"The shocking truth about electric cars"

The shocking truth about electric cars - The Globe and Mail:

Electric cars aren’t necessarily green at all. Electric vehicles require large amounts of electricity – so much that Toronto Hydro chief Anthony Haines says he doesn’t know how he’d get it. “If you connect about 10 per cent of the homes on any given street with an electric car, the electricity system fails,” he said recently.

You cannot repeal the second law of thermodynamics.

Remember the electric-only Honda Clarity, that was advertised to use no gasoline at all?



The problem is that hydrogen is a fuel but not a resource. Hydrogen gas, H2, has to be made. It just can't be sucked out the air or water or earth. As I explained in "Buy a Honda, Kill a Polar Bear,"

where does the driver get the hydrogen to begin with? Hydrogen gas, H2, is not found free in nature. There are two ways to separate hydrogen from its compounds: hydrolysis and reforming. The former, most commonly and easily done with water, uses electricity and a catalyst to break H2O into H2 and O2. Reforming uses heat instead of electricity.

More than 90 percent of the hydrogen produced in the world is obtained by steam reforming of natural gas. It's not energy efficient since the energy gained from the hydrogen gas is less than the energy required to produce it. H2 produced in this manner is not used for fuel (except rocket fuel and some others exotics), but for industrial and chemical purposes. ...

That's the problem with fuel-cell or any other electrically-powered vehicle. There is no free way to produce the electricity. Since most electricity in the United States is produced by coal-fired plants, all that electric cars do is shift the environmental effects from the tailpipe to the power plant. This is not a good shift, since today's auto burn extremely cleanly already.

If the H2 is produced using electricity somewhere, then odds are that coal produces that electricity. So the CO2 production has been merely moved off the auto to another emitter. Also, does it take more energy to produce the H2, whatever the source, than the H2 supplies? If so, exactly what is the benefit of the Clarity?

The Globe and Mail makes the same point:

And if the extra electricity [needed to recharge electric cars] isn’t generated by renewable energy, then overall carbon dioxide emissions will go up, not down, Prof. Smil says. “The only way electric cars could reduce global carbon emissions would be if all the additional electricity needed to power them came from carbon-free energies.” He also makes the essential point that the world’s energy infrastructure is based on fossil fuels. Changing that will take decades.

Electric cars are not ready for mass market and never will be.

Obama's oil release long gone

Remember just this week when President Obama ordered the release of 30 million barrels of oil from the nation's Strategic Petroleum Reserve?

Looks pretty good, yes?

On the right is the SPR release. On the left is America's daily consumption of petroleum in all its products, according to the US Energy Information Administration.

Do the math:

Daily consumption - 18,771,000 barrels per day (actually almost 3 million bpd less than it was before the recession).

SPR release - 30 millions barrels.

How long before the SPR release is all used up - 1.6 days, which is to say, yesterday.

The administration claimed that it was releasing the oil because of disruptions of supply from Libya (talk about a self-inflicted wound!) and other countries. But this is a canard. According to the US Energy Information Administration, worldwide consumption lags production daily by almost 117 million bpd. There is no meaningful disruption of supply.

So why release the oil from the Reserve? One thing we can discount right away: it could not possibly have anything to do with the 2012 election. Nope, not at all.

Gas Coupon! Print and Use!

Found at Extreme Couponing In the Near Future @ AMERICAN DIGEST

Fun with headlines

When Oil Prices Double, Look Out For Another Recession

EPA again blocks Shell from drilling on leases it bought from the federal government for billions, which should do wonders for gas prices

Mission accomplished!

Update: a Drudge-ku:

Update: Obama can run, but he can't hide. Will Collier tracks the price of crude oil isnrelation to presidential actions regarding drilling and extraction, "Thanks to Obama, Gas Jumps in a Flash."

The day corresponding to that [2008] peak, an all-time high of $145.16/barrel, was July 14, 2008. By some strange coincidence, that was the very same day then-President George W. Bush lifted, by executive order, a federal ban on offshore oil drilling. ...

By Friday, July 18, the price of a barrel of crude had dropped to $128.94, a 12% decrease. A month later, on August 14, the price had fallen to $115.05. ...

By election day, November 4, the price of a barrel of crude had plummeted to $70.84 — a 51% decrease in less than five months. ...

Obama had been president-elect for all of five days when he announced his intention to rescind Bush’s order. Oil prices started going up again in January of 2009 and steadily increasing ever since. Obama Energy Secretary Ken Salazar announced a highly restrictive offshore leasing policy last December, and the Bush executive order was officially reversed on February 8, 2011.

The price of crude that day was $85.85. By April 19, it had risen to $107.18, with no end in sight.

Now the sky is the limit:

Saudis cut oil output

Saudis Slash Oil Output, Say Market Oversupplied:

Saudi Arabia's oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.

Consumers have urged the exporters' group to pump more crude to put a cap on oil, which surged to more than $127 a barrel this month, its highest level in 2 1/2 years amid unrest in North Africa and the Middle East.

Oil Ministers from Kuwait and the United Arab Emirates echoed Saudi Arabia's Ali al-Naimi's concerns about oversupply and said rocketing crude prices were out of the hands of OPEC, which next meets in June.

"The market is overbalanced ... Our production in February was 9.125 million barrels per day (bpd), in March it was 8.292 million bpd. In April we don't know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied," Naimi told reporters.

This is probably true. Surely no one in the world better analyzes the world oil market better than the Saudis. Oil prices have skyrocketed in the past several months. Most of us probably attribute the rise to unrest in the Middle East, but that is the minority cause. But early this month I covered that:

... the unrest does not account for nearly as much of the price increase as you might think. After all, supplies from the Middle East have remained almost entirely uninterrupted. Egypt's hardly burbled and Libya's disruption accounted for such a tiny proportion of world supply that its effect was marginal. IMO, the oil futures market, which is an aggregated risk assessor, has already discounted the possibility of future unrest regarding supply.

No, it seems the real reason oil prices have risen so much is because we, the American people, gave hundreds of billions of dollars to banks that then turned around and put our billions into investments in oil and other commodities funds rather than making loans to businesses. It all started with Ben Bernanke (no surprise)... .

The price of oil and of oil funds tanked today. US Oil (USO) dropped from Friday's close of 43.71 to a low today of 42.55 to close at 42.88, a one-day loss of 1.90 percent. Proshares Ultra DJ-UBS Crude Oil (UCO), plunged 3.70 percent from Friday's close of 59.66 to close today at 57.45 after reaching the day's low of 56.54.

USO, April 18:

UCO, April 18

One day does not a market make, but oil funds generally ended the day on the uptick.

My guess as to why oil dropped is that the market reacted to the Saudi announcement, but mainly because of this: U.S. credit rating outlook lowered by S&P.

NEW YORK (CNNMoney) -- Standard & Poor's lowered its outlook for the nation's long-term debt Monday, saying the political grousing over the deficit could put more pressure on the still shaky economic recovery.

"The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012," said S&P credit analyst Nikola Swann.

S&P maintained its top-tier 'AAA/A-1+' credit rating on U.S. sovereign debt, saying the nation's "highly diversified" economy and "effective monetary policies" have helped support growth. But the ratings agency lowered its outlook for America's long-term credit rating to "negative" from "stable."

Since oil is (for now) traded in US dollars, the S&P move blasted uncertainty into the market right at the time that the Saudis said they were cutting back. And if there is anything that futures markets hate, it's uncertainty. The initial impulse of investors is to sell, which as trhe graphs show, they did early. But then some sanity returned and prices crept back upward.

This is not to say that prices will rise again tomorrow. It's the long-term trend that matters most unless you're deliberately a short-term trader (and how do you like them ulcers, eh?). For people with oil funds (not commodity options) in their IRAs, for example, a price drop might be a good buy opportunity since the price outlook for crude oil remains rising over the longer term.

Yes, oil, will continue to rise in price - unless it doesn't: "Potential Black Swan: $10 Oil."

Mike Maloney of Gold and Silver Inc. ... said oil would go down to perhaps as low as $10 per barrel (which closely resembles our contention that deflation will cause prices of assets, commodities etc. to fall by 80-90%).

But back to the broader markets. Today, after tanking 250 points following S&P's announcement, the Dow recovered to close at -141 from Friday. So apparently the market does not believe that S&P is correct (they didn't shine in their evaluations of Japan, for example).

So what will the morrow bring? Sorry, my crystal ball is completely cloudy.

Okay, here's what I think: Gold and silver will fall some (they shot up like a rocket today as investors fled the dollar and oil) and oil and the overall market will rise, but not by a lot.

$5 per gallon gas, coming to a pump near you

CBS Chicago: "Gas Prices Climbing Toward $5 Per Gallon"

Some experts say $5 per gallon gas is possible by Memorial Day-or sometime in summer. Others caution that reaching that mark is unlikely over the next six weeks. In Chicago, the prices keep rising to near-record levels–with no relief in sight.

As the photo shows, gasoline is already well above $4 per gallon in Chicago. The question is, is there a top?

Eventually, high oil prices from the international spot market will slow oil-consuming countries' economies enough that the demand will decrease and oil prices will drop in response. At least, that's been the pattern in previous cycles.

A potential offset, though, is that the output of Saudi Arabia, the world's largest single producer, is declining for two reasons. One, some of the fields are reaching the end of their supply life and fewer barrels are being pumped from them. Two, the kingdom's own domestic needs are rising because of a rapidly rising population, meaning that Saudi Arabia is exporting a decreasing proportion of its production. Hence, “Saudi net exports of crude oil have entered terminal decline."

So we are in uncharted territory regarding supply and demand.

The Oil Price Bubble - When Will It Pop?

Why have petroleum prices soared so high so fast? Presently we are seeing the highest spot price for crude oil ever in the month of March. Is it because there is a decreasing supply of oil coming onto the world market?

2010's figures are not yet compiled for worldwide production, but this table tells the tale. Oil production has held steady since 2004 except for a small surge in 2008 (when prices topped $150 per barrel, so you can bet anyone with a derrick was pumping). But even 2008's production was significantly less than 1 million bpd more than 2007's. When oil prices fell in 2009, so did production, but only back to about the same level as before.

Of course, production is only half the equation of whether there is a shortage. The other half is demand. Just as oil production fell in 2009, so did consumption, though not quite as much. But production and consumption are very closely correlated with supply keeping up with demand. There are, after all, no long lines at gas stations. In fact, as gasoline prices have risen, there are pretty much no lines at all at gas stations.

Are oil prices rocketing skyward because of unrest in the Middle East - Egypt, Libya, Syria, Bahrain, even some in Saudi Arabia? Partly, but the unrest does not account for nearly as much of the price increase as you might think. After all, supplies from the Middle East have remained almost entirely uninterrupted. Egypt's hardly burbled and Libya's disruption accounted for such a tiny proportion of world supply that its effect was marginal. IMO, the oil futures market, which is an aggregated risk assessor, has already discounted the possibility of future unrest regarding supply.

No, it seems the real reason oil prices have risen so much is because we, the American people, gave hundreds of billions of dollars to banks that then turned around and put our billions into investments in oil and other commodities funds rather than making loans to businesses. It all started with Ben Bernanke (no surprise):

This run-up in oil prices started with Fed Chairman Bernanke`s Jackson Hole speech where the big banks realized they were going to get a bunch more juice in the form of POMO operations by the Federal Reserve to play around in markets with.

And what did the large financial institutions do with this newly created juice? Instead of allocating the almost zero percent money they are all borrowing to productive activities such as lending loans to small businesses which will create jobs and stimulate the economy, the big banks have decided that since the fed is electronically printing money and providing extra liquidity/juice for financial markets that this is inflationary and devalues the dollar.

All Fed Juice Leads to Commodities

And just to make things worse, the big banks have decided to take their cheap capital they borrow at basically zero percent , and invest into commodities, i.e., agricultural futures like Wheat, Corn, and Soybeans, energy futures like Oil (NYSE:USO) and Gasoline (Fig. 2), and industrial and precious metals like Copper (NASDAQ:CU), Gold (NYSE:GLD) and Silver (NYSE:SLV).

Hence, inflationary pressure on those commodities resulted, which explains why food prices have risen along with oil prices. The rise in oil/commodity prices is being driven by investors and speculators (maybe not much of a diff).

What we have here is a 2008 redux. The Brent contract on the ICE exchange is being used to engineer prices up, as it is an unregulated exchange with no real transparency on position limits by the Big Banks. The Big Banks are also piling a bunch of money into commodity related ETF`s and mutual funds, which in turn have to buy exposure to the futures market in all these commodities. Add in the hedge funds, pension funds, money managers, and retail traders, and voila! you have these bubbles created which have no relation to the underlying fundamentals.

This situation is very much like the loose money policy of the Fed under Alan Greenspan regarding mortgage leveraging, and we know how that turned out.

Speculative bubbles always pop. The problem is that no one knows what the trigger will be or when it will come. But watch for signals from the Fed that its monetary policy might get tightened up some. The bubble might not pop, but it won't get bigger, either.

How high for oil?

Maybe higher than ever.

What happened to "no blood for oil?"

Remember these days of yore?

Well that no longer computes when it comes to bloodied Libyan oil.