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Powerful Ways to Save and Replace Oil Have Been Quietly Emerging for 30 Years
by Amory B. Lovins
Some 94 percent of the world's oil reserves are held by governments that don't know or won't reveal the size of their holdings.
 The
world uses a cubic mile of oil a year, costing almost $2 trillion. Oil
and cars are the world's biggest and most entrenched industries. Yet an
inexorable half-century transition beyond oil has begun, squeezing oil
between efficient use and alternative supplies.
Lamp oil from whales lit most American homes in 1850. Yet in
the next nine years, just before Drake struck oil in Pennsylvania,
five-sixths of whale oil's lighting market fled to cheaper competitors.
Likewise in 2007 powerful ways to save and replace oil, which have been
quietly emerging for 30 years, will visibly start to rout oil from its
strongholds.
Fleet turnovers take time: putting the first half-million
hybrid cars on the road took nearly a decade. Yet in 2007 20 new hybrid
models will enter the American market, and operating efficiency will
finally become entrenched as carmakers' top design priority, locking in
oil savings for decades. Biofuels, too, will continue double-digit
growth as Brazil's 2006 oil independence and Sweden's 2020 off-oil goal
spur emulation.
Some 94 percent of the world's oil reserves are held by
governments that don't know or won't reveal the size of their holdings.
But no matter how much oil there is, we should save it whenever doing
so is cheaper than buying it, and nowadays that is always. Unlike
short-term behavioral changes, efficiency investments are irreversible:
you don't scrap fuel-frugal furnaces or remove roof insulation when
fuel prices drop, so efficiency ratchets up. And elegant frugality will
outdo incrementalism: efficiency often yields expanding returns.
Each day a modern car burns fuel derived from 100 times its
weight in ancient plants; yet a mere 0.3 percent of that fuel moves the
driver. Tripled-efficiency, ultralight gasoline-hybrid SUVs were
designed in 2000, paying back in one year at European and Japanese fuel
prices or two years at America's much cheaper pump prices. In 2007 the
Automotive X Prize will start moving such designs to market. Just in
America, they will ultimately save 8 million barrels of oil a
day—equivalent to finding a new, secure, and inexhaustible Saudi Arabia
under Detroit.
 In
2007, too, Toyota will emerge as the leader in superefficient plug-in
hybrid cars: electric for short commutes, gasoline-hybrid for long
trips. This could double the already doubled gasoline efficiency of a Prius
(pictured). Next, make that car ultralight and its gasoline efficiency
redoubles. Biofuel it and you quadruple gasoline efficiency again, to
30 times today's norm. Sound like the whale-oil story yet? Oil prices
will drop—but efficiency will remain cheaper still.
Full practical use of the best 2004 efficiency technologies in
all applications would halve American barrels burnt per dollar of GDP,
to a quarter the 1975 level.
The average cost: $12 per saved barrel. Saved natural gas and
advanced biofuels could replace the remaining oil for $18 per barrel.
Thus eliminating American oil use by the 2040s costs $15 per
barrel—one-fifth its 2006 price. It surely follows that getting off
oil—thus abating 42 percent of global carbon-dioxide emissions—will be
led by business for profit.
That transition already shapes competitive strategy.
Wal-Mart's new heavy trucks will be a quarter more efficient in 2007
than in 2006. By 2015 they will be twice as efficient, saving more than
$300 million a year. Next will come trebled efficiency, which yields a
60 percent internal rate of return.
In 2007, Boeing's 20-percent-moreefficient but same-price 787
will take flight. In Detroit, Schumpeterian "creative destruction" will
accelerate as smart money favors leapfrogs; markets will change
managers or their minds, whichever happens first. Ford's new chief
executive, Alan Mulally, whose efficiency-based Boeing strategy is
beating Airbus, will bring to Ford Boeing's focus on ultralight
materials (the 787 is 50 percent advanced composites), systems
integration, and breakthrough design.
The Greening of the Pentagon
 In
Washington, D.C. a surprisingly strong voice in 2007 for getting off
oil will be the world's biggest buyer both of oil and of renewable
energy—the Pentagon. This is not just because oiligarchs tend not to be
freedom-loving democrats and sometimes foment instability and conflict.
Rather, the risk and cost of vulnerable fuel convoys, easy prey to
roadside bombs, will persuade military leaders that only superefficient
platforms dragging dramatically slimmer fuel logistics tails, or none,
can fight persistent, dispersed, affordable wars.
This strategic shift will not just save hundreds of lives and tens of
billions of dollars a year. It will also speed key technologies, like
ultralight materials, that can triple the efficiency of civilian cars,
trucks, and planes—just as military R&D created the Internet, GPS,
and the jet and chip industries. Thus the Pentagon will start to lead
America, and the world, off oil so nobody need fight over it.
A vision will form of a United States that can treat countries with oil
the same as countries without oil, and gives others no reason to
suppose it is motivated by oil. The bet of Russia's President Vladimir
Putin that he could hold fuel customers to ransom will eventually turn
sour. China's 2005 adoption of energy efficiency as its top development
priority will start paying off. Decisive evidence will emerge that
stabilizing the earth's climate is in fact not costly but profitable
(because saving fuel costs less than buying it). And as we all drill
for wasted oil to power our buildings, factories, and vehicles, the
market- and community-driven rise of energy saving—or
"negabarrels"—will begin laying visible foundations for a richer,
cooler, fairer, and safer world.
Amory Lovins is Cofounder and CEO of RMI. This article is reprinted with permission from The Economist.
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