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: 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.