In the US, and most industrialized economies, the second largest expense of individuals and households is personal transportation. Given the hundreds of man-years in development of the technology, the extremely low cost and high energy density of gasoline and diesel as fuels, it is not surprising that the dominant means of transportation is combustion powered. Cars, buses, motorcycles, even bicycles are powered using the same basic combustion approach.
Considering the possibilities of improved personal transportation, the consequences of a major change in transportation technology are significant and should be carefully considered as we move forward.
The major impact of all the technology being promoted these days is increased efficiency and reduced fuel consumption. Whether your motivation is reducing emissions and cleaning the air, or you are interested in reducing your cost of transportation, the requirement is the same; get more miles out of a gallon of gasoline or eliminate gasoline usage altogether, as is the case for a pure electric vehicle.
Across the entire population of cars in the US, the average fuel efficiency is around 20 miles per gallon. Despite the demand for higher fuel mileage from consumers, this situation hasn’t improved much in the last few decades. A dismal thought in contrast to the claims being made these days for the new solutions.
The US consumes 383.25 million gallons of gasoline and diesel fuel per day. This all goes into transportation. The only fuel going into electrical generation is in diesel gen-sets for backup and remote power, just in case anyone is thinking about the barrel- of-oil-to-electricity energy equivalency.
Imagining a future in which gasoline usage declines is not difficult. I drive a Ford Fusion for work which is averaging 30 mpg combined city and highway. If the US fleet average is 20 mpg, increasing that average to 30 mpg implies decreasing the amount of gasoline sold by 1/3. Currently, gasoline retails for $3.25/gallon, or $453 Billion annually at the pump.
So a sharp change in usage due to efficiency or an increase in the number of electric vehicles, is cause for concern from oil & gas exploration companies, gasoline refiners, distributors and dealers. Unless gasoline prices continue to go up. In which case there would be less gasoline solid at roughly the same total revenue, which suggests that higher profits might be the side effect if the true cost doesn’t go up.
What about tax revenues? The direct state and federal tax on gasoline is about 40 cents per gallon. This does not include large excise taxes collected by the states, taxes paid by refiners and distributors, etc. In fact, it would be hard to calculate how much of gasoline pricing is taxes and how much is the cost of the product. Regardless, at 40 cents/gallon, the daily revenues are $153 million and the annual is above $55.8 billion.
Given the current economic picture, is there any level of government that is willing to give up the tax revenue from gasoline? Probably not. Is this any different than “Dollars for Oil” at the UN a couple of years ago? Probably not. But we thought that was a scandal.