econintersect .com

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 29 July 2016

How The Car Fueled Global Economic And Foreign Policy

from The Conversation

-- this post authored by Paul Nieuwenhuis, Cardiff University

Cars are rarely at the centre of either the economic or political debate. In media terms, cars are often in the realm of the likes of Jeremy Clarkson, with some more serious commentators such as the RAC, FIA or SMMT as well as independent analysts chipping in on occasion to highlight issues such as emissions, safety, consumer problems or jobs and manufacturing.

The International Organisation of Motor Vehicle Manufacturers has called the automotive industry the "single greatest engine of economic growth in the world", yet it is rarely the focus of serious news.

This lack of mainstream coverage significantly underplays the central role that the car industry plays in our lives, beyond its significance as a mode of transport.

It is the car's current reliance on oil that makes it crucially important; little more than a century ago, motorists still had the choice of steam or electric traction as the motive forces for their cars. Unlike most modern internal combustion engines, steam cars could use a variety of fuels to generate steam, while electricity could also be generated from a multitude of primary energy sources.

Ford Model T, 1923. William Creswell/Flickr, CC BY

However, it was with the discovery of the Spindletop gusher in Texas in 1901 that oil came to be seen as a plentiful resource in the US, so much so that when Henry Ford had to choose a power source for his Model T, the world's first mass-produced car, internal combustion was a no-brainer - albeit his cars could also still run on ethanol, easily produced from corn by the target market for his car: farmers.

Global oil

Other countries did not enjoy such plentiful domestic oil resources, but still opted for the internal combustion engine, as this new fuel was abundant in many other locations such as the Middle East, which at the time was easily accessible by Western powers.

Eventually, around 1970, US oil extraction peaked and the world became more and more reliant on oil-rich countries. A division between the oil producing countries and oil-poor but car-rich countries became apparent, with the former reminding the latter of their position in 1973 through an exportation embargo. From that point onwards it became crucial for car-rich countries to ensure supplies of oil by whatever means possible, creating new energy policies and locating new sources of oil in the North Sea, Alaska and Mexico. Car-rich countries had become dependent on the vehicle: by 2011, road transport alone absorbed some 90% of global oil.

Dependence on oil not only came from transport needs, but also the consumption of citizens and the needs of industry - mainly located in oil-poor countries. In fact, during the 20th century, this need for oil became so important that both economic and diplomatic systems increasingly came to be shaped around it, giving the Middle East, for example, a prominence in world politics it would not otherwise have enjoyed. Similarly, for many industrial countries like Japan, their negative trade balance was largely due to oil imports, as well as energy efficiency legislation; exports of cars came to be seen as a means to redress this imbalance.

Without the need to feed our cars - and trucks, ships and aircraft - with oil, the Middle East would be of little political interest to Europe, North America, Japan, Korea or China. The wars that have shaped geo-politics in recent decades in Kuwait, Iraq, Afghanistan, and more, would not have happened. The various terrorist organisations whose activities now divert significant security resources worldwide, are unlikely to have sprung up.

As it turns out the decision to take up internal combustion-engine cars that were dependent on oil was, in hindsight, a very high risk strategy. And one that is becoming riskier over time.

Fuelling development

Fortunately - though the same cannot be said for all elements of the global economy - in the case of cars there are readily available options. Certain liquid fuels that can be used in cars, such as ethanol, methanol, methane, or hydrogen can be derived from a range of renewable materials, many of which are more readily available in car-dependent economies than oil or gas. Electricity can be generated from an even wider range of energy sources, including renewables wind, tidal and solar - sources that can also be used to produce hydrogen.

More than a bright spark: the electric car. Taina Sohlman /

A move towards electric and hydrogen fuel cell cars is therefore not just a technological choice: it would have a fundamental, and largely positive, impact on both Western economic systems and geopolitics.

The extraction of fossil fuels is likely to become more and more difficult and hence costly - notwithstanding recent developments in fracking and tar sands, which are only marginal contributors at around 5% of world oil supply. Yet the alternatives, particularly where renewables are concerned, are on the whole, technological systems that will over time benefit from cost reductions as demand increases.

While we are therefore likely to see diminishing returns on fossil fuel extraction, we will see the opposite in renewables technologies, as is already borne out by significant reductions in the cost of solar panels in recent years.

Unlike a century ago, with what we know now, a move to electric and hydrogen fuel cell cars really is a no-brainer - from an economic, political and technological perspective.

The ConversationPaul Nieuwenhuis, Senior Lecturer and Co-Director, Electric Vehicle Centre of Excellence (EVCE), Cardiff University

This article was originally published on The Conversation. Read the original article.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

Econintersect Contributors

Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

 navigate econintersect .com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2018 Econintersect LLC - all rights reserved