Thinking about Basic Materials and Energy

Today the automobile business is vast. It is a global industry that has evolved by leaps and bounds in the 100 years since Henry Ford made his famous remark in 1908 about building “a car for the great multitude.” The worldwide customer base includes at least a billion people — spread over six continents — who have income sufficient to buy a car or small truck. According to figures assembled at the MIT Sloan Automotive Laboratory, there are about 700 million automobiles and light trucks in the world. About 30 percent of those vehicles are in North America.

Every car requires steel, aluminum, copper and lead. Each car requires rubber, plastic, and myriad of other petroleum and natural gas by-products. And there is much else in the long industrial ladder of automobile production. Just think in terms of the energy that goes into processing materials, fabricating parts, building components, assembling a finished product, and all the transportation along the way. In addition to the basic energy and material resources that go into manufacturing an automobile, the sheer number of vehicles reflects a lot of fuel tanks to fill with gasoline and diesel. And this does not even touch on the energy and resources that go into building road systems.

Automobiles and Energy

The oil shocks of the 1970s — in both price and availability — spurred improvements in auto energy efficiency within the U.S. as well as worldwide. In the U.S., the increase in fuel efficiency was related to rising costs for gasoline, as well as government mandates for higher fuel efficiency dating from the late 1970s. On average over the past 25 years, the typical power train of gasoline-fueled automobiles in the U.S. has improved in efficiency by about one percent per year according to data gathered by MIT. While discrete, one percent improvements may not appear to be much, the compound improvement in the typical U.S. automotive engine over 25 years has been about 30 percent.

There has been even more progress in the fuel efficiency of diesel engines over the past 25 years. Diesel power trains are no longer the sooty, “knock-knock” devices that they were back in the days of disco. Most cars sold today in the European Union (EU), for example, are powered with clean-burning, fuel efficient, smoothly running diesel engines. In fact, the demand for diesel fuel in Europe is such that EU refineries routinely ship surplus gasoline to sell into the North American market. And in North America the relatively low prices for gasoline throughout the 1980s and 1990s discouraged the use of diesel engines.

So there have been significant improvements in automobile power train efficiencies over the past couple of decades. But have these improvements translated into any overall reduction in demand for fuel? No. In 2007 motor fuel consumption in the U.S. was high as it has ever been. (Although according to the American Petroleum Institute, demand for motor fuel may be at a plateau due to price increases at the pump in 2006 and 2007.) In the past 25 years we’ve seen more people driving more cars for more miles. But compounding the fuel issue, the cars that people are buying and driving tend to weigh more and offer higher performance.

The Future of the Automobile

As I’ve said over and over again in Whiskey and Gunpowder, we live in a world of peaking oil output, and of energy and resource scarcity. So the trend lines for fuel usage by automobiles simply cannot continue for much longer. The first, most obvious sign is the rising price for oil and by extension for fuel at the pump. Something has got to give, and the energy markets are sending signals of long-term high prices for motor fuel. Where do we go from here?

Well first, people and policy makers have to realize that there is an energy problem. Everyone has to realize that this is something permanent, going forward. “Peak Oil” will not pass if we ignore it long enough. And no one can solve the problem just by bellyaching about the rising price for gasoline.

It helps to view the age of the automobile — and its future — as a systemic whole. And some social critics are out in front of the broad discussion, with a sharp focus on the automobile and what it has brought us as a society. James Kunstler, for example, author of highly regarded books such as The Geography of Nowhere and The Long Emergency, believes that the car-dependent suburban build-out of the U.S. may be “the greatest misallocation of resources in all of human history.” That is, in an era of expensive energy and scarce resources, a car-dependent culture has no real future and is in fact a hindrance to progress in other directions. That is quite a viewpoint, well-presented by Kunstler in his writing. It’s depressing, but it sure gets your attention.

And criticism of the automobile culture is not confined just to social commentators like Kunstler. Another remarkable indictment comes from no less an automotive insider than Prof. John Heywood, the director of the MIT Sloan Automotive Laboratory. He has stated that “cars may prove to be the worst commodity of all.” According to Prof. Heywood, cars are “responsible for a steady degradation of the ecosystem, from greenhouse emissions to biodiversity loss. What’s worse, even if we improve vehicle efficiency, turn to fuel hybrids or make rapid advances in hydrogen-based fuel technologies, the scale for slowing down the degradation may run to the decades. Turning the curve won’t be easy.”

You can agree or disagree with the broad themes of Jim Kunstler or John Heywood. But there’s no argument with one of Prof. Heywood’s points. Wherever we are going, it will not be easy to “turn the curve.” Looking forward, the oil just is not there to fuel cars in the future in the way that we did it in the past. So a lot of people are going to have to do things differently.

Worldwide, the automobile industry has seen the handwriting on the wall. Fuel is expensive, and is getting more so with each passing year. So the industry has invested tens of billions of dollars in improving engine and power train efficiency. In addition, auto designers are coming up with new ways to eliminate weight and drag. (At higher speeds, up to 70 percent of the energy used to turn the wheels on a car goes just to push the air out of the way of the chassis.) The auto industry is looking towards different sorts of fuels, and moving towards what is called fuel-flexibility.

Hopefully this will lead us to a great new investment in the car of the future.

Until we meet again,
Byron W. King
April 15, 2008

Cars and Energy was originally featured on Whiskey and Gunpowder

“I will build a car for the great multitude,” proclaimed Henry Ford in October 1908, as he announced the release of his first mass-produced automobile called the Model T. Indeed, Ford’s introduction of the Model T revolutionized both personal transportation and much else in American industry. Ford was a prolific inventor who received 161 U.S. patents in his own name. And as owner of the Ford Motor Company he became one of the wealthiest and best-known people in the world.

Henry Ford used mass production to turn out large numbers of inexpensive automobiles. In order for his workers to be able to afford to buy the product that they built, Ford was among the first large employers to pay the then-astonishing wage of $5.00 per day to line production workers (today’s equivalent is $225 per day, adjusted for inflation). Ford was committed to lowering costs, which led to many of his business innovations. Initially, Ford’s Michigan factories turned out parts and shipped automobiles in kit-form to regional assembly sites in large cities.

There, workers put the kits together into complete automobiles. Later, as the costs of nationwide transportation declined, Ford put together automobiles on giant assembly lines and shipped the completed cars. To sell the cars, Ford created a franchise system. This system established a dealership in virtually every city and town of any size in North America, and in many major cities on six continents. And if the customer could not afford the entire price of a car, Ford even created a finance arm to loan the necessary funds.

Ford believed in controlling both costs and access to resources. Over time his company acquired resources ranging from iron ore mines to rubber plantations. To assure supplies of automobile-grade metal, the Ford Company even established its own steel mill at River Rouge, Michigan. Thus Ford was one of the pioneers in building an integrated industrial business. Ford and his company made money at every stage, from digging ore out of the ground, to fabricating parts and assembling a product, to shipping a finished automobile to the final customer.

Cars, Food and Ideas Ahead of Their Time

Indeed, some of Henry Ford’s ideas were way ahead of their time. In fact a few ideas were so far out that they went nowhere, but not for lack of merit. For example, Ford was always looking for ways to save money on the costs of materials but without sacrificing quality, design integrity or safety. From his childhood background on a farm, and because many of his customers were farmers, Ford was deeply interested in agriculture. Ford often commented that crops could grow quickly, “as compared with lumber or especially iron ore.” So Ford funded a laboratory to assist farmers to find a way to use crops in industrial applications. Ford hired a highly regarded chemist named Robert Boyer to run the lab, where dozens of workers researched industrial uses for farm crops such as cantaloupes, carrots and beets.

Among other crops, Henry Ford was a great promoter of soybeans. In one marketing effort that Ford intended to impress his farmer-customers, every vehicle that Ford sold came with a bushel of soybeans on the front seat. And during the Great Depression, Ford entertained visitors at luncheons in which every course contained locally grown soybeans. The Ford menu included tomato juice with soybean sauce, soybean cookies and soybean candy for dessert.

But Ford used soybeans to do more than just amuse visitors at lunch. Ford was looking for projects that combined industry with the output of agriculture. Among other things, Ford had an abiding interest in developing soybean-based plastics. Throughout the 1930s Ford pioneered the use of soybeans in plastics that he used in his automobiles. The soybean components included plastic parts (even body panels), seat covers and paint. Ford’s soybean-automobile project culminated in August 1941, when he patented an automobile made almost entirely of soybean plastic, attached to a tubular welded frame.

Ford’s soybean-car weighed 30% less than a car made of steel. Even better, the plastic panels did not rust. And an array of experiments concluded that they were ten times as durable as steel. Ford claimed that plastic panels made the car safer than traditional steel cars because the car could roll over without being crushed. Ford hoped that the new soybean plastic would replace metal, which was in short supply in the years just before World War II as the U.S. government was building up the country’s navy. Furthermore, Ford’s soybean-car ran on grain alcohol — yes, ethanol — instead of gasoline.

Ford’s engineers were building a second soybean-based car when the U.S. entered World War II in December 1941. Because of the war, the federal government suspended all U.S. automobile production for the duration of the conflict. Thus Ford’s soybean-based car experiment languished. Almost all of the Ford Company’s resources were directed towards war-related production. Indeed, in one gigantic undertaking Ford converted the massive facility at Willow Run, Michigan to building B-24 bombers. At one point during the war, the Willow Run plant rolled a brand-new B-24 — made of over 140,000 separate parts — off the assembly line every hour. This was a far cry from building automobiles — made of soybeans or otherwise. By the end of the war in September 1945 the idea of a soybean car had simply fallen through the cracks.

Henry Ford died in 1947, aged 84. And we can only speculate about what might have happened if Henry Ford and his company had continued to pursue the idea of a car made out of soybeans, and powered by ethanol. But even six decades later — with or without the soybean car — much of the automobile business of the world reflects the image of Henry Ford. We certainly owe an immense debt to the man.

Until we meet again…
Byron W. King
March 12, 2008

Agriculture and Automobiles was originally featured on Whiskey and Gunpowder