August 2009 Archives
08/28/09 2:52 PM
Happy 150th Birthday to Oil
Exactly 150 years ago oil was drilled out of the ground for the first time in Titusville, Pennsylvania. In honor of the energetic hydrocarbon, here's a birthday song called "Gas Gas" by the Croation bombshell Severina. (Lyrics are here but I've heard there is some resonance between the smell of gas and hormones, which seems credible given the video.) Considering the piles of money the government is spending on a "green economy" to "leave oil behind" it's worth taking a look at just how long it took to really get the oil party started, and take bets on the time line for its greenish offspring.After the discovery at Drake's Well, oil was mostly used for lubrication and lighting. What we think of as the automobile age actually took a long time to get started:
26 years to invent an internal combustion engine and a gas pump (1885) (Timeline is here.)
41 years until there were 14, 800 autos registered in the US and the first really huge oil well (Texas's Spindletop) came roaring out of the ground with a higher daily production than all US oil wells combined. (1901)
49 years until the first Model T. (1908)
54 years before you could drive your internal combustion engine into the first gas station. (1913)
61 years until there were 8.5 million cars registered in the US. (1920)
The business and regulatory model seems to have developed a little bit faster.
11 years for Rockefeller to devise a business model that disciplined the cycles of boom and bust into a monopoly. (1870)
42 years before Ida Tarbell began exposing the model in McClure's magazine (1902), leading to the ultimate break up of Standard Oil into 37 companies 50 years after the discovery. (1909)
Now taking bets:
How long to until there are a million non-gasoline cars on the road?
How long until we've cut oil consumption by 33 percent?
How long until a radical, scandalous post-oil business model emerges?
How long until we regulate it?
(Photo: Flickr User sara.atkins)
Thanks to Branko Terzic for "Gas Gas" and translation.
08/26/09 8:43 PM
Sayonara Cash-For-Clunkers (And What Could Have Been)
So yesterday the much discussed Cash For Clunkers ended its $2.877 billion run, moving 690,114 new cars off America's car lots and into the traffic jams. According to the Obama administration, it created or saved 21,000 jobs. So far so pat on the back. Except that each of those cars cost US taxpayers $4168 per car. And for that much money, we could have gotten a lot more. Consider this: C4C only required a fuel economy increase of 2 mpg over the original car, so the total mandated gas savings was about 38 million gallons of gas. The auto companies can raise the fuel economy of cars on the assembly line by that much at a cost of $500 per vehicle. So, we could have given our $2.87 billion to the auto companies to upgrade 5.5 million cars by 2 mpg or more, and bought ourselves a yearly fuel savings of 303 million gallons of gas. If we wanted to be even trickier, we'd stop giving handouts to the auto dealers and give credit to consumers who are struggling with unemployment, the mortgage crisis, and everything else. If we'd turned the $2.87 billion into loan guarantees we could have offered $57.5 billion in low interest auto loans--enough to finance 3.8 million cars at $15k a pop. Now THAT would have created a LOT of jobs. Better still, the loans would have helped working families save money on car payments (which for people with shaky credit can easily run to 18 % interest) and on gasoline.
Gasoline: Another missed opportunity. If we'd made only cars getting 32 mpg or more eligible for the loans we could have saved 855 million gallons of gasoline a year. Much much more than 38 million.
And if you're not riled up enough:
See UC Davis economist Chris Knittel's excellent work on the implied cost of carbon in Cash For Clunkers.
And here's a consumer-action warning that some dealers may be "double dipping" from both consumers and the program.
(Photo: Flickr User Tony the Misfit)
08/18/09 11:15 PM
Astroturf on Coal's Grave?
I know I'm supposed to be outraged that lobbying firm Bonner and
Associates, acting on behalf of the (ironic tongue twister alert!)
American Coalition for Clean Coal Electricity, has filed 13 forged
letters on behalf of senior centers and the elderly with a House
Committee against the Waxman Markey climate bill. And I'm also supposed
to be furious that the American Petroleum Institute is trying to whip
up an astroturf teabagger death panel anti Waxman Markey extravaganza
by creating the illusion of "Energy Citizens" against the bill at town
halls. But it makes me laugh. Who wants to be an "Energy Citizen?"
Never mind call on Congress to "get it right?" Who's going to carry a
loaded AR15 to such wishy washiness? Certainly not someone with a nice
job in at an oil services company. This smells of desperation. When they're not being ignored, coal, utilities, and oil companies are despised. There's a good chance that the climate bill will not pass, but it will not be because of spontaneously created "energy citizens" but because of old fashioned energy politicians.
And then the battle will continue, because not only does the energy industry have to forge letters from senior centers to fake a grassroots, they have a lot to fear from real grassroots.
The anti coal movement is growing weedily. In the last two months alone there have been 6 fairly major anti coal demonstrations in the US, according to Sourcewatch and Coalswarm. Activists have scurried up a 20 story strip mining tool, climbed Mt. Rushmore, and locked down West Virginia's Department of Environmental Protection. 700 people protested carbon sequestration in Greenville Ohio. They were not protesting anything tangible like mountaintop removal (which got Darryl Hannah to West Virginia) , but instead a proposal to inject carbonated soda water more than 3000 feet below ground. (Note: I think well-run carbon sequestration is a decent idea, and the oil industry has done it for years to force more oil out of their wells.)
Looking at these protests reminds me of the days of anti-nuclear protests in the 70's and 80's that piled on top of financial and liability problems to stifle the industry. The forces are gathering and coal is about to go nuclear in the worst way. Take a look at the many groups allied against coal in the US, consider the deal that stopped the building of the TXU power plants in Texas, the 97 coal fired power plants canceled since 2001 (in part because they're expensive), and it's clear that coal is slowly but surely becoming politically radioactive. (And also literally.)
Now I'm not a big fan of coal, but I do like the occasional electric light, and I don't believe that killing coal in the US alone will cool the planet. In order to do that we'll need to figure out how the world can burn it more cleanly, or cheaply replace its power with other lower carbon energy. And the world needs US leadership to get there. The coal industry could try to jump on that bandwagon and innovate their way ahead. But instead, they're stuck in a rut and forced to forge letters of support.
(Photo: Flickr User wsilver)
08/14/09 1:19 PM
Oil Smuggling: Is It Time To Start Worrying Yet?
I've been waiting in vain for more information on the U.S. companies involved in buying oil smuggled out of Mexico by drug gangs. So far the money tied to U.S. firms is small potatoes. Trammo, a small firm, paid $2.4 million for hot oil, and two even smaller San Antonio firms may have paid $40K and $100K. Who, and where are the big fish? Worldwide, oil smuggling involves a lot of money and players; the people at Havocscope estimate it's worth $7.7 billion a year, which puts it well below cigarette smuggling ($50 billion) and above music piracy ($4.5 billion). See the full list here. Should we worry?The WSJ suggests that this is a symptom of cartels fighting as enforcement shrinks the drug pie, while an industry expert wonders if Mexico will go the Nigeria route, which raises the scary possibility that successfully reducing drug trafficking could create even more instability in Mexico and in U.S. petroleum markets.
"The cartels are fighting for pieces of a shrinking pie. When you have no pie left...then you have to look for another illegal business to pay your people," said Ariel Moutsatsos, adviser for international affairs for the attorney general of Mexico.
Industry experts warned of the risks to Mexico from unchecked oil-smuggling. "You could eventually end up in the same situation that you have in Africa," said Wayne Wilson, managing director with Protiviti, a risk-management consulting firm. In Nigeria, violent gangs tap into oil pipelines and raid oil company facilities to steal hundreds of millions of dollars worth of oil each year."
Stolen oil is the key component of cycles of violence in both the Niger Delta and in Iraq. In Nigeria, the stolen oil directly buys weapons for the gangs who smuggle it, which has in the past raised the violence in the area, which raised world oil prices, which made the stolen oil more valuable, increasing theft, which increase the weapons imports.... Oil theft in Nigeria has become very sophisticated (there is a discussion of the ability to "hot tap" pipelines) and sad (same report: 5000 people have been killed taking fuel from pipelines since 1998). And here's a link: http://www.meforum.org/1020/
If this is really what's taking shape in Mexico, then we may soon long for the good old days of drug cartels, but I think it's worth considering whether we're actually seeing anything new. There have been networks of diesel thieves near the border for years.
And it may be that more of the oil we buy is stolen than we realize. Oil tankers change hands as many as 300 times at sea, so there's no good way to track the ownership of oil--yet. And I've also been told by academics that as much as 10 percent of the oil coming into the port of Houston may be stolen. (Readers, feel free to diss this totally unverified information.)
For me, the question is not whether to start worrying, but how. Oil smuggling is, like oil futures market rigging, currently invisible but potentially very powerful. The trick is to start measuring it, and tracing out the networks of trade. If I were a policy maker, I'd ask the Department of Energy to start publishing an annual report on oil smuggling.
And for what it's worth, Mexico is not the only major US oil supplier with something funny going on around its pipelines. The Economist reports that a mysterious arcadian bomber has attacked an Encana pipeline in British Colombia six times in the past 10 months.
(Photo Credit: http://www.flickr.com/photos/kenjonbro/2824471343)
08/11/09 5:01 PM
The Freaky Math of Plug In Hybrids
Times have changed: the once-mighty GM seems to be live blogging its "game changing" Chevy hybrid electric VOLT today, claiming its $40K price is justified by its 230 mpg EPA rating. But that number, like so many numbers associated with plug in hybrids, is less impressive than it seems. The charming dorks at Environmental Economics point out that the Volt gets 230 mpg when the trip length is exactly 51.11 miles, but for a trip of 200 miles the car gets 62.5 mpg, which is not much better than my diesel VW Golf, purchased used for around $15K. Of course, there's a lot to love about Plug In hybrids, and GM's new game, but the numbers around them are vexing. Rickety math wouldn't be a problem if it weren't for the fact that we're trying to fashion an energy policy out of the dream of having a million electric and plug in vehicles on the road by 2015. (More math: today we have only 2000 capable of sustaining freeway speeds, according to cleantechblog. So we're looking at 5000 percent growth in six years. Talk about your hockey stick inflection point!)
But the other problem with plug in hybrids, in particular, is that their gas mileage depends heavily upon the behavior of the driver. As I wrote for Forbes, one person can coax more than 99 mpg out of a modified plug in Toyota Prius, while a pedal-to-the-metal type who forgets to plug the thing in at night will get less than 40 mpg. A study by Argonne National Lab found that driving style alone can reduce the electric range of a vehicle from 40 miles to 15. The numbers get even dicier from there out, because charging a plug in Prius in a state that's got a lot of coal fired electrical generators turns out to be not much better from a greenhouse gas emissions perspective than just using gasoline.
Plug in hybrids are a great idea for Detroit, and for the rest of us too, but they are not a silver bullet for the problems of energy security and greenhouse gas emissions. And they're really not solid enough to base an energy policy around.
