Wednesday, January 17, 2007

We Have the Answer!

We now have the answer to how we can eliminate foreign oil, which, as Thomas Friedman of the “New York Times” so aptly points out, is the primary source of funding for radical Islamic terrorism. In my view, the answer is hybrid automobile technology, even as it exists today in its still rudimentary form.

A few months ago, I bought a new Toyota Highlander Hybrid SUV, which is not a small vehicle, weighing in at just over 4,000 pounds. It is rated at 33 MPG city and 28 MPG highway and I am averaging nearly 31 MPG in combined city and freeway driving. Why is it higher in the city? Because the engine shuts off every time you coast or stop at a sign or red light and, if you’re careful, you can pull away from a stop without immediately having the engine start with the always functioning motor/generator. After driving this vehicle for a few weeks, I started to realize, to my amazement, that every other car around me at a stoplight was burning expensive gasoline and mine was not! I also discovered that when I am in slow-moving rush-hour freeway traffic that my car runs almost exclusively on its battery, with the engine only coming on every few miles to replenish the battery, but not to drive the wheels. This is truly amazing when I look at the hundreds of cars around me that are blatantly wasting imported oil. Then I started to ask myself: How much gas could be saved in this country if just half of these cars were hybrids?

So, I made a few admittedly simplistic calculations, which turn out to be pretty mind-boggling.
There are approximately 250 million cars and light trucks in the United States, which get an estimated 17 MPG in fuel economy, according to the online encyclopedia, Wikipedia. I’m sure that statistic is an average of the mileage ratings of all these vehicles, so I can accept it statistically, although I believe the number must be lower if you consider the millions of cars driven in stop and go traffic daily, which get a fraction of that mileage.

Let’s assume that the 250 million cars in the United States are driven 15,000 miles annually at an average of 17 MPG. That amounts to usage of 220.6 billion gallons of gasoline annually. Now let’s see what happens if those same cars become big SUV hybrids like mine, getting 31 MPG. Fuel consumption would drop to 120.9 billion gallons, a spectacular saving of 99.7 billion gallons annually! (This number would be even more impressive if we could include the correct proportion of higher-mileage hybrid Camrys and Priuses in the fleet.)

Depending on the grade of crude oil being refined, each 42 gallon barrel of oil nets between 30-50 percent gasoline, or about 17 gallons per barrel. Therefore, a saving of 99.7 billion gallons of gasoline would eliminate approximately 5.9 billion gallons of crude oil a year, an amazing 2.2 billion barrels more than the 3.7 billion barrels we import each year, from places like Saudi Arabia, Iran and Venezuela.

But wait, that’s not all. Current E-85 alcohol technology will allow us in the near future to use only 15 percent petroleum in each gallon of fuel that we burn in our hybrids. Also, remember that hybrid technology is still in its infancy and that more efficient batteries and the addition of high efficiency diesels burning bio-diesel, as charging platforms, will likely be available within a few years. All of these things taken together convince me that we do indeed have the answer to completely eliminate our dependence on foreign oil

Now, you might think that my statistics aren’t sufficiently conservative. So cut them in half and the answer is still mind boggling. And just remember that all the technology to which I refer is currently in existence and is going to get even better over the next few years, as future hybrid generations hit the road with better and perhaps plug-in batteries, and E-85, and bio-diesel become our standard fuels.

I have spent most of my 66 years as a student of the automobile industry, first growing up in Detroit and ultimately as treasurer of Chrysler Financial Corporation, until 1977. More than 35 years ago, while working on my MBA at night and studying statistics with a Westinghouse electrical engineer, we dreamed aloud one Sunday afternoon and drew a schematic of a car that would use an internal combustion engine to charge a battery, just like the diesel locomotives being built by General Motors. I took our “hybrid” idea to some Chrysler engineers and found no interest. So much for American ingenuity, and thanks to the Japanese for seeing the light three decades later.

I am very concerned about the American automobile industry, radical Islamic terrorism and global warming. All of these problems relate to our inefficient use of oil and something has to be done about it right now. What can you do? Just go buy a hybrid car or SUV that suits your needs. Detroit will get the message, or they will fail.


Note: Neither Jack or Peter Falker, nor any of the clients of FalkerInvestments Inc. hold positions in any of the companies mentioned in this report.

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