We must electrify the transport sector by Fred Smith
This story first appeared in The Financial Times on May 9, 2011
It is tempting to say that the headlines about rising fuel prices, Libya and other events in the Middle East will be a wake-up call to the dangers of oil dependence. But such calls have been repeated for almost 40 years, and yet the vulnerability – both in the US and across the globe – remains.
Our mobile economy remains defenseless against oil-price shocks and supply interruptions. In the US, transport accounts for 70 per cent of petroleum consumed. 97 per cent of transport fuel in the US is derived from oil, and there are no plausible substitutes. When prices go up, there are only two choices: drive less or pay more. If supplies are disrupted for any reason, the choices are even worse. This must change.
Every American recession over the past 35 years has been preceded by – or occurred concurrently with – an oil-price spike. The last time this happened, just a few years ago, the average retail price of gasoline in the US increased from $1.46 to $3.27, costing typical households $2,115 a year in increased fuel expenses. That price spike contributed greatly to the recession and financial crisis which the world is still struggling to recover from.
