Further Along the Path

There is plenty of good observation abound.....

Hybrids cars continue to pervade the American automotive landscape. Nissan has made a solid entry with its Altima and Chevy has introducted a hybrid version of its full size Tahoe SUV which can deliver 21 mpg in the city. More and more electric hybrid versions are entering. Annual sales of electric hybrid models are approaching the 500,000 units and further economies of scale will make future models cheaper. The hybrid premium is already lower on the price of a car. The average is now estimated at $1,500 which is lower by 50% from a couple of years ago.

While Ion Lithium batteries remain a distant target the industry appears fairly determined on reaching it and replacing the current standard of Nickel Hydrite.

Toyota is entering the hydrogen fuel cell landscape with its own experimental model pushing up some more confidence in this little understood fuel source.

Bio Diesel seems to be staying firm and I personally hear stories of people filtering used vegetable cooking oil from restaurants and using it in their engines through converter kits.

I personally was witness to a hear warming sight of a hill top house in San Diego surrounded by solar panels. And I saw solar panel installment bill boards in Central California put up there by private enterprise.

And last but not least, crude oil is looking to settle north of $90/bbl while gas prices at the pump are (on average) north of $3/gallon again. At least in this case, I am glad that my own prediction on a lower price for crude oil has fallen apart. The higher prices provides greater financial incentive in alternative fuels. OPEC need not worry. World demand will continue to rise and a great dependency on crude oil will stay for several decades. Even the government of oil-rich Dubai (the most progressive of the oil rich and wealthy Arabia fiefdoms) has entered agreements with firms to convert its taxi fleets and other government vehicles to the hybrid model.

Green Skies ??

Taking a much overdue lift off the ground I took in a lot of air on some hearty green activity in the great blue skies. It came as no co-incidence. I was travelling an inter-continental route and as usual was overly avowed at the wonderous, marvellous and even inscrutable nature of the machinery and mechanics of the jetliner. One leg of my trip was a 14 hour flight on a Boeing 777. Its mind boggling how the engines, these girdling citadels of steel, sustain for so long the raging jet-fuel fires that are hot enough to lift 100 tons off the ground and push it up into the air at 1,500 feet per minute. Just as mind scratching is the amount of energy required to perform such a take off. As a child we lived 3 miles from an airport and I still recall the trenchant roar of the full powered engines as the plane geared for take off. Never did I once hear an engine when planes were landing at minimum thrust (due to descent inertia and lighter fuel load). Hence as an energy enthusiast I honed in on Boeing advertising the 777's energy conscience. Their website states that the 777-200LR (its long range model) uses 6,500 less gallons per flight without giving us the average flying time or the total fuel load for such a flight. The number obviously looks better on its own and so be it. 6,500 gallons after all is 6,500 gallons. Expect the average flying time for the 200LR to be something like 8 hours. The flight I was on was 14 hours but the 200LR has passed a durability test of 22 hours and 42 minutes which by the way is the new world record! The longevity of the flights is an added bonus as by avoiding a re-fueling stop makes the trip more energy efficient (some time gain and avoiding a second full thrust take off and ascent to crusising altitude). Nice going, Boeing. Get it....going....Boeing. Never mind.

Well, that's not all. Another development in the short range flight domain also seems to have taken a turn for the better. Using a jetliner for a 375 mile flight from LA to San Francisco would strike quite a few of us somewhat egregious. How do airlines make it economical? Not exactly sure but airlines to need to switch flights for planes which can mean them flying around without a load or a loss leading flight to cover sunk costs. The average price they charge probably covers the costs of these short range flights on jets. No doubt, people prefer jets and some would pay dearly for them. But not all of us. And not in this 6 billion global population era that can ill afford energy luxuries. Hence, its nice to see a resurgence of twin propellor (props) on short routes. As per a recent article by Newsweek magazine, the new generatin of this not-cutting-edge technology is made to customer order in regards that caused people to shy away from them. Two turbo-props are featured. The Q400 bombardier (featured below) and the ATR 72-500. Both can seat 70+ passengers. Both are reported to consume 30% to 40% less fuel than comparable passenger capacity jets. The Q400 can crusie at 400 mph and has something called an active vibration and noise cancelling system. Here's the best part. The business proposition is hot. Given the fuel savings some regional airlines have started to convert. Worldwide orders for small turbo props (less than 90 passengers) had dropped to a dismal 25 aircraft in 2002 and by 2004 the figure was no better than 48. In 2005 that number shot up to 150 and in 2007 we are at 125 half way through the year. The predominant factor: price of fuel.

I guess we don't really think of the sky as green but a bluer blue may just carry some hint of that awesome GREEN. Its been a while since I have found a worthwhile video to add to one of my blog entries. Here is one which is as much a tribute to the capabilities of the Boeing 777 as it is to the skills of the test pilots who can perform such acts. In this case high cross winds landings with approach angels requiring nerves of steel......

OPEC WARNS WITH A PRICE BACKLASH

OPEC (Oil Producing & Exporting Countries), a consortium of countries in the Middle East, Asia, Africa and Venezuela that control 40% of the world's oil supply have stated, out of an act of medieval mentality and childish bickering, that if a large shift is planned out of the petroleum fuel sources by the industrial nations then they will re-evaluate their investments which could lead to a prices 'going through the roof'. A warning! A reaction. Concern and fear. But do not fear, I think they are bluffing. In any case, they are being quite stupid. China, India, the Pacific Rim and other developing companies will keep demand on the up. The alternative fuels are decades from even something like 20% of the market. And by that time the market will be much bigger. If anything, an OPEC act of retaliation will only strengthen the resolve and create more political will to prioritize a larger shift out of petroleum based fuels. OPEC should instead work with the manufacturers and innovators. Do more R & D. Work on making the fuel more potent and cheaper. Make it compete. Play the good game. A spike in the price of gas and other commodities will be very harmful to consumers and economies in the short run. However, it justifies bigger investments in the alternative fuel projects.

OPEC WARNING ON BIO FUELS

I TOLD YOU SO (AS DID HALF THE WORLD)

It can be a brief uplifting experience to see one's predictions come true. That is until you discover that so did half the world's. If you are predicting that the price of some commodity or stock is going to go up or down and so it happened then its likely that half the world was right about it and the other half wrong. Unless you belong to that elitist club of contrarians that shine as rare as the sun does in the city of London. In the world of gas prices these days that ray of sunshine would be even more scarce. Most people knew that gas prices at the pump would rise. To what level? And if they will break $4/gallon in the high-cost-of-living markets is the real game. I think with the Nat'l average this week around $3.15 there really isn't much of a danger over all but some spots in California and trudging perilously close to the psychologically sensitive $4 mark.

Ever since I found my interest in this domain I have been watching the relationship between Gas prices and Crude Oil futures which is quoted in $ per barrell and is the international benchmark for the market price of petroleum. Now, that's whole sale and not the retail that we face everyday. And after wholesale it breaks out into a lot of different types of fuels the largest of which would be the one that ends up in our cars. I have watched countless TV clips of newscaster and energy pundits hacking out the relationship between crude oil and gas at the pump and nothing anyone has ever said really sticks to mind. The relationship is not without its sense of complexity and perplex and why shouldn't it be. We are talking about two different things. Because crude oil encompasses more than just what we see at the pumps and there other elements between raw material and finished product namely refining the relationship is put in myopia. However, crude oil has stayed at or around $65. The high end of the $65 - $45 range I predicted in December of 2006. Which means the range is off and will likely bust. Still I am impressed that it held there for quite some time. Understand that suppliers like Venezuela, Russia and the OPEC block co-ordinate to regulate supply and price.

Also understand that does demand at the pump have a real direct relationship with the price of crude oil? Let's say the sales of HEVs that do 40+ MPG went up to 5 million units per year. Well its not quite that simple. To get a perspective of why that necessarily doesn't change things a whole lot read my blog entry TO LIVE AND TO LEARN. But, as no one can really predict the future, this can still have a profound impact. The production of Nickel Hydride batteries, Ion Lithium batteries and Hydrogen fuel cells will get more efficient. And the level of fossil fuels these production processes consume will lessen. The use of these technologies over the combustion engine may even have a consumption advantage vis-a-vis crude oil. We do know that things will change in the future. At some point, these factors will bear enough, I hope, to impact the price of crude oil lower. Crude oil can already take a few hints:

PRIUS AND CAMRY HYBRID SALES SOAR IN MARCH
TESLA TO PROVIDE BATTERY PACKS TO TH!NK
NEW US ALT. FUEL STATIONS DIRECTORY HAS 2,200 LISTINGS
DUBAI INTRODUCING HYBRID TAXIS

I would still like to make an optimistic and perhaps more contrarian short term prediction. That Crude Oil futures will dip below $60 at least once in 2007 despite a vast and thorough effort by supplying nations to control supply and also refining still under developed.

To be continued..............

Hybrid Sales & Crud Oil Data

The latest data on sales of HEVs (Hybrid Electric Vehicles) is encouraging. After the market took some pundit-bashing due to lower gas prices and product uncertainties like longevity & cost of battery, the numbers rebounded posting an 18.3% rise in 11/2006 vs. 11/2005. The total number of HEVs sold in November were 18,283 units. To put this more into perspective, its a 430% increase over the 4,252 HEVs that were sold in 01/2004. This also coincides with the NYMEX crude oil futures dropping slightly 50 cents to $63.22. Its being resisted quite strongly at $65 despite announcements by OPEC that they will be cutting production. The two pieces of data are not related. At least, not yet. But its nice to see them together. The day that crude oil is impacted owing to breaking news in alternative car energy is, I reckon, closer than a lot of us think. The crude oil data is being rationalized with warmer winter temperatures leading to lower energy requirements. Again, that is, for now.

Anyway, getting back to the HEV data. For me, the most endearing piece of news is that sales of the Toyota Camry Hybrid have really taken off breaking the 3,000 units mark and now constitute almost 10% of the most sold Toyota model in the USA. Compare that to the Honda Civic Hybrid which has been around for a couple of years and sold only 2,208 units. The answer is simple and I elaborated it in my earlier blog entry titled 'Hybrid Reality Check'. I'll refrain from elaborating. Basically, the Camry Hybrid is close to 200bhp and 40mpg. A killer combo at $26,000. Honda needs to get its act together. The Civic Hybrid needs to deliver at least the 140bhp to match its EX trim. If they do that - I will buy one even if it does not make complete economic sense. Other cars that are doing well with growth are the Ford Escape and Mercury Mariner HEVs. Toyota, with its Prius/Camry/Highlander and a string of Lexus HEVs, took the lion's share of the market.

I also read an article on mixedpower.com that Nissan execs have been complaining about HEVs not being profitable. I would like to see the analysis. Is it due to not reaching break-even? Are they also saying HEVs will not be profitable at 2 million units per year ? And, if that is true, why are they building HEVs and earger to join the market? Afraid of something? The future? What might happen if they don't? Execs they may be but people ain't stupid. Especially in the age of blogging. Further crap exists in the area of HEV battery life and replacement cost. After checking out a myriad blogs and sites, I don't think its 5 years and $5000. It rings more like 7 years and $3000. And after 7 years, with far bigger market, the cost will be lower.

Source articles:

http://www.greencarcongress.com/2006/12/us_sales_of_hyb.html

http://mixedpower.com/modules.php?name=News&file=article&sid=1306

Crude Oil resisted below $65

In the blog entry that I wrote on 11/19/2006 about crude oil hitting a 1 year low at $55 I reckoned that crude oil should be range bound to $45 - $65 a barrel. I know this is wide. But recently it picked up again and was eyeing the $65 mark before being pushed down again at now rests at around $61. OPEC (the middle east oil exporting block which is the largest in the world) has said it can scale back production by 1.2m barrels a day. They like keeping prices on the higher side. Another big reason being sighted is warmer than expected weather in the northern US.

Will crude oil make a break towards the $50 level? OPEC will resist it. But, if global warming is for real.....who knows? Just stay cool. Anyway, a better range would be $70 - $50. I think it will come close to both levels in the next 12 months. The average price of gas at the pump in the US is $2.285 today slightly up from a month ago as per www.gasbuddy.com. That prediction didn't go as well. But we still have 2 weeks before the end of the year. Plenty of time to drop.

Crude Oil dips to $55/bbl, 1 year low

The price of crude oil petroleum futures has taken a 1 year low dip to around the $55/bbl mark. Pundits are pointing to higher stockpiles as well as production capacity. But the specific reasons in turn for that begin to get scarce. They hype-o-rama that started 18 months ago around rising demand in the US as well as the up and coming behemoth levels in China has long been laid to rest. Though not much can be done about high growth vehicle demands in China, India and other Pacific Rim countries, the advent of alternative fuels in the west and USA's potential to check its appetite and demand will keep the markets guessing. Winter forecasts and further psychological pressure should drive the price lower. But there should be oscillation. I would look for a range of $45 - $65 over the next one year or so. And, do not dismiss that powers-that-be can lower price by jacking up production, refining and delivery to keep the black gold attractive.

Gas prices at the pump here in the USA, however, have increased by roungly 8 cents or so. These should see some softening ahead of a winter with a mild forecast.

Though important, such matters I feel are not critical. The job is at hand: Diversified sources, low cost, eco-conscience, less political fodder.

Gas Prices

Its 11/02/06. One week to elections and the psychology is HOT. Gasbuddy.com is reporting the national price average of one gallon of petrol at $2.204 from $3.90 in 08/2005. The NYMEX Crude Oil Futures is listed at $58/bbl giving us no direction from the current levels of $56 - 58 /bbl.So is the current downtrend wave (apparently approaching its end-cycle) more of a factor of government/corporate manipulation, a pull back reaction from the $70/bbl hype-spike in the crude oil market from what was it - 6 months ago, or are consumption/demand factors adjusting quickly enough to force the powers that be to keep things calm enough and not prompt people to cancel trips and actions that drop overall revenue at the pump and makes it harder for the owners to meet overhead expenses.Despite all the political flak G. Bush picked up for Gas coming with in a hair of $4/gallon and Exxon-Mobil reporting $60 Big-Bs profit, I really doubt the guy even gave it much thought (that a good thing, isn't it ?). China, India and a host of developing countries are gonna need a whole lotta gas-feeding frenzy in the future. American trucking lifestyles is probably even bigger. Demand IS on the up and up. Prices need to rise and tame it.But how soon is now anyway ? Not that soon. Demand is going to rise substantially but not too sharply. The momentum to structure alternative fuels is sharp too. In the short term lifestyles can adjust and hybrid vehicles can build serious volumes (as they operate on the existing fuel delivery infrastructure). In the longer term, a host of alternatives will wage war and some choices like possibly hydrogen and electricity will prevail. Fossil fuels by no means are an endagered species. My bet is they are here to stay for some generations albiet not in domination. Global geo-political instability will play some part but it usually looks a lot bigger than it really is. And don't forget refining. Refining capacity should rise as some existing infrastructure is plugged back in. OPEC is talking about cutting back production again to stabilize price but perhaps there's more to life for them than just stuff like that. Low gas prices are a short term economic boost. If they take motivation away from alternatives then its not healthy. Look for prices at the pump to start re-scaling towards $3/gallon for the summer of 2007. Its a good level. Good for both sides. Good for me ? We'll find out in the summer.Links for this blog entry.....

http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=24

http://www.americasmpg.com/EIA.aspx

And now, to let it loosen a bit, enjoy.............