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
Has OPEC Lost Control?
OPEC wants to prop up the dive-bombing price of oil, to keep their bank accounts flush with fresh cash. Russia is also feeling the pinch, as the rest of the world decides it _can_ live on less oil than previously consumed. OPEC would like Russia to join them in cutting output, in an effort to bring prices up.
Opec has been eagerly trying to recruit Russia to join its efforts and analysts say together the two could announce a further reduction of as much as 3m barrels a day of oil production within the next week.
Chakib Khelil, Algeria’s oil minister and Opec’s president, told state radio on Thursday there was a consensus among Opec members to reduce production when they met in the Algerian seaside town of Oran on December 17. He said: “The Oran meeting will decide a severe production cut to stabilise the oil market.”
Time will tell if they can woo the worlds consumers back to heavy consumption at the same time they bring prices back to “normal” profitability. If they are successful at turning this train around, then it’s likely the run-up and recovery of recent history were always under OPEC control - then what does it say about their intentions, as America teetered on the brink of the housing investment crisis in an election year…
What do you think?
OPEC Promises “Significant” Cuts - Again.
OPEC is to meet again on December 17th to mandate their members turn back their production output valves, in an effort to bring the price of oil up from it’s current lows.
OPEC President Chakib Khelil, who is also Algeria’s minister for energy and mines, told the Associated Press that a consensus has emerged among OPEC producers that a “significant reduction” is warranted by the current price slide.
Khelil would not discuss specifically how deep the cut might be. But he used the word “severe,” and noted that some analysts have predicted cuts of as much as two million barrels a day.
OPEC previously announced a 1.5-million-barrel-a-day reduction in October, but the decision failed to halt the fall in prices and markets have been expecting another cut at the Dec. 17 summit.
Why not keep OPEC on the run - regardless the price of oil - conserve as much fuel as possible w/o degrading your standard of living. Use resources like FuelClinic.com ( http://www.fuelclinic.com ) to learn to conserve and track your progress.
Continue to demand alternative sources of energy for your personal transportation. Demand “future-proof” FLEX-FUEL capable cars to take advantage of ethanol and methanol mix fuels w/o expensive new equipment, demand plug-in hybrids that charge overnight using clean electricity, demand small clean diesel engines that can run on bio-diesel that can be produced from algae.
Consumers cut consumption as a result of summers painful fuel costs - and pulled the rug from under OPEC, causing oil to “crash” back down to market value. Keep it going even lower by continuing to curb consumption, and keep pressuring government and industry to bring to market ways we can _replace_ most of oil from our transportation requirements.
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US Govt gives automakers $25B in loans; drops fuel-efficiency mandate
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By Peter Forman |
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The United States continues to “perpetuate” a broken auto industry. Because of pressure from Detroit, unions, and Michigan lawmakers, the “Big Three” auto makers have been insulated from the real market-place of competition for the past 30 years. The Japanese and Germans have figured out how to build cars in the American South profitably–but not the Big Three. That’s fine and good except now we have a completely broken auto industry that is unable to compete. Now exposed to declining demand and lacking access to “cheap” capital, they are likely to disappear in their current forms–even after we spend untold billions in short-term assistance. The move, aimed at ending what the White House called partisan “gridlock,” represents a significant escalation in the political battle over aid to the Big Three auto makers. This is ahead of an expected showdown next week in Congress between Democrats and Republicans. While we are unlikely to ever see a return of these funds, the car companies could at least agree to manufacture all cars beginning in 2012 with flex-fuel compatibility and continues progress towards EVs (electric vehicles). Without at least those commitments, what will we have to show for this “investment”? Demand that your Congressperson and Senator act–call today! |
Used w/ Permission: MoveBeyondOil.org
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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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MapMPG - How Far will a Gallon of Gas Take You?
How far you can travel on a gallon of gas? What if you improved your mileage by 20%? What if you bought a new car - how does that compare to your existing car? This isn’t hard to figure out, and FuelClinic.com will do this for you, but what if you wanted to see what this looks like on a map?
Today I received an interesting note from Jay Hoffman at ESRI about a new website they are beta testing called MapMPG.com
ESRI has an interesting new web site called MapMPG.com that maps the distance two different cars can drive on one gallon of gas. This rather unique and useful application compares the mpg’s on your specific neighborhood streets.
I compared my 2001 Toyota Tacoma to a newer Toyota Prius to produce this map of my local area.
Select one vehicle as Vehicle 1, and another as Vehicle 2, enter a street address and zip code, and you’ll see a graphic representation of how far you can get on one gallon of gas, based on the roads in your area.
Right now the site uses EPA estimated MPG figures for each vehicle, but Mr. Hoffman indicated that his team is seeking comments and may be able to modify the interface to be more usable.
ESRI is a world-leader in digital mapping for large organizations and government agencies, and has been doing scientific GIS and mapping long before anyone else.
What do you think? Comments are open.
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.
