It's The Infrastructure, Stupid

170,000! There are 170,000 gas stations in the United States. Hold that thought for a minute and I’ll get back to it, and I’ll tell you why it may be the most important statistic in the entire discussion about high gasoline prices.

In 1973, before the Arab oil embargo, the average gas mileage for American cars was 12.4 MPG. Then our government took action, mandated better fuel economy from the auto makers, and by 1984 the average was 22.7 MPG—almost double what it had been only ten years previous. That was the last meaningful action from our government on this matter. The average now is 22.4 MPG, actually less than what it was a quarter century ago. Left to their own devices without government interference (the Reagan years), the automakers pushed horsepower rather than fuel economy, knowing that the consumer would always buy the most horsepower that they could afford. And the auto buyers, the consumers, took the bait and swallowed what the TV ads were pushing. Now everyone is shocked at the price of gas because they can’t afford to feed the horsepower beast in their garage. As my son would say, “Who didn’t see that coming?”

The government is blaming foreign oil, or those pesky Arab evildoers (they get blamed for everything), or environmental limits on domestic drilling, or surreptitious manipulation by unscrupulous commodity traders, or any other possible thing they can trump up to focus attention away from the automakers and the consumers. Here’s why that is. The American automakers are so anemic and pathetic that they will probably go into bankruptcy soon, and the government doesn’t want to be accused of “piling on.” And the auto buyers, the consumers, can vote, so nobody wants to offend them by telling them their buying habits are financially suicidal. Nothing gets done and everybody kicks the can down the road.

So what about alternative fuels? Have you heard of the General Motors model called the Volt? It surfaced about seven or eight years ago with a futuristic body and no propulsion system. It was promised at the time that it would run on fuel cells. Fuel cell technology was perfected in the 1960s by NASA for the Apollo trips to the moon. That whole process— perfecting the fuel cells and going to the moon— took eight years. Flash forward to now. In an identical eight years time, GM has done nothing with the Volt but show it off. NOTHING. The project has languished on the shelf at GM for so long that the once-futuristic body is now starting to look retro. It gives new meaning to the words, “empty shell.” GM spokespeople say that they are waiting for someone to develop workable fuel cells. No wonder that Toyota pushed GM out of the lead in the car market.

Remember that earlier number of 170,000 gas stations? I told you it was important, and here’s why. Those vendors only sell gas. None of them sell pure hydrogen, and fuel cells require pure hydrogen to operate. When GM says that they are waiting for someone to develop workable fuel cells, the operative word is, “workable.” GM is telling the truth. GM is waiting for someone to establish the infrastructure that will supply the hydrogen. It took most of the last 100 years to build out that petroleum-supply infrastructure of 170,000 stations. Even with a crash program like the 1960s Apollo initiative, it would take at least 20 years to have the hydrogen-supply infrastructure that GM is waiting for. And GM is content to wait. GM has no money to do anything else. Meanwhile, the next wave of American entrepreneurs who might start making their fortunes selling hydrogen— they won’t make a move until there are fuel cells cars available in quantity. It’s the classic Mexican stand-off (can I say that?).

So what should you do? Here’s my advice. Live like a European. Buy only small, light, fuel-efficient cars, preferably from Asian or European car makers, so that you’ll have a car dealer still in business ten years from now to service your vehicle. Ride a bike, if possible, for shorter trips. Make fewer trips. Walk whenever feasible. Take public transportation. And finally— this is the most important tip of all— arrange your personal finances so that you will be able to pay $7.00 per gallon for gasoline in four years. The Europeans pay more than that now, and they live quite nicely with that reality.

If this sounds un-American, then be a good American. Trust your government to solve an unsolvable problem. Wait 20 years for off-shore drilling of domestic reserves to drop the oil price 5%. Vote for whoever tells you the lies you want to hear. Reminisce about the Reagan years. Bitch about the oil companies and the commodity traders, and when you do this, try to make it sound like you know what you’re talking about. That may be hard to do. Live like a macho country-music-star-wannabe behind the wheel of your giant pickup truck, even if it drives you to the poorhouse. Who knows? General Motors might put you in their next television commercial.