IMAGINE: 500 MILES PER GALLON

Zakaria, Fareed (2005) Imagine: 500 miles per gallon, NEWSWEEK, 3/7 27

Here is another story of technology that will supposedly put the gasoline business out of business. If true, you take a hybrid car that gets around 50 miles per gallon. You then add on a plug in and get 75. You then mix 15% gas with 85% ethanol and you get 100’s of miles per gallon. There is much more, but that is the basics.

So why doesn’t it happen? As Zakaria notes, we are not in a perfectly free market. Robinson called it imperfect competition. That means that you could wake up tomorrow and go get a loan from a bank and go drill for oil. However, most of us don’t do that. We can’t afford to, don’t have the knowledge, won’t get the credit, and so forth. However, another already existing company will probably do the drilling.

Thus, the competition is not perfect. Further, why invent something that will put you out of business or dramatically reduce profits? So, when an inventor comes along, you buy them out or your attorneys watched for new products and then make knock offs that do the same job, but still improve the field marginally. Then you kill the new inventor with lawsuits, public relations, and advertising. You can also hire the inventor, give them a great title, and tell them to go live someone where else in the world. They of course live in luxury.