Consumer fuel choice will drive oil independence


Last week GE announced it is teaming up with PayPal to launch the Ecomagination-approved WattStation and WattStation Connect, a complete electric vehicle charging platform solution. Bigger than the announcement is the news that we are leveraging our electric grid system to accommodate an electric charging station that will help all-electric vehicles sell. There is no reason that, in the future, a parking meter won’t double as a charging station.

We are also starting to leverage the infrastructure of our natural gas.  As many who follow fuel costs know, the price of natural gas has dropped dramatically. Infrastructure for natural gas fueling stations has never really taken off as Floyd Norris of the New York Times wrote in June. However, vehicles like city buses and garbage trucks often have centralized refueling infrastructure so they are a good place to start.

Before the price of gas dropped this summer, the Heritage Foundation’s Nick Loris wrote aboutTen Actions Congress Can Take to Lower Gas Prices. Although gas prices are currently low, there is obviously no guarantee that they will not rise again.

So, Loris’s list includes the following:

  1. Lift offshore and onshore exploration and drilling bans.
  2. Approve Keystone XL.
  3. Require timely environmental review for oil and gas projects to commence on federal lands.
  4. Improve permitting process to drill – that take too long.
  5. Issue leases on time.
  6. Allow development of oil shale.
  7. Stop the land grab and arbitrarily classify federal land areas as “Wilderness” or “Wild Lands”
  8. Implement 50/50 revenue sharing for states for offshore drilling.  States now receive 50 percent of the revenues generated by onshore only
  9. Prohibit greenhouse gas and Tier 3 gas regulations.
  10. Repeal the renewable fuel standard.

Many people believe that this list will lift the shackles placed upon the oil industry to increase production and production efficiency. It would therefore keep the price of oil down, or controlled. It could lower our dependence on foreign oil.

On the other hand, environmentalists may look at this list as “environmental suicide,” taking us down a sure path of destruction of all our natural resources in the name of cheap oil.

Suffice it to say, this list tries to take away fuel choice, keeping us tied to our oil addiction. The question is, does this list actually help us achieve “transportation fuel independence”?  Are we better off investing in better and cheaper ways to discover oil, or ways to make oil compete for our fuel dollars?

After all we have alternative fuels that make fuel choice possible with flex-fuel technologies: An example today can be seen with the heavy truck-maker Peterbuilt. The company is already building about 33 percent of its new trucks equipped to run on natural gas (NG). This number could be increased to 100 percent by next year, leading to more than 160,000 new NG trucks by 2018.

Imagine if we went to a filling station and matched at least the choices that Brazil provides its people. Imagine if your car had the flexibility to allow you to choose the fuel that was the cheapest at the time?

This is why we are dumb.  We have the technology, yet we have not built the last mile of the infrastructure. Heritage is saying it is not worth building out this last mile. In this case, unlike the Internet, the last mile is a plug in and a storage tank/filling hose to accommodate these fuel choices.

So, if we were to take our next dollar and invest it in the last mile of infrastructure and flex fuel vehicles, or in improving our efficiency and ability to tap more oil, what would you choose? The Heritage Foundation, a conservative group, is certainly for competition to create market efficiency.

The world production of oil exceeds 87 million barrels per day. There has been more oil drilling in the USA in the last four years than in any time since the original Dallas TV show was on the air.  All of the oil drilling in the USA and Canada will only result in another 3 percent to our global oil production, hardly enough to guarantee lower oil prices or oil independence. Oil independence will come from intense efforts on vehicle efficiency and fuel switching away from oil to natural gas, ethanol, electricity, and other alternative fuels. Saudi Oil’s competition is not more oil drilling it is fuel diversity driven by consumer demand.

Let’s stop the oil-to-oil comparisons and let fuel competition win the day. Let’s go the last mile.

Jigar Shah is CEO of Jigar Shah Consulting and a partner with Inerjys. Shah founded SunEdison in 2003 with a new business model, the solar power services agreement business (SPSA). SunEdison now has more solar energy systems and megawatts under management than any other company.


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