Thursday, June 19, 2008

Economist: The end of the petrolhead

This story from the most recent Economist is a quick update on the state of electric cars.

It seems pretty clear to me this is the future:

  • Electricity is a much cheaper and cleaner energy source for vehicles than fuel burned in an engine.
  • We have a very wide variety of renewable and non-renewable sources we can use to generate electricity.
  • We have a large existing infrastructure for distributing electricity.
  • Very good electric and hybrid cars are already in production. (Check out the Tesla Roadster. This is a thorougly sweet set of all-electric wheels that goes for only $120k. Reserve yours today!)
I don't have any idea where oil prices are going, but there are two possible scenarios:

  1. Oil prices stay high or increase. At the current price of oil, there are huge economic incentives for firms to make mass-market electric car technology work. Indeed, it appears all the major auto companies are racing in this direction.
  2. Oil prices fall dramatically. Even if oil gets really unprecedentedly cheap, it's never going to be cheaper to burn it in your engine than in a power plant. Electric car technology will continue to progress in an environment of cheap oil, as it has for the last three decades--it just won't be emerging as fast as it appears to be now.
Either way, we're all still going to be able to drive as much as we please, probably a lot cheaper than ever before. It won't happen tomorrow, and there will be transitional costs. But don't imagine that high oil prices is a problem the free market is not well capable of solving.

1 comment:

Philip said...

And, even better, we can quit fooling around with all this ethanol nonsense! We've absolutely got to stop burning our food and using up more real gas to do it.