consumers, then secondary and so on. You assign a non-specific probability to recoovery. I will give it a probability of 1.0 I never asserted that there will be no damage. Nor did I ever use the word “tiny”. I did say that when viewed in scale to the entire Gulf, it is a non-event and I stand by that assertion.

    Talking about recovery in areas which which already suffer from hypoxic zone areal increases, overfishing, eutrophication, rising water temps, and wetland loss is a red herring argument. Such areas were already dead or dying before the spill not because of the spill so worrying about their recovery from the spill is a different matter.

    You reiterate what I said about the economic loss and I agree with you. I also agree with you that much of what humans perceive as loss is actually a matter of aesthetics since the animals don’t really care what it looks like on the sand and in the marshes.

  15. Scott

    It’s been painfully obvious, & now Dan admits it, “I have a grade-level education.”
    Certainly nothing to do with business or econ.

    Half of released oil is natural. Concentration does make a difference, temporarily for small areas.

    Good job at pointing out all the long-term bad effects of oil spills, especially on humans. BTW, jobs change all the time.

    Wind will drive oil inland? How is that? Storm surges don’t go very far.

    Mangroves don’t grow in cold climates.

    Shall all actions that have occasional accidents, be eliminated?
    Yep, back to gathering; hunting too risky. That’s the only option for lefties to be content, except that they think wealth is magically created.

  16. Dan

    Nobody wants to hear the message, so harrumphing and ululating will ensue about lefty something or other wealth-killing fringe lunacy bullsh–.

    DS

  17. ws

    I do not disagree with ROT in that there are limited alternatives, I disagree with his assertion that rising costs of fuel is going to be absorbed easily by sprawled Americans.

    I also disagree that we can “table” externalities once we are wealthy enough. That doesn’t seem to fit under any Libertarian ideology, either, which I find perplexing. Not to mention the US is already one of the wealthiest countries there has ever been.

    Time is now to address externalized costs.

  18. gpasha

    Come on, Randall! Don’t be so mean to the Diesel industry. There are diesel vehicles that can do more than 80 miles per hour today. I think some can do 85mph. ;-)

    Regards
    Gordon

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