Reduce without Suffering: The 2% Solution

Today we have another guest post from Bradd Libby. His post discusses reducing oil consumption by driving slightly less each year, but you could also extend it to reducing spending without suffering. Just spend 2% less each year. Total up ALL your spending, including necessary expenses, and then aim to spend just 2% less in 2010. For example, if you spend $100,000 a year, reduce that by $2,000. It sounds huge as one big number, but it’s really just $5.60 a day. You can do that with relatively small changes like scaling back your cable bill, eating dinner out one less time a month, skipping night at the movies a month, packing your lunch three times a week, etc. Take that savings and put it in a savings account to watch your money grow.

Small Reductions Add Up

Back in the mid-1990′s I attended a presentation by a NASA astronaut who had flown on the Space Shuttle to grow particular kinds of silicon-oxygen-aluminum crystals that are commonly used in oil refining. Due to inefficiencies in the refining process, most of the crude oil that gets used to make gasoline never actually becomes gasoline. The purpose of the trip to space was to grow the largest, most-perfect crystals possible so that we could better study back on Earth how they work. Even if we could only find a way to reduce the waste by 1%, the astronaut explained, the benefit to humanity would be worth the billions of dollars in research effort.

I’ve never run the numbers, but I’m sure he’s right. People currently use about 80 million barrels of oil a day, about 1/4 of which is used in the U.S. and about half of American consumption is to power vehicles, so any small percentage change is large in absolute numbers. And there’s no question that, one way or another, those figures must decrease in the long run. Even President George W. Bush, in his 2007 State of the Union address, halfheartedly called for the U.S. to reduce its gas consumption by 20% over the next 10 years. So, billions are also being spent for research on (and purchasing of) hybrid cars and other alternative-fuel vehicles.

All of this concern with researching new technologies had me wondering if there’s an easier way to reduce gasoline consumption – one that could use presently existing technologies and one that work to reduce demand, so that it could be used even if the research efforts don’t pan out. And if they do pan out, all the better.

Drive Just a Little Less Each Year

So, I’ve come up with this billion-dollar business idea which I’m throwing out for free to anyone willing to try: have each vehicle drive 2% fewer miles per year. Develop a website in which vehicle owners can sign up and pay a yearly fee to be a member. Like TerraPass, they’d get a sticker to put on their car showing that they’re part of ‘The 2% Solution’. They’d also get an allotment of 15,000 miles that they’d be allowed to drive. They simply enter the mileage on their car at the start of the year and then agree to not drive more than their allotment each year. (How this would be enforced I’m not certain – maybe from your car’s inspection report each time it has an emissions test, or maybe just from the honor system.)

The next year, the allotment would drop by 2%. So, 15,000 miles the first year and about 14,700 the next year. 14,406 the next year and 14,117 the next year, and so forth. It’s as simple as that. One interesting thing about this idea is that it’s not very hard to achieve. If the average person commutes to work 250 days a year, then they could comply with a 2% reduction in driving just by carpooling, biking, or other forms of not-driving only 5 work days.

A person whose round-trip commute is about 40 miles (about 10,000 miles per year just to get to work and back) who telecommuted only every other day and made no other changes to their lifestyle would reduce their annual driving enough to comply with their driving allotment for the next 20 years.

Another interesting aspect of this scheme is that it actually gets easier to comply as time goes on. In the first year, you’d have to reduce your driving by about 300 miles (or one 5-hour car trip), but in the second year, you’d only have to reduce by 2% of 14,700, not 2% of 15,000. So, by the 20th year, you’d only have to cut out 200 additional miles, and in the 35th year, only 150 additional miles.

I’m thinking that there could be a ‘mile exchange’ board – sort of a voluntary cap-and-trade system – so that if you hit your allotment and needed to drive more, you could buy extra miles. If you drove a less than your allotment some month or year, you could offer to sell miles and make a tidy profit.

For some people, it would be like a game. A scoreboard could show which members reduced their driving the most. Monthly and annual lotteries could be held with prizes given away for the top travel-reducers. (For people who ditched their cars entirely, well, they could be entered in the lotteries for free.) For others, continuous improvement in one’s environmental habits would just become a new lifestyle. No need to replace America’s fleet of cars. No need for hydrogen-powered cars. Just drive 2% less each year. Part contest. Part game. Part exhange board. Part environmental lifestyle. All for a good cause. The 2% Solution.

Expand the 2% Solution to the Rest of Your Life

And this idea could be applied to all sorts of areas of life beyond driving. Your monthly electricity consumption. Pounds of trash you produce per year. Percentage of food products that are locally grown, etc. After a few years, you could write a book about the website (“The 2% Solution: How I Started a Website that Solved America’s Energy Crisis, Made a Fortune and Saved the Earth from Global Warming”) and get millions of dollars from a publisher. Just be sure to give me proper credit…and feel free to send me some of the money.

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