Hydrogen Discoveries company blog

(Note #1: This is Hydrogen Fact #12 from “Twelve Hydrogen Facts” which is part of the Hydrogen Manhattan Project.)

(Note #2: I am personally outraged with the lack of leadership and focus on solving the energy crisis despite all of the problems that are a result of our reliance on oil such as high fuel prices, wars, global warming, air pollution, etc.

My feeling is that it is time to stop expecting politicians and corporations to lead.  Instead, we should all become leaders and start a revolution of our own to solve this problem.  YOU must be a catalyst for positive change.

The Hydrogen Manhattan Project is “A movement led by individual Americans to support corporations and elected officials that work towards the goal of having every car on the road in the U.S. powered by hydrogen produced from clean sources of energy by the end of 2020.”  The first step to achieving this goal is to get the government to help build the initial hydrogen fueling stations that the car companies have been pleading for.

The problem is that very few people are even aware of all that is happening with hydrogen cars and how hydrogen can solve the problems we are now facing.  Therefore, I have started a grassroots campaign to spread the word about hydrogen.  If you would like to be added to the e-mail distribution list for the Hydrogen Manhattan Project grassroots campaign, please e-mail me at gblencoe@hydrogendiscoveries.com.)

Hydrogen Fact #12

The days of powering our cars with gasoline in an internal combustion engine will be over much sooner than most people think.  High oil prices that will go much higher are taking away the economic viability of our current transportation business model.  Hydrogen fuel cell cars are the only option for meeting all customer requirements.  Therefore, the transition away from oil to hydrogen will begin in the near future.

High oil prices have a startling negative impact on the economy.  The cost of fueling your car is just the beginning.  Practically every single product that is sold in a Wal-Mart Supercenter from food to televisions to tires had to be shipped to the store in a truck with higher fuel costs.  This raises the price of each item shipped.  The cost to fly or ship a package is more expensive.  It costs more to mow your lawn.  Higher oil prices hit consumers from all different angles.

The result is that people simply have less money to spend.  And the problem is going to get much worse as oil prices go even higher.  The reason that oil prices have increased and will increase much more is very simple.  Oil production is peaking, but global demand has continued to steadily increase.  This means that prices can only go up.

Now let’s consider how consumers will act in this environment.  How will this situation influence sales of new cars?  Here are four factors that will impact how many consumers will purchase new cars:

1)  The average American has less disposable income now due to high oil prices.  And they will have less in the future as oil prices continue to rise.  This means fewer and fewer Americans can afford to buy a new car.

2)  More people are realizing that the price of oil will only go higher in the future.  The reason is that oil production is peaking, but global demand continues to steadily increase due to the rapid growth of countries such as China and India.

3)  Hydrogen cars are just about ready.

4)  The cost of hydrogen produced today from wind power (without any subsidies) would be less than the equivalent of gasoline at $3 per gallon and the cost will be even lower in the future.  (For the complete analysis, please go to Hydrogen Fact #7.)

Under this scenario, what motivation is there for consumers to buy new cars that are powered by gasoline?

Fewer people today can afford to buy a new car.  Even fewer will be able to afford one in the future as oil prices continue to rise.

However, even the people who can afford to purchase a new car will soon realize that buying a new car that is powered by gasoline is a terrible investment.  When you purchase a new car right now, you are making a very expensive 10-12 year commitment to oil.

Some might counter this by saying, “I am not very concerned about this, because I will just sell the car once hydrogen cars become available.”  The problem is that cars powered by gasoline will have almost no resale value when gasoline is $7-8 per gallon.  People will be stuck with cars that they can’t afford to drive and won’t be able to sell.  This will be an even more difficult situation if you are still making payments on the car.  At some point, banks will likely stop making loans on cars that are powered by gasoline, because the collateral will be almost worthless.

As you would expect given high oil prices and the state of the economy, new car sales have been on the decline lately.  Total vehicle sales in the U.S. are down 12% from this time last year.  This decline will obviously continue as oil prices rise even further.

However, new car sales will sharply fall as more and more people realize that oil prices are going to stay really high and hydrogen cars are just about ready.

Consumers will have a choice between:

1)  Buying a new car and making a 10-12 year commitment to oil; or

2)  Keeping the car they have right now or buying a used car to get them by for a couple of years until hydrogen cars are available and hydrogen fueling stations are in place where they live.

Most consumers will undoubtedly choose the second option.  The cars that will be most in demand will be inexpensive used cars over five years old that will last at least a couple of years and get really good gas mileage.

The sharp decline in new car sales will leave the car companies scrambling to bring the hydrogen cars to market as soon as possible.  They will also be much more vocal in demanding that the government help to get hydrogen fueling stations built as soon as possible.

Up until now, Larry Burns from GM has been the most vocal about the need to get hydrogen fueling stations built.  Other car companies with very advanced fuel cell programs have not been vocal at all about the need for hydrogen fueling stations.  The reason is the dirty little secret that car companies desperately don’t want you to know about.

Here is the problem: If car companies are vocal about the need for hydrogen fueling stations, it means that the hydrogen cars are just about ready.  And if the hydrogen cars are just about ready, then people will stop buying cars powered by gasoline.  This is a huge problem for car companies.  How do they get the hydrogen fueling stations built without dramatically decreasing the number of cars that they currently sell (and which finance their research and development programs)?

However, this problem is basically taking care of itself as new car sales decline.

When car companies are making money by selling cars that are powered by gasoline, there is no economic incentive to promote hydrogen cars.  However, high oil prices are causing new car sales to decline.  As this trend continues, you will see many more executives from other car companies join Larry Burns from GM in the effort to get hydrogen fueling stations built.

We are entering into an unprecedented period of change within the transportation sector.  The car companies with the most innovative hydrogen research and development programs who bring the best hydrogen cars to market will be extremely successful.  The others will be in serious trouble.