Plunging Oil Prices act as $350-Billion-Dollar Stimulus Package
It was only five months ago that oil prices hit a record high of $147 a barrel. Now they’re below $40 thanks to slowing global demand. At the same time, gas prices have plunged from over $4 a gallon to around $1.67 nationally. (And some analysts think they’re heading to a buck a gallon.) And just as high energy prices were a drag on the economy last summer, they’re giving it a boost heading into 2009. JP Morgan Chase economist James Glassman estimates that the drop in oil prices represents “a boost equivalent to a $350 billion stimulus.” To bring that down to the average consumer, Glassman explains, think of it this way: The typical household drives 15,000 miles annually. So a drop in gas prices to, say, $1.50 a gallon would represent a savings in their annual gas bill of $2,500 from when gas was at $4. This could boost GDP growth by as much as two percentage points.
Read the rest at: 5 Reasons Why the Economy Might Recover Faster Than You Think in 2009
The E7 Purpose-Built Cop Car: Can sniff out nukes while getting 30mpg
I needed to get some eye-candy out here on the blog… how about a purpose-built cop car that has a bio-diesel burning power-plant, built-in lights, machine-gun holders, and does 0-60 in 6.5 seconds?
Meet the E7 - even Batman would like this car.
Unlike conventional police cruisers, which are retrofitted consumer vehicles such as the Ford Crown Victoria, the E7 is the first car designed and built specifically for law enforcement.
“You would never send a pickup truck to go put out a fire,” Li said. “Why would you send a family sedan to go take care of a homeland-security issue?”
Flashing emergency lights are embedded in the E7’s frame, making the car aerodynamic and visible from all directions. The front seats are designed with extra space to accommodate a police officer’s utility belt…
…Li said the car’s 300 bhp forced-induction 3.0-diesel engine will deliver 420 lb-ft of torque and propel the vehicle from zero to 60 mph in 6.5 seconds, with a governed top speed of 155 mph.
He also said the E7’s engine, which can run on either ultra-low sulfur diesel or biodiesel, will have a combined fuel economy rating of 28 to 30 mpg — up to 40 percent more fuel efficient than conventional police cruisers.
That last point is important when you remember that earlier this year police were cutting patrols, mounting horses, or using bikes to try to control the skyrocketing impact of fuel on the operating budgets.
Watch the video report over at Fox.
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Dude, Where’s My [Electric] Car!?!!
Another great find tonight, and I can’t believe this one snuck past me. Thanks to the guys at PowrTalk I think I just found my next car. And it’s already monogramed for me!
Ready to hit the American market in 2010, Miles Electric Vehicles 4-Door Sedan is the first practical, affordable, 4-door, high-way-speed rated, all-electric vehicle you can buy (if you can still get a car loan…) for around $35K USD.
According to the Miles EV website:
“In early 2004, concerned by growing environmental problems linked to micro-carbon emissions, Miles Rubin set out to make a difference – by developing a line of safe, affordable, all electric vehicles that produce zero emissions. He centered the company’s activities in Tianjin, China, where the battery industry had expert manufacturing experience. Since then, Miles Electric Vehicles has begun importing low speed vehicles and is working to develop a highway speed, all-electric, midsize sedan.”
“The MILES XS500 prototype sedan currently under development will top 80mph and travel over 120 miles on a single charge – for about the cost of a gallon of gas.”
“Miles Electric Vehicles is owned by Miles Automotive Group, Ltd, and headquartered at the historic Santa Monica Airport in Santa Monica, CA.”
Hopefully I can get in touch with my local rep for some additional information and to arrange a demonstration. I’ll keep you posted.
DOD’s Energy Plan is Running on “E”
Tonight, while scouring the web for the best sources of energy and new fuels information I can find for you, I stumbled upon a gem of a blog ( DOD Energy Blog ) that focuses on the impact of our energy crisis on the Department of Defense - the worlds single largest oil consumer.
And what perfect timing! First up, a post about a report that will get us all right up to speed on current DOD energy issues.
I’m not exaggerating when I tell you Dr. Sohbet Karbuz’s ”Can the U.S. military move to renewable fuels?” in last month’s Bulletin of Atomic Scientists is perhaps the best, most concise summation of the military’s fuel concerns in 2008.
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What Should Obama’s Energy Policy Include/Exclude?
Senator Obama ran a brilliant campaign and yesterday a majority of Americans voted him in to the Office of the President of the United States. While there is certainly reason to celebrate today, in a few short months he will inherit a failed energy policy, one in desperate need of change – but exactly what kind of change?
The Obama-Biden comprehensive New Energy for America plan will:
+ Provide short-term relief to American families facing pain at the pump
+ Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
+ Within 10 years save more oil than we currently import from the Middle East and Venezuela combined.
+ Put 1 million Plug-In Hybrid cars — cars that can get up to 150 miles per gallon — on the road by 2015, cars that we will work to make sure are built here in America.
+ Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.
+ Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
In the past Obama has been a friend of the ethanol industry, supporting the subsidies that enabled the young industry to flourish in his home state (and surrounding states) early by encouraging private investment and innovation. He recently said corn ethanol is not “optimal” when compared with sugar cane ethanol, a comparison that is not entirely fair, since corn ethanol production produces feed for livestock as a byproduct.
Will he continue to support the ethanol subsidies, and work to raise the “blend wall” on E10 from 10% to a higher figure? (Ethanol production is about to “cap” out due to the lack of market for it’s excess product.) There is no mention of the Flex-Fuel Vehicle in the bullet points above, although it would be the cheapest fastest method for reducing (in a meaningful way) America’s transportation reliance on oil.
So, besides encouraging fuel conservation and mandating FFV’s w/ the Open Fuels Standard Act, what else should President Obama’s energy policy include and exclude?
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Will Improving Gas Mileage Now Help or Hurt the “Green” Movement in the Long Term?
I believe that improving energy efficiency is the “low hanging fruit” in this energy crisis - and obviously should be the first step in any reasonable plan to fix the way we power civilization.
I attended an Energy Freedom Conference last weekend in Chicago with the idea that energy conservation (esp. fuel conservation thru eco-driving techniques learned using websites like FuelClinic.com ) is a key component to helping solve our problems.
I was surprised by the several attendees I talked with who believe improved fuel efficiency was not to our long-term best interest, saying it may help to reduce prices but at the same time would reduce the public’s interest (and long-term investment) in actually fixing the problem with alternative fuels, etc…
I’m curious what others here think - does energy conservation work to our advantage, or does it actually hurt the green movement in the long term by reducing investment?
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The Case for “Future-Proof” Flex Fuel Vehicles (FFVs)
Over the next few years you’ll see a change at your local gas stations as more alcohol-blended fuel pumps are installed across the nation. Alcohol-blended fuels like E85 are already available in some areas, and more are coming to market as more FFVs are sold in the United States.
US based manufacturers have committed to making 50% of their new autos FFVs by 2010 and and 85% by 2012. In addition, there is proposed legislation called the Open Fuel Standard Act which will mandate all cars sold in America meet the same goals, so this will mean that all imports sold in the US will meet the same FFV standard. (You can help support this legislation here.)
Since FFV is an widely available and mature technology (there are already millions of FFVs on the road in the US - you may be driving one), adding the capability to all new vehicles sold in the US doesn’t add notably to the cost of making new cars (usually about $100) - and provides a way for auto manufactures to “green-up” their product lines.
Drivers of FFVs will be able to choose what fuel to buy, based on price at the pump, performance needs, personal preference, etc. - just like shopping for any other commodity. You’ll be able to mix E85 with E10 (the current flavor of gasoline almost everywhere in the US) and newer alternative blends like E25 or M50. Using FFV technology, your car will automatically adjust your engines settings to run properly on any combination of gasoline and alcohol fuels.
Unlike more exotic alternative fuels like compressed hydrogen or natural gas, drivers of FFVs are not stuck on a virtual “energy island” of specialized refueling stations. You will be able to travel freely, just like today, as far and wide as you like - choosing your favorite blend of alcohol fuels as you go - or using straight gasoline where no other choice exists.
So if your next car has an engine that burns liquid fuel, makes sure it is “future proof” and check that it’s a Flex-Fuel Vehicle before you buy it, or else you’ll be left without options at the pump when the alcohol-blended fuels hit the wider market.
Turning Oil into Salt
I’m home from the Energy Freedom Summit in Chicago with so much material and information that it’ll take me weeks to digest, understand, summarize, and disseminate it to you. Let me start with a “sound-bite” sized summary of the theme of the conference…
Once was a time when nations went to war over salt. Seriously.
Until the 19th century salt was a strategic commodity much like oil is today. Salt was required to preserve meat - and preserved meat was required to allow armies to march. Salt was required for societies to grow beyond traditional collectives, and salt was required to store, transport, and sell meat that could not be consumed immediately. Wars were indeed fought over salt, and those nations with large salt reserves had tremendous political and economic prosperity - and power over those who needed their salt - much like countries with oil do today.
So, what happened to change the world, and strip salt of it’s strategic importance?
New technologies were invented which made salt unnecessary for food preservation. The invention of electricity, refrigeration, canning, and other preservative technologies forever changed the world, and salt became just another freely traded commodity like we are accustomed to today.
You can still preserve your meats with salt if you wanted to, but most choose to refrigerate it.
Today we find ourselves in a 19th-century dilemma again, where oil has replaced salt as a global strategic commodity, and where the trade in this commodity is tightly controlled in order to weild political and economic power.
Oil’s strategic value stems from it’s monopoly in the transportation sector. This monopoly gives the petrocrats that control OPEC and the bulk of world oil reserves unacceptable power over the global economy.
How exactly can we “turn oil into salt”. The answer is surprisingly simple and familiar - by using technology to provide fuel choice thru Flex Fuel Vehicles (FFV) and plug-in hybrid w/ FFV engines or new 100% electric vehicles (EV).
“Future-Proof” Flex Fuel Vehicles (FFVs) keep to a liquid-fuels based technology that is no different from the norm today. The element of “choice” is created by allowing drivers to decide what type of fuel to consume, with options ranging from straight gasoline (no change from existing habits) to a variety of blends of alcohol/gasoline like E25, E85, M50. FFV technology does not restrict auto manufactures in any way - they can make any variety of vehicle they’d want, from scooters to Hummers.
Plug-in Hybrids w/ FFV engines (similar to the Prius Plug-In) move the hybrid technology forward by decoupling the vehicle from the gasoline pump. With a plug-in hybrid, you can choose to recharge your car using your residential electricity. For distances greater than your battery capacity, your hybrid will switch to using it’s FFV engine, where you’ll have the same fuel options of non-hybrid FFV’s.
Electric Vehicles (EVs) (like these from an auto show earlier this year) are quite different and have no engine and require no liquid fuels on board. Instead they have bigger and better batteries and electric motor(s) which meet commuting needs of most Americans, and are recharged at home or at specialized recharging stations around town. This option allows a “no-oil” choice, as your car is recharged by the power grid. (The power grid is of course fueled somehow, in the U.S. usually natural gas, hydro-electric, coal or nuclear.)
At this point, when there are a variety of ways to power your vehicle, gasoline will have to compete with other forms of fuel that are not completely controlled by “big-oil”. As in Brazil, market forces will control costs and create a vigorous new-energy economy. Consumers decide what fuel to buy, based on a variety of reasons they get to determine.
When consumers have a choice and a real alternative to replace 100% gasoline, oil will no longer be a strategic commodity and it will be forced to be valued competitively, just like salt.
Once Bitten… Will Americans Continue to Conserve Fuel?
As oil prices continue to slide away from the peak crude costs earlier this year, and as the price at the pump lags downward, will American’s forget the hard lessons of the summer’s high fuel prices and lapse back into the sleepy denial of the true nature of our current energy crisis?
Judging from recently released data from US DoT, the ”mileage bubble” has yet to burst.
The U.S. Department of Transportation said Friday that Americans drove 5.6 percent less, or 15 billion fewer miles, in August compared with same month a year ago—the biggest single monthly decline since the data was first collected regularly in 1942.
But it’s not uncommon for market factors like these to lag behind one another. As fuel prices start to look “cheap” again to your average American driver, will they start forgetting the pain of $4+ gasoline?
Many experts I spoke with at the Energy Freedom Summit in Chicago believe that these lowered prices are very temporary, and that our energy strategy is so inherently weak that almost any “glitch”, storm, or supply chain attack will send prices soaring, probably beyond the record highs of this summer.
Robert McFarlane, former National Security Advisor for Ronald Reagan, went as far as to predict a massive attack on oil infrastructure in the next six months that would cause crude oil costs to soar over $200 per barrel, and cement the looming world recession, noting that a 5% cut in current production would mean oil would cost about $200/bbl.
While not everyone agrees with the certainty of the event, most did agree that should such an event occur, the damage to world population would be devastating - especially to the parts of the world where higher oil costs mean starvation and death, in addition to here in the West where it will mean job-loss and economic hardship or ruin for many.
It’s my hope that the oil market have overplayed it’s hand with the American people, and that the lessons of the summer of ‘08 will not be quickly forgotten.
What do you think? Comments are open…
OPEC Cuts Production, Oil Prices Continue Slide
SINGAPORE (AP) - Oil prices fell to 17-month lows at $63 a barrel Monday in Asia as investors weighed Friday’s OPEC output cut against growing evidence of a severe global economic slowdown that would undermine crude demand. Light, sweet crude for December delivery fell 32 cents to $63.83 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. Investors brushed off a 1.5 million barrel-a-day cut announced by the Organization of Petroleum Exporting Countries on Friday, focusing instead on falling crude demand as economies across the globe reel from the impact of a credit crisis. On Friday, oil fell $3.69 to settle at $64.15. Prices have plunged 57 percent from a record $147.27 on July 11.
Energy Freedom Summit - First Impressions
Today and tomorrow I’m in Chicago attending the Energy Freedom Summit, organized by the Set America Free Coalition. I wasn’t sure what to expect from this summit, not knowing much about the organization until just two months ago.
My first impression after today’s panels; I’m impressed with the knowledge, experience, focus and pace of this organization - they have a laser-lock on what they intend to do, and are efficient in getting the message out as powerfully as possible.
The panels are impressive leaders in their fields, from geo-political security experts to plug-in hybrid magazine editors. I’m taking many notes.
The attendees are an ambitious and eclectic group of people from a variety of backgrounds who are interested in understanding and solving the current energy crisis. Authors, government officials past and present, entrepreneurs, concerned citizens fill the conference hall - about 150 in all.
I’ve met several authors, a frog farmer, a history professor, a few lawyers, and several “regular joes” who are attending in an effort to ”do something” about this problem.
I’m not yet sure where I fit in here, but I keep talking to people, and am learning quite a lot.
(Update 10/27/08 - I’m home from Chicago, with enough new information to fill this blog for weeks. I’m currently writing a few entries, and will begin posting them as they are completed.)
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Airlines Hurt by Fuel Price Hedging
Slacking oil prices has United Airlines paying more for fuel than what it currently costs on the openmarket - and unintended consequence of hedging oil contracts.
Source: Wired
Here’s a very simplified explanation of how fuel hedging works, using a hypothetical scenario: Let’s say oil is selling for $130 and the price is expected to rise. An airline signs a deal with a supplier to buy, say, three months worth of fuel at $110 a barrel. That’s called a fuel hedge. The price of oil rises to $140 a barrel, but since the airline is locked in at $110, it can sit back and laugh as its competitors pay more for fuel…
But let’s turn that scenario on its head and say the airline hedges at $110 but the price drops to $92. Oops. Now the airline is paying more for fuel than it costs on the open market, placing it at a competitive disadvantage. The balance sheet craters.
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