The Fuse

Frederick W. Smith: Ending a History of Oil Dependence

June 08, 2015

Guest Post by Frederick W. Smith | @FedEx

Frederick W. Smith is founder, chairman, and CEO of FedEx Corporation, a global transportation, business services and logistics company.

The global contest for energy resources has continuously reshaped modern history. Japan’s vulnerable energy supplies and the attack on Pearl Harbor; Hitler’s move into the Caucuses, prompting the beginning of the end of the Third Reich; the oil embargoes of the 1970s that imperiled U.S. prosperity and international influence; Iraq’s invasion of Kuwait and Operation Desert Storm. Oil has been a driver of geopolitics for the entire modern era.

Rising U.S. oil production over recent years has yielded major economic benefits. Hard-working, innovative men and women have positioned the United States as the world’s top oil producer—a status that would have seemed unimaginable only a few years ago. Nonetheless, our nation has not achieved energy security, and in fact, America remains profoundly vulnerable.

Oil is priced on a volatile market driven by geopolitical events, cartels, and ever-changing and surprising supply and demand dynamics. Today’s low oil prices, although thankfully benefiting U.S. consumers, threaten domestic oil production trends and investment in long-term solutions like alternative transportation. Oil price volatility has returned to record levels not seen since the aftermath of the 2008 financial crisis.  All leading forecasters expect OPEC to play a major role in the global oil market going forward. For 40-years, we have been lulled into complacency when oil prices drop, only to be tripped up again when oil prices spike.

For businesses reliant on oil for every day operations, including FedEx, this volatility makes long-term planning nearly impossible. With oil accounting for 92 percent of the energy consumed by the nation’s cars, trucks, and aircraft, an oil price spike often yields calamitous effects.

Delinking the U.S. economy from an increasingly unpredictable global oil market will require four specific measures.

First, we must ensure that we have a domestic oil and natural gas policy framework for the 21st century that maximizes domestic production to benefit both our economy and balance of trade. Second, we must reduce overall U.S. oil consumption through greater fuel efficiency in our cars, trucks, and aircraft. Third, we must accelerate the deployment of alternatives, including electricity and natural gas, to diversify the fuels that power our transportation sector. And finally, we must convene a national conversation on the importance of undertaking these three steps as the only way forward in tackling one of our greatest economic and national security challenges—oil dependence.

Ultimately, to advance long-term solutions that revolutionize American prosperity and energy security, it will take all of us and all of our voices, which I hope you will share here, on The Fuse.

ADD A COMMENT

  1. Tom Farley says:

    In support of the need for a “National Conversation” you might consider some starting points.
    A) Education starting at the preschool level & up which addresses the development of demand. An informed populace will usually make informed decisions. Behavior is learned.
    B) An informed populace will recognize the “opportunity cost” of military action to support unnecessary demand. (see: THE THREE TRILLION DOLLAR WAR…by Jos. E. Stiglitz, and WAR IS A RACKET by Maj. Gen. Smedley D. Butler. also see The McNamara Fallacy by Robert McNamara). Military is one sided & restricts commerce. Some Countries go broke.
    C) Redirect gov’t. spending & private investment to infrastructure starting with objective media. An investment in the “real economy” is an investment in commerce & all that follows. Any chance of a “National Conversation” producing productive results will require a “group think” approach not a “I’ve got mine” philosophy. Perhaps a Scandinavian approach…
    Our dependence on oil is by design. We just didn’t know it. Again, behavior is learned. Lack of maturity included.
    D) A “National Conversation” would require a respected leader & Mr. Smith seems to fit the bill.

  2. Richard Beckers says:

    Ms. Mcnally Mr. Furby Mr. Howard, Mr. smith, I’m having a bad Experience with your company FedEx, they ship me page a phone from Boston to Honduras, we paid express to FedEx express 124.00 dollars in the stat to have it ship to Honduras and was never told that we will have to pay any more money in Honduras , I would not have sent it. the phone cost 100 dollars , FedEx in Honduras charge me another 60.00 dollars more .I paid FedEx 180.00 dollars to get a hundred dollar package. so I called every department for help , they sent me to about five different office’s even your legal department and as well was told were sorry , but no one can handle my case , so I went to Honduras FedEx office and she told me that it will be 10 to 12 business days before I get my phone so I paid FedEx 180.00 for express and I have to wait 17 days to get my package. so were is the express, it has to be something I can do, I’m not a rich person. I have talk to a lot of persons social network who have the same experience as my self in Honduras. class action suit in the stats , I will know more info once I talk to a lawyer in the states. FedEx has to be responsible. we have many family’s over sea’s and we have to ship from the state’s all the time FedEx should be responsible anywhere with the name FedEx at lease tell us that it will be a extra charges .
    thank package 807295909313

  3. Jeff says:

    Mr. Smith, You are a leader and innovator with a business that will certainly reap the rewards of energy independence. Natural gas is our fuel of the future, I hope you can help make a difference.

  4. Mike says:

    Ok Fred lets start with CNG delivery vehicles. Don’t let UPS lead the way.

  5. Lee Griffin says:

    This guy would make a great president

  6. Roger says:

    Good for you Mr Smith – well said Sir! Having worked with some of your team in establishing an early-adopter fleet of EV Trucks in London, Paris and elsewhere – the MODEC ZEV – I know at first hand both the challenge and the opportunity. Your advocacy and action is most welcome. You know as far too many forget – low oil prices do indeed lull the R&D effort amongst other things – the time to act is right now.