Oil Prices and the Pace of Auto Innovation

The price of oil dropped below the psychological barrier of $100 a barrel today—despite hurricane-damaged oil rigs in the Gulf, rebel groups declaring an “oil war” in the Niger Delta, and a barrage of negative news from Wall Street that previously led speculators to drive up the cost of petroleum. The current drop in oil prices—more than $50 off the record high price of $147.27 a barrel on July 11—raises questions about how soon auto companies will deliver on exciting plans for “game-changing” alternative vehicles.

Buyers beware: Any time you see the term “game-changer” applied to a single vehicle or a single technology, pause for a moment to think about how fast or slow the game will really change. That’s what Joseph White considered in today’s Wall Street Journal article, “Why the Gasoline Engine Isn’t Going Away Any Time Soon.” As White outlines:

  • Gasoline and diesel are easily transported and easily stored…Even now, gasoline in the US is cheaper by the gallon than many brands of bottled water.
  • Engineering and tooling to produce a new vehicle takes three to five years—and that’s without adding the challenge of major new technology. The best new models will be relatively expensive, and will take several years to become big sellers.
  • By 2020, many mainstream cars could be labeled “hybrids.” But most of these hybrids will use relatively low-cost “micro hybrid” systems to shut the car off automatically at a stoplight, and then restart it to accelerate.
  • “Moon-shot efforts” like GM’s Chevrolet Volt get a lot of attention, but the most effective ways to use less energy may have less to do with changing technology than with changing habits.

White points to “glitzy ads, media chatter and Internet buzz” about plug-in hybrids, electric cars, and hydrogen—and writes that it’s easy to get lulled into thinking “auto makers can quickly execute a revolutionary transition from oil to electricity.” But, he says, “the revolution will take years to pull off—and that’s assuming it isn’t derailed by a return to cheap oil.” The genuine desire for alternatives—from outside and within the auto industry—shouldn’t cloud our thinking about the real pace of a green car revolution.

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  • Zachb

    OK Who is buying a bottle of water for$3.50? If we all think like this guy we will never get off oil. The time is now to invest in all the different technologies out there (Hybrid, PHEV, Hydrogen, etc.) This guy gets paid by the Wall Street Journal and hasn’t a clue. Check out Honda and Toyota’s website, the technology is already on the roads.

  • jvoelcker

    White is right. Consider that it took hybrids 10 years from the very first ones built commercially (1997) to reach roughly 2% in the US market–and far, far less anywhere else in the world.

    Energy density is a very powerful concept. It still awes me when I realize that one gallon of gasoline–which I could carry around in a backpack–will transport a 2-TON vehicle 20 miles! Powerful indeed.

    Liquid fuels will be with us for decades to come. They will not, however, power every vehicle on every duty cycle. And some of them, we hope, will not be based on petrochemicals but other forms of production (biomass fermentation, excretion by custom-tailored algae, etc.).

    So it’s not an either/or … it’s a both.

  • Paul Rivers

    “OK Who is buying a bottle of water for$3.50?”

    No, he said *per gallon*. Think of a gallon of milk – the average bottled water container holds what, 1/4th of a gallon?

  • Bryce

    it’ll be slow and sure. It will come though. When yoiu appeal to people’s pocket books, they will make the logical decision. $100 a barrel gas is still more expensive than it was several years ago and the per gallon price is going to take months to come in line with barrel prices. The fuel efficient trend has nothing to worry about from cheap gas.

  • Bob_C

    Anyone else notice that the last time the price of oil steeply dropped was just a few months before the 2006 election? That a few months after which it began it’s never ending climb up into the Land of Ridiculous Pricing Land until it once again steeply began dropping off for apparently no reason just a few months ago? Despite hurricane concerns on top of it? I noticed it back in 2006 and am beginning to see a trend in 2008. Can we time capsule this post to be re-opened two years from now for comparison?

  • Collin Burnell
  • Samie

    Bryce you may be right but maybe you should be careful with your statement about low gas prices vs fuel efficiency trends. Stable or lower fuel prices over a long period would easily trump any trend in fuel savings. Consumers react only when the prices are unstable over a short period of time. We could look at the last 2 years. Look at the artificial prices of the late 70’s, although technology has changed, we see some of the same conditions today.
    “Moon-shot efforts” like GM’s Chevrolet Volt get a lot of attention, but the most effective ways to use less energy may have less to do with changing technology than with changing habits.——True but how long and how often do people hear this but ignore using less energy, “Moon-shot efforts”, the Volt? I’ll put my trust in new vehicles any day over the statement above. Why, do you see any mass market alternatives using other inputs besides oil exclusively, no you don’t. Can’t change human behavior but you can change the vehicles that he or she drives.

  • steved28

    “Those who cannot remember the past are condemned to repeat it.”

    Insanity: doing the same thing over and over again and expecting different results.

  • RKRB

    -Speaking of innovation, The Economist magazine had a fine section on green technology in their September 4 edition, with several relevant articles about autos and about Energy Efficiency. Some conclusions were:
    1. Hydrogen-fueled cars, like nuclear fusion and the Cubs winning another World Series, will always be many years into the future. Projected and current technology requires extracting hydrogen from fossil fuels, which produces more carbon than if the fossil fuels were burned with the efficiency of modern auto engines.
    2. Major technological changes bringing more efficiency to existing cars will soon arrive in several waves, and regardless of the price of fuel. A “green car,” like “friendly fire” or “journalistic ethics,” is an oxymoron, but future cars should destroy the planet considerably more slowly than existing ones.
    3. Technology will also make other appliances, including computers and rechargeable batteries (which use an increasing amount of the electricity consumed by our cars and homes), far more efficient as well. Green Geeks, Rejoice!!
    4. Most of these innovations appear relatively independent of oil’s price. Of course, anything can happen, and often does!
    4. Climate Engineering, the stuff of science fiction, may be possible sooner than one thinks (“possible” is not synonymous with “practical,” or “desirable,” but it may be a good thing to have in our bag of tricks). “Not in my backyard,” you say? It may be possible to fine tune it a bit so Canada doesn’t freeze even as the Amazon sheds excess heat. “Horsefeathers!” you say? Read the article.

    -The article has some interesting expert-based information and is well worth a quick read (on their website or at your library, which you naturally visit on your way home from work or your shopping trip to the organic farmer’s market, instead of making a special visit). PS I have no financial considerations from them other than a subscription (oops! that means I’m wasting paper!)
    Enjoy the trip into the near-future!

  • Cliff


    I pay about $.70 for a gallon of water.

    We better NOT be using mostly gasoline within 10 years, or the good ‘ole US of A will be wholly owned by the Arabs, and other foreigners who we give our hard earned money to without even thinking about it.

    We need to start using Natural Gas, Electricity, and renewably (or with nuclear power) produced hydrogen for our major transportations fuels, ASAP!!!!


  • michael a.

    The internet changed the wold in 10 short years. And, this change was completely unexpected. The transition to green power will also happen with unexpected speed.

  • Bryce

    let’s hope so. : )

  • Joe

    The American people know that gasoline will only go up and we want more fuel efficient vehicles, until we have EV’s, Hydrogen cars and biodiesel. We want Solar, Wind , clean coal plants, and new nuclear technology to supply these future vehicles. We can no longer to rely on OPEC to screw our economy anymore with fluctuating oil prices. To me this is a Terrorist Economical attack on America!

  • BP

    Steady supply of energy is vital to our economic stability and national security. We cannot go on depending on energy sources that comes outside the control of and outside the territory of the US. We should limit the use of oil based fuel for military and emergency use only. The rest of us civilians should use alternative energy generated by the sun, wind, nuclear and geothermal plants, etc. This country is blessed with so many gifted and creative people. It is interesting watching at YouTube some of this guys working from their own small garages and some in big university laboratories to make technological breakthroughs happen that will improve power generation and storage. And, yeah, my bottled water costs 25 cents a gallon.