Combining the Pickens Plan and an Auto Bailout 18 comments
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With the automakers in such dire straits and in search of government funding for the second time this year, it is only natural to assume that the federal government will be able to dictate terms to America’s once proud industrial titans. With the changing political climate, these new terms will be driven by Barack Obama and the congressional democrats.
While the Big 3 (General Motors (GM), Ford (F) and Chrysler) are currently asking for over $50 billion, they have already received $25 billion to retool plants for more fuel-efficient vehicles. Such a large intervention should be used by the Obama administration to expand their own agenda while at the same time saving countless American jobs in the process.
Sponsored by oil man Boone Pickens, the “Pickens Plan” made its debut during the summer as an attempt to put the idea of energy independence back at the forefront of the political discussion in America. While displaced by the collapse of the financial markets in September, the Pickens Plan can be used by the Obama administration to bring about the achievements of some of its key objectives.
While the details of the Pickens Plan are not entirely clear, the plan is centered around the construction of vast wind farms in the central United States that will be used to displace Natural Gas production which will then be switched over for automobile consumption. Such a plan would be beneficial to the United States because of its vast stores of natural gas, the relative cheapness of natural gas (it costs less then a $1 per gallon to fill up a car) and the significant environmental benefits of natural gas when compared to oil.
When preparing the various legalities of the bailout, Congress should put such stipulations in the agreement so that it forces the Big 3 to significantly ramp up their efforts to produce natural gas friendly vehicles as an intermediate solution to our country’s dependence on foreign oil. Such a stipulation would help provide cover for the unpopular bailout of the Big 3 while stimulating the economy, pleasing the environmentalist lobby of the Democratic Party and by helping to wean Americans off foreign oil.
Given the surplus of natural gas production coming on in the next several years, excess natural gas supply should be enough to cover the initial consumption boost that would occur with the first generation of Big 3 natural gas based cars. In addition, the initial infrastructure spending that would be needed on the part of the federal government for a nationwide roll out of a natural gas system would provide an additional direct stimulus to the economy.
Disclosure: None
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For years, Ford and GM both produced CNG vehicles (cars and trucks) in the US that burned compressed natural gas, including bi-fuel vehicles that could run on either gasoline or natural gas from separate fuel tanks. Some of these were sold or donated to governmental fleets and energy companies for testing and evaluation.
Few were sold to the public - customers had no practical way of filling the natural gas tank beyond a very small number scattered fueling stations; and hauling around an empty natural gas tank in the trunk while running the engine on gasoline is not helpful: neither economical nor "green".
Until a vast infrastructure of natural gas refueling stations for road vehicles is assembled, there can be no natural gas vehicles in common use on the highways. Ford and GM would be absolutely delighted to immediately load up vast numbers of new cars and trucks with natural gas tanks and engines designed to run on CNG: all the technology and manufacturing capability is already in place. They just won't sell very many until refueling stations and/or economical home refueling systems are in place for the customers to get them on the road for daily use.
However, this also provides ANOTHER economic opportunity for Detroit. They could install CNG refueling equipment relatively inexpensively at thousands of dealerships, thereby saving BOTH themselves AND their distribution networks.
Of course, this assumes that Detroit and the Feds have the brains to pull off something this smart, which is doubtful.
It's time to get with it, guys!
We put a conversion kit on a 2009 OEM Showcar in the OEM's booth at SEMA which caused a buzz among the press to see if this was really going to be an OEM option, and EPA threatened to fine us if we didn't pull it off the car! That's where there priorities are...keeping the status quo..
1) Not a cent of the $25 billion already approved has made it to any of the auto makers. They have to jump through hoops to get funds approved for specific (green) projects. Which is as it should be, but it doesn't help them with their current cash crisis.
2) CNG is closer to $2 per gallon [equivalent]. (I own a dual CNG/gas fuel GM vehicle. I bought it used; it used to be a fleet vehicle.) Pehaps it could be a little cheaper if people were filling up at their homes with gas from their utility company, but not much. All the filling locations in my area (very sparse) are already owned by the gas company.
3) The auto companies can not magically develop a filling infrastructure, nor a market for such vehicles. They have the technology and will build the vehicles if consumers start demanding them.
www.hyperionpowergener.../
Neither Wind or Solar are cost effective with Natural Gas at these levels.
Specific points:
drgoodwrench - Excellent comments regarding the need to simplify regulatory structure. Obama wants to cut government expenses? Start with streamlining inefficient government beaurocracies.
Gene Herring - The answer to the CF problem is diversification of power gebneration technology.
paultaut - What is cost effective in July, 3008 is not cost effective in October, 2008. The question is what is cost effective over the next 40 years. If we can figure that out we will have a bright future. If we can't, the turmoil of past 40 years will continue.
What this article and all the comments are talking about is finding the right business plan for the 21st century.
Wind on the other hand, may stop at any point. As a result, there can be literally thousands of megawatts that the wind generators were producing that need to be replaced. This happens often in Texas, where there is an overabundance of wind generators in the west of the state. In order to prepare for the sudden reduction in power generation from the wind resources, one of two options is required: (1) a non-wind generator must be paid to "idle" or sit at a minimum, prepared to ramp up megawatt production as soon as the wind stops flowing; or (2) customers must be paid to accept the possibility of their power cut-off when the wind stops. Texas relies primarily on the latter.
Another major issue is the lack of an adequate transmission grid to carry power from the wind generators to the load centers. Again, Texas has numerous problems due to the wind generators being located in the west, and the load centers in the east. Anyone who works for a utility would be able to explain the purpose of having generation close to load; I will try to make it simple: apparent power is made up of watts (real power) and vars (reactive power). Reactive power essentially pushes the real power through the power lines. However, reactive power gets weaker and weaker over distance, meaning your sources of reactive power need to be near your load centers. Most generators produce both real and reactive power. One exception to this is, unfortunately, wind generators. So, in order to get the real power generated by the wind farms, not only would you need a number of new high-voltage power lines to carry the real power the great distance to the load centers, you would also have the additional expense of needing a source of reactive power along those lines. Good luck convincing anyone that a new 500kv power line needs to be built near their house.
In case this wasn't clear, allow me to sum it up: Wind power does not in any way reduce expenses. It may reduce emissions, as natural gas and coal fired plants could run at lower levels. But costs would be raised - not lowered.
Finally, the article above makes a dangerous assumption that natural gas prices will remain low. As anyone who watches this market saw this past summer, that is certainly not the case.
Strategically located how? The nation's interstate highway system is about 50,000 miles. At least one station every 10 miles or so on the freeways seems a reasonable start, and two or three provides for some pricing competition. Alternately you would eventually want every exit that has one or more gasoline stations nearby to have at least one that serves CNG. In any case this indeed requires thousands of CNG fueling stations. Another factor is, if the car runs out of CNG between exits, it would be impractical for the stranded driver to carry an "emergency" spare tank of compressed gas to the next gas station and back, as is done with gasoline - so again, an infrastructure of thousands upon thousands of fueling stations is absolutely essential.
When gas hits $5 in a few years, people will again be pointing fingers wondering why we haven't done anything yet.
Government isn't even good at Government... let alone banking! or whatever else is on special interests 'wish list'
Adios Ford, Chevy, Chrysler....
If I want a CNG auto, I'll go to my local Honda dealer and buy an accord!!!!
GET A GRIP and give me back my money!
Until someone wrestles control away from the unions, America's Big 3 are doomed to self destruct and throwing more taxpayer money at the problem so that they can pay union bosses is just not going to work. Take tax money from a citizen and give it to a union member?? Who is building something no one wants?? Not going to work.
How about we tear up all of the contracts and start over again. Match what the Toyota plants are doing here in the US. Make money again!! Or let them just go away like other businesses do. The guy who built the restaurant down the street from my house didn't last because he served food no one wanted. He went belly up. Same should happen at GM.
Here is a workable plan with common sense for the U.S. Auto Industry -
pacificgatepost.blogsp...
This would clean old contracts ... UAW as well as executive ones.
Do not leave it to Paulson or Congress to come up with a creative plan or consider taxpayers' interests.
There is much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW.