Being a fuel agnostic and a believer, simultaneously

enemyBeing agnostic about certain things in life either makes you a person of little faith or willingness to leap across no or partial data; a wise person who is intellectually and emotionally strong enough to reflect on his or her personal doubts; a person who would prefer not to think about life’s complexities; or, succinctly, a person who is intellectually and emotionally lazy.

No, I am not going to discuss God at this time. But I do want to talk about fuel agnosticism. When people ask me which fuel I like, most times I reply that I am fuel agnostic. Put another way, except for gasoline, I have only strategic short-term fuel favorites among the fuels now on, or soon to come on, the market. As far as gasoline, I agree with the president, almost all environmentalists and a growing number of business leaders, that America must wean itself off gasoline. It just does not cut it, given the country’s air quality, GHG, pollution, economic and security objectives.

Happily, drivers, particularly owners of flex-fuel vehicles (new or converted) have fuel choices at the present time besides gasoline. They are not perfect by any stretch of the imagination. But they are better than gasoline with respect to key public policy and quality of life commitments.

Flex-fuel vehicles (FFVs) can use E85 ethanol blend, the vast majority of which is made from corn; battery powered vehicles can power up on electricity; vehicles with fuel cells can fill up with hydrogen. Natural gas-based ethanol likely will come on the market relatively soon, perhaps within the next 3 to 5 years. This is only a partial list, but they include the “biggies” with respect to alternative fuels.

Obstacles exist restricting consumer ability to exercise their choices among alternative fuels. Among them:

  • lack of investment in infrastructure — fuel stations, pumps etc.
  • franchise agreements excluding sale of E85 at brand-name stations

Both electric and hydrogen-cell cars, on average, are too expensive right now for most Americans to purchase, and reliance on batteries increases the psychiatrist’s bill for many drivers because of mileage constraints. Fear of being stuck on a freeway without electricity and without proximity to fuel stations induces lots of pre-driving psychodrama and expands the use of Ambien the night before driving relatively long distances. Misery, in this case, doesn’t like company. Sort’ve up the crowded creek without a paddle. However, on the good news side, we may have a paddle soon, as electric car producers are aiming at batteries capable of “driving” cars longer distances and producing cheaper sticker prices. Hopefully, with increased use of natural gas, wind and solar power as substitutes for coal, electric cars will become even better than they are now concerning life-cycle GHG emissions.

Corn-based ethanol is presently the best alternative fuel capable of competing with gasoline on a large scale and simultaneously responding to environmental, pollution and GHG objectives. Independent retailers selling E85 have grown in number and locational diversity. Better land management by farmers and an ample supply of corn have lessened the intensity of the food vs. fuel dialogue. While varying over time, the price of ethanol now in most areas of the nation is very competitive with gasoline on a mileage-per-gallon basis. The price differential between the two fuels seemingly has stabilized at between 20 and 26 percent.

Detroit, aided by available federal incentives, has put more than 17 million FFVs on the road. And even though there is a paucity of fuel stations, sales of E85 have still increased modestly.

Because of costs related to development and certification, only one EPA-approved conversion kit exists to change internal combustion engines to FFVs. It is very expensive. Even though consumers, including drivers of fleet vehicles, administered by the public sector, indicate driver satisfaction with the kit, its limited use to convert EPA-approved vehicles to FFV status is understandable. An increase in the number of certified kits would bring down their price and lead to expanded conversion of existing gasoline-only autos.

Natural gas-based ethanol has stimulated a good deal of interest. The process of making ethanol from natural gas seems doable. Coskata, Inc., has developed and tested a process to convert natural gas to ethanol. It results in a product that is relatively inexpensive and responds well to environmental and GHG objectives. The company is seeking financing to build one or more facilities. Its success will provide a strong contender among alternatives for consumer fuel dollars.

It is important that we extend the menu of choices at the pump. Right now, the nation has no real strategy to get from where we are now, which on paper and in a limited way at your friendly gas station is promising, to an effective nationwide menu of consumer fuel choices. Acting now to secure such a strategy is important, in light of GHG emissions, pollution and security problems, including growing tension in the Middle East and our allies’ continued need for imported oil.

We need an immediate, transitional and long-term strategy that increases competition, over time, among multiple fuels — fuels able to respond to national economic, social welfare, and environmental as well as GHG objectives. Through public-private sector partnerships, the nation should be aiming at low-hanging fruit (substitute fuel) like corn-based ethanol E85, and, when it’s ready, natural gas-based ethanol.

Electric vehicles and hydrogen-fuel vehicles are not yet ready for prime time, but both, with technological, cost, and design improvements, could be a necessity in the intermediate and long-term future. Let’s not meet the enemy only to find out that he or she is us (Pogo). We have the data to become a believer concerning the benefits of a transitional and growing fuel menu, while at least for now being fuel agnostic.

Tesla continues to walk the tightrope

One simple slide in a PowerPoint presentation by a Tesla official at an auto convention in Washington this month did almost as much damage as Elon Musk’s rocket blowing up soon after liftoff.

JB Straubel, chief technological officer and co-founder of Tesla Motors, put up a slide on June 15 indicating that Tesla’s Model 3 would not “begin production until 2018.” This apparent delay set the new vehicle back from the previously announced deadline of 2017 and almost knocked the company for a loop. The website Inside EVs broke the story, as it were, and word of the PPT slide was repeated in countless news stories. The interpretation was clear: Once again, Tesla had been forced to postpone key product rollout.

Within hours, Tesla had assured investors and analysts that it was not changing its schedule. The $35,000 Model 3 will be available in 2017, as previously planned. “Contrary to speculative blogger reports, we still plan to show Model 3 in 2016 and begin production in 2017,” Ricardo Reyes, vice president of communications, tweeted. The statement about production in 2018 was said to refer to “full production,” an attempt at back-filling that many analysts viewed with a grain of salt.

Whether the reference to 2018 was just a typographical error or an inadvertent peek under the kimono, the controversy showed how delicately balanced Tesla’s position is, both in terms of meeting customer expectations and in raising money to continue its projects.

Missing deadlines would certainly be nothing new for Tesla. In February 2012 the company said its crossover Model X would be available by the end of 2013. In February 2013, it said it would be late 2014. In November 2013 the company announced that a small number would be available by the end of 2014, but actual deliveries would not begin until the third quarter of 2015. Everyone is waiting to see if this deadline will be kept. Meanwhile, speculation has increased that any delay in the debut of the Model 3 may be due to the resources that have been spent trying to get the Model X out the door.

The Model 3 is Tesla’s bid for the big time. The car is projected to have a range of 500 miles and would be priced at the aforementioned $35K, less than half of the $79,570 MSRP of the 2015 Tesla Model S. The Model 3 is intended to be a mass-market sedan that’s well within the reach of the average car buyer. Musk, Tesla’s flamboyant co-founder and CEO, hopes to sell 500,000 versions of the Model 3 by 2020, a feat that could put Tesla on a firm financial footing.

But there are pending obstacles. One is the Chevrolet Bolt, a plug-in all-electric that is the successor to the Volt, a plug-in hybrid. GM demonstrated the Bolt in a sample model this month and will also be priced in the $35,000 range. GM promised to have the Bolt on the market by early 2017, which would beat Tesla’s Model 3 out of the gate.

Whether electric-car buyers will be attracted to the Bolt – or whether they will wait for what will almost certainly be a superior product from Tesla – is a hotly debated question. “GM is ramping up to make 20,000 Bolts. Tesla is ramping up to make 500,000,” said one commenter to a Wall Street Journal story. “When a company names its new car the ‘Bolt,’ Tesla has little to worry about,” said another. But other readers cited GM’s superior service network, and the company’s long history of making money, while Tesla has only lost money.

One thing is certain: Tesla is building brand loyalty. A survey of 145 Tesla owners by automotive analyst Dan Dolev of Jeffries found that 85 percent said their next car would also be a Tesla, and 25 percent wouldn’t even consider another brand. Eighty-three percent said they would recommend Tesla to their friends, and a remarkable 89 percent said they would still buy a Tesla without the $7,500 federal government tax break. The owners also turned out to be not nearly as rich as expected. Almost 70 percent had previously owned cars that cost less than $60,000, including ones as modest as a $15,000 Toyota Highlander. They paid an average premium of 80 percent over their previous car when they bought a Tesla. As a result of the survey, Jeffries raised its target price for Tesla stock to $350 from its current $265.

The battery-producing Gigafactory outside Reno is moving ahead on schedule, with the first phase of the structure near completion and machinery is about to be moved in. The current phase represents only 14 percent of the planned layout. Once completed, the Gigafactory will be the largest building in the world, with a footprint of 5.8 million square feet and two stories of manufacturing totaling 10 million square feet. Panasonic, Tesla’s battery partner, is expected to send hundreds of workers to the site this fall to prepare for full-scale production. The factory will also employ hundreds of local workers.

Wall Street Journal columnist Charley Grant threw a wrench into the works recently when he wrote that Tesla is still burning through cash and probably will run out of money if the Model X does not sell as expected. He says the company should sell another issue of stock while the price is still high. He suggested that a price of $200, 25 percent below the current market rate, could raise $750 million and carry the company over to the introduction of the Model 3.

Whether the company will dilute ownership or take a chance that Model X sales will reverse its cash flow is just one of the many decisions Musk will be facing in the near future. One thing is certain: He will be balancing atop that high wire for several years to come.

Declare your independence from oil with Fuels 101

Fuel Freedom has something new this Fourth of July to help Americans declare their independence from oil and its monopoly on the U.S. transportation fuels market.

This week we launched Fuels 101, a set of tools you can use to learn about alternative fuels. The pages include:

  • Check Your Car. An interactive feature that allows you to determine whether your car, truck or SUV is a flex-fuel vehicle, and thus can run on any combination of gasoline and ethanol, up to E85 (85 percent ethanol, 15 percent gasoline).
  • Fuel Types. A guide to the different transportation fuels, including ethanol and methanol. All facts, no myths.
  • Find a Fueling Station. We’re using the Alternative Fuels Data Center’s cool interactive map, which helps you find not only E85 stations, but CNG and others.

Consider Fuels 101 an introductory course in all the alternatives to fuel. Although they come from different sources (ethanol, for instance, can be made from a variety of starchy plants, not just corn) and are made in different ways, their commonality is that they burn cleaner than petroleum-based fuels, reducing toxic pollutants that befoul our air and water. Domestically produced fuels also create American jobs and strengthen our national security.

Give Fuels 101 a spin. Don’t worry, none of it will be on the final.

Fuels 101 is the kickstart to what we’re calling Fuel Freedom Month. Our goal is to raise awareness coast to coast about ways we can all help create a genuinely competitive fuels market for the first time in America.

To learn more about how you can help, visit our Take Action page. And while you’ve got some down time between barbecues and fireworks displays this weekend, watch our all-American documentary film, PUMP the Movie, starring Jason Bateman.

You can also get regular updates on social media by following Fuel Freedom’s Facebook page and Twitter feed. PUMP has cool content as well (it has an independent streak of its own), so check it out on Facebook and Twitter as well.

Happy Independence Day, America!

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