On 22 February, 2006 two vans packed with explosives crashed into the outer security fence guarding the giant Saudi oil processing facility at Abqaiq. Though the news accounts are sketchy (no doubt deliberately so) one vehicle penetrated the security barrier, its apparent target the piping through which 60 percent of Saudi Arabia’s 10 million barrels per day flow. Success for the terrorists would have taken enough oil off world markets to cause a stunning price spike and a likely crash of the global economy. Instead, the terrorists’ explosives detonated near a secondary pipeline, which was quickly repaired.
Afterward, the Saudi oil minister cited the failed attack as evidence that the world’s oil supply remains secure. In truth, it is otherwise—it is evidence of the urgent need to move road transportation away from its current near-total dependence on oil. We have known this as an intellectual proposition since the first oil embargo of October, 1973. But knowing is not enough. Purposeful action must flow from the thought. In the 37 years following that embargo, energy policy has pursued a long series of fads—sometimes with expensive enthusiasm, sometimes with costly subsidies that accomplish little beyond benefitting favored recipients…and in between just kicking the can down the road.
It is time to end serial fads as a substitute for serious policy. The Progressive Automotive X-Prize has taken an important step in this direction, and not with a massive government program. Instead, it engages the creativity of inventors around the nation, expands the envelope of the possible, and calls public attention to those possibilities. This is much to the good.
It is just not enough. For these inventions to make a difference to oil consumption, they must enter the marketplace. And for this to happen, policy must enable the kind of entrepreneurs who competed for the X-Prize to revolutionize road mobility the old-fashioned way—through offering superior products and services in the marketplace. The list of supporting policies is well known: allowing consistent price signals to guide consumer purchases; patient and durable policies that allow the marketplace to pick the winner; broad-based scientific research and technical education; and encouragement of grass-roots initiatives (like those of the X-Prize competitors).
It is truly easier to stay out of trouble than to get out of trouble. Or as my Dad would have put it, dig your well before you’re thirsty. Let’s start digging.