In Business, Creating Sustainable Enterprises & Communities

DRIVING BEYOND OIL

In Business, September-October, 2006, Vol. 28, No. 5, p. 24

Tour through the Midwest, driving an SUV hybrid and a Flex-Fuel car, allows communities and the media a chance to “kick the tires” on the road to energy independence.

Deron Lovaas

LEAVING workers behind, factories have shut down throughout the “Rust Belt” girdling the Midwest. A lot of manufacturing, once the mainstay of this region, has departed for other regions or shores. According to the Northeast Midwest Institute in Washington, D.C., transportation is about one-fifth of the regional manufacturing picture, so workers take it in the teeth as the auto industry struggles. Most recently, as reported in the August 8th edition of Automotive News, Ford announced the closing of 14 factories and loss of nearly 30,000 jobs through 2012. General Motors is under the gun too.
Yet it's also a time of opportunity. The Midwest is where solutions to oil addiction could take root. For example, factories can be retrofitted to build more efficient cars. A study by the University of Michigan (“Fuel-Saving Technologies and Facility Conversion: Costs, Benefits, and Incentives,” Hammett, Patrick, et al., November 2004) found that government incentives for building advanced technology cars such as hybrid-electric vehicles could save as many as 60,000 jobs.
And a shift to biofuels could be a boon to rural economies. The bioeconomy is already strong in many Midwestern states, and by shifting to the next generation of ethanol derived from plant cellulose, farmers could reap billions of dollars in new revenue by 2025.
For these reasons, the Natural Resources Defense Council (NRDC) mapped out a “Drive Beyond Oil” tour through the Midwest. The concept is simple. We assembled a small team of experts to drive two key technologies on a 2,000-mile, one-week trek. Our ambitious route took us through 16 cities in these states: Kentucky, Illinois, Indiana, Missouri, Ohio, Virginia and West Virginia. And the bottom line was twofold: To meet with key activists and officials, and drum up stories in the press about common sense solutions to oil dependence.
We chose two cars from domestic companies: A hybrid-electric Ford Escape SUV and a flex-fuel-capable Chevy Impala. As one reporter said, these cars “don't look like a spaceship,” evidence of mainstreaming. Better yet would be a combination hybrid-electric, flex-fuel vehicle on the road, but no such thing exists, yet.
Why combine the two? Ethanol, no matter where it comes from, has more than 30 percent lower energy content than gasoline; a boost in miles/gallon provided by the hybrid engine helps make up for that. And frankly, if we don't increase the efficiency of our cars, we won't have enough land to grow the energy we need to replace oil!

HITTING THE ROAD
We pulled away from the NRDC building in Washington, D.C. on a warm Sunday in August. First we stopped at a Wal-Mart parking lot in Martinsburg, West Virginia and talked with local residents, propping the hoods of the cars up in a show-and-tell exhibition. Then we headed to Youngstown, once one of Ohio's steel-industry powerhouses but now an economically depressed community of less than 80,000 people. We created a bit of a stir with the media, including interviews with two television stations and the local newspaper, The Vindicator.
On day two, I gave back-to-back speeches to audiences at Ohio State University (OSU) and the University of Dayton. The speech, called “Set America Free: Getting Clean of Oil,” was about policies and technologies for breaking the petroleum habit. At OSU, we toured world-class facilities for experimenting with car technology, including the “Buckeye Bullet II,” which holds the speed record for electric cars at an eye-popping 321 mph. The Escape we were driving is a more modest version of this technology, using batteries to fuel the car in addition to gasoline.
Next step is a “plug-in” hybrid-electric car, which runs exclusively on battery power for a limited range. But, as I wrote in the blog for the trip: “[S]ources of electricity aren't uniform across the country. One study showed that much of the power for plug-in hybrids can come from off-peak, surplus generating capacity. That's good. But what if more power is needed to accommodate a new fleet of plug-ins in a particular region? In those cases, a grid powered by clean, renewable energy is a must for maximizing environmental benefits such as cutting global warming pollution.”
By now, we were looking for spots to fulfill our commitment to run the Impala on E85, a blend of 85 percent ethanol and 15 percent gasoline. Higher-ethanol blends burn more cleanly, emitting fewer smog-forming pollutants. Fueling up with E85 is a tall order. There are almost 170,000 gasoline retailers in the United States, and less than one-half of one percent of them carry it. Ohio has only one E85 pump for every million residents, which made locating and fueling up at one such location (in Wooster, Ohio) a rare treat. And sadly, after we turned the corner and were headed home from St. Louis, we had to fill up with gasoline given the dearth of pumps elsewhere.
Next day, we hosted a “hybrid rally” with NRDC activists in Peoria, who drove Honda hybrids (an Insight and a Civic) to a lot where reporters from the local paper and television stations talked with us about our tour. We then headed to the Hoosier Environmental Council (HEC) in Indianapolis, where we discussed alternatives to oil with staff and board members and took a look at a Volkswagen running on biodiesel. On the way out of town, we visited the Indianapolis Motor Speedway, where racers starting in 2007 will use 100 percent ethanol in their cars.
On Wednesday, after meeting with staff from the Mayor of St. Louis' office about greening government vehicle fleets, we sped down to Louisville (home of the Kentucky Derby as well as distilleries of alcohols besides ethanol) for a press conference outside a top-notch restaurant called Lynn's Paradise Café. Organized by University of Louisville Professor John Gilderbloom, the event attracted several citizens and two television stations. Next it was on to Lexington for a whirlwind set of media appearances and interviews - two talk radio shows, two NPR affiliates and the local television and newspaper - followed by a stop in Charleston, West Virginia for a quick television appearance. Then we hit our last stop in front of a cool natural food store in Roanoke, Virginia, where we showed off the autos below a funny marquee, “Gas Pains? Hybrid Cars Here.”

TAKE-AWAY LESSONS
After testing these vehicles and much back-and-forth with reporters and activists in towns, we learned at least three lessons:
Vehicles must combine technologies (i.e., imagine a flex-fuel hybrid-electric vehicle), since it's cumulative oil savings that matter; Policy must help bridge the infrastructure gap, making sure the private sector builds oil-efficient technologies and biofuels pumps; and Consumers want more choices, both in vehicles and fuels.
The last point is worth emphasizing. Thanks to the dramatically dropping costs of marketing, distribution and inventory afforded by technologies such as the Internet, consumers are encountering so-called “long tails” of demand curves - the curve which stretches to the right along the horizontal axis of units sold - in an increasing number of markets. As detailed in a compelling new book by Chris Anderson, The Long Tail: Why the Future of Business is Selling Less of More, after a century of “obsessing” over the few hit products at the head of the demand curve, the new economics of distribution turn consumers' focus to the many more products in
the tail. Basically, there's a trend away from markets based on a short number of hits to ones based on large numbers of small niches. This trend has dramatically boosted choices for consumers, for example, in rental movies (Blockbuster vs. Netflix), radio (Top 40 vs. satellite radio) and books (Crown vs. amazon.com).
Yet when drivers pull into a dealership they have precious few hybrid alternatives. And when they pull up to a pump at nearly every retailer in America, they have no choice but petroleum-based fuels. Consumers demand and deserve more choices.
And that's the message we'll be taking on our next “Drive Beyond Oil.” Our tour takes us through Florida - 1,200 miles in one week - in October. Maybe we'll meet you on the road!

For more information about the tours go to http://drivebeyondoil.typepad.com/.

AUTOMAKERS CAN PROFIT FROM EFFICIENT FUELS
A REPORT published on September 19, 2006 shows that Ford Motor Co. and Daimler-Chrysler can boost annual profit as much as a combined $2 billion by raising the fuel efficiency of their vehicles. "What is surprising is that each automaker is financially safer if they follow a proactive fuel-economy strategy, regardless of what their competitors do," says Walter McManus, lead author for the study done by the University of Michigan Transportation Research Institute.
U.S. automakers had the most to gain by boosting fuel economy because they depend on sport-utility vehicles and pickup trucks, which are generally less efficient than cars. Researchers found that Ford would gain the greatest profits of any U.S. automaker. McManus said that U.S. car manufacturers would profit from boosting fuel economy even if gasoline sold for $2/ga11on, the lowest price they considered. Profits would be $1.3 billion in 2010.
The study used gasoline prices of $2.30/gallon as its basis for comparison. Boosting fuel economy for a future with $3.10/gallon gasoline would create a net total of 16,000 new jobs because of increased production according to the study analysis.