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The Path to Lower Oil Demand and Gas Prices: A Green Vehicle Revolution Is a Much Better Route Than a Global Financial Crisis

| Wednesday December 31st, 2008 | 4 Comments

electric-engine1229.jpgWould a dramatic reduction in demand for oil caused by a green vehicle revolution cause the same type of reduction in oil prices that the global financial crisis has?
Overall, I don’t see why not.
In fact, I’m guessing that the eye-opening impact of the financial crisis on oil demand and prices is exactly what major oil producers are afraid of should the world experience a green vehicle revolution.
Think about all the benefits that our society would receive from an oil demand-destroying green vehicle revolution that lowers gas prices via efficient, clean technologies rather than via a global financial crisis:
* Broad economic stimulus beyond the oil sector: the combination of highly efficient clean vehicles and low gas prices will free up untold fortunes of peoples’ gasoline money to be spent on all things non-energy, providing a green injection of economic stimulus far and wide. Previously, I noted that:

Switching from a car that gets 20 mpg to one that gets 50 mpg will save the average American nearly $1,100/year in gas costs at $3/gallon (given the average distance Americans drive per year – about 12,000 miles; savings rise considerably as gas prices and miles driven go up). That savings is nearly two times the cash provided to us by our 2008 stimulus checks! Multiply that by the 112 million households in the U.S. alone, and that’s $123.2 billion/year that American households are now spending on gas that with a mandate for more efficient vehicles, they would have to spend on…everything else.

Even at currently lower gas prices, a Clean Vehicle Revolution promises to be a significant stimulative force in our economy.


* Greater economic stability as we break society free from the whims of increasingly unstable oil markets: I don’t know anybody who wouldn’t be thrilled to see more stability and predictability in their energy bills. The volatility of gas and other energy prices crimps many a budget — from families to businesses to whole governments.
Another — and major — economic benefit is that the U.S. will no longer need to spend untold $billions on military operations to secure oil supplies in the world’s most unstable regions — which cost us dearly both economically and politically. A Clean Vehicle Revolution promises to be a welcome stabilizing force.
* Massive environmental benefits – climate change and beyond. Not only will global heating carbon emissions be dramatically slashed, but so will emissions of other pollutants that have negative — and expensive — impacts on human well-being, like particulates, ground-level ozone, and acid rain-causing pollution. As I’ve noted previously, these environmental impacts of vehicle pollution inflict untold $billions in health-related, agricultural, and quality of life damages upon families and businesses each year. A Clean Vehicle Revolution will be healthy for our environment, and as a result, for our families and businesses.
* Significant security benefits will result from cutting off the flow of dollars from our gas and energy purchases that currently end up funding harmful agendas of countries that don’t like us. Reports are that the Saudis, Iranians, and Russians — countries that either showed increasing military boldness as oil prices rose (e.g., Russia and Iran), or are breeding and financing terrorism (e.g., Iran and Saudi Arabia) — are struggling with their first budget deficits in years. That means less money to spend on military adventurism and support for terrorist groups. Of course, the root causes of terrorism, such as poverty and the associated lack of education and social services, will still need to be addressed.
* Obviously, there are many more environmental, economic, security, and quality of life benefits that we will realize via a green vehicle revolution. You get the picture. Please feel free to contribute more in the comments below!
A Temporary Window of Opportunity – We Need to Act Now and Act BIG
Unfortunately, unless we act now to implement a green vehicle revolution at World War II mobilization-level speed, the low gas prices that we’re currently enjoying will be painfully short-lived. In fact, as soon as the economy starts to recover, demand for oil will recover with it, and growth will hit what I call “The Petroleum Ceiling“. This is especially likely now because low oil prices are slowing the development of new production projects. Thus, once the recovery begins, oil supplies won’t be able to keep up with rising demand, and there is a real danger that we will experience a far worse price spike than this past summer’s. Should this happen, it could potentially plunge us into a much more dire economic crisis than the one we’re currently experiencing — one rooted in Peak Oil.
The good news: we’ve learned this year just how quickly demand destruction can lower oil and gas prices. Now, let’s make this demand destruction permanent by implementing a historic green vehicle revolution that stands to become the type of victory story that our history texts tell for generations.
America can lead the way by devising a smart Auto Industry Bailout that propels Detroit into the forefront of a new age of efficient, green vehicles. The result will be both a psychological boost that helps lift America out of our recessionary malaise, and a broad economic boost as the proliferation of next-generation vehicles cuts our energy costs and inspires the creation of whole new sectors of supporting industries.
Jonathan L. Gelbard, Ph.D. is a conservation biologist and communications expert. He is the Executive Director of the Conservation Value Institute and the National Sustainability Producer of the Green Apple Festival.


▼▼▼      4 Comments     ▼▼▼

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  • http://steigercounter.blogspot.com/ Tom Steiger

    Articles like this drive me nuts. I don’t disagree with the idea of green vehicles, but the rosy outcomes offered by the “magic pill” of new technologies is typical of short sighted, quick fix, too often American perspective. For the rest of my comment see: http://steigercounter.blogspot.com/2008/12/technological-fixes-are-only-part-of.html

  • http://conservationvalue.blogspot.com Jon Gelbard

    Thanks for your comment Tom.
    Rather than arguing that technology is ‘the’ quick fix, I’m pointing out key ways that this type of green business solution can solve so many of our other major current challenges – economy, energy and climate – with one stone’s throw.
    It’s sure a heck of a better path to putting money in our pockets than those rebate checks – which in many cases just went to peoples’ credit card bills and then ‘poof’, were gone. It would have been much better if the ‘stimulus’ checks came as credits/rebates towards energy efficiency retrofit materials/services, energystar appliances, solar installations, and other such efficient and green solutions. This way of issuing stimulus checks would create a positive feedback in which the the checks continue to generate savings long after they are initially spent – a much better bang for the taxpayer’s buck!
    Will savings generate an unintended negative feedback of greater consumption and resource use? If you read the earlier post that the quote you cite comes from, you’ll note that I list ‘spending’ money saved via efficient technologies as just one option for what to do with it. Other options are SAVING the money for ourselves and our families, or GIVING to support charitable causes. In my case, it’s the latter two that I
    focus on, as I’m not big on ‘stuff’. From what I’m reading, the current economic crisis is generating a rise in savings for the first time in quite awhile – a hopeful trend.
    I certainly agree that major behavior changes are important – really we do need a whole new way of viewing our relationship to the natural world, or mother nature will probably show us the hard way (a good read of Diamond’s ‘Collapse’ demonstrates what happens when civilizations fail to make the needed changes…)
    These are all pieces to the puzzle of the change that we need to see, and I think that being aware of all the wonderful benefits of clean tech will help drive behavior changes – especially by emphasizing related value judgments: that if we can get from place A to place B in vehicles that generate far less emissions and cost much less to operate, than not to do so is just ‘wrong’. And we need to take those values to the voting booth to make sure that we elect leaders who make much smarter decisions than our leaders (and citizens) have been for awhile now…
    Just a few thoughts in response…

  • http://urbanworkbench.com urbanworkbench

    Personal transportation is unsustainable at the rates we experience now for at least these reasons:
    – The production of passenger vehicles uses almost as much energy as the vehicle will use during its lifetime.
    – We cannot expect that roads will be maintained at levels that will be able to support the speeds and traffic loads we currently experience.

    Your “one stone’s throw” should be re-localization and forget about investing in a short term fix, which will passify the masses and put all of us further behind the eight ball.

    There is a reason that humanity has not experienced the convenience of the past couple of generations of westerners – oil. The population of the world has quadrupled in the past 150 years – should everyone be able to drive? Is that the end goal here? Is economic collapse and energy descent not deserved after we prop it up with so much unfounded credit and false markets. There will likely be hardship, broken supply chains, food and water scarcity as well as political turmoil and many displaced persons.

  • http://conservationvalue.blogspot.com Jon Gelbard

    Mike – thanks for your comment.
    In martial arts, we don’t expect to go straight from white belt to black belt all at once. There are steps to take along the way. In the same way, I absolutely love all things local and public transport (which can be aided by things like a distance tax, MUCH more funding for public transportation, and the like). However, right now, our policymakers are focused on spending billions on a bailout for the auto industry, and a first step is to make sure that it is as smartly and forwardly-thinking green as possible.
    That said, our public transport systems do need a lot of work. It is ridiculous, for example, that while the Bay Area passed $1 billion for electric car infrastructure this year, our train system (BART) stops running at midnight. Without an easy public transport choice for getting home, weekend night-time drives over the Bay Bridge are terribly harrowing, full of dangerous drunk drivers (I’ve seen several horrible accidents and almost been hit myself by swerving cars several times)? This is truly a travesty.
    When I visit New York, I can always take a train home. Sadly, the Bay Area – for all its touted greenness – will NOT be a truly green metro area until its citizens have public transport options for getting home across the bridge at all hours.
    On that note, who wants to start the all-night BART ballot measure? If we can get $1 billion passed for electric vehicle infrastructure, surely we can get the $$ needed to run 2AM and 4AM trains between SF and the east bay – if nothing else, at least on weekend nights!