Why the U.S. Is Not Addicted to Oil

In 2006, President Bush announced to the world that we were addicted to oil.

Given the President's track record and horribly failed energy policies, I didn't really buy what he was trying to sell. The fact is, I could write an entire book about why his declaration to wean us off oil (which was made more than two years ago) doesn't quite match up with the administration's continued agenda of impeding the growth of promising alternatives.

But let's face it: In these pages, I'd just be preaching to the choir. And my intention is not to tell you something you already know, but rather share with you the information and data that I use on a regular basis to validate the economic superiority of alternatives to fossil fuels.

And that's why I'm asking you today

Are we really addicted to oil?
The word addiction indicates that we have a compulsive physiological and psychological need for oil, as if it were cigarettes or caffeine. When you wake up in the morning, do you crave oil? Do you need it to get through the day?

It is true that, without oil we don't have gasoline. And without gasoline, how the heck are most folks supposed to get to work, school, or even the grocery store? The fact is that many Americans don't live within walking distance of their workplaces, shopping districts and schools. So assuming your car runs on gasoline (a safe assumption to make), your oil requirement may be a real one.

But does this necessarily qualify as an addiction? Or is this merely a case of having a lack of options? In other words, if your car ran on something other than gasoline or diesel — something that was actually cheaper and better for the environment — would you still shell out $4.00 a gallon to fill your car with 87 Octane?

Conspiratorial nonsense or good business?
It has long been suspected that Big Oil and the major automakers have spent millions on strategic suppression and misinformation campaigns regarding alternatives to oil and the internal combustion engine. Some consider this to be nothing more than conspiratorial nonsense, others consider it good business.

Either way, as oil prices continue to rise and the truth about the economic shortcomings of the oil industry are exposed by the marketplace, alternatives to oil and the conventional internal combustion engine are now surfacing. And just like so many investors made fortunes in oil and auto manufacturing, we're going to do the same with the first validated alternative transportation market that will eventually force auto manufacturers to embrace the future—-or fall victim to it.

Backed into a corner
There are certainly a number of alternative transportation technologies in existence today. But what we see as the best near-term solution for both consumers and investors is the Plug-In Hybrid Electric Vehicle (PHEV).

PHEVs exist right now. The infrastructure exists right now. The vehicles exist right now. And some of these things are delivering in excess of 100 miles per gallon.

Kind of puts that whole greenwash of the updated CAFE standard in perspective.

While the bureaucrats in Washington have patted themselves on the back for requiring a fuel-efficiency standard of 35 miles per gallon by 2020, there are companies--heck, there are just regular people--building PHEVs that can double, even triple that.

So why are we really only starting to hear about this stuff now?

Because there's finally a market for it.

The daily commuting population in the United States is being backed into a corner.

In fact, just just last month the American Public Transportation Association released a report that showed public transit trips from January to March rose 3 percent over the same period last year, and light rail systems saw a 10 percent jump.

Unfortunately, only about 20 percent of U.S. households have easy access to buses or trains. So mass transit, as it stands now, anyway, is not necessarily an option for many people. A sad commentary indeed on how the greater good of the country has been compromised by special interests.

Nonetheless, the PHEV can certainly provide the relief many of these commuters need from higher gasoline prices.

Why?

Because many of the PHEVs that are being developed today, including conversions, can deliver at least 30 "all-electric" miles on one charge.

That's 30 miles without using a single drop of gasoline!

Since the average commute for a U.S. driver is 29 miles per day (according to the Bureau of Transportation Statistics), that 30-mile range is more than sufficient. And imagine, just for a moment, the impact this would have on the entire U.S. commuting population.

What are you paying?
According to the U.S. Census Bureau, there are 105,046,395 commuters in the United States who drive to work, alone, in their cars, vans, or trucks. Assuming all the passenger cars driving 29 miles per day delivered 27.5 miles per gallon (CAFE for passenger cars as of December, 2007—before the CAFE upgrade was mandated), these typical commuters will blow through 1.05 gallons per day.

Based on our 105,046,395 commuters, you're looking at a total consumption rate of 110,298,714.75 gallons per day. At an average of $4.07 a gallon (the average cost at the time this post is being written), that's $448,915,769.03 that hard-working Americans are paying every day—when they don't have to!

These people aren't addicted to oil. They just don't have access to the vehicles that can get them to and from work, everyday, without using the stuff.

But they do exist. And it won't be much longer until consumers will have the option to purchase these things at their local dealerships. We're not talking about decades anymore, either. We're talking about three to four years! And when this happens, you're going to see the true power of consumers, as their purchasing decisions will reflect the demand for real fuel efficiency—thereby continuing the transition of the personal transportation marketplace.

This is why PHEVs have a real shot at being the first alternative transportation technology to become integrated on a large scale.

Next week, we will take a look at a few of the companies that are developing these PHEVs, and more specifically, the publicly-traded companies that investors are looking at as the most promising long-term investments in this sector.

To a new way of life, and a new generation of wealth

More on the cost of oil
The Green Quotient: A Q&A; with Thomas L. Friedman
Big Oil Economics: The Greatest Welfare Scam Ever!
New Cafe Standards? Don't Break Out the Champagne Yet
More on PHEVS
We Wuv PHEVs
Ultimate Benefits of PHEVs Will Depend on Fuel Economy of Vehicles
Plug-In Hybrids Could Help Stabilize The Grid