What is the economic impact of hybrid cars?

Hybrid Cars' Effect on Oil Companies
Mine operator Dallen McFarland, right, inspects the teeth of a continuous mining machine at the Horizon Coal Mine outside Helper, Utah.
Mine operator Dallen McFarland, right, inspects the teeth of a continuous mining machine at the Horizon Coal Mine outside Helper, Utah.
AP Photo/George Frey

The financial upshot of hybrid cars on oil companies essentially parallels the effects of clean air regulations, fuel economy standards and policies like the Kyoto Protocol, Copenhagen Accord and CAFE standards. These and other issues confronting the petroleum industry have compelled companies like BP to shift their focus toward alternative energies and superior efficiencies as a hedge against probable disruptions in the petroleum markets.

Although hybrid vehicles boast lower emissions at the tailpipe than fully gasoline-powered cars, they remind us to bear in mind the emissions produced by electricity generation, thereby exerting subtle pressure on power companies to switch to cleaner alternatives. This holds particularly true for plug-in hybrids, which recharge by plugging into the national grid (gas-electric hybrids recharge use their own gasoline engine and regenerative braking to top off their batteries).

In terms of carbon footprint, electricity produced by coal coughs up more airborne gunk than oil, which churns out more than natural gas, which produces more than low-carbon electricity, such as wind power, solar power, geothermal power, nuclear power, and technologies such as carbon capture and storage, which prevent carbon dioxide emission into the atmosphere. The electrical production process has a significant impact: According to one study, lifetime greenhouse gas emissions from plug-in hybrids come out to about one-third less than those put out by traditional gasoline-powered cars, but using coal-fired electricity, they have a worse carbon footprint than traditional gas-electric hybrids, although they still beat out traditional cars. Experts project that coal plants will constitute the major source of electricity through 2035.

In other words, even if hydrogen fuel cells or electric cars are the wave of the future, we must develop a decarbonized electric grid to power them. Industry insiders view this as a long-term solution; in the short term, the sector will likely turn to more efficient hybrids and toward using biofuels or cleaned-up gasoline. Some companies have already initiated this shift: Even now, BP invests heavily in sugarcane and advanced biofuels. Oil companies that do not make such investments might find themselves left behind in the long term, if or when hydrogen-fuel-cell hybrids or non-petroleum-hydrocarbon-burning hybrids become feasible. Hydrogen hybrids offer the advantage of significantly higher propulsion system efficiency than internal combustion engines, but with zero tailpipe greenhouse gas emissions.

Supply and demand, price fixing and spikes, the need for increased energy security, concern over greenhouse gas emissions from fossil fuels and other large-scale factors ultimately drive shifts in the petroleum economic landscape; the growing hybrid market flows from these forces as well, and feeds back into the economic system totality, but they do not drive major shifts in the petroleum market. Only time will reveal their ultimate impact.