The Alternative Fuel Vehicle and $300 Oil 22 comments
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It is amazing sometimes that just by browsing the news you can piece together a totally different picture from a single original news item. Here are three items I came across in the past few days:
Pickens: Oil Will Reach $300 a Barrel
"Oil legend T. Boone Pickens, now CEO of BP Capital, says oil prices will continue to rise… So, 10 years from now, the price of oil could well be $300.”
DOE to Spend $300 Million on Alternative Vehicles
"The U.S. Department of Energy..will allocate nearly $300 million from the American Recovery and Reinvestment Act to help fund the development of alternative fuel and energy efficient vehicles displacing approximately 38 million gallons of petroleum per year."
**Note: To put it in perspective, based on the US EIA data, dometic gasoline consumption is estimated at 378 million gallons PER DAY.
U.S. Automakers’ Small-Car Output May Outstrip Demand
General Motors Co. (GRM), Ford Motor Co. (F) and Chrysler Group LLC plan a 63% boost in small-car production capacity by 2015 that may outstrip demand since consumers may not be ready for that many small autos. The small-car push is being driven in part by the U.S. requirement that auto fuel efficiency rise about 40% to an average of 35 miles per gallon by 2016. Automakers also are tapping sources such as the Energy Department’s $25 billion loan program to develop more fuel- efficient vehicles."
Related Thoughts
Unlike other commodities, oil has a long, complex and global chain of supply going from offshore platforms, pipelines, tankers, ports all the way into storage, refineries and ultimately, gas stations. This is one of the reasons that oil is probably the most volatile commodity attracting the most speculators. Demand, mostly from exploding emerging economies, had outstripped supplies over the past 5 years. Speculators further exacerbated the market fundamentals and drove oil prices to historical highs last year.
Now, high oil/gasoline prices, the economic crisis and concerns over global warming have been three of the major factors leading to an increasing interest in alternative fuels and vehicles. The battery powered electric vehicle market is slowly developing while the hybrid electric vehicle market, including plug-in hybrid electric vehicles ((PHEV)), and electrical vehicles ((EV)) could move ahead more rapidly. Fuel cell vehicles, however, are in the prototype state and most likely will be late to fully participate in the big new green transportation game. Meanwhile, natural gas vehicles (NGVs) and hydrogen as alternative fuels for vehicles have their own infrastructure and storage challenges.
A study dated March 2009 by the IEA Hybrid & Electric Vehicle Implementation Agreement representing 12 member countries including the US, France & Italy, noted that the growth of the sales share of hybrids is expected to continue; however, supply might be limited due to the battery production bottleneck. The study further projects the share of hybrid cars in 2015 for new car sales is expected to below 10%. And the EV share of new car sales in 2015 is expected to be well below that 10%. The forecast by Just-Auto in 2009 believes that conventional hybrids such as the Prius from Toyota Motor (TM) will represent 3% to 8% of global light vehicle production by 2015. Other plug-in vehicles, such as Volt by General Motor (GRM) will take a much lower share.
Some of the most cited reasons EVs or PHEVs are not used on a large scale includes high initial purchase price as batteries are still expensive, concerns over adequate supplies of electricity; the lack of production and maintenance infrastructure, and limited battery range. Though alternative vehicles still have ways to go due to various production and technical constraints, the evolution and growth is bound to continue through aggressive government subsidy policies and consumer demand.
However, the fact remains that most of the alternative energy and vehicle industry currently are not economically competitive with conventional industries without substantial government funding and subsidies (i.e., taxpayers’ money). Another fact: We are still in the midst of the longest U.S. recession since the Great Depression with a real unemployment rate at 16%. In light of our newly upward revised $9+ trillion budget deficit running in the next 10 years, now is probably not the time to spend billions to fund programs not directly reviving the economy. It makes common sense that those funds could be better utilized elsewhere in the economy to create a more immediate impact.
We also need to come to a common understanding that the world needs all sources of energy, conventional as well as alternative. Worldwide energy consumption is projected to rise more than 50% by 2030, with most of that growth in emerging economies, such as China and India. Even if the use of renewables doubles or triples over the next 20 years, the world is likely to still depend on fossil fuels for about 70-85% of its energy needs, based on various forecasts. (see graph)
It is imperative that we keep investing and developing in all forms of energy to maintain a healthy and competitive energy market without any favoritism or politics. Otherwise, the emergence of lithium (used in batteries to power EVs) as a strategic commodity, and the geopolitics associated with electricity as the primary vehicle power source will mean that the alternative fuel or the hybrid/EV battery market could end up with the same volatility and speculation as the current crude oil market.
Disclosure: No Positions
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The US turns out tens of thousands, maybe hundreds of thousands of econ students every year, but only a very small fraction have read the last chapters of their econ books. If they read them, and genuinely thought about what they read, they should come to the conclusion that energy should be a public or near-public good like parks, streetlights and crazy wars thousands of miles away. Accordingly, governments would make it their business to be intelligent governments, and select the right energy option. The right energy option is a diverse energy portfolio, with nuclear energy playing a key role.
The transportation sector (particularly cars, trucks, and buses) is one of the greatest contributors to air pollution in the United States.
What is your company doing to improve Air Pollution from your vehicles and more important, what is your company doing to Wien yourself off of imported oil? To you use or plan to use Hybrid, CNG, etc., if so what and when.
Emissions from vehicles contribute to smog, low visibility, and various greenhouse gas emissions. According to the Department of Energy (DOE), about half of all air pollution and more than 80 percent of air pollution in cities are produced by cars and trucks in the United States.
I'm conducting a survey at CleanCNGVehicle.org if you would be so kind as to visit the website and complete the survey, I would appreciate it.
Thank you
Mike
Paul
The IEA projected that vast investment is needed over the next few years to produce around 4 hew Saudi Arabia's worth of oil to allow this.
With the recession and comparatively low oil prices this is just not happening.
The choice is going to be between driving much more efficient cars and walking.
My guess is that in the US liquified natural gas will be the main option chosen, and in the far east and Europe electric.
The variability in electric supply mentioned does not occur with nuclear power.
In France, for instance, no shortages or price spikes in electricity are likely.
China is also moving rapidly to mass produce nuclear power stations.
There are sufficient lithium supplies for many billions of cars.
Good comment Paul except the turbine, not eff, and lack of BEV mentions, you hit it on the nose.
Facts are oil will hit $150bbl as they economy comes out of recession as we have hit oil production peak as last yr proved.
This will drive alt fuels by 2015 to NG semi's. trucks, buses and PHEV's and increasingly BEV's because they are far more energy eff by a factors 2 and 3 respectively and the price of batteries dropping a lot.
Lithium is not and never will be in short supply as new sources are being found all the time with recent Nevada finds supplying al we need for the next decade. And we have just started looking for it.
Lithium batteries are now selling less than sealed lead batteries/kwhr. Soon it will drop to under flooded lead batteries then you can kiss ICE' cars goodbye.
But Lithium is not the only battery. They have been sidelined because there was no market and Sodium, alum/zinc-air are very viable once the EV maket begins, they will step up. In fact sodium is the best for well used vehicles like taxi's, trucks, trains. There are other good batteries like NiMH, Ni-Cad but their materials will go up in price so not viable.
As oil prices rise to probably $175/bbl before the economy tanks again in 2 yrs from it, it will focus minds of govs, auto and customers to alt fuels, eff, smaller cars. PHEV's and EV's will rise to the top as home wind, CSP solar and in a couple yrs even PV becomes cost effective and common.
The future is not hard to see if you really know the tech and costs. Luckily there is no shortage of energy, just the means to catch, make it for now. Only a fool would be relying on oil for their future energy supply.
While waste biomass, coal, NG will be F-T process into gasoline, diesel it will be priced as oil so to expensive also. Good profits though so good investments.
With home wind at $2kw now, Solar CSP at $3k/kw in the near future and PV soon hitting $4k/kw will supply a good % of our future energy needs because in 5 yrs they will be 1/2 the price or less than fossil fuels for homes and charging EV's, PHEV's for personal transport.
.
On Aug 30 10:24 AM Ferdinand E. Banks wrote:
> Good article, except for the business about favoritism or politics.
>
>
> The US turns out tens of thousands, maybe hundreds of thousands of
> econ students every year, but only a very small fraction have read
> the last chapters of their econ books. If they read them, and genuinely
> thought about what they read, they should come to the conclusion
> that energy should be a public or near-public good like parks, streetlights
> and crazy wars thousands of miles away. Accordingly, governments
> would make it their business to be intelligent governments, and select
> the right energy option. The right energy option is a diverse energy
> portfolio, with nuclear energy playing a key role.
using the analogy you used, our governments give money to the dope dealers to keep the price down so we remain hooked. they further kept us hooked on the stuff when together with our bankrupt automakers, govt hatched a plan to further boost our dependence on the stuff by offering tax breaks for the bohemoths which have become prevalent on our roads.
On Aug 30 08:11 AM stocknerd wrote:
> Explaining consumption and demand is real simple. It goes like this:
>
>
> OIL=dope
> The US and world are dope addicts. They cannot wean themselves away
> from dope. Oh sure, they talk a mean game about kicking the habit
> but...oh well, talking to a dope addict never works. Let $300 oil
> do the talking. Small cars? Give me a break. Sun and wind power?
> Wake me when it is 10% of all energy consumed.
There is a need to become MORE EFFICIENT, not to CUT energy use.
The USA is prosperous BECAUSE of its energy use. For example, the energy a washing machine uses saves the user time to focus on their specialty. This is specialization of labor at its best. Go to a third-world country, like Mexico, and you will see people wasting time and capital washing by hand.
To mindlessly say that a farmer or a rural homeowner should dramatically cut their energy use is uneducated. They already are near the level their status allows them. The markets will do the rest. If anything, replace the federal income tax with a higher gasoline tax, but don't do it as a shock to the system, raise it over time. This nonsensical cap-and-tax garbage is meant to concentrate power in Washington, DC.
On Aug 30 07:00 AM 58robbo wrote:
> i find it puzzling that governments emphasize the need to cut energy
> use yet most of them continue to subsidize energy exploration, production
> and technology. not only do they do that, they continue to encourage
> consumption on an unprecedented scale through all the stimulus?!
An impossibility.
Something tells me we are headed into multiple energy crises...
On Aug 30 12:22 PM Chad Brown wrote:
> disagree on this. Economics courses teach that markets do the best
> job of allocating scarce resources. Not govts. You need govts to
> step in for some things like parks and streetlights. Oil does not
> meet the criteria to qualify as a "public good"
Same goes fro your sources.
On Aug 30 08:11 AM stocknerd wrote:
> Explaining consumption and demand is real simple. It goes like this:
>
>
> OIL=dope
> The US and world are dope addicts. They cannot wean themselves away
> from dope. Oh sure, they talk a mean game about kicking the habit
> but...oh well, talking to a dope addict never works. Let $300 oil
> do the talking. Small cars? Give me a break. Sun and wind power?
> Wake me when it is 10% of all energy consumed.
If governments want to fight terrorism without distant wars, they should concentrate more on the development of alternative energies and seriously reduce the consumption of fossil fuel, thus reducing the income of petrodollars, the main income which finances global terrorism.
On Aug 30 08:11 AM stocknerd wrote:
> Explaining consumption and demand is real simple. It goes like this:
>
>
> OIL=dope
> The US and world are dope addicts. They cannot wean themselves away
> from dope. Oh sure, they talk a mean game about kicking the habit
> but...oh well, talking to a dope addict never works. Let $300 oil
> do the talking. Small cars? Give me a break. Sun and wind power?
> Wake me when it is 10% of all energy consumed.
On Aug 30 10:25 AM Clean CNG Vehicles wrote:
> I hear alot but I don't see much - What are you doing?
> The transportation sector (particularly cars, trucks, and buses)
> is one of the greatest contributors to air pollution in the United
> States.
> What is your company doing to improve Air Pollution from your vehicles
> and more important, what is your company doing to Wien yourself off
> of imported oil? To you use or plan to use Hybrid, CNG, etc., if
> so what and when.
>
> Emissions from vehicles contribute to smog, low visibility, and various
> greenhouse gas emissions. According to the Department of Energy (seekingalpha.com/symbo...),
> about half of all air pollution and more than 80 percent of air pollution
> in cities are produced by cars and trucks in the United States.
>
>
> I'm conducting a survey at CleanCNGVehicle.org if you would
> be so kind as to visit the website and complete the survey, I would
> appreciate it.
>
> Thank you
> Mike
On Aug 30 10:25 AM Clean CNG Vehicles wrote:
> I hear alot but I don't see much - What are you doing?
> The transportation sector (particularly cars, trucks, and buses)
> is one of the greatest contributors to air pollution in the United
> States.
> What is your company doing to improve Air Pollution from your vehicles
> and more important, what is your company doing to Wien yourself off
> of imported oil? To you use or plan to use Hybrid, CNG, etc., if
> so what and when.
>
> Emissions from vehicles contribute to smog, low visibility, and various
> greenhouse gas emissions. According to the Department of Energy (seekingalpha.com/symbo...),
> about half of all air pollution and more than 80 percent of air pollution
> in cities are produced by cars and trucks in the United States.
>
>
> I'm conducting a survey at cleancngvehicle.org/ if you would
> be so kind as to visit the website and complete the survey, I would
> appreciate it.
>
> Thank you
> Mike
if the price for energy went up, perhaps YOU would wash your clothes by hand like they do in mexico. i personally would take the money i saved from the tax cut (due because the govt decided not to subsidze energy) and i would be buying a more energy efficient machine. i assume many people might do the same.
additionally, if the price of gas went up, YOU might CHOOSE to walk. i would take the tax rebate money i got back when the govt decided to end ethanol subsidies, and i would buy a more efficient auto. sometimes i might cycle more. perhaps i'd move closer to work.
with these high energy prices, manufacturers would not need some big govt bureaucrat to tell them how efficient they ought to be. the market, and by that i mean consumers looking to curb their energy costs, would start buying the most efficient cars, washers, driers, a/c etc. manufacturers would then prioritize energy efficiency.
in addition, some alternatives might start looking good. solar water heating for a start. can be set-up for about $2 grand and getting cheaper. as a florida native i find it bizarre that most of the households in the south don't have these systems.
now that the market has taken care of that problem, perhaps we can get rid of the doe, epa, cafe standards etc. that means another huge tax rebate coming your way instead of going over to some washington fatcats.
perhaps some of those new jobless leeches can get a real job and provide something useful to society. some of them would see huge opportunity in the healthcare field where they could better channel their skills and talents.........blah blah blah
sorry i didn't clarify what i meant in my first post. do you get the picture now?
On Aug 30 12:56 PM MarkitWacha wrote:
> I disagree.
>
> There is a need to become MORE EFFICIENT, not to CUT energy use.
>
>
> The USA is prosperous BECAUSE of its energy use. For example, the
> energy a washing machine uses saves the user time to focus on their
> specialty. This is specialization of labor at its best. Go to a third-world
> country, like Mexico, and you will see people wasting time and capital
> washing by hand.
>
> To mindlessly say that a farmer or a rural homeowner should dramatically
> cut their energy use is uneducated. They already are near the level
> their status allows them. The markets will do the rest. If anything,
> replace the federal income tax with a higher gasoline tax, but don't
> do it as a shock to the system, raise it over time. This nonsensical
> cap-and-tax garbage is meant to concentrate power in Washington,
> DC.