We are fast approaching the tipping point at which world oil
production begins to decline. The United States is not only by
far the world’s largest oil and gas consumer, but it is also
the largest importer. And in contrast to many other nations, there
is no sign of policy-driven efforts to control consumption. Big
energy-consuming countries such as China, the United States, Japan,
Germany, the Republic of Korea and India are all contributing to
rising oil prices.
Rises in oil prices have more complicated explanations. Fundamentally,
supply and demand in the global oil market is rather fragile and
a primary estimate suggests that, based on supply and demand alone,
the price for crude oil should be around $40 per barrel. What comes
next, the “terror premium?” Could the fear of emergencies
such as acts of terrorism be bumping up oil prices? Some say it does,
reckoning that this accounts for $10-$15 of the current per-barrel
cost. As if that were not enough, the “speculation premium” adds
In his 2006 State of the Union address, President Bush called for
an end to the nation’s “addiction to oil.” Keeping
America competitive requires affordable energy. And here we have
a serious problem: America is addicted to oil, which is often imported
from unstable parts of the world. The best way to break this addiction
is through technology.
Environmental Consideration Driving Manufacturers
Manufacturers are keen to optimize their environmental impact and
communicate the positive steps they are taking to NGOs and other
public interest groups. Increasingly, environmental considerations—and
public input—are driving manufacturers’ decisions. The
ways urbanization and urban transformations unfold over the next
few decades will have profound implications for the prospects of
sustainability at regional and global scales.
In the near future, utilizing drive-by-wire (or direct-drive) technology,
the hybrid’s electronic controls add a new degree of precision
to the communication between driver and vehicle.
Drive-by-wire technology refers to the replacement of mechanical
components with electronic controls. Basically, brake-by-wire means
there is no mechanical connection between the brake pedal and the
brakes during normal operation. This lets the system electronically
optimize braking for maximum fuel economy and braking performance.
If enough power is available for safe braking, the residual energy
caused by the braking is channeled back to recharge the battery.
Along with the braking system, the hybrids utilize another form of
drive-by-wire technology, the electronic throttle control. As with
the brake pedal, when the driver steps on the gas pedal, a sensor
monitors the movements. In turn, the vehicle control system balances
the driver’s input with the amount of energy required by accessories
like air conditioning that are running.
Drive-by-wire technology may be essential to the hybrid’s functioning,
but the technology has also found a home in some of Ford Motor Co.’s
non-hybrid vehicles. For instance, the 2004 Ford Explorer introduced
electronic throttle control with the 4.0-liter V-6 and the 4.6-liter
V-8 engines, while the redesigned F-150 also incorporates electronic
throttle control. In Europe, a number of Ford vehicles have utilized
drive-by-wire throttle controls for many years on both gas and diesel
The most direct market signal to encourage consumers to demand fuel
efficiency is an increase in the cost of driving. Recent record-high
gasoline price increases encourage consumers to value fuel-saving
technologies. However, motorist interest in fuel savings often dims
when fuel prices decline. Advanced fuel-efficient technologies are
frequently costly, particularly in their first years of introduction,
and such incentives can facilitate the introduction of advanced technologies
by helping to bridge the price differential between these vehicles
and conventional vehicles. Congress has considered a variety of technology-based
incentives in recent years to encourage consumers to purchase advanced-technology
The Promotion Of Alternative Fuels
The promotion of alternative fuels has been the centerpiece of
energy policy. Bush has said the primary reason he would like to
see more drivers shift to vehicles such as flex-fuel vehicles, which
utilize the E85 ethanol-gasoline mix, is that it reduces the amount
of oil the nation must buy from foreigners. “It’s in
our national security interest and our economic interest as a state
to diversify,” Bush said. “It would make sense to me
to be reliant on sources of energy internationally that would be
more stable than oil from Venezuela, oil from the Middle East (or)
oil from Nigeria, where there is political instability or outright
hatred of our country.”
While there’s debate on whether using more ethanol would make
much of a dent in oil imports, environmentalists agree with Bush’s
second reason for promoting its use: It spews much less pollution
into the air. The E85 tends to promote a cleaner environment.
Since 2001, Ford has spent nearly $10 billion to develop cleaner,
cheaper and more reliable alternative energy sources—and the
company is on the threshold of incredible advances. But we must also
change how we power our automobiles. At Ford, we will increase our
research in developing better batteries for hybrid and electric cars,
and in pollution-free cars that run on hydrogen. We’ll also
fund additional research in cutting-edge methods of producing ethanol,
not just from corn, but from wood chips and stalks, or switch grass.
Our goal is to make this new kind of ethanol practical and competitive
within six years.
These days, small cars are making a comeback. Automakers are rediscovering
how easy it is to sell good fuel economy and low prices. “Small
is big in America,” said Mark Fields, Ford’s head of
American operations. To illustrate this point, consider that the
top Japanese car companies, Toyota, Honda and Nissan, are launching
$11,000-$14,000 subcompacts smaller and cheaper than their popular
Corolla, Civic and Sentra compact sedans, respectively.
Ford is using the international auto show to test reaction to its
Reflex concept car, a coupe so small that only one adult fits in
the back seat. Audi already is selling a subcompact hatchback, the
A3, in the United States. Mazda is marketing a mini-minivan. Mercedes-Benz
and BMW keep thinking out loud about bringing subcompact cars to
Online car-shopping service Autobytel reports that 42 percent
of online shoppers surveyed would “definitely” buy a
Not all automakers are convinced that small cars make good business
sense. Chrysler is exploring the idea of making a small car with
an outside, Asian partner, but the business case would have to show
Chrysler making a solid profit. If economy models zoom as much as
automakers think, it’ll be a huge about-face for a country
in which bigger has been better for years, and in which trucks have
outsold cars handily. Three-dollar-per-gallon gasoline and an evolving
moderation seem to have redirected shoppers toward small cars.
A recent KPMG survey showed that 84 percent of the executives believe
that fuel economy is a top concern of buyers, second only to quality.
That presages a push for higher-mileage models over the next few
years. Automakers hope the fresh array of economy models will divert
some used-car buyers into new-car showrooms. Automakers aren’t
fielding low-price, high-mileage small cars altruistically to put
fuel efficiency and the new-car smell within reach of most Americans;
they are doing it to make money and keep making money.
Concern for Safety
Consumers are looking for ways to save fuel, and they need to know
that if they decide to buy a much smaller vehicle, they aren’t
putting themselves and their families at risk. Compacts made up 13.4
percent of vehicles on the road in 2004, and data account for 30
percent of vehicle fatalities occurring in compacts that year. Small
cars have more than twice as many occupant deaths each year as large
cars. The deadly potential of small cars isn’t, as many people
fear, because big SUVs crash into them. Instead, 41.5 percent of
small-car deaths in 2004 were single-vehicle accidents. Another 6.1
percent of small-car deaths were from small cars crashing into one
another. Small cars lack the size to provide generous crash-absorption
Some say an overabundance of choice is a hurdle. The economic models
are hitting the market along with a staggering array of other cars
and trucks, slamming shoppers with a ton of selection that could
bewilder, even paralyze. Chances are, you’ll walk out of the
showroom with nothing. On the other hand, low price is a big selling
point. Instead, automakers are planning a record 67 vehicle introductions
for the 2007 model year, according to a tally by investment house
Merrill Lynch. With a $12,000 price point, the economy-car market
goes beyond gasoline prices.
Another factor for change has been the federal Clean Air Act. For
years, dozens of health groups—including the American Medical
Association, American Lung Association, American Heart Association,
American Cancer Society and American Academy of Pediatrics—have
urged the EPA to set tougher standards for short-term and long-term
exposure to particle pollution from vehicle tailpipes and factory
smokestacks. Particle pollution can trigger asthma attacks, heart
attacks and premature death from various heart and lung ailments.
Transportation sources contribute more than half the total amount
of man-made air pollution in the United States today. Motor vehicle
emissions account for approximately 77 percent of the carbon monoxide.
In compliance with the Clean Air Act, car makers have since greatly
reduced the amount of pollution that comes out of the tailpipe. New
cars are estimated to run 90-percent cleaner than those made 20 years
ago. Still, a few months ago, the U.S. government approved new air
pollution standards, promising “cleaner air to all Americans,” but
health and environmental groups said the revised rules are too weak
to protect against lung disease and other pollution-related ailments.
The new standards will reduce premature deaths, heart attacks and
hospital stays for people with heart and lung disease, and bring
health benefits valued at between $20 billion and $160 billion a
year. The EPA, the California Air Resources Board, engine manufacturers
and others have completed tests and demonstration programs showing
that using the advanced emissions-control devices enabled by the
use of Ultra Low Sulfur Diesel (ULSD) fuel reduces emissions of hydrocarbons
and oxides of nitrogen (precursors of ozone), as well as particulate
matter to near-zero levels. EPA studies conclude that ozone and particulate
matter cause a range of health problems, including those related
to breathing, with children and the elderly among those most at risk.
The EPA estimates that there are significant health benefits associated
with this program.
Breakthroughs on this and other new technologies will help us reach
another great goal: to replace more than 75 percent of our oil imports
from the Middle East by 2025. By applying the talent and technology
of America, this country can dramatically improve our environment,
move beyond a petroleum-based economy and make our dependence on
Middle Eastern oil a thing of the past.
Green Vehicle Research
Right now there appear to be two directions in which green vehicle
research is headed. One is toward the development of cellulosic ethanol—ethanol
made from everything from wood chips to grass clippings—as
replacement for gasoline in conventional cars. The other path is
toward better battery technology, specifically with lithium-ion batteries
to be used in hybrid, plug-in hybrid or electric vehicles. Will one
technology beat the other in the race for cleaner vehicles for tomorrow?
Or will the technologies simply converge and complement each other?
Since cellulosic ethanol could be derived from nearly free plant
waste or cheaply grown fuel crops (such as switch grass), it seems
likely that it will be less expensive to produce than today’s
ethanol made from corn or sugar cane. Further conventional gasoline
engines need only minor and inexpensive conversions to allow them
to run on ethanol.
Those two attributes alone should give cellulosic
ethanol an edge. But ethanol will always have less energy content
than gasoline. More needs to be burned for the same number of miles
driven. Automakers have set a goal of selling 1 million hybrids,
diesel and ethanol vehicles in 2006, and 2 million by 2008. They
are selling 46 models of alternative-fuel automobiles, including
ethanol vehicles capable of running on E85, clean-diesel autos and
hybrid electric vehicles. Thirty-five models of alternative-fuel
autos are in development for future introduction.
The number of alternative-fuel autos on U.S. roads has more than
doubled from 3 million in 2000. Electric and plug-in hybrid cars
can use energy from a variety of sources: coal, nuclear, natural
gas or oil-fired power plants, as well as solar, wind, geothermal
or landfill gas.
Advocates for diesel—a less-refined fuel than gasoline that
burns more completely in the engine, delivering more power—say
it can cut oil use, perhaps more quickly and cost effectively than
alternatives such as hybrids and ethanol. Diesel fuel is also far
more widely available than some alternative fuels such as ethanol.
Nearly half of the nation’s filling stations already carry
diesel, compared to the less than 5 percent that offer an E85. But
new environmental regulations pose a problem for automakers, stopping
all of them other than DaimlerChrysler’s luxury Mercedes brand
from setting a date for a diesel engine introduction in cars and
Even Volkswagen, which has the largest range of diesel-powered cars
and light truck offerings now on the market, may have to pull out
of the market at least temporarily, as it can’t say when it
will be able to meet the new regulations that go into effect with
the 2007 model year. The government plans to change how it calculates
fuel economy for new cars and trucks; it will knock down expected
mileage for city driving in conventional cars 10 percent to 20 percent,
and in gasoline-electric hybrids up to 30 percent.
The EPA is proposing new test methods for calculating the fuel economy
estimates that are posted on the window stickers of new cars and
trucks. The new miles-per-gallon (MPG) estimates will take effect
with model year 2008 vehicles, which will be available in dealer
showrooms in the fall of 2007. Auto makers will continue to be responsible
for performing the fuel economy testing and calculating the label
MPG estimates. The EPA will continue to confirm the manufacturers’ test
results by performing audit testing at its National Vehicle and Fuel
Emissions Laboratory in Ann Arbor, Mich.
Nearly all semi-trucks, delivery vehicles, buses, trains, ships,
boats and barges, farm, construction, and military vehicles and equipment
have diesel engines. In 2005, diesel fuel accounted for about 15
percent of total refined petroleum products and 75 percent of the
total distillate consumed in the United States. On-highway motor
vehicles use about 80 percent of total diesel fuel, with off-highway
vehicles, construction and farming equipment, and diesel-electric
generators consuming the rest.
Most diesel fuel consumed in the United States is produced in U.S.
refineries. In 2005, about five percent was imported from foreign
countries, mainly Canada and the Virgin Islands. U.S. refineries
produce diesel fuel from crude oil, of which about 65 percent was
imported in 2005. Most diesel fuel is transported by pipeline (some
by barge and rail) from refineries and ports to terminals near major
consuming areas, where it is loaded into tanker trucks for delivery
to individual refueling stations.
The Petroleum Industry Is Producing ULSD fuel
New EPA standards require a major reduction in the sulfur content
of diesel fuels and emission levels from diesel engines and vehicles.
To meet the EPA standards, the petroleum industry is producing ULSD
fuel, a cleaner-burning diesel fuel containing a maximum 15 parts-per-million
As of June 1, 80 percent of the highway diesel fuel produced or
imported is ULSD fuel, replacing most Low Sulfur Diesel (LSD)
contains a maximum of 500 ppm sulfur. Used in combination with cleaner-burning
diesel engines and vehicles, ULSD fuel will help to improve air quality
by significantly reducing emissions. By December 1, 2010, all highway
diesel fuel offered for sale must be ULSD fuel. Many public and private
organizations are collaborating through the Clean Diesel Fuel Alliance
to facilitate the introduction of ULSD fuel. The U.S. Department
of Energy (DOE); the EPA; engine, vehicle and component manufacturers;
all sectors of the petroleum industry; and fuel consumers, such as
truckers, are providing comprehensive information and technical coordination.
Owners of 2007 and later-model-year diesel-powered highway vehicles
must refuel only with ULSD fuel. Owners of 2006 and earlier-model-year
diesel-powered highway engines and vehicles may use ULSD fuel or
LSD fuel during the transition period. Only ULSD fuel will be available
for highway use starting on December 1, 2010. Under typical operating
conditions, there should be no noticeable impact on overall power
using ULSD fuel. Fuel economy may be reduced slightly because the
process that removes sulfur also can reduce the energy content of
Engine and vehicle manufacturers expect ULSD fuel to be fully compatible
with the existing fleet, including 2006 and earlier-model-year vehicles.
In some instances, the introduction of ULSD fuel to older vehicles
may affect fuel system components or loosen deposits in fuel tanks.
As part of a good maintenance program, owners and operators of existing
cars, trucks and buses are encouraged to monitor their diesel-powered
vehicles closely for potential fuel system leaks or premature fuel
filter plugging during the changeover to ULSD fuel.
Like LSD fuel, ULSD fuel requires good lubricity and corrosion inhibitors
to prevent unacceptable engine wear. As necessary, additives to increase
lubricity and to inhibit corrosion will be added to ULSD fuel prior
to its retail sale. With these additives, ULSD fuel is expected to
perform as well as LSD fuel. Diesel-powered highway engines and vehicles
for 2007 and later model years are designed to operate only with
ULSD fuel. Improper fuel use will reduce the efficiency and durability
of engines, permanently damage many advanced emissions-control systems,
reduce fuel economy, and possibly prevent the vehicles from running
at all. Manufacturer warranties are likely to be voided by improper
fuel use. Additionally, burning LSD fuel (instead of ULSD fuel) in
2007 and later-model-year diesel cars, trucks and buses is illegal
and punishable with civil penalties.
There should be no operational problem if consumers switch from a
biodiesel-ULSD fuel blend to ULSD fuel without biodiesel. ULSD fuel
will enable the use of cleaner-technology diesel engines and vehicles,
resulting in significantly improved air quality. Annual emissions
reductions will be equivalent to removing the pollution from more
than 90 percent of today’s trucks and buses, when the current
heavy-duty vehicle fleet has been completely replaced in 2030.
As an additional environmental benefit, ULSD fuel will enable diesel-powered
passenger cars and light trucks to meet the same stringent emissions
standards as gasoline vehicles. Diesel-powered vehicles tend to be
more fuel efficient than gasoline-powered vehicles.
David Clayton Wells is an automotive industry consultant.