Fuel Freedom Staff

Real Clear Politics: The Future of Cars: Batteries Included?

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Elon Musk, founder and CEO of Tesla, has done what GM couldn’t when, 20 years ago, EV1 was introduced as the first (failed) mainstream, all-electric car. Tesla has moved electric vehicles (EVs) from cult to elite status. Seductively designed and impressively engineered, the nearly $100,000 Tesla is a must-own for one-percenters.

Could Tesla, in particular, with its to-be-released cheaper plug-in sedan, along with the other dozen major EV manufacturers, be the portent of an automotive revolution that finally displaces the vilified internal combustion engine? Or has Musk created—no small feat—a modern Maserati? (The latter celebrates its centennial on December 1, 2014.) At present, the wisdom of the stock market gives Tesla a value approaching that of GM, which produces as many cars in a week as Tesla does in a year.

 

Read more at: Real Clear Politics

Fuel Freedom Staff

Hofmeister interviewed on NBC’s ‘Meet The Press’

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John Hofmeister, a Fuel Freedom board advisor and the former president of Shell Oil Co., appeared on NBC’s “Meet the Press” on Nov. 23 to discuss the falling price of oil.

Watch a clip here:

Watch the entire “MTP” program here (Hofmeister comes on about the 35:20 mark), and read the transcript here.

Hofmeister, appearing along with author Daniel Yergin, was asked by host Chuck Todd whether lower-priced oil amounted to an extra sanction against Russia and Iran, which already are burdened by sanctions — Russia for its actions in Ukraine and Iran for its pursuit of a nuclear program.

Hofmeister replied:

It is. It’s an extra sanction because it reduces their economic clout. Well, we’ve seen what happened to the Russian ruble. Iran is not able to subsidize many of its programs.

CHUCK TODD:

They need to have oil to be at $100 or more a barrel for them to balance their budget.

JOHN HOFMEISTER:

Yeah, the estimates are Russia needs well over $100, Iran even more. And the consequence of that is the people of Russia, the people of Iran will suffer as a consequence of the low oil price. That’s why the panicked feeling within the OPEC meeting coming up on Thursday.

As we know, at that meeting, OPEC decided not to cut production quotas, effectively ensuring that oil prices would not stabilize in the near future.

As The Wall Street Journal reports, Saudi Arabia, OPEC’s largest producer, now believes that oil will settle at about $60, down from about $110 over the summer.

Hofmeister said that, despite the worldwide surplus of oil, the U.S. should keep pumping, in anticipation of demand coming back:

… the reality is, we will be short of oil in the world over the next several years as global growth exceeds oil production. So we need all the production we can have. We need all the infrastructure we can build to make sure the U.S. is taken care of.

Hofmeister, author of the book Why We Hate the Oil Companies, has much more to say about oil in the Fuel Freedom-produced documentary PUMP. The film is now available for pre-order on iTunes. Visit PumpTheMovie.com to watch a trailer and learn more.

Fuel Freedom Staff

Oil makes biggest one-day price jump in 2 years

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Have we seen the bottom of the great oil-price plunge of 2014?

Experts say not yet. But oil prices rose sharply Monday, making their biggest jump in two years: Nymex crude-oil futures rose 4.78 percent, to $69.31 a barrel. And Brent crude, the international benchmark, rose 3 percent, to $72.54. It had been down as low as $67.53 earlier in the day, the lowest it’s been since July 2009.

Oil is down about one-third since June, and late last week the commodity plunged even more precipitously after OPEC announced it would not stem the price drop by ramping up production among its 12 member nations. But some analysts saw Monday’s jump as merely profit-taking after last week’s sell-off.

From The Wall Street Journal:

… many market watchers were skeptical that Monday’s gains signaled that oil prices had reached their bottom, pointing to global supplies that continue to overwhelm demand.

Many investors and analysts believe with OPEC on the sidelines it will take cutbacks by companies in the U.S. and Canada to bring supply and demand in line and pull the market out of its swoon. That day may not come until deep into 2015 or beyond, some analysts say.

From Reuters:

“The market clearly got a little overdone to the downside and now it’s coming back up, proof that there will be a response from the shale patch to these low prices,” said John Kilduff, partner at energy hedge fund Again Capital in New York. “Several shale companies are already reporting capital expenditure reductions next year as their profit margins get thinned out.”

On Wall Street, shares of shale energy companies such as Denbury Resources (DNR.N) and Newfield Exploration (NFX.N) took a beating for a second straight session, down about 5 percent each in late afternoon trade.

Data reviewed by Reuters on Monday showed the new low-price environment for oil might have started affecting U.S. shale production, with a 15 percent drop in permits issued for new shale wells in October.

Fuel Freedom Staff

OPEC stands pat … will $70 oil be the new normal?

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The big news in the international oil markets last week was that OPEC decided not to cut production, which would have propped up free-falling prices, at least temporarily.

OPEC’s non-action sent oil prices falling further Friday, with the Brent benchmark slipping below $70 for the first time in four years.

NPR reports that some experts say oil in the range of $70 a barrel could last through 2015:

Igor Sechin, the head of Russia’s Rosneft, says he thinks oil prices will average $70-75 per barrel through 2015. That prediction was in line with what Bill Hubard, chief economist at Markets.com, told Reuters: “I think $70 a barrel will be the new norm. We could see oil go considerably lower.”

Some OPEC member nations, including Iran and Venezuela, which need a higher oil price to pay for their generous public services, had been pushing for the cartel to ease back on production to halt the plunge in prices. A moderate pullback would have come amid a global oil glut, thanks in part to reduced demand in Asia and Europe, as well as soaring production in the U.S.

Iran’s oil minister, Bijan Namdar Zanganeh, said OPEC’s decision was no guarantee that the United States would scale back production in North Dakota and Texas, a surge aided by advances in hydraulic fracturing.

“High prices are a disadvantage to OPEC’s market share,” Zanganeh said, according to Bloomberg. “If you want to increase your share, you have to reduce prices, but you can’t do it through ‘shock therapy’ over the course of three months if you want to change everything.”

Fuel Freedom Staff

EPA touts health, economic benefits of reducing smog

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The battle lines already are drawn over the Environmental Protection Agency’s announcement Wednesday that it’s seeking to reduce the nation’s levels of ground-level ozone, the main component of smog.

Under the Clean Air Act, the EPA is required to review air-quality standards every five years. Under President George W. Bush, the agency set the ozone threshold at 75 parts per billion in 2008.

The EPA now wants to lower the bar to between 65 ppb and 70 ppb, the level that the agency’s advisory board of independent scientists and physicians has recommended. However, EPA will review comments on a lower benchmark of 60 ppb during its commentary period.

Ozone is created when sunlight hits emissions coming from vehicles, electricity-generating plants and factories. The EPA said ozone at the current accepted levels “can pose serious threats to public health, harm the respiratory system, cause or aggravate asthma and other lung diseases, and is linked to premature death from respiratory and cardiovascular causes.”

The NRDC said medical evidence shows that the revised limit, even at the lower end of 65 ppb, is harmful to health. ”So we urge EPA to set the standard at 60 ppb.”

AQI (Click on the image at right to check the national Air Quality Index.)

That stance will put the EPA on a collision course with the manufacturing sector and Republican elected officials, who will control both the Senate and House in January. Sen. James Inhofe, the Oklahoma Republican who will take over as chairman of the Senate Environment and Public Works Committee, said in a statement that the lower threshold “will lower our nation’s economic competitiveness and stifle job creation for decades.”

National Association of Manufacturers president and CEO Jay Timmons said the new ozone regulation “threatens to be the most expensive ever imposed on industry in America and could jeopardize recent progress in manufacturing by placing massive new costs on manufacturers and closing off counties and states to new business …”

The Associated Press notes that the EPA initially proposed a range of 60 to 70 ppb in January 2010. Had that gone into effect, it would have come with an estimated price tag of between $19 billion and $90 billion and would have doubled the number of U.S. counties in violation.

In 2011, President Obama, in advance of his 2012 re-election campaign, “reneged on a plan by then-Environmental Protection Agency administrator Lisa Jackson to lower the permissible level to be more protective of public health,” The AP wrote.

“Seldom do presidents get an opportunity to right a wrong,” Bill Becker of the National Association of Clean Air Agencies told AP. “Obama has walked the walk on air.”

Current EPA administrator Gina McCarthy, in a post on CNNMoney.com, put the health argument front and center. But she also said cutting emissions would help the economy, not hinder it:

“Missing work, feeling ill, or caring for a sick child costs us time, money, and personal hardship. When family health issues hurt us financially, that drags down the whole economy. … Special-interest critics will try to convince you that pollution standards chase away local jobs and businesses, but, in fact, healthy communities attract new businesses, new investment, and new jobs.”

 

Fuel Freedom Staff

Naomi Klein: 4 reasons Keystone matters

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Environmental writer and activist Naomi Klein writes in The Nation that the conventional wisdom, at least among supporters of the proposed Keystone XL pipeline, is that the project didn’t really matter. Even if it were scuttled, TransCanada, the company hoping to build the pipeline extension from tar-sands oil in western Canada to Nebraska, would find another way to get the oil to market, either by way of another pipeline across Canada or by rail.

But opposition to the project has put pressure squarely on President Obama, Klein writes.

His decision is no longer about one pipeline. It’s about whether the US government will throw a lifeline to a climate-destabilizing industrial project that is under a confluence of pressures that add up to a very real crisis.

Klein, author of the new book This Changes Everything: Capitalism vs. the Climate, then outlines four ways in which the Keystone XL debate does, indeed matter.

Read it and tell us what you think.

Fuel Freedom Staff

BusinessWeek: Ethanol just avoided a death blow

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BusinessWeek’s Matthew Phillips reflects on the EPA’s decision to delay proposed changes to the renewable fuel standard, a revision that was expected to reduce the amount of corn-based ethanol to be blended into the nation’s gasoline supply.

Now that the new RFS standards have been put off until sometime in 2015, ethanol producers have the chance to regroup and fight another day, Phillips writes.

The ethanol industry just avoided a death blow. Rather than deciding to permanently lower the amount of renewable fuels that have to be blended into the U.S. gasoline supply, as it first proposed a year ago, the Environmental Protection Agency last week opted to wait until next year to decide. The delay (official notice here) means this year’s ethanol quotas won’t be set until 2015 and ensures they will be lower than the original mandate envisioned. That’s not great news for ethanol producers, but it gives them more time to fight and avoids an outcome that could have been far worse.

…

Ethanol industry leaders pretended to be angry at the EPA’s decision to delay on Friday: “Deciding not to decide is not a decision,” Bob Dinneen, chief executive of the Renewable Fuels Association, said in a written statement. But the reality is that they’re relieved the White House didn’t choose a more aggressive plan pushed by refining and oil companies.

Fuel Freedom Staff

Whatever OPEC does, U.S. oil companies will keep drilling

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Bloomberg has a story about what U.S. drillers will do in response to whatever OPEC does this week at its regular meeting.

OPEC, led by its top producer, Saudi Arabia, will do one of two things: Nothing, which means the cartel’s output will remain unchanged, and crude prices will say flat (or keep sliding). Or it could cut production, which “would lift prices and profits across the board and help finance further U.S. energy innovation,” the Bloomberg story says.

Either way, U.S. producers will have the same response: Drill on.

“The industry is very resilient, as strong as ever in recent history,” Tony Sanchez III, chief executive of Texas producer Sanchez Energy Corp. (SN), said in an interview. “The technological advances we’ve made underpin virtually everything right now.”

A continued price plunge would put more pressure on U.S. companies, but they’re increasingly insulated by OPEC’s actions, the story says.

The swagger of U.S. producers in the face of plunging oil prices shows the confidence they’ve gained from upending OPEC’s six decades of market dominance with technology that wrings oil from dense rock for prices as low as $40 a barrel. The shale boom has placed the U.S. oil industry in its strongest position since OPEC began flexing its pricing power in the early 1970s.

Arctic Leaf

Can alternative vehicles still play a role?

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A couple of Google engineers shocked the world last week by announcing that after working on the RE<C (Renewable Energy Cheaper Than Coal) Initiative for four years, they had concluded that renewable energy is never going to solve our carbon emissions problem.

In a widely read article in IEEE Spectrum, the prestigious journal published by the Institute of Electrical and Electronics Engineers, Ross Koningstein and David Fork announced that after working at improving renewables on the Google project, they had decided that it wasn’t worth pursuing. Google actually closed down RE<C in 2011, but the authors are just getting around to explaining why.

At the start of RE<C, we had shared the attitude of many stalwart environmentalists: We felt that with steady improvements to today’s renewable energy technologies, our society could stave off catastrophic climate change. We now know that to be a false hope.

Google’s abandonment of renewable energy raises the immediate question: What about the effort to reduce carbon emissions from vehicles? And here the news is much better.

Although everyone concentrates on coal and power plants, they regularly forget that half our carbon emissions come from vehicles. It’s typical that Google’s RE<C effort didn’t address what to do about our cars. It’s too complicated to try to control the emissions from 200 million point sources.

But what’s never discussed is the fuel that goes into these vehicles. It’s well known that ethanol and methanol cut carbon emissions compared with gasoline. That’s a good chunk of the battle right there. But it doesn’t even take into account the possibility of making both fuels from non-fossil-fuel resources, so that both would be all pluses on our carbon budget.

Ethanol, as currently produced in this country, is synthesized entirely from corn, so there is no fossil-fuel element involved. Ethanol currently takes up 10 percent of all the gasoline sold is this country, but it is currently marketed at 85 percent ethanol in the Midwest, with only a 15 percent element to guarantee starting on cold days.

Methanol is generally synthesized from natural gas, so there is still a fossil-fuel element there, but there is always the possibility of making methanol from non-fossil sources. Municipal waste could easily be converted directly to methanol.

And of course there is always the possibility of synthesizing ethanol and methanol using renewable energy. People always talk about storing wind or solar energy as hydrogen, but methanol would be easier to store than hydrogen since it is a liquid to begin with and not subject to leakage and escape. Methanol can be easily stored in our current infrastructure.

The Chinese are currently building six methanol plants in Texas and Louisiana to take advantage of all the natural gas being produced there. All this methanol is slated to be shipped by tankers back to China, where it will be used to boost China’s own methanol industry — and to run some of the 1 million methanol cars the Chinese have on the road.

Yes, the Chinese are far ahead of us when it comes to using methanol a substitute for oil. But there’s a scenario that will introduce methanol in the American auto industry. With all this methanol on hand in Texas and Louisiana, someone will install a pump on one of the premises for dispensing methanol. Cars at the site will use it. Then someone will say, “Hey, why don’t I use this in my car at home? It’s cheaper.” Before you know it, there will be a contingency to have the EPA decide that methanol can be used in automobile engines the same as ethanol is currently used. And in the end, we will have large quantities of methanol substituting for foreign oil.

Is it a dream? No more unrealistic than the dreams that kept the Google scientists occupied for four years.

Fuel Freedom Staff

New York Times launches series looking at N.D. oil industry

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You won’t be fully up to speed on how oil production, and hydraulic fracturing, has transformed the rural communities of North Dakota unless you read Deborah Sontag’s exhaustive piece in The New York Times.

Sunday’s Part I of a series, “The Downside of the Boom,” includes video, satellite maps and other visuals to complement its reporting.

At the heart of Part I is the way land has been “sliced and diced” in North Dakota for years, and rights to the surface don’t necessarily mean the landowner has control over the resources that lie beneath.

Given that mineral rights trump surface rights, this made many residents of western North Dakota feel trampled once the boom began.

In 2006, a land man for Marathon Oil offered to lease the Schwalbe siblings’ 480 acres of minerals for $100 an acre plus royalties on every sixth barrel of oil.

“Within a few years, people were getting 20, 30 times that and every fifth barrel,” Mr. Schwalbe said. But the Schwalbes did not expect “to see any oil come up out of that ground in our lifetime.”

Oil companies were just starting to combine horizontal drilling with hydraulic fracturing to tap into the mother lode of Bakken oil. “We didn’t really know yet about fracking,” he said.

The Schwalbes’ first well was drilled in 2008, their second the next year. Powerless to block the development, Mr. Schwalbe and his wife, nearing retirement, took some comfort in the extra income, the few thousand dollars a month.

Then that was threatened, too.