Oil prices may be easing for a minute, but it's
fresh off new record highs, having reached $4.30 USD across many parts of the
U.S. Yet despite enthusiasm by industry
figures and the
government, there's still much debate about whether electrified vehicles
like hybrids, battery electric vehicles (BEVs), plug-in hybrid electric
vehicles (PHEV) are really going to be viable. Some analysts and
customers say they are turning
the corner -- others say electrified vehicles still don't make sense 
FedEx Corp. (FDX)
joined the fray, when its Chairman, President, and CEO Frederick W.
Smith published an editorial in The Financial Times, which FedEx later reprinted on its
In the article Mr. Smith firmly throws FedEx's
support behind electrification, which he characterizes as vital for U.S.
security and financial stability.
Regarding the financial costs, he writes:
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.
And Mr. Smith, who served as a U.S. Marine from
1966 to 1970, also complains that America's "addiction" to foreign
oil is also costing the lives of servicemen:
This addiction has also led the US to commit its young men and
women in uniform to protecting the world’s oil infrastructure. And it means
that western diplomacy is handicapped by the need to placate oil-producing
nations, including those that do not share America’s views or values.
II. What Should be
Mr. Smith says that given that the U.S. spent
$260B USD last year on foreign oil, the "wisdom of producing more [oil]
domestically becomes clear". He praises stricter safety and
environmental standards regarding oil exploration, but complains that some
environmentalists and government bureaucrats are acting as obstructionists.
Fuel economy improvements are another vital
mechanism, according to Mr. Smith. The CEO praised former U.S. President
George W. Bush and current President Barrack Obama for passing
updates to the CAFE standards, which are actively forcing automakers to
improve fleet wide efficiency.
But he complains that oil drilling and fuel economy
improvements are only "interim measures". He comments that the
only real way to save the U.S. is through electrification, stating:
Only electricity can give the transport sector the flexibility to
switch fuels when one or more become too expensive. Electricity from homegrown
sources – wind or solar, coal or hydro, natural gas or nuclear – would free
America’s mobile economy from dependence on a single source. And unlike some
alternatives, the infrastructure backbone for “refueling” electric vehicles
already exists in the US national grid, which offers significant spare
generating capacity at night, when it is needed for this purpose.
He says he's not one usually for government
intervention, but that the government must intervene to push electrification as
there's no free market on oil. He writes:
I am not someone who tends to advocate for increased government
involvement in the private sector. Free-market solutions to these economic
threats would be ideal. But there is no free market for oil. To the contrary,
today more than 90 per cent of proved conventional global oil reserves are held
by national oil companies that are either fully or partially controlled by
foreign governments, whose interests often have as much or more to do with
geopolitical considerations than free-market principles.
The issue is one that hits close to home for
FedEx. FedEx has attempted some
modest electrification projects, but the majority of its fleet runs on
gasoline. And as a business heavily driven by ground shipping, the
company is very vulnerable to gas price fluctuations.
The company's CEO remains optimistic that America
can electrify and kick America's "addiction" to foreign oil, but
warns, "The time to do so without truly calamitous consequences is rapidly
DailyTech has raised similar thoughts,
in some regard, in past
editorials about transition America's economy to an all-electric
infrastructure driven by clean nuclear power.
quote: America is also dependent to foreign on Lithium, since the big portion of Lithium found in China.Maybe the shift to EV just so America can invade China then...
quote: I'd like the see them cut the Ethanol (Corn) subsidies too. I have found that crap to make me loose 1-2 mpg overall per tank in my car when I use gas with any Ethanol in it.
quote: Why doesn't America just cut the EV subsidies AND the subsidies to oil companies. Just level the playing field.
quote: Now eventually supply and demand would kick back in, and it would level itself out. But just ripping the band-aid off in an already fragile economy would be disastrous.
quote: The flaw in your thinking is that this would hurt the big bad companies. It wouldn't Exxon will still have a growth year, the only thing that would change is that gas prices would jump up at the pump.
quote: And how many extra pockets are getting filled in the bureaucratic chain with subsidies, versus if the consumer was directly giving money to the company itself. You're ultimately paying far more yearly in taxes than whatever premium you'd pay at the pump were the subsidies were removed...
quote: It is amazing how "conservatives" (me) and "liberals" (you) can see eye to eye on so many subjects.
quote: I tend to be "liberal" in so much that I don't believe in policing petty drugs like marijuana
quote: government adopting moralistic crusades (cough, morning after pill, cough) based on the religious beliefs of some of its citizens
quote: Am I correct in assuming that you would agree that drugs like meth should stay off limits? What criteria would you use to rationalize a new approach to the legality of drugs (harm to individual & society, addictiveness, etc.)?
quote: might be an area we could compromise on as long as my tax dollars don't fund somebody's use of the morning after pill or more "extreme" solutions.
quote: As far as oil prices, you're paying for them anyways, whether you realize it, if the government is giving tax subsidies to keep prices low.
quote: Jason, that would be disastrous for America. There are only thousands of EV cars in America. Your idea would make gasoline prices rise astronomically, impacting hundreds of MILLIONS of American's, not to mention the trucking industry. Which would raise the cost further on EVERYTHING in the country.
quote: Also the federal government makes hundreds of billions in tax revenues from oil companies and gasoline taxes, making the oil subsidies almost a wash. How much tax money do EV's bring in again?
quote: I can't believe you're promoting socialism and big government!
quote: I'm glad we've at least been able to establish that you're not a conservative except when it suits your interests.
quote: No, if you had read the one sentence (I know, so long, must be hard on you) that you quoted, you would see I was suggesting EV subsidies be cut.
quote: For the record I also suggest removing the high gas taxes.
quote: In reality you just have a very poor knowledge of the situation and bafflingly are supporting government pork and bloated bureaucracy. Have fun paying that bill, my friend.
quote: would occur naturally if we slap a $2-4/gallon excise tax on gasoline and diesel.
quote: even with a massive tax like that we wouldn't be anywhere close to the highest gasoline prices.
quote: It wouldn't occur "naturally" if you're slapping a $2-4 tax on the product in order to artificially manipulate prices and demand.
quote: Gasoline prices around the world - most notably Europe where it is most expensive - is not that way because of demand, supply, or refining. It's because they tax the hell out of everything to pay for nationalized/socialized healthcare. I guess if it was up to you, we'd all just keep writing blank checks to the government so they can "invest" in boondoggle after boondoggle, pad the wallets of special interest groups who fund their campaigns, give us more dept...and then somehow con the people of the need to tax the rich and socialize industry. Sounds pretty sheepish to me.
quote: The US does tax it's fuel, see here:
quote: Most countries that heavily tax fuel are also in less debt, the United States debt level is simply incredible with it in the Trillions, not that there is a clear link between the two.
quote: It probably helps that we have significant deposits of natural Gas though to keep prices stable.
quote: Oddly, if you post facts about where our oil comes from (Canada) you get rated down...
quote: But if this guy was serious he would convert all, not just some of his fleet to something other than gasoline.
quote: Mr. Smith says electrification -- and government intervention -- are the only workable solution as there's no "free market" in oil (FedEx EV delivery truck pictured)
quote: Oil prices may be easing for a minute, but it's fresh off new record highs, having reached $4.30 USD across many parts of the U.S.
quote: The time to do so without truly calamitous consequences is rapidly running outa.