Amid all of the excitement around new mobility technologies, a single, inescapable reality often gets lost: modern transportation does not run on lidar, telematics, or any other technologies. That is why 2019’s biggest story in mobility is not about Waymo, Hyperloop, or Lime – nor is it about innovations coming out of Detroit, Silicon Valley, or Germany.
It’s in the Middle East, and it’s about oil.
Abqaiq, a Saudi Arabian oil processing facility that also happens to be the largest in the world, was attacked by 10 drones on September 14. Reports estimated that the attack immediately halted the production of 5.7 million barrels of oil per day at the facility – cutting the global supply by about 5 percent. On the first day of trading after the attacks, oil prices experienced their largest surge on record.
While this was bad, it could have been far worse. Although the strikes may increase oil price volatility overall, potential price shocks were tempered by factors including a well-supplied oil market and slower economic growth. It also helped that Prince Abdulaziz bin Salman, Saudi Arabia’s Energy Minister, stated last Tuesday that the country would restore the majority of its output and recover within weeks.
But the alarm bells should not be drowned out by the sighs of relief. This is yet another reminder in a decades-long string of reminders that transportation’s overwhelming reliance on oil is its greatest vulnerability.
One of the most infamous examples is the 1973 oil crisis, when the Organization of Petroleum Exporting Countries (OPEC) proclaimed an oil embargo, shooting gasoline prices through the roof and triggering long lines at gas pumps across the United States.
Since oil is a globally-traded commodity, a supply disruption anywhere affects prices everywhere. Even worse, this single commodity has a virtual monopoly over mobility: the U.S. relies on oil to power 92% of its transportation sector. This renders American commuters and businesses vulnerable to price shocks caused by, say, a drone strike halfway across the world at an oil processing facility that they have probably never heard of, by a rebel group they know nothing about.
The bitter irony for the transportation sector is that policymakers at every level of government invest a tremendous amount of effort in optimizing the flow of goods and people by attempting to manage hundreds of variables. City planners attempt to reduce traffic and expand mobility options for residents; states regulate driver licensing, insurance, and build highways; the federal government distributes funds to aid in the construction of infrastructure and regulates vehicle safety.
These interlocking authorities have been painstakingly designed and tweaked to keep the economy moving, but everything could still slow to a crawl if the price of a single commodity spikes.
Put simply, oil reliance is the proverbial putting all your eggs in one basket.
In order for the future of mobility to deliver on its promises, it must also be the future of choice. This means choice in transportation modes like transit, shared autonomous vehicles, scooters, and bikes – but also a choice in fuel sources.
Electrification presents the most readily-scalable opportunity to provide that choice. Transportation trends in the past few years have already shown where this is headed: electrification allows us to power scooters, bikes, cars, delivery vehicles, and trucks by using and expanding infrastructure that exists today.
A key benefit of electricity is that it is produced in the United
States by American businesses and workers, using a variety of fuels that are available to us today: solar, wind, hydropower, natural gas, coal, and nuclear. This diversity breeds certainty: since our power grids generate electricity from a wide range of sources, the cost of electricity has largely remained stable over time. This makes electric vehicles (EVs) a truly domestic solution to the energy security challenges confronted by our transportation sector.
Transportation policy is energy policy. It is economic policy. And it is national security policy.
The future of mobility will not be realized until these truths are absorbed and political leaders recognize the importance of fuel diversity to our transportation sector. Only when our policymakers embrace this truth will we realize the full potential of a transportation sector that serves every American, rather than rendering them vulnerable to an opaque commodity market driven by entities that do not share their interests or values.