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Carmakers confront the end of easy oil

Since Henry Ford introduced the moving assembly line in 1913, the world's automakers have relied on a single source of power - the gasoline-dependent internal combustion engine. Today, the twin threats of US$100-a-barrel oil and global warming are convulsing an industry addicted to cheap, abundant petroleum. Auto companies, already hurt in 2007 by the lowest US demand in a decade, are struggling to perfect cars that run on ethanol, diesel, natural gas, hydrogen and household electricity. They're under the gun from California and more than a dozen other jurisdictions to cut carbon exhaust by 2020 with vehicles that must get 19 km per litre of gasoline, about double today's average. Bill Reinert, who helped design Toyota Motor's Prius hybrid, says automakers are endangering themselves by basing sales and profits on the big, fast cars that many US customers say they want in 2008. In five years, as oil shortages and global warming intensify, car companies may be out of step with drivers' demands for fuel-efficient vehicles. Even worse, degrading stretches of the planet like Fort McMurray will only delay - not prevent - the time when the world must function in a post-peak-petroleum economy. Canada's oilsands region may eventually provide a quarter of US crude oil demand, currently at 21.3 million barrels per day, Reinert says. "At that point, the environmental impacts are totally irreversible," he says. "You turn this area into an ecological sacrifice zone." Toyota investors say the company's priority must be weathering a weak US market, not chasing breakthroughs in green technology. Last year, US sales declined 2.5% to 16.1 million vehicles industry-wide. "There's cake, and there's frosting," says Jeffrey Scharf, president of Scharf Investments, a fund firm that owns Toyota stock among its $700 million in assets. "Hybrids are more into the area of frosting."

Shareholder ambivalence about clean cars is only one hurdle to surviving the end of easy oil. Reinert, a former US Navy submariner, says he lies awake at night wondering whether he's making the right recommendations for the future of Toyota - and the planet. His suggestions run from building lightweight compacts and plug-in hybrids to redesigning smog- and people-choked cities and populating them with electric-only cars. Reinert says nobody can say for sure how the separate tailpipe emission, fuel economy and manufacturing regulations promulgated worldwide by multiple levels of government will affect the environment. There's no blueprint for the impact of increasingly scarce oil on a US economy already labouring with a mortgage crisis and a dropping dollar. Add industrialization in China and India, and the number of cars and trucks worldwide may double to 2.1 billion by 2030, according to the International Energy Agency. "We don't have a past, a history or a database that allows us to explore the simultaneous impact of recessions, disruptions to the energy supply and climate change," says Reinert, who spent six years in the 1980s maintaining solar- and wind-powered telephone towers in Colorado's Rocky Mountains. "We don't have the legislative, regulatory, financial or product planning tools." Toyota is making excuses for not moving faster on fuel-efficiency, says Daniel Becker, a Washington lawyer and former head of global warming programs at Sierra Club. Since Toyota's 2003 hit with the second-generation Prius, which gets as much as 45 mpg in city driving, the company has slid backwards, he says. Toyota's technical triumph with the petroleum-saving Prius shows carmakers can be a force in mitigating the environmental damage Reinert worries about. He says that's only a start. As threats from the end of easy oil multiply and global warming accelerates, the desecration at Fort McMurray may be a harbinger of what's to come if automakers and politicians fail to act.
(Vancouver Sun 080125)

.....is competent leadership, at all levels, government and corporate, to do the right thing as opposed to chasing the almighty dollar. There needs to be a sea change in how corporations work and how they define 'profit' - a need to realize that shareholder value is not the only factor that needs to be considered when making decisions that affect the entire world. Now that corporations have the influence to change the face of the world and the future, it is necessary that they realize there are other, bigger, more pervasive consequences of decisions that need to be brought to light in the boardrooms and government offices of the world. I'm not sure how to go about this...if it comes down to revamping economic models, we may never get to this point. If we never get the leadership that is so desperately required, then gob help us all.