Easing the Pain at the Pump

Innovative Transportation Solutions Foster Immunity to Oil Price Shocks

The United States uses a tremendous amount of oil each year—enough to fill a large 
football stadium more than 350 times.[1] More than half of this oil is imported, partly from volatile Middle Eastern countries.

Why do we consume so much? We drive the kids to soccer games. We ship orange juice 
from Florida to Maine. We make business trips from Denver to Houston. More than 70% of U.S. oil in 2009[2] was used to the transport of people and goods. Such a heavy reliance on oil to sustain our modern lifestyles leaves us defenseless when gas prices soar to over $4 per gallon.

To combat this problem, President Obama recently unveiled a plan to cut oil
 imports by one-third by 2025 in an effort to enhance U.S. energy security and economic prosperity. This goal includes a mixture of increased domestic production of oil, accelerated production of advanced biofuels, and improved vehicle efficiency.

While increased domestic oil production may mitigate national security
issues, it does little to ease the pain at the pump— US oil reserves are considerably more expensive to extract than reserves from the Middle East or Venezuela.[3] In addition, these supply-side solutions are only a finger in the leaky dam of our addiction to oil. Instead of trying to produce more, we should focus on using less through the efficient use of energy—starting with transportation since it drives the majority of US oil demand.

As explained in Rocky Mountain Institute’s (RMI) forthcoming book, Reinventing
Fire, which presents a credible vision of, and practical business-led pathways to, a U.S. economy free of oil and coal by 2050, and of natural gas thereafter, the key to eliminating the need for oil is first through radically improved vehicle efficiency, then through greatly improved vehicle use.

Doubling the fuel economy of passenger vehicles alone would almost be enough to reach President Obama’s goal of reducing foreign oil imports one-third by 2025. Based on RMI’s consulting work within the automotive industry, this is not only possible, but also economical in the near-term. However, to achieve long-term energy security, we must pursue radical efficiency, combining ultra lightweight aerodynamic vehicles with electrified powertrains.

Given that an inefficient SUV purchased today will probably still be on the road in 2025, we must start now.

A parallel approach, improved vehicle use, has little to do with stock turnover, vehicle fuel economy, gas taxes, or supply-side solutions. It requires us to examine when, where, why, and how we use our vehicles. Let’s look at the how?:

We can use vehicles in new, better, and more efficient ways (or not use them at all) and improve system-wide transportation efficiency in the following ways:

  • Carsharing programs lower the cost of vehicle ownership and reduce vehicle miles traveled, saving oil and time wasted in traffic jams.
  • Variable pricing mechanisms, like tolls on congested roadways, encourage carpooling and help traffic flow more smoothly (which means less starting and stopping and better fuel economy).
  • Well-designed urban environments cut back on the need to drive in the first place by co-locating workplaces and homes, providing high-quality public transit access, and creating solid infrastructure for biking and walking.

Efficient vehicles and improved vehicle use can not only meet, but also exceed President Obama’s 2025 goal. Automakers are pursuing efficiency with hybrids and fully electric vehicles—Ford, and several others, are going one step further, pursuing substantial lightweighting.[4] Entrepreneurs have created innovative solutions to enable smart vehicle use, from carpool-enabling phone apps to carsharing programs. Saving oil is more than good business—it fosters the nation’s immunity to oil price shocks.

[1] http://www.arnewde.com/architecture-design/architecture-building-sport-stadium-dallas-cowboys-stadium-by-hks/; and source 2

[2] http://www.eia.doe.gov/aer/pdf/pages/sec5_3.pdf

[3] http://www.reuters.com/article/2009/07/28/oil-cost-factbox-idUSLS12407420090728

[4] http://www.greencarcongress.com/2011/01/ford-20110114.html