How much would it cost to convert the entire U.S. fleet of passenger cars, which collectively burn 40 percent of the oil that we use, to electric cars? Let’s look at some numbers:

total oil consumption in the U.S.: 21 million barrels every day (CIA Factbook)

cost per barrel: $130

days in year: 365

total spent per year: $1 trillion

percentage of oil consumed by passenger cars: 40 (source)

total spent per year on oil for passenger cars: $400 billion [refining into gasoline, distributing, and retailing add even more to this; looking at the 138 billion gallons the U.S. consumed in 2006, at $4 per gallon this is about $552 billion every year (subtract perhaps 5 percent for gasoline used by non-diesel trucks; add 1 percent for oil used by diesel-powered cars)]

at 5 percent interest, how much we could we borrow and pay $400 billion every year in interest: $8 trillion [current 10-year T-bill yields enable government to borrow at 3.84 percent]

number of registered cars in the U.S.: 250 million (Wikipedia)

cost of a new electric car, if mass-produced: $20,000

value of a used car, if exported to Latin America or China: $5,000

cost to upgrade average existing American car to a brand-new electric car: $15,000

number that could be converted for $8 trillion: more than 500 million cars (i.e., twice as many as we have now)

percentage of electricity in the U.S. currently being generated from burning oil: about 1 percent (the rest is coal, natural gas, nuclear, hydro, wind)

Instead of sending $400 billion each year to countries such as Saudi Arabia and Venezuela, we could spend it on electric car production in the U.S., Mexico, and China. At current oil prices, it wouldn’t cost us a dime extra to stop importing and burning oil for passenger cars. In fact, if the goal were to end up with the same number of cars on the road, we would have a few trillion dollars left over. One or two trillion dollars would be sufficient to build nuclear, solar, or wind electric power plants to replace all of our plants that currently burn coal and oil (note that less than 1 percent of current electricity generation in the U.S. is from oil (source); most electricity that we use today is from coal, natural gas, or nuclear).

So… simply by stopping our purchases of oil we could finance the construction of power plants that emit no CO2 and electric cars that emit no CO2.

[Many folks quickly commented that I did not figure in the cost of electricity to run the electric cars. I thought that it was common knowledge that electric cars cost very little to run, even at today’s high electricity rates, somewhere between 1 and 4 cents per mile. The gas engine in a car is much less efficient than the generator in a power plant, about 20 percent for the car versus 40-60 percent for fossil fuel plants and 80 percent for hydroelectric. The electric motors in an electric car are often quoted as roughly 90 percent efficient. The U.S. has a near-infinite supply of coal for generating electricity and plenty of existing surplus electric generating capacity in the evening hours (see wikipedia). As noted above, oil is so expensive now that we could use the leftover trillions of dollars to build solar, nuclear, or wind-powered generating plants. http://en.wikipedia.org/wiki/Electric_car offers some numbers for electric car running costs. Periodically replacing the batteries in electric cars costs more than buying the electricity to run them. Of course, nobody has ever seen what would happen to battery costs and reliability if there were a multi-trillion market for batteries.]

[Some other folks noted that it might be tough to borrow between $4 and $8 trillion to finance this conversion. To that I would say that the Three Trillion Dollar War authors claim that the U.S. government has borrowed $2 trillion for our wars in Iraq and Afghanistan. Perhaps our creditors would be even happier to lend if it were for something that might pay some dividends.]

[Others have objected that selling our old cars to Latin America or China is not environmentally correct and would not cut down on CO2 emissions. That’s mostly true but remember that this posting was not about cutting CO2 emissions. It was about using the money that we currently spend on oil to pay interest on a loan big enough to replace all of our passenger cars with electric. Why not convert existing cars? A 7000 lb. SUV is not that amenable to electric power. If we leave the 7000 lb. SUV on the road, piloted by a fearless teenager, it becomes a serious hazard to anyone in a 2000 lb. electric car. Exporting the old cars and driving electric cars still saves quite a bit of CO2. Folks in developing countries are going to buy more cars, whether or not we sell them, and they will probably make more efficient use of any cars they have (a 7-seat SUV in the U.S. is occupied by one person; a 7-seat SUV in Peru would be occupied by 10 people). Folks in the U.S. are going to buy newer cars, whether or not they are gas or electric. The entire U.S. fleet of cars will be replaced within 10 years. Currently we are on track to replace our gas guzzling fleet with a newer shinier gas guzzling fleet. I’m not sure that qualifies as progress.]