As I write this, oil is selling at somewhere in the neighborhood of $140 a barrel. According to the CIA Factbook (available online at www.cia.gov), the United States consumes 21 million barrels of that $140-a-barrel oil each day. Multiply that by 365 and you can see that, as a nation, we’re spending more than $1 trillion on oil each year (probably more now, since that 21 million barrel estimate is from 2005).
What does that oil get used for? Interestingly, only 1 percent is used to generate electricity. Electricity is generated primarily by coal, natural gas, nuclear energy and hydroelectric generators.
The Energy Information Agency (EIA) of the U.S. Department of Energy (www.eia.doe.gov) estimates that 40 percent of the oil we use is consumed by passenger cars. That means passenger car fuel consumption costs the nation at least $400 billion a year in crude oil (40 percent of $1 trillion). Of course, the crude oil is just a starting place. U.S. drivers consumed more than 142 billion gallons of gasoline in 2007, according to the EIA, which at $4 a gallon translates into nearly $600 billion. The difference goes to refiners, distributors and retailers, each of which adds its markup to the original product.
In a recent blog post, MIT professor Philip Greenspun (www.greenspun.com) asked how much it would cost to convert the entire U.S. fleet of passenger cars to electric. What could we accomplish with the $400 billion (or more) that we spend for the crude oil that becomes the gasoline that powers those cars?
Obviously, we can’t get very far on $400 billion. So, Greenspun proposes we leverage it. At 5 percent, $400 billion will cover the interest payments on $8 trillion. Assuming mass-produced electric cars would cost $20,000—and you could export the original gas-powered vehicle to Latin America or China and get (on average) $5,000 for it—then it costs about $15,000 net to replace a gas-powered car with an all-electric vehicle. The $20,000 price tag is a bit of a stretch today: The all-electric Telsa Motors Roadster costs $100,000, and Chevy’s Volt will probably cost $40,000 by the time it’s released in 2010.
Borrowing $8 trillion would let us replace more than 500 million cars. As it turns out, there are only about half that many passenger cars in the U.S.—although that still represents about one car for every American of driving age.
Greenspun believes, and I agree, that it makes a lot more sense to spend money on producing electric vehicles in the U.S., Canada, and Mexico than to send it to Saudi Arabia or Venezuela. Although the Prius is presently manufactured in Japan, Toyota recently announced plans to manufacture it in both the United States and China (so maybe exporting our old gas-burners there won’t work quite as well as Greenspun thinks).
He goes on to say: “At current oil prices, it wouldn’t cost us a dime extra to stop importing and burning oil for passenger cars. In fact, if the goal were to end up with the same number of cars on the road, we would have a few trillion dollars left over. One or two trillion dollars would be sufficient to build nuclear, solar, or wind electric power plants to replace all of our plants that currently burn coal and oil. So, simply by stopping our purchases of oil, we could finance the construction of power plants that emit no CO2 and electric cars that emit no CO2.”
Doesn’t the electricity to run those electric cars cost something? Yes, but substantially less per mile than a gasoline car. With gas at $4 a gallon, driving a mile in a 20 mile-per-gallon car will cost you $.20. Even with high electricity costs, an all-electric car like the Tesla Roadster (www.teslamotors.com) costs about a tenth of that. The reason is the electric motor is about 90 percent efficient at converting stored energy into power, while an internal combustion engine is perhaps 20 percent efficient (much of the energy stored in gasoline is lost as heat).
And doesn’t selling those old gas-burners to developing nations just move the CO2 problem around? Well, yes. But Greenspun wasn’t out to solve global warming when he proposed this concept. Energy sufficiency isn’t the same as carbon-neutral. As shown at Japan’s G8 Summit in July, developing nations aren’t rushing to sign up for limiting economic development in favor of carbon neutrality (with notable exceptions like Costa Rica, where agriculture and tourism predominate over manufacturing). And the numbers are such that you could lose the $5,000 offset for a 33 percent increase in cost. I’m not sure there’s a worldwide market for 250 million used cars (even though some might be very new).
Won’t electric car batteries wear out and need to be replaced? Yes, but having a nation that runs on electric cars is virtually guaranteed to increase research and investment into battery technology. Much as the cost of photovoltaic solar cells has dropped (and efficiency improved) as interest in solar power increased over the past decade, I predict increased reliance on large batteries will see similar effects. We just need to get past the so-called tipping point. With technology, production volume leads to price reduction.
The biggest obstacle that I see to Dr. Greenspun’s modest proposal is the financing. Currently, that $400 million originates in the pockets of our nation’s drivers as they buy gas down at Rotten Robbie. Replacing everyone’s car for free (which is the only way to get them to do it) doesn’t mean they’re going to send you their gas money to pay the interest on that multi-trillion-dollar loan. But the message is clear: Insanity is doing the same thing and expecting a different outcome. I’d sure like to see us spend $400 million where people don’t die as a result.
Let me give you Greenspun’s closing words: “Folks in developing countries are going to buy more cars, whether or not we sell them. Folks in the U.S. are going to buy newer cars, whether they’re gas or electric. The entire U.S. fleet of cars will be replaced within 10 years. Currently, we’re on track to replace our gas guzzling fleet with a newer shinier gas guzzling fleet. I’m not sure that qualifies as progress.”
Agreed.
