The crack Research Staff is still busily at work.
This week, the group (of one) uncovered a speech by E.M. “Pete” Estes, president of General Motors Corp., in 1978. His remarks still ring true today. What prophetic observations pronounced 34 years ago!
“Saving energy is important, all right — very important in the short term. But it is not the only action we can take …
“First, it’s appropriate to point out that the world — and, yes, even the U.S. — still has huge reserves of petroleum to find and develop.
“As battery technology progresses and electric cars come into use, electricity can take up some of the transportation burden. But for the foreseeable future, electricity is likely to remain a small contributor to our overall mobility.”
Electricity is still “a small contributor” in 2012, proven by disappointing sales results of Nissan’s Leaf and Chevrolet’s Volt.
Further from Pete Estes: “Blessed as we are with oil and natural gas, our country has been blessed with bountiful resources from which other fuels can be produced … However much oil is left, the United States’ ultimate coal reserves are enormous by comparison. They are on the order of 100 times greater than our oil reserves.
“Beyond that, U.S. oil shale deposits are roughly twice as large as our coal reserves … Solar energy, of course, is the great, bright hope (Still is a hope) … But it is still going to be a long time before solar energy frees up significant amount of petroleum-based fuels. (The same can be said today.)
“There’s no question you can produce alcohol cheaper from coal than from grain (Read: corn) … The U.S. has enough potential energy at a reasonable cost to ensure us a transportation future measured in centuries.
“This country has so many resources left; it doesn’t have to hang its entire future on the dead-end of conservatism.
“Conservatism does not cure scarcity; it only delays it.
“Improving fuel economy is not easy or inexpensive — not if we continue to provide room and utility that many American customers still want and need.” (That statement is still valid today. Look at the number of soccer moms in their SUVs picking up their children at school).
How much does it cost to meet government mandated miles-per-gallon standards? Check out 34 years ago from Pete Estes: “At GM, we estimate that it has cost us roughly a billion dollars in investment for each half-mile-per-gallon improvement in our average fuel economy.
“There comes a point where the country can buy more transportation by putting its billions into increased energy production than by continuing to put them into vehicle mileage improvements …
“This crossover point occurs when it costs more to save a gallon of gasoline than to produce an additional one.
“The government’s role must be to provide the right economics, the right climate and enough incentives.”
Going back to Pete Estes’ point on grain, an article in Fortune magazine recently reminds us, “It turns out that while the U.S. subsidies are gone, U.S. law still requires oil refineries to blend corn ethanol into fuel — some 12.5 billion gallons this year and at least 15 billion gallons by 2015 … That’s still a small portion compared with the 133 billion gallons of gasoline that the U.S. Energy Information Administration estimates Americans will burn this year.”
Some analysts have figured that the global price for a bushel of corn has risen 20 percent. A Wall Street Journal editorial, in a way, supports the Estes contentions made so long ago: “Forget ‘clean energy.’ Oil and gas are boosting U.S. employment …
“Oil and gas production, which now employs some 440,000 workers, is an 80 percent increase since 2003…
“The ironies here are richer than the shale deposits in North Dakota’s Bakken formation. While Washington has tried to force-feed renewable energy with tens of billions in special subsidies, oil and gas production has boomed thanks to private investment.
“And while renewable technology breakthroughs never seem to arrive, horizontal drilling and hydraulic fracturing have revolutionized oil and gas extraction — with no Energy Department loan guarantees needed.”
If Pete Estes were alive today, he could repeat his speech of 1978 — with pride!
Dr. George G. Spaulding is a retired General Motors executive and distinguished executive-in-residence emeritus at the School of Business at the College of Charleston. He can be reached at 2 Wharfside St. 2A Charleston SC 29401.