Ford’s new CNG-gasoline truck, etc.
Competition between cars is
feeble. It is weak, slow, expensive, and cumbersome. It
will do very little to lower fuel prices. Competition between power
sources within a single vehicle, on the other hand, is robust,
vigorous, agile and immediate. It pits fuels against each other,
creating a strenuous daily battle to provide the best deal for the
consumer. That's the kind of competition we should be aiming for.
To brew coffee at home, imagine what it would be like if each different kind of coffee required a different kind of machine.
If you wanted to brew Folder’s coffee, you had to use a Folder’s
machine. If you wanted to make Peet’s coffee at home, you had to use a
Peet’s coffee machine. Each machine costs, let’s say, $100. You would be
able to say that technically the different kinds of coffees are
competing with each other, but it is also clear that this is a far cry
from what we have now — where a single drip coffee machine can brew any
of these brands of coffee, which forces the brands to compete more directly
with each other. They must constantly try to outcompete
each other to get your coffee dollars.
What if Peet’s
dropped the price of their coffee, and you really liked Peet’s coffee,
but you had a Folder’s machine? You couldn’t take advantage of the new
low price for Peet’s unless you forked over 100 bucks for a new machine.
You might hesitate to get the new machine. Peet’s new lower price might
be temporary, after all. And how long would it take for you to recoup
the 100 dollars for the new machine at Peet’s new low price?
the choice people have now with cars and fuels (but with far more money
at stake). You can buy a CNG car, but the car is more expensive than a
gasoline-only car, and it still runs on only one fuel. No fuel choice.
And what happens if natural gas prices rise and/or gasoline prices drop?
You cannot easily switch fuels. That’s what happened in Brazil
during the mid-80s and early 90s — the country had switched most of
their cars to ethanol-only cars in the early 80s (flex fuel cars hadn’t
been invented yet), but OPEC decided to drop the price of gasoline very
low in the mid-80s. Brazilian drivers of ethanol-only cars were paying
much more for their fuel than the owners of the old fashioned
Competition between cars is feeble compared to competition between fuels within
a single car. Think about what happened to phones. Originally, each
cell phone had different features, and you could choose between phones. This was weak competition, though, because phones cost money and you often had to agree to a two year contract, etc.
Now most phones are capable of using apps. The apps are
competing within single phones, and innovation has exploded. You don’t
have to buy a new phone to get a new function. There are literally millions of apps available, doing every conceivable thing, with the level of innovation rising exponentially.
same thing could happen in the fuels market. Imagine automakers
creating cars that can use multiple power sources — the more power
sources the better. For example, General Motors is coming out with a Chevrolet Impala in 2015 that will be capable of using gasoline or compressed
natural gas. It will have two different tanks. Drivers will be able to
fuel up on either, so those two fuels will have to compete against each other at the pump.
But GM could
go even further. Since the car can burn gasoline, with a few very minor
tweaks it could also burn ethanol, using the same liquid
fuel tank used for the gasoline. Now all three fuels would have to constantly battle each other.
the EPA changes its regulations, methanol could be added too. Four
fuels in a single car. That's starting to look like robust competition.
Methanol and ethanol can also be made from multiple feedstocks, and those sources would
have to compete with each other. Most methanol, for example, is made from
natural gas. But it can be made out of many things. If a local waste conversion facility was turning garbage into methanol, it could compete
with methanol made from natural gas. They could compete on price, and they
could also compete on other factors. Even if the methanol made from
local waste was more expensive, some people would rather buy it because
it is local or because they want to support that industry, or for
whatever reason. So even between different sources of methanol, we could
have competition. The same would be true for ethanol.
can go still further. If the car can burn compressed natural gas and
gasoline and methanol and ethanol, it might also be a plug-in hybrid.
Now all those fuels would have to compete directly with electricity.
The point of all of this is that we need to draw a clear distinction between vehicle competition and fuel competition.
They are two very different things. And we should be aiming most
intently at fuel competition. We should aim at pitting fuels against
each other in real time.
Methanol sells today for 93
cents a gallon. It is only 60 percent of the energy density of gasoline,
but that still makes it half the cost of gasoline per mile driven. This
low cost is in the absence of a vigorous competitive fuel
market. If methanol was allowed to fight for our fuel dollars in an open
market (which is what the Open Fuel Standard would accomplish),
methanol could get even cheaper, and gasoline would have to radically drop its price if it had any hope of competing.
fuel competition would transform our economy. Each of us would have more money to spend, which would create more jobs. The strategic
importance of the Middle East would dwindle, which would allow for fewer conflicted foreign policy decisions. We’d save billions that we now
spend protecting shipping lanes for oil. Every power source we’ve
mentioned — CNG, ethanol, methanol, and most sources of electricity —
produce less pollution than petroleum fuels, so the competition would be
good for our health too. The petroleum industry would no longer have a
monopoly and the excessive power it gives them. America would be a
happier, freer, more prosperous country.
You can help us make this happen. Begin here.
Author: Adam Khan, the co-founder of OpenFuelStandard.org and co-author of the book, Fill Your Tank With Freedom.