Energy Literacy Advocates Newsroom

Below is a good article about how car makers are approaching the range issue with electric vehicles. It will be interesting to see how this plays out in the end.



Where can I juice up my ride?
Nov 17, 2009
Washington Post
Peter Whoriskey
As their manufacturers see it, the electric cars entering U.S. showrooms as early as next year will be engineering marvels: stylish, battery-operated, zero-emission wonders.
Yet for all their technological prowess, there's one practical question that unsettles the green dreamers and entrepreneurs alike:
Where, oh, where, can you plug them in?
While most electric cars are expected to be recharged at home, the predicament of a driver who runs out of battery power on the road has yet to be settled, and the issue of "range anxiety" has set off an array of billion-dollar speculations.
On Monday, a coalition of companies that includes Nissan, FedEx, PG&E and NRG Energy issued a report calling for billions of dollars in government aid to support the transition of the U.S. vehicle fleet to cars that run on batteries.
The group is asking for $124 billion in government incentives over eight years including $13.5 billion for tax credits to build public charging stations.
"The public charging infrastructure is really important early on for getting drivers over range anxiety," said Sam Ori, one of the authors of Electrification Coalition report. "No one really knows how intense it will be. Everyone has pet theories. But consumers need to see that the whole thing works and feel confident in adopting this new technology."
Indeed, one of the main rivalries in the race to build mass-market electric cars, between the forthcoming Nissan Leaf and the Chevrolet Volt, turns on the different ways that each will address range anxiety.
Nissan chief executive Carlos Ghosn said in an interview Monday that he believes that range anxiety will afflict only a portion of the potential market. For plenty of people, trips of 100 miles or less will be fine.
Thus, the Nissan Leaf is a pure electric vehicle with a battery that will give it a range of approximately 100 miles.
If the Leaf were targeted for all drivers, "range anxiety would be a real issue," he said. But it only "exists for 30 percent or 40 percent of the market."
General Motors, meanwhile, has studied range anxiety and seems to have arrived at a different conclusion.
During the late '90s, it produced about 900 electric vehicles, known as EV1s.
"Our experience with EV1 told us that range anxiety is very real," company spokesman Rob Peterson said. "It was something the drivers experienced."
Accordingly, its forthcoming electric car runs on a battery for the first 40 miles, but when the charge runs low, a gasoline engine kicks in. With or without public charging stations, a Volt driver can motor on as long as there is a gas station nearby.
"For a long time, cars have represented a way to move around -- freedom," Peterson said. "Some people are unwilling to accept restrictions to that."
One critical distinction between the Leaf and the Volt will be price, though neither company has said what their vehicles will cost. Both are struggling to make the price comparable to a gas-powered car.
But Ghosn said that by forgoing the gas engine at the expense of a more limited range, Nissan will be better able to make its electric cars cheaply.
"We are not a maker of electric cars," Ghosn said. "We are a maker of affordable electric cars. That is the most important thing from the beginning."
Even so, Nissan and other companies exploring the market for electric cars say it would be very difficult to win over consumers without the benefit of the $7,500 tax credit for people who purchase electric cars.
Ghosn said Nissan plans to sell the Leaf only in countries such as the United States, Japan and France that offer consumer incentives.
Not surprisingly, the Electrification Coalition, of which Ghosn is a member, proposes that at least $75 billion in U.S. government money be used to fund the consumer incentives.
That's a lot of money to ask of government, the coalition's Ori said, but it "pales in comparison to the cost of U.S. oil dependence, which has huge environmental, economic and national-security costs."

Labels: automakers, energy policy

As we continue evaluating adding a new tax on gasoline, today we'll take a snapshot look at the pros - are there any positives to such a tax?

Adding a new tax on gasoline raises the overall price at the pump. This leads to decreased demand for gasoline, and thereby reduces the amount of fuel we consume (and pollution we put out) overall. Additionally, if a static gas tax is set, raising the price to $4 or $5 a gallon, consumers will demand more fuel efficient vehicles. The average fuel efficiency of the US fleet will go up.

If the revenue generated from a higher gasoline tax is designated for renewables and alternative fuel development and research, this means a boost for new energy technologies.

On the business side, car manufacturers now have a predictable demand for fuel efficient vehicles. The static price of gasoline helps new automotive design meet the future needs of drivers.

In March of 2004, the Congressional Budget Office (CBO) ran a study comparing the costs of raising CAFE standards versus raising the gas tax. The costs of raising the gas tax by 46 cents per gallon were found to be LESS than the cost of mandating a higher average fuel economy to automakers. Gains in fuel efficiency would be realized more quickly, and 42 percent more fuel would saved than raising the CAFE standards 3.8 mpg.

These are some of the "wins" with a new gas tax. Tomorrow we'll look at several negatives associated with the tax.

Tapping into shale for natural gas deposits is not something new in the US. However there has been much talk of somewhat recent drilling technology and how much NG just might be available using new techniques. This discussion has been going on for some time, and it seems very similar to the oil discussion to me. We are likely nowhere near running out of either resource, but that is not the point. The point is that both oil and NG has become increasingly more time and resource consuming to drill and harvest. That still leaves us in a situation where increasing price pressures (not so much present currently with the recession) cause great harm to economic growth.

The following article notes the concern of a gentelman who, whether right or wrong, seems to be closed out of the debate as shale gas becomes a hot item once again. It's ashame we can't look at these issues thoughtfully and rationally, in order to get a true picture of the possibilities they hold for the future. A similar example would be the hype over ethanol a few years back. There is nothing wrong with ethanol in my view, (a domestically produced fuel with about the same or perhaps slightly better environmental impact than oil), the problem was touting it as a viable alternative to oil when experts knew it would never account for more than 10-20% of our total fuel use.

Shale or sham?
	Nov 13, 2009	Houston Chronicle
	Shale or sham? By LOREN STEFFY Copyright 2009 Houston Chronicle Art Berman didn't set out to become the Cassandra of shale gas. That's simply been the result as the Sugar Land petroleum geologist and consultant has persisted in raising doubts about the hottest play in the domestic energy industry. Natural gas extracted from shale formations has transformed the U.S. energy outlook, leading to predictions that it could produce as much as half of our natural gas by the end of the next decade. Shale gas, though, requires more expensive drilling techniques to produce than conventional gas. That made shale gas attractive last year, when natural gas was selling for $13.58 per million British thermal units, but it can be a money-loser at today's prices of less than $4.50. In a boom-prone industry known for greeting new discoveries with wide-eyed hype, shale gas has unleashed a gusher of zeal, sparking a drilling craze and soaring lease rates across millions of acres from Texas to New York. Berman isn't saying that the major shale players — companies such as Chesapeake Energy, Devon Energy and Houston-based Petrohawk Energy — are wrong, but he's skeptical that shale gas will be the domestic energy boon that the companies claim. “I'm saying it's a bubble,” Berman said. “They're creating an illusion.” Decline rates disputed That view puts Berman at odds with a host of energy companies, consultants and investment bankers, who claim shale gas may more than double our domestic supply. They argue Berman's analysis is flawed. The two sides disagree on how to calculate the decline rates for the wells. In simple terms, Berman believes that shale gas wells will play out much faster — producing much less gas — than his detractors do. He also believes that many of the wells being drilled in shale won't be commercially viable. His conclusion is based on production rates from the Barnett Shale near Fort Worth, the country's oldest field, which he says show steep and persistent declines. Supporters say the initial declines ease over time and settle into a steady production stream. In criticizing shale, though, Berman has become something of an Oil Patch pariah. “I'm being creamed,” he said. “There's a brotherhood of defenders out there, and they're all lined up against me.” A column he wrote for the trade publication World Oil got spiked, and Berman resigned in protest. He claims the shale companies put pressure on World Oil's publisher to silence him. ‘Time to move on' John Royall, president and chief executive of Gulf Publishing, said he didn't receive any pressure from gas companies. World Oil serves a global audience, and gas shale is largely a domestic issue. Berman had written on the topic for a year, and Royall decided that was enough. “Art had an interesting take on shale gas,” he said. “It was interesting, provocative stuff, but it was time to move on.” Berman doesn't come off as obsessed or paranoid. He simply believes that the industry has abandoned caution when it comes to shale, wasting millions drilling wells with a lack of scientific analysis. “All of my instincts say if you approach it this way, it's just insanity,” he said. If he's right, the insanity could affect us all. As Congress discusses carbon capture and environmentalists champion converting vehicles to run on natural gas, the prospect that gas supplies could be far less than we think could have a profound economic impact on the country. “My message isn't ‘this is bad,' it's that we need to practice some caution here,” Berman said. Loren Steffy is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at loren.steffy@chron.com. His blog is at http://blogs.chron.com/lorensteffy/.

Labels: energy policy

So what does a tax on gasoline, specifically on fuel, look like?

Traditionally, any revenues collected from the tax go either to transportation specific funds or go to general government revenue. Those that go to transportation specifically can be considered as a user tax. In the past few years, several countries in Europe - Italy, the United Kingdom and France - have created an extra tax on fuel to decrease fossil fuel consumption and traffic congestion.

Recommendations for a potential US gas tax have claimed $4 to $5 as the optimal price per gallon to reduce fossil fuel consumption. The US is last among most developed countries in terms of its gas tax rate. (Click here to view this chart)

Raising the tax on gasoline, particularly that product used for fuel, is touted to improve infrastructure, increase investments in alternative energy, and decrease fuel consumption. Tomorrow we'll look at the pros for creating a new US tax on gas.

The first week of November witnessed an unusual sight - automotive executives lining up behind environmentalists and conservationists to call for a tax on gasoline. But what really are the pros and cons of a gas tax, from both a policy and everyday perspective?

My blogs this week will take a brief look at some of the points in this issue.

First of all, be under no illusion - Americans already pay a gas tax at the pump. Currently, the federal tax on gasoline is 18.4 cents per gallon. After that, states assign a tax, which can range from 65.8 cents per gallon at the high end (California) to a low 26.4 in Alaska. The average state tax rate in the US is 47.3 cents per gallon. These funds are gathered for road maintenance and other items. To check your state's rate, click here.

Despite the taxes already paid, the US remains low in comparison to other countries in terms of taxes on gasoline. Proponents of hiking the US gas tax rate claim that raising the price of gasoline through taxation, rather than through market mechanisms, forces demand to more efficient vehicles earlier.

Want to check out an international study on this? Click here?

Tomorrow: a look at the theory of a gasoline tax and some number crunching from real examples.

The International Energy Agency has released its 2009 Energy Outlook report, and along with its findings had harsh words for those clinging to a fossil fuel paradigm.

The IEA unveiled its own solution steps toward reducing carbon emissions and changing the energy landscape. With an estimated $10.5 trillion investment, the Agency called for greatly expanded renewables, biofuels and nuclear energy use to offset fossil fuel reliance. Additionally, the IEA called for 57 percent of the reduction to come from simple energy efficiency measures.

Gains can certainly be realized through energy efficiency. Simple actions taken per household, such as buying more fuel efficient vehicles, maintaining vehicles, and using energy efficient appliances and light fixtures can acheive great steps toward responsible stewardship of energy.

The following is an op-ed article by Colorado Senator Mark Udall and T. Boone Pickens (of oil fame) touting natural gas as an option for fueling our transportation fleet. It is certainly one option to bridge the gap (which could be many years) from oil to an alternative fuel source. For those interested you can learn more at http://www.pickensplan.com/.




Natural gas should be the vehicle fuel of the immediate futureBy Sen. Mark Udall and T. Boone Pickens
Friday, November 06, 2009
Too often in Congress, and in our political debate, people stake out a position and, in the course of defending that position, refuse to credit anything their opponent is saying. We’ve all seen that.
When it comes to passing a clean energy plan for the United States, we need to take a broader, longer look at all of the tools we have at our disposal to accomplish two very important goals: Enhancing national security and reducing our dependency on foreign oil.
Far from being mutually exclusive, these two crucial goals are complementary and should be understood as goals that are beyond partisan politics. They really are crucial for our country’s future, along with the pressing need we also have to spur job growth and get our economy fueled up.
In spite of all the talk about energy independence since the first “energy crisis” in 1973, we are still importing nearly two-thirds of the oil we use in the United States. Why is this a national security problem? Because we are dependent on that oil from many countries and regions that are unstable or unfriendly to the United States.
Month after month, we are spending about $25 billion to buy foreign oil. Over the course of a year, that may add up to $300 billion. That is money that should be circulating through the economy of the United States, instead of the economies of Saudi Arabia, Nigeria and Venezuela.
To show just how dangerous this situation is becoming, earlier this month CNBC reported that Russia has surpassed Saudi Arabia as “the top crude oil producer in the world, pumping a record 10.01 million barrels of output in September.”
Russia is the largest single supplier of natural gas to much of Europe. Last year, in the dead of winter, in a price dispute with Ukraine, Russia simply turned a valve and shut off supplies to Europe to force the affected countries to bring pressure on Ukraine to settle.
This is where using all the tools in our toolbox comes into play.
One bill making its way through the Senate and the House is the NAT GAS (S.1408) Act, which will help provide tax incentives to change cars and trucks running on imported gasoline and diesel to natural gas.
With recent improvements in the techniques and technology to recover natural gas from the enormous shale deposits under the continental United States, studies indicate we could have natural gas deposits that would last for more than 100 years. This is a sea-change from what we thought our natural gas reserves were prior to being able to utilize these so-called “shale plays.”
Going to domestic natural gas as a principal transportation fuel will also have significant, if not almost immediate, impacts on the U.S. economy. Along with jobs being created in other alternative energy areas, we can produce and/or save thousands of jobs in the supply chain of natural gas vehicles, from the well-head to the manufacturing floor and from sales and distribution to fueling and maintenance.
Seventy percent of the oil we import is used as transportation fuel. We can’t run 18-wheelers on batteries and, while we can and should do more with renewable energy sources like wind and solar, putting fuel in the gas tank is a special challenge. There are over 10 million natural gas vehicles in the world, but only about 130,000 in the United States. Natural gas can be used in virtually any vehicle running on our streets and highways.
Natural gas is cleaner than either oil or coal. In fact, natural gas emits almost 30 percent less carbon dioxide than oil, and just under 45 percent less carbon dioxide than coal. And natural gas produces almost no particulate emissions.
Natural gas can and must be developed in an environmentally responsible way that includes involvement from local communities. But properly developed, it can play a significant role in our energy future.
It is a bridge fuel that can get us to the next era of clean fuels. Natural gas will not last forever, and we will not need to use it forever. But, as a transition fuel, it can help us do our part in cleaning up the planet, it can reduce our dependence on foreign oil and it can provide a real boost for jobs and the economy.
Mark Udall, a Democrat, is the senior senator from Colorado. T. Boone Pickens is chairman and CEO of BP Capital, which operates energy-focused commodity and equity funds.

Labels: energy policy, National Security

British Energy and Climate Change Minister Ed Miliband announced a possible 10 new nuclear sites today, as part of the United Kingdom's low carbon transition plan.

This announcement came along with plans to speed up approval for both nuclear and big wind energy plants.

This most recent decision, driven by the need to cut greenhouse gases, highlights the controversial use of nuclear power. While nuclear energy is very competitive with existing carbon-based energy sources, the costs for implementation upfront are a barrier. Additionally, security concerns are a huge barrier for public acceptance.

Want to compare energy sources? Use our handy chart by clicking here.

Chrysler Fiat unveiled vehicle plans from 2010 to 2014, revealing a strategy that emphasizes fuel efficiency over new technology, and includes new micro-class vehicles.

The company plans to increase the percentage of four cylinder and six cylinder engines currently in the fleet, while decreasing gas guzzling eight cylinder engines. Additionally, the share of diesel vehicles will increase from 9% to 14%. Small and micro vehicles are projected to make up 11% of the company's offerings.

Surprisingly to many, Chrysler Fiat's presentation did not include an expansion of hybrid or all-electric vehicles.

Fiat has a successful record in Europe, especially with its compact and subcompact cars. While models like the Panda and 500C have proved popular overseas, nothing like them were available in the US. Hope is now there for seeing these models in the US market, as Fiat models plan to compose 58% of Chrysler's model share by 2014.

At the Reuters Autos Summit in Detriot today, automotive executives joined the call for a gas tax in America.

The reasoning behind car execs joining the ranks of enviromentalists, etc? Rather than using $25 billion in stimulus for alternative fuel projects, car companies cite that a gas tax which raises gas to a constant price level would drive more consumers toward efficient cars, and thus supply the demand necessary for innovation.

Mike Jackson, chief executive of AutoNation - the largest car retailer in America, called for using a tax to set a $4 to $5 gas price that remained steady. Car executives feel that this would generate consumer demand for efficent and alternative fuel vehicles, rather than allowing the market to dictate gasoline prices.

Ultimately, executives concluded that an energy independent American can only come after higher prices are placed on fuel.

However, auto executives are about as (un)popular as any proposed fuel tax. Raising the price on gasoline remains a politically unpalatable issue.

Drawing surprise from forecasters, the price of oil continued to rise today. Much of that price jump came from news that US stockpiles of crude oil were down. The price of oil and fuel continue to rise, despite declining demand and demand that's down from the same time last year.

Adding to the run up in price is the run down in the US dollar, the form of currency used in oil transactions.

What does this price jump mean? For one thing, it indicates that simple demand/supply mechanics are not always enough to bring down the price of oil. This mirrors much of the commentary from the Oil & Money Conference, held October 20-21 of this year in London. Complex issues like looming policy change, lagtime in oil production capabilities and increased expenses in developing new oil fields threaten to exert extreme pressure on the price of oil.

The data reinforces the need for smart, timely decisions on energy policy, and for the diversification of America's energy supply, particularly in transportation.

For a link to the co-founder of ASPO-USA Steve Andrews' commentary from the Oil & Money London conference, click here.

The following article discusses whether or not taxpayer money should be used to promote the manufacture of electric cars and the proliferation of charging stations. I agree that the government has a poor track record of picking "winners" when it comes to technological advances. However, our 40+ year love affair with oil is a public policy nightmare that will only get substantially worse as demand grows and supply (whether growing or not) becomes more concentrated in areas of the world who are not necessarily friendly with the United States.

One very simple but hardly politically feasible solution is to levy a national carbon tax. In a classic economic sense we would then be taxing the bad and letting the free markets figure out the "winner" for what is good. But in the absence of a strong stomach by both politicians and the public for such a solution we simply have to pick some technologies to be ushered along, even if they end up not being the best choice. Why? Because the alternative is to wait until oil prices spike again (remember $147/barrel in the summer of 2008 - what if that were permanent?) and then suffer an estimated 10 year dislocation as the free market - finally incentivized to act due to the high price of oil - works out the best substitute technologies over that longer time frame. Or we can start planning now so as to make the transition as smooth as possible (although it probably won't be overly smooth no matter what), so that some technologies, whether the most fit are not, are at least available when we need them most.

Energy Dept. awards money for electric cars
	Nov 4, 2009	USA Today
	Katharine Lackey The federal government and some states are plugging into the future of electric cars with subsidies to develop charging stations. But their plans are generating opposition. The U.S. Department of Energy awarded $2.4 billion in stimulus money in August to build electric vehicles and support them with charging stations. The goal is to promote clean energy and reduce U.S. dependence on oil, says David Sandalow, assistant secretary of Energy for policy and international affairs. The largest of 48 approved projects — out of 250 proposals for stimulus grants— is with Arizona-based Electric Transportation Engineering Corp. (eTec), which signed a $99.8 million contract with the Energy Department last month. Some of the money will pay for charging stations in 11 cities in five states by 2011, according to Colin Read, vice president of corporate development for Ecotality, eTec's parent company. The cities are Portland, Salem, Eugene and Corvallis in Oregon; Seattle; San Diego; Phoenix and Tucson; and Nashville, Chattanooga and Knoxville in Tennessee. Nissan is partnering with Ecotality on its project and will make 4,700 additional Nissan Leafs available in 11 cities by working with dealerships, Read says. The Nissan Leaf, expected to be released late next year, is an all-electric vehicle capable of getting 100 miles on a single charge, Read says. In addition, Chrysler, General Motors and Ford received DOE grants, ranging from $30 million to $70 million, to manufacture plug-in hybrids and electric cars, according to the Energy Department. The projects come when there are only about 1,000 plug-in hybrids on the road today, and major auto companies do not plan to release their plug-in or fully electric models for another year, says Mark Duvall, director of electric transportation at the Electric Power Research Institute, a non-profit organization that conducts research about the generation, delivery and use of electricity. Opposing views Tom Schatz, president of Citizens Against Government Waste, a non-partisan, non-profit organization with more than 1 million members, says the government should not spend taxpayers' dollars to push a technology but should let the private sector develop it. "Why is the government picking and choosing which type of technology will be best for the country?" Schatz asks. "Maybe someone will come up with another idea." A report released in October by the National Research Council — a non-profit government-charted agency — questioned whether electric and plug-in vehicles' impacts are better or worse than conventional gasoline vehicles, mainly because about half of the energy supplied to the electricity grid comes from coal plants, "which contribute to air pollution" said Dan Greenbaum, a member of the committee that wrote the report and CEO of the Health Effects Institute in Boston. U.S. Rep. Jeff Flake, R-Ariz., a frequent critic of what he calls excessive government spending, says it would be better to let the marketplace decide whether technologies such as electric cars will prevail. "I don't think the federal government does a very good job of picking winners and losers," he said, referring to the government's effort to fund various renewable energy programs. Charging ahead Charles Territo, senior director of communication at the Alliance of Automobile Manufacturers, an advocacy group for the auto industry, says having charging stations in place could help entice consumers to purchase an electric car. Sandalow says the stations could mean the difference between establishing a strong electric car industry in the USA vs. letting another country take over production. Schatz says government spending on charging stations won't entice consumers to spend the extra money the vehicles will cost — at least 10% more than their gas counterparts — especially in a down economy. Prices for electric and plug-in models hitting the road in 2010 have not been officially released. Other areas exploring the future of electric cars include: Virginia: The state Department of Transportation has partnered with Dominion Virginia Power to install an electric car charging station at the New Kent rest area on Interstate 64 that will be capable of charging four vehicles, says Jeff Caldwell, VDOT's chief of communication. Ashland, Ore.: The city plans to install four charging stations even though it wasn't selected to receive stimulus funds, says Electric Department Director Dick Wanderscheid. New England: Northeast Utilities, which serves New Hampshire, western Massachusetts and Connecticut, plans to begin to install stations in Connecticut and Massachusetts, using its own funds, in public and workplace locations within six months, spokesman Al Lara says.

Labels: energy policy

For those who wonder what oil industry insiders are thinking about the future of oil prices we bring you a second installment of commentary from the Oil & Money Conference from our friends at ASPO-USA. The commentary speaks for itself, and clearly there is reason for concern about the future of oil prices. (See our first post on the Oil & Money Conference Here).



Commentary: Oil & Money Conference—What the CEOs and VPs are Saying
By Steve Andrews
On October 20-21, the 30th Oil & Money Conference, convened in London by Energy Intelligence and the International Herald Tribune, attracted roughly 500 attendees, many from the industry press (most of them working for the conveners). Held under tight security at the opulent Intercontinental Hotel, a half-dozen oil ministers past and present plus two dozen CEOs and VPs of oil producing, service companies and other industry players shared their views.

No statements were as ground-breaking as the O&M conference two years ago, when the Wall
Street Journal and others covered stark warnings by Total’s CEO Christophe de Margerie, Libya’s oil minister Shokri Ghanem and former Saudi Aramco VP Sadad al Husseini that world oil production was going to undershoot demand in the foreseeable future. But all three were present again, and all three echoed their previously-stated concerns, especially in light of the late-2008/2009 downturn in investment by a growing number of players outside of the super-major investor-owned oil companies. In fact, the majority opinion was a warning about the looming impacts of climate change decisions and project investments on prices and supplies over the next few years. A few comments from key presenters:

Optimists
Abdalla El-Badri, Secretary General of OPEC, said that among the reasons for extreme price
volatility during 2008 is “…the peak oil theory, which in OPEC we don’t believe in. We know that we have a lot of resources, we can supply the world with oil for the foreseeable future.” He focused on the new level of trading volumes of paper barrels, pointing out that from 2003 to late 2008, the daily paper barrels trade increased from 900 million barrels to 3 billion barrels a day—roughly 35 times the amount of oil actually consumed per day.

Tony Hayward, CEO of BP Plc, stated that “I do think the market is driven by the fundamentals of supply and demand…Between 2004 and 2008, the growth in demand meant almost all of the world’s spare capacity had been consumed. As we came into 2008, spare capacity was probably
somewhere just a bit above a million barrels a day…Declining production from existing fields,
coupled with new demand, mean we’ll have to find ways of bringing on-stream nearly 50 million
barrels a day of new capacity between now and 2030…The problem in meeting that goal isn’t
geological. It’s political. We have the natural, human and financial resources…We need secure and reliable access to those resources. If the conditions are right, industry will invest.”

Harsh Realists
Christophe de Margerie, CEO of Paris-based Total SA, in his lunchtime talk said that, “…demand
[will be] constrained by supply, and not the opposite. Demand will take time to recover, but
production capacities are taking more and more time to come on-stream. It is our responsibility to be critical and vocal. It has nothing to do with being provocative. When I still hear people say we will develop more than 100 million barrels of day of production, I want them to come here, now, and tell me where is it going to come from? Because it is not possible. Now the good news: we’ve made good discoveries and the reserves will last longer. Brazil is a brilliant result. But no production from those discoveries before 2016, 2020. Well, I’m not in charge of the road shows for Petrobras. It’s great, but it’s not for tomorrow. So tomorrow we will be short of capacity.”

Jim Mulva, Chairman and CEO of ConocoPhillips, stated that “the world economic downturn has
caused the largest decline in oil demand that we’ve seen in 25 years. It took approximately 8 years to get oil up to $147…but they lost more than two-thirds of that increase in about 8 months; and today, with the oil price around $75 a barrel we really don’t know whether that $75 a barrel is going to hold or not…And reserve replacement costs in our industry have more than doubled…Reserve replacement costs are not falling as quickly as the oil price [did].”
Mulva commented on gas-to-liquids during Q&A: GTL “is quite a challenge…It’s a pretty capital
intensive process and you have to ask whether that’s really the right way to go. I don’t think so and I think the markets pretty well said that…I don’t remember the numbers but I do remember certainly that GTL did not compete with LNG and it’s more complex, more costly.

Paolo Scaroni, CEO of Italian oil company ENI, said that comparing a cap-and-trade system to
carbon taxes, “I prefer a carbon tax because it seems to me easier to apply, more clear, something that can be implemented right now…But it is the only way in which we can push forward what I think is the real answer, short term, to the CO2 fight…which is energy efficiency. Energy efficiency should be the name of the game starting tomorrow.”

Sadad al Husseini, former VP of oil exploration and production for Saudi Aramco and now an
industry consultant, started by saying “I am not a peak oil or flat oil or plateau oil [person]; I think we just need to be good engineers and try to see what’s going on…It’s the short term and the long term—you’ve got to look at both the recent volatility and the longer term direction…
“In the long term, and that’s kind of where we probably miss the boat, we are depleting reserves. The clock is ticking. The replacement rate has not been very good…If you want to push production beyond say 70 or so million barrels a day, you have to move into higher cost alternatives. “Other sources of energy we’ve talked about this morning…is coal going to displace oil? The cost of clean coal is going to almost double the cost of electricity….Is [natural] gas going to displace oil? The top 10 gas reserves holders have about 77% of the reported gas reserves…How realistic is it to count on them as a future alternative to oil?...We get a little bit too facile with our talk about alternatives and switching and so on—there’s a problem with every source of energy. “…as you go up to say $90 a barrel, you’re consuming 4.5% of the global economy [for oil]. That in itself is a ceiling—you cannot go indefinitely into more expensive alternatives without destroying [the] economy and therefore destroying demand. So we do have a ceiling on prices and how much expensive alternative fuel we can put into the market.
“…in spite of the fact that oil prices were going up, North American production was going
down…We’ve had a very exciting development in Brazil with the subsalts, but on the other hand
there’s Venezuela coming down and the rest of South America hardly moving. Another example:
West African production is climbing very steadily, but Nigeria is declining; in North Africa, Libya has increased but flattened out and the others are generally flat. So the relationship between real high prices and increased production does not hold when you don’t have the resources.
“One of the projects I do with my friends in Morgan Stanley is to track global projects…Here are 273 non-OPEC projects, country by country, [and assuming] a 6.5% decline rate; at an 8% decline rate you need even more [projects]. Here are the OPEC projects including Iraq, Iran, Saudi Arabia, at a 3.5% decline rate; at a 5% decline rate means more intense production [is needed]. Combining OPEC and non-OPEC and looking at the global replacement rate, which should be around 4.5 million barrels/day per year, assuming conservative decline numbers, you just don’t have enough projects…Even if you have a very moderate increase in demand of about ½% per year, that shortfall becomes very substantial. I’m not saying this is the forecast—of course a lot has to be done to avoid this—but this is the reality as it stands today.

Nobuo Tanaka, Executive Director of the International Energy Agency, said that at their recent 35th anniversary meeting of the IEA, “certainly the issues there were the oil market, the gas security…but the most important and focused issue was climate change.” To achieve the “450 [CO2 parts-permillion] Stabilization Scenario…we have to peak out the demand of fossil fuels by 2020. This is the new finding of our 2009 World Energy Outlook.” “To achieve the 450 Scenario, we need first energy efficiency; but at the same time we have to invest in renewables, nuclear and carbon capturing and storage; and the cost as a whole is about 10 trillion US dollars between now and 2030.” In response to a question, he admitted that IEA was previously criticized for being too optimistic; “now we are criticized for being too pessimistic.”

Steve Andrews, a co-founder of ASPO-USA, was granted a press pass to cover the pricey O&M
conference for the Peak Oil Review—an intriguing decision by the Energy Intelligence group.

Labels: economy, oil supply/demand

Looking for some hope and resolution in combating our dependence on oil? For a bit of optimism, check out the Model 44 Coupe.

The Coupe, produced by Woods Motor Vehicle Company in 1916 (yes that date is correct), is a hybrid very reminiscent of the Prius. The vehicle boasted a 4 cylinder gasoline engine alongside an electric motor. The Woods company produced both these hybrid vehicles and several all-electric versions. While the coupe only managed a top speed of 35 miles per hour (not a horrible range for cars of that era), the electric motor worked alone until 15 mph was exceeded.

Ironically, looking back at the development of the car - before oil became the go-to fuel source - can yield interesting insights for today.

For pictures, click here.

Honolulu, Hawaii received $3.8 million today in their effort to decrease energy consumption. The funds specifically target projects to reduce fuel consumption and increase efficiency, as well as those that create green jobs.

Hawaii and Alaska represent petri dishes for America's shift to a green economy. Thanks to their outlying positions, any escalation in fuel and energy prices is much greater in those states, forcing them to stay ahead of the curve when it comes to alternative fuels and renewable energy.

The following article has a discussion about whether or not the Cash for Clunkers program actually increased car sales, or just moved them forward. While ELA could take a side or at least comment on the contents of this article, we will not. Why? Because as we stated multiple times (see our previous posts on the Cash for Clunkers program) that any meaningful program should permanently shift consumer and producer attitudes towards more fuel efficient vehicles. A program that lasts three months certainly cannot pretend to do that.

'Clunkers' critique draws fire from White House
	Oct 31, 2009	The Washington Times
	William Ehart Oct. 30, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- The White House lashed out again Thursday at a media outlet, calling the automotive site Edmunds.com "wrong (again)" for saying that the "cash for clunkers" program cost too much money and had little lasting impact on car sales or the economy. Jeremy Anwyl, chief executive officer of Edmunds.com, said he was "shocked" by the administration's reaction and said it ignored his auto research firm's other conclusion that the industry is recovering faster than analysts think. "I think they've got their B team responding," Mr. Anwyl said. "I know there are smart people at the White House, but I don't think they're blogging today. Why are they even messing with this? We're talking about the White House. "I feel like Joe the Plumber," he said. Edmunds.com said Wednesday that it cost taxpayers $24,000 to spur each car sale beyond what would have occurred anyway. About 690,000 cars were sold under the hugely popular program, from late July to late August, at a cost of $3 billion. Congress agreed to increase funding based on the heavy response. The initiative was designed to boost car sales and reduce emissions, as rebates of up to $4,500 were available to those buying more fuel-efficient vehicles. No one argues that some portion of "cash for clunkers" buyers were already planning to buy a car at some point this year or next. Therefore, hundreds of thousands of Americans got stimulus checks from their fellow taxpayers for making routine purchases. But analysts differ on how many car buyers fit in that category. Edmunds.com estimates that only 125,000 cars, or 18 percent of the total sold during the program, can truly be tied to "cash for clunkers" incentives. The auto information site based its analysis on a study of factors such as actual sales and pre-existing sales forecasts. The analysis excluded luxury cars and other vehicles ineligible for the program. Dividing $3 billion by 125,000 yields a cost of $24,000 for each sale the stimulus program fostered, according to Edmunds.com's analysis. The average transaction price for a new vehicle in August was $26,915, the firm said. The White House fired back on its Web blog Thursday, noting that motor-vehicle output boosted economic growth by 1.7 percent in the third quarter. "This is the latest of several critical 'analyses' of the 'cash for clunkers' program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV," the administration said. "This analysis ignores ... reports from across the country that people were drawn into dealerships by the 'cash for clunkers' program and ended up buying cars even though their old car was not eligible for the program." The White House also argued that automakers are ramping up fourth-quarter production because the program depleted their inventories, and that other research firms, including IHS Global Insight, have reached different conclusions about the economic impact of the stimulus program. Mr. Anwyl faulted the administration's "anecdotal" evidence. "There's always that one consumer who came in and found they didn't qualify but bought something anyway," he said. "Car companies are increasing production, but the fact of the matter is that the car business is recovering. No car company is going to increase production because of a little 30-day increase in sales," he said. The White House cited an analysis by IHS Global Insight predicting that the program would add 600,000 net auto sales this year. An IHS Global Insight spokesman declined to comment on the dispute specifically. But an economic analysis released by the firm Thursday said the "clunkers" rebates were not the major factor in increased auto production, as the administration argues. "Most of the [third-quarter] increase in vehicle output would have happened even without cash for clunkers," wrote IHS Global Insight economist Nigel Gault. Newstex ID: KRTB-0225-39321590

Labels: economy, energy policy