The “Prius Plan”

August 1st, 2007

by Joel Kurtzman

Catalyzing The Clean Fuel Economy

jkurtzman_blog.jpgHere’s a thought experiment that could send shivers up OPEC’s spine. Imagine you buy a Prius (or a Prius-like hybrid car) that is modified by one of those shops in California, so you can plug it into the wall socket in your garage and give it a charge. Immediately, your mileage goes from about 60 miles a gallon to about 100 miles a gallon. Then, imagine you take your Prius…
to another one of those shops that modifies it further to burn E85, a mixture that’s 85 percent domestically-produced ethanol and 15 percent gasoline. By taking these actions, you’ve cut the amount of gasoline you use to drive 100 miles from about five-plus gallons — in today’s average car — to 1.6, in a normal Prius, to 1 gallon in a modified Prius, to less than 0.15 gallons in the modified E85 version. In addition, you’ve just cut your greenhouse-gas emissions to nearly zero.

Now, imagine that you and every other American driver did the same thing. By taking these actions you and your fellow drivers would not only have made the United States self-sufficient with regard to oil for decades to come, you would also have given it an oil surplus while cutting the trade deficit by at least a quarter. And, it would have cost only a few thousand dollars a car.

If we continue with this thought experiment a little longer we see that it would require only minor modifications to the country’s network of filling stations to add E85 pumps (The Federal government will pay up to $30,000 to convert a filling station to pump E85). In addition to that, the country’s electrical power grid has the capacity to charge those cars if they were plugged in at off-peak times, mostly at night.

This thought experiment requires no new propulsion or battery technologies or manufacturing techniques. For the average driver, life would be very much the same - traffic hassles included.

Now, if we take this line of thinking a little further, it is safe to say that without the United States importing oil, the price of a barrel would tumble. How far? It’s difficult to estimate precisely, but any commodity that suddenly loses a fifth of its market would likely suffer.

Though OPEC might try to maintain prices by cutting output, it’s unlikely it could do so for long. Oil prices contain within them assumptions about the future demand for oil and the rate at which the world’s reserves will be depleted. With the United States no longer an importer, all those assumptions would change and OPEC would be hard pressed to keep its prices high. Even with China’s growing demand for oil prices would fall since it will take a decade or more for China to consume oil at U.S. levels. Besides, other countries, witnessing such a major transformation in the United States, might want to follow their own “Prius plans,” China included.

Tumbling oil prices would have other impacts. As the United States imports less oil, capital would stop flowing in such large quantities to volatile countries like Iran, Russia, Venezuela, Saudi Arabia and Nigeria. With incomes slashed and their economies in need of radical change, it is difficult to imagine these countries continuing to wield so much influence.

To be sure, there are more than a few problems that must be overcome to make this thought experiment a reality. Since oil prices would most likely start falling as Americans began their switch to new vehicles, owning big, gas guzzling cars would suddenly become cheaper and more attractive which could slow down the transition. Producers of big V-8s - not wanting to go out of business — might even offer additional incentives to keep their cars on the road. Investors seeing oil prices fall, might not want to put their money at risk by building plants to efficiently convert switchgrass, miscanthus and wood chips into ethanol to augment and then supplant corn-derived fuels.

Still, what this thought experiment shows is that it might not take that much sacrifice or new investment to wean the United States from imported oil and reduce greenhouse-gas emissions. Nor will it require a second Manhattan Project or inventing anything new. Each piece of the energy-independence puzzle already exists.
Problems like those relating to the environment and to imported oil are not likely to improve with age. Nor will they solve themselves. The first step in overcoming any big problem is to see it in a different light.

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