by David Thill

Created on: October 28, 2007

For any commodity, there are two ways to lower the price paid by a consumer: increase the supply of the commodity, or lower the demand for the commodity.

When it comes to fuel, we tend to think "Hey, there's only so much oil in the ground" and stop thinking about supply right there. However, fuel is more than just old petrochemicals buried hundreds of feet down in countries with shaky political systems. Even if you focus just on burning hydrocarbons to power the type of car we have been using for the last hundred years, you have ethanol, biodiesel, and even plain old crude from new sources like Canadian oil sands that are adding to the supply side of the equation already.

As soon as you look beyond hydrocarbons, you get into the realm of the hybrid cars that are already whizzing off the lots as fast as they can make them. Sure, they still burn hydrocarbons some of the time but they sure burn a lot less. And the commercial success of hybrids feeds into the technology needed to design and produce power trains designed to be run one hundred percent by electricity without sacrificing the type of performance we need to survive on the highways. Fully electric vehicles have been around for a while, and have generally been heavy, slow, expensive and restricted in their range by how much juice you can squeeze into batteries. With every passing day, however, every element needed for a really useful, commercially viable electric car is improving. Lithium batteries can store more power more reliably than ever before as our mp3 players and laptops need to last longer. Every new hybrid vehicle designed teaches car makers how to get more performance out of an electrically driven power train. And every year sees new advances in materials technology that let us build smaller, cheaper, more powerful fuel cells.

With fuel cells, suddenly boring old hydrogen is fuel, too. And there is no limit to the supply of hydrogen it can be cracked out of plain water using (lots of) electricity. Then electricity becomes fuel which may mean dirty coal plants or cleaner gas turbines but it could also mean that totally renewable hydro or wind power is suddenly fuel. The supply of fuel is not nearly as limited as we are used to thinking.

Decreasing the demand for fuel is also a way to lower the price. Although it may be the most immediately straightforward way to lower prices, it is also the way that is likely to most impact our day to day lives. There are dozens of things we could do each day to lower our own personal demand for fuel lower the thermostat, car pool or bus to work, or walk to the store for milk instead of driving. Each of these small sacrifices is easy to make once in a while. Really affecting the demand in a way that changes the price of fuel would either require us all to be good all the time . . . or the government stepping in somehow and making us all be good.

Since most folks agree the less the government gets involved in our daily lives, the better, it makes a lot of sense that so many resources are being devoted to electric cars and alternative fuels and other ways to increase fuel supply they are the less-sacrifice, small government way to lower fuel costs while letting us live our regular lives.

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