Fewer cars on the road would be better for our planet but what about the people living on it?
For months now been hearing about the negative effects of cheap oil on the world’s sovereign economies. Russia’s in trouble, Venezuela is essentially broke, and even Saudi Arabia has issued a public bond in order to maintain its generous social spending. So is peak oil over and done with and are we looking at cheap oil for the rest of our days? My view is yes, which is both very good and very bad at the same time.
Breaking it down, nearly 60% of oil is used as some form of fuel. If the world can dramatically reduce the overall demand for fuel then the price will drop and we can all enjoy cheap oil forever.
Here’s why that might happen. . .
Firstly – the sharing economy. Uber’s phenomenal success has extended into package and food delivery, all in the last mile. It stands to reason that if you have a single vehicle capable of delivering everything from people to food then you’re going to need fewer vehicles on the road that will use less fuel. Currently, Uber still uses drivers – inefficient humans who speed up and brake on a whim. Driverless vehicles would be safer and more fuel efficient and Uber’s testing driverless Volvos right now.
And that’s just cars. Driverless delivery trucks would completely transform logistics, saving a fortune in fuel. Mercedes is bringing new driverless trucks to market in the next two years but at $250,000 each, the adoption curve is going to be relatively flat.
However, when a US startup called Otto came out with a retrofit kit for existing trucks for under $35,000, Uber bought Otto for $600m. If fleets adopt this quick fix then worldwide diesel consumption could go into permanent decline. Then there are advances in materials science. Commercial vehicles are solidly built but heavy vehicles burn more fuel and lighter vehicles less. Boeing just launched a new alloy called microlattice that’s ten times stronger than steel and – wait for it – 99.9% the weight of air. Imagine an airliner body built mainly from this and the tiny, fuel-sipping engines required for take off and cruising. Across the global air fleet, the fuel savings would be colossal.
Then the Internet of Things, once every part of every vehicle is connected to the web as well as each other, we’ll have a grid of superintelligent cars that talk to each other in order to optimise traffic flow. There’ll be no more traffic jams burning fuel but going nowhere. There won’t even be any traffic lights. Web connected tyres could even track hyper local weather conditions to continually match their pressure to road conditions. Since tyres underinflated by just 1bar can increase fuel consumption by 6%, having every tyre optimally inflated would again slash the demand for oil. These are just a few examples that don’t even get into typhoon turbines, super efficient solar cells, tidal wave power generators and advanced battery technology. And let’s not forget Elon Musk, who recently launched a range of roofing tiles that double as solar panels. While you’re thinking how all this will be great for the environment, inner city air quality and family budgets, hang on a moment. . . it’s not that simple. Oil producing nations have generated huge surpluses of cash for decades. Norway, for example, has a near $1tn sovereign wealth fund to invest in anything it deems as ethical. But once oil stops being so lucrative, we’ll potentially have a world cash liquidity problem. Who will finance banks to allow lending once oil revenue ceases to slosh round the banking system? Given that liquidity is essential to economic growth, governments may end up printing money, which would cause inflation. This, in turn, would mostly impact on the poor – precisely the people who benefit the least from greater energy efficiency. And what of the 3.5m truck drivers in the USA who currently haul goods in an industry that employs a further 5.5m workers? Bring in self-driving trucks and a lot of those jobs disappear overnight. The real benefit of any disruptive technology is that it can make our planet a better place for everyone. However, the ripple effects can be so far-reaching, unexpected and significant that we need to consider each and every one of them.