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FedEx CEO Frederick Smith (right), a former U.S. Marine, says that America's oil "addiction" is costing American lives and jobs.  (Source: AP Photo/Mark Humphrey)

Many have claimed that America's invasion of Iraq, costly in American lives, was driven by a desire/need to safeguard the nation's oil supplies.  (Source: AP Photo)

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)
Company says failing to transition to EVs would be disastrous for America

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 [1] [2].

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 own site.

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 Done?

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 running out."

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.



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Typical nonsense
By Beenthere on 5/20/2011 10:46:47 AM , Rating: 3
U.S. oil is sold in Japan because they can get a higher price than selling it in the U.S. Oil prices are all about financial greed. Oil is a commodity and is sold for whatever consumers will bear, commonly known as RAPE by the oil companies who continue to reap record profits. The only way you reap record profits from lower sales volume is by raping consumers.

If Fedex wanted to do their part, they would ban together with UPS, DHL and all airlines worldwide then park their fleets of planes and trucks until the price of fuel dropped to $2/gal., which would only take a few weeks. Yes their would be a lot of turmoil but the oil companies would get the message that the law of supply and demand works. The oil companies know consumers will not stand to be inconvenience so they will continue to rape us all because consumers are too dumb to figure out that oil is worthless if no one buys it.

EVs won't fix anything as the cost of electricity will increase just like oil prices. When you have a Cabal or industry monopoly, you have a license to steal from consumers and the oil and utility companies are happy to oblige.




RE: Typical nonsense
By SnakeBlitzken on 5/20/2011 11:00:44 AM , Rating: 2
American companies making big profits is not always a bad thing. Those profits translate to a lot of jobs not to mention all the citizens invested through pensions, mutual funds etc. Oil companies don't directly set the price of oil. The commodity traders do. Their only influence is on how much they produce. OPEC tries to manipulate price by controlling production. If there's so much money in it, buy stock in oil companies.


RE: Typical nonsense
By Beenthere on 5/20/2011 4:06:41 PM , Rating: 2
Actually windfall CEO salaries and bonuses does not create any more jobs nor does it pay dividends to investors. There is a big difference between making a good profit and raping consumers so that the CEO gets a $10 million bonus annually. It's pure financial greed.

Controlling the supply side and duping consumers via false, misleading, deceptive, "industry news" released to the media is what inflates prices based on investor speculation. You may be able to hedge your bets buy buying some oil stock but that doesn't help society nor reduce the unscrupulous behavior of those who exploit consumers for great wealth.

RAPE is the name of the game when you have a monopoly.


RE: Typical nonsense
By ZachDontScare on 5/20/2011 3:17:26 PM , Rating: 2
Simply Wrong . American oil is sold in Japan because its cheaper to ship oil from Alaska to Japan and then use that money to buy oil from Venezuela and Mexico and ship that to New Jersey, than it is to ship oil all the way from Alaska to New Jersey. Big oil tankers cant go through the canal, so it saves a trip all the way around South America.


RE: Typical nonsense
By MrTeal on 5/20/2011 6:58:54 PM , Rating: 2
You know what you should do? Organize a day where everyone doesn't buy any gas at all! That would totally clog up the oil system, and bring down all the big oil companies.

It would be awesome, you could post it up on Facebook and all your friends could invite all their friends and soon everyone would be ready.

That would definitely teach the MAN that the little guy still has all the power.


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