How to Solve Our Energy Issues—Fast

Instead of forcing automakers to improve fuel economy, a better way to save gas would be to lower speed limits and encourage telecommuting

Wouldn't it be great if Congress really could legislate the U.S. out of its current energy problems? When you listen to the recent political debates, raising the fuel efficiency for new vehicles by some far-off future date sounds like a more-than-reasonable idea, provided you aren't in the car business. But the fact is that any proposed legislation of this kind can do absolutely nothing to solve our current or near-term oil problems. Even legislated help, if it were to become effective this week, would do little to help today's working-class Americans deal with the now three-year rise in the price of gasoline at all.

That reality seems to have been overlooked both by those debating (and lobbying) about raising the fuel efficiency of our vehicles to 35 mpg (more or less) and by those reporting it. Say this idea was to become law, and the start date for the improved mileage set at 2020: It would still take another 13 or 14 years after that before these new high-mpg vehicles completely replaced the nation's fleet of motor vehicles. That would mean that any legislation for improved fuel efficiency, if it passed today, could not fulfill its potential to reduce the nation's fuel requirements until at least 2035—or somewhere around the time many experts are predicting that "peak oil" will become a reality.

(For the life of me I can't figure out why General Motors (GM), Ford (F), Toyota (TM), and other automakers are fighting this legislation. Right around the time it would take effect, it probably would be wise not to be selling automobiles whose only propulsion unit is a gasoline-powered V-8.)

Now, imagine if you will that Congress could pass legislation tomorrow that would immediately raise the fuel efficiency of every vehicle on the road in the U.S. by 4.6 mpg and end the current high energy costs in somewhere around seven working days.

Assuming the average of 15,000 miles driven per year, and assuming that this new and magical law gave a vehicle 25 miles to the gallon instead of its current 21, each driver would save 125 gallons of gasoline annually, or 2.4 gallons of gas per week, per car. But it's not magic. In fact, it's simple: Roll back the speed limits on our nation's highways.

Step One: Back off the Gas Pedal and No One Gets Hurt

It's past time. We've been complaining about the price of oil and gasoline for three years now, and come up with no real answer. It's only pointing out the obvious to say that in major U.S. cities and on highways nationwide, one is either stuck in traffic and going nowhere fast—a surefire way to get the lowest possible fuel efficiency from one's vehicle—or traveling at 75 mph in the fast lane, with four people flashing their bright lights in your rearview mirrors, signaling "move over" so they can pass. This too ruins any modern vehicle's fuel efficiency.

The modern movement to super-fast highway speeds is a direct reflection of how much our automobiles have improved over the past decade. Quieter interiors, better suspensions, anti-lock brakes and electronic stability platforms have all contributed to a new Autobahn-like atmosphere on our highways. They give a driver the sensation of traveling much slower than he or she actually is; and that, plus the ability to brake smoothly and safely from a high rate of speed, combine to give one the feeling of absolute security.

That's why, when the 55 mph speed limit was raised 12 years ago, suddenly we found ourselves not content with the improved 65 mph speed limits, but started pushing it up past 75 and 80 on a regular basis. But in test after test, I've found that driving at 60 mph, in contrast to keeping up with the traffic by going 75 to 80 mph, easily improves mileage by anywhere from 4 to 6 mpg.

Let's make the conservative estimate that only 20% of the 200-million-plus vehicles on the road today, or approximately 40 million, are primarily freeway drivers on their way to work and home in the suburbs: If we lowered the freeway speed limits back to 60 mph and rigidly enforced them, those 40 million vehicles alone would save 96,135,846 gallons of gasoline each and every week. That's 722,961 barrels of oil per week—100,000-plus barrels a day. (One barrel equals 42 U.S. gallons.)

Okay, maybe there aren't 40 million drivers hitting the open freeways at 75 mph every day; simply cut the numbers in half and we still save close to 45 million gallons of gas and 361,000 barrels of oil per week. We hear every night on the news how worried everyone is about oil supplies, or about problems with our refinery capacity, when even at the lowest numbers this single action could resolve our energy problems in seven working days.

How? The futures market for oil and gasoline would collapse, bringing prices back down to more reasonable levels. Families would quickly find their budgets would improve by $1,000 or more annually because they'd buy far less gasoline. Financially it's a win-win strategy for the entire nation—unless your money is tied up in petroleum futures or you enjoy that 80-mile drive to work.

Step Two: Reward Telecommuting with Broadband Access

This move doesn't resolve the problem of fuel wasted as a result of being stuck in traffic. But again, politicians cry about the lack of money to improve our nation's highway system (while on the other hand they brag about how this is our wealthiest economy ever), so maybe it's also past time to think about improving our computer infrastructure and start moving more individuals into telecommuting.

Ten years ago I built recording studios at my home and when broadband Internet connections became available I installed no less than three. This allows me to comb the world's news wires and papers every morning, write and produce my daily news segments and transfer them online to 570 KLIF AM in Dallas five days a week.

This in turn removed the need for my daily drive to Dallas, knocking 70 miles a day, 350 miles a week of driving down to zero. With telecommuting, hundreds of thousands of vehicles could be taken off the road—possibly those of employees in database maintenance or customer service—by allowing them to work out of their own home offices.

Obviously the nation needs high-speed Internet accessibility everywhere to accomplish this step, combined with employers willing to buck the "on-the-job" paradigm. But this too would result in gasoline saved, freeways made less congested, and air quality improved. Telecommuting would also deliver quicker results by freeing up the highway space we have for people who must be physically present at the job or in the office. Not to mention that high-speed, fiber-optic cable lines are much cheaper than highways to build and install.

This would reduce the need for ever-growing amounts of money to keep expanding our highway infrastructure and maintaining the roads and bridges already in place. But an even bigger improvement would be the reduced demand for oil and gasoline—and cleaner air for all.

Further, where lowering the speed limits would improve our gasoline expense situation quickly, the dramatic dent telecommuting could make in our twin problems of high oil prices and congestion would manifest itself over a decade's time. So, like lowering the speed limit, voluntary telecommuting and high-speed Internet accessibility would begin to ameliorate both problems long before the positive effects of raising our automobiles' fuel efficiency could be felt.

Telecommuting is already here and growing, but sometimes we just don't recognize it as such: The rise of retail sales on the Internet signals nothing less than telecommuting to the mall. It's time to use the Internet to get to work, when and wherever possible.

Shortcuts That Could Work

These two programs alone would go a long way toward furthering our energy security, while giving most individuals a better lifestyle. Implementing them would end the charade of the ethanol promise, allow people to buy whatever vehicle they felt most comfortable in and push back the date of peak oil for our children and grandchildren. Not to mention that lowering the speed limit would save lives.

On the downside, futures traders won't like it, the corn and ethanol lobbies won't like it, and I sincerely doubt that at first the public will like mandated and enforced lower speed limits. In fact, I won't like them either. But in the end they'll get us where America is going anyhow; and moving faster toward the future has always been our driving national passion.

Before it's here, it's on the Bloomberg Terminal.