The Truth About Cars » Big Oil The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 23 Jul 2014 16:29:19 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Big Oil Keystone Vote Looms Amid Iraq Implosion Mon, 16 Jun 2014 13:22:40 +0000 photo2-505x600

Global oil prices are on the rise as the crisis in Iraq contributes to market instability. Large chunks of Iraq’s oil production infrastructure have fallen under militant control, leading to a sharp drop in output. Meanwhile, Canadian officials are upset with the Obama administration’s handling of the Keystone pipeline. They contend that the inaction on Keystone is keeping millions of barrels of Alberta crude from reaching more profitable markets.

Bloomberg reports that market analysts are divided on how much the Iraq crisis will influence crude prices in the future. This isn’t particularly surprising, given the number of variables in that still-developing situation. However, all observers expect that the price will only go up. The price of Brent crude on the London exchange has already crested $113 a barrel as of June 13; this is the highest level since last September. In the United States, West Texas crude is near $107, also the highest price since the previous September. Most forecasters expect oil to reach around $120 a barrel by the fourth quarter, when rising demand will also drive up prices. Longtime oilman T. Boone Pickens told CNBC that a complete shutdown of Iraqi production could drive oil into the $150-200 range by destabilizing world markets.

Part of the problem is attributable to the OPEC oil cartel’s difficulties in increasing supply. Since the Libyan revolution, oil production in that key OPEC member has declined precipitously to barely 10% of previous output. Meanwhile, fluctuating production in Nigeria and other OPEC members has introduced more volatility into the supply and demand curve. A report issued by the International Energy Agency last week states that Iraq could provide up to 45% of all growth in global oil output through 2020. As militants from the hyper-violent Islamic State in Syria and Iraq (ISIS) group overrun ever-larger swaths of the country and curb down production, that future is looking cloudy.

The latest Iraq crisis comes just as negotiations surrounding the embattled Keystone XL pipeline are finally coming to a head. The U.S. Senate Energy and Natural Resources Committee will likely vote this week to approve the pipeline. The bill under consideration is an attempt to sidestep the regulatory approval process, which critics say the Obama Administration has intentionally drawn out. The bill is unlikely to make it far in the Senate, due to general gridlock as well as the opposition of several key Senators.

The government of Canadian Prime Minister Stephen Harper is displeased with the Obama administration’s perceived stalling on the pipeline. Finance Minister Joe Oliver and Natural Resources Minister Greg Rickford have both criticized Obama, stating that continued delay of the pipeline is hurting the Canadian economy. Currently, crude from the Alberta oil sands is undervalued due to a transportation bottleneck, leading to lower prices. The Canadian Chamber of Congress estimates that this bottleneck is costing the Canadian economy as much as $50 million a day in lost revenue. Therein lies the contradiction at the heart of the dispute.

Environmental concerns and global warming have long been cited as the Obama administration’s reasons for drawing out the Keystone approval process. In reality, the economics of the pipeline are heavily skewed in Canada’s favor, to the possible detriment U.S. consumers. Keystone is the most visible manifestation of the long-term goal of Canadian energy companies to find markets outside the U.S. As the Wall Street Journal explains, and the Canadian Chamber of Commerce and Harper government freely admit, Keystone’s biggest benefit will be to Canadian oil producers, not American consumers. Keystone will enable them to export oil outside of the low-priced American market to higher-priced markets in Asia, Europe, and the developing world. Keeping Canadian crude from hitting world markets is in the best interests of the U.S., but not the Canadians. Of course, it’s not exactly kosher to say that out loud, considering that the United States is still getting about half its oil imports from Canada.

Given that, the “solution” to the Canadian oil price problem is probably going to be built entirely on Canadian soil. Oil companies are already developing a “Plan B” system of trans-Canada pipelines, should Keystone not be approved. Even so, the long-term viability of the Alberta oil sands depends on a relatively high minimum price floor. The highly adulterated quality of that oil, and the resulting expense of processing and refining it, means that Albertan production can only be profitable when the price of oil is relatively high.  This reason combined with new technology is the explanation for why Canadian tar sands haven’t been highly productive until recently. A worldwide decline in the price of oil, such as what happened in the 1980s and 1990s, could still be devastating to tar sands production.

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Gasoline Power To Dominate U.S. Highways Through 2040 Fri, 20 Dec 2013 13:30:56 +0000 2014 Chevrolet Corvette Stingray

The green warriors who hoped EVs and hybrids would be the dominate force on the highways of America may need to wait a bit longer: the United States Department of Energy predicts gasoline will be the fuel of a generation until at least 2040.

In fact, the DOE’s Energy Information Administration states in a report issued earlier this week that 78 percent of all vehicles on the road in 2040 will still burn fossil fuels, though more efficiently; the EIA predicts an average of 37.2 mpg at that point in time. While 42 percent of all vehicles will use some form of advanced fuel-saving technology, plug-in hybrids and full EVs will each account for only 1 percent of sales.

As for the pump, the EIA believes a gallon of gas will rise to the equivalent of $3.90, with diesel tagged for $4.73. The agency also predicts 30 percent increase in miles traveled from 2012 through 2040, and overall fuel consumption in the nation’s transportation sector to fall by 4 percent.

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The 1973 Oil Crisis: 40 Years Later Mon, 21 Oct 2013 16:00:03 +0000 Landscape

Forty years ago this month, the Organization of Arab Petroleum Exporting Countries (consisting of OPEC’s Arab members plus Egypt, Syria and Tunisia) began an oil embargo that would last through March of 1974.

The cause of the embargo: Intervention. During the Yom Kippur War between Egypt and Syria versus Israel, other Arab nations had lent their support to their brothers in northern Africa (as well as the Soviet Union, who supplied weapons). In turn, the United States helped their ally (who had gone on full nuclear alert) by supplying arms and other goods through President Richard Nixon’s authorization of Operation Nickle Grass. This prompted OAPEC to respond by beginning an oil embargo whose effects still linger to this day.

In the United States — the main target of the embargo –this led to long lines at the pumps during the weekdays (after a suggestion by Nixon that gas station owners voluntarily not sell fuel on Saturday night and Sunday; 90 percent complied with the suggestion), odd-even fuel rationing, three-color flag systems denoting availability (or lack thereof) of any fuel, and the passing of the Emergency Highway Energy Conservation Act, better known as the act that would set the national speed limit at 55 mph for the next two decades.

Though the first oil crisis would end when OAPEC accepted the promise of a settlement negotiated between Syria and Israel through the United States, the effects of the five-month-long embargo would linger for the rest of the decade and beyond.

Prior to the embargo, the most popular cars sold were large and in charge with big V8s to pull them along the highway. After the shock, however, most motorists sought out smaller, more fuel efficient offerings from Europe and Japan. The shock also gave birth to compact trucks, such as the Chevrolet LUV and Toyota Hilux, and prompted the Big Three to offer their own import fighters prior to downsizing their entire lineup of cars by the end of the 1970s, and the switch to front-wheel drive that would come to dominate the 1980s.

The shock also affected motorsports, with the cancellation of both the 24 Hours of Daytona and the 12 Hours of Sebring in 1974, and NASCAR reducing all race distances by 10 percent.

And of course, the 1973 oil crisis set off the movement to find as many energy sources as possible (and ways to conserve said energy) to reduce if not outright eliminate dependence on foreign oil, as any Albertan or North Dakotan could explain in detail today to anyone who will listen.

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Gas Will Get Cheap And Plentiful – That Other Gas Causes A Glut Thu, 24 Jan 2013 19:28:05 +0000

Reuters has a highly interesting oil and gasoline story. If you are one of the “peak oil” types
, you may not want to hear it. As a matter of fact, it could shake your belief system so much that you scream “BIASSSSSSSS.” As a service to all our readers, we give you a chance to stop before it gets ugly.

So much money is made to convert crude oil in to motor fuels, that power and industry can’t afford it, making power and industry switch to other fuels, mostly gas. Motor fuels however is a low growth industry. What’s more, it could also easily switch to natural gas. The effect is an oil glut.

  • BP predicts a worldwide oil demand growth of just 0.8 percent a year up to 2030 – slower than for any other energy type and only half the projected total energy demand growth rate over the same period.
  • Transport is slow growing as cars are getting more efficient. BP’s Outlook 2030 study shows the fuel economy of new cars in the United States and China falling well below 5 liters per 100 kilometer by 2030 from between 7 and 8 now.
  • In OECD countries, transport fuel demand is set to actually fall as weak economies, a shift to smaller cars, and a move onto public transport in congested urban areas take a further toll.
  • Worldwide, gas, biofuels and other alternatives are expected to steal almost a third of what growth there might be.

Gas is already approaching a similar overall market share to oil in the world’s energy mix. Liquefied natural gas (LNG) already is a viable transport fuel, and oil executives are starting to see a point at which familiarity and availability could tip the balance away from diesel and gasoline.  Big oil players are already heavily invested in LNG.

LNG is expected to replace diesel in trucks and buses, ships, even airplanes first, before it makes a difference in private cars some decades away.

LNG-powered ships are already a reality. The first commercial gas-powered civil aircraft flight left Doha for London on Jan. 9 this year, fueled by jet fuel made from gas.


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Oregon Considers Per-Mile Tax On Fuel-Efficient Vehicles Fri, 04 Jan 2013 15:51:38 +0000

“Everybody uses the road and if some pay and some don’t then that’s an unfair situation that’s got to be resolved,” said Jim Whitty, manager of the Oregon Department of Transportation’s Office of Innovative Partnerships and Alternative Funding.

Ah, yes. As with any number of current governmental activities, the rationale for per-mile taxation will be fairness.

With the recent American election safely delivered into the appropriate hands, there’s no longer any need to sugar-coat the facts of life in the United States, is there? So let’s not. The unemployment rate is dipping because many people have simply given up and have either stopped looking for work or have dropped off the five-year cliff beyond which the Bureau of Labor no longer considers people unemployed – as if being unable to find a job for five years and one day was somehow equivalent to swanning one’s way off to Sun City, AZ. Meanwhile, we’re reassured that the middle class hasn’t disappeared — it just looks like the lower class now.

This modern life, this grey parade of single mothers and hopeless, underemployed men listlessly piloting the oldest automotive fleet in the country’s history between 29-hour-a-week “part-time” jobs, dismal food, and lonely evenings lit only by the constant flickering of the Internet as the one-percenters and rich kids of Instagram breeze past in an ever more obscene panoply of tasteless, pumped-up hyper-SUVs and bluff-faced, BMW-based Rolls-Royces. It’s not just bad for morale. It’s bad for taxes. And if some of the nation’s proles have the nerve to swing a loan for a more fuel-efficient car in the hopes of simultaneously preserving scarce resources and making a long-term positive economic impact in their own lives… well, something will have to be done.

The Statesman-Journal reports that Oregon has started a pilot program to study the implementation of a per-mile travel charge. This was apparently done in response to stricter CAFE standards and concerns that a smaller fleet of more fuel-efficient vehicles would impact gas taxes, which are already declining as more and more people just stay home.

Under the pilot, about 50 participants in Oregon paid 1.56 cents per mile and received a credit for the gas tax they paid at the pump. Participants, which mainly included transportation officials and lawmakers, chose from five plans with different ways to track miles driven and pay their bill.

They could report miles driven using a smartphone application, a geographic positioning system device or a reporting device without GPS.

Participants could also pay a flat annual charge or opt out of using a gadget in the vehicle to record miles.

The existing state gas tax is thirty cents per gallon, so this program would effectively return revenues to the days when the notoriously thirsty Ford Explorer was simultaneously doing 400,000 units or more a year and punishing the buyer of each one with real-world fuel mileage in the 15-mpg range. If you’re wearing a tinfoil hat right now, you’ve no doubt considered a likely implementation scenario where the flat fee will be based on a very high annual mileage and payable in a high-three-figure lump sum, while the privacy-eroding GPS-tracking device will be easy to use and the most affordable choice.

Insofar as this program deliberately encourages people to hold on to older, less fuel-efficient vehicles, the Obama administration will surely have an opinion on Oregon’s antics. The state’s famously liberal urban residents might also have a strong opinion about a program that seems targeted at electric and plug-in vehicles. One question perhaps not covered in the pilot program is this: If a young man lets a pair of valets put two hundred miles on his father’s vintage Ferrari, will running it in reverse on a pair of jackstands result in a tax refund?

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Peak Oil, Meet Plateauing Demand Mon, 08 Oct 2012 15:17:22 +0000

TTAC is no stranger to the topic of Peak Oil, but the theory has fallen by the wayside with the recent explosion in unconventional oil and gas. A study by the British think tank Chatham House argues that the biggest issue facing oil and gas producers in the coming century isn’t Peak Oil, but Peak Demand (summary here).

The crux of Chatham House’s argument rests on the reformation of the transportation industry – a desire for fuel-efficient automobiles, the expanding use of biofuels and government regulation mandating reduced carbon emissions has all led to a slackening demand for oil.

Those factors, combined with the rise in “unconventional” supplies, like shale gas could have drastic effects on the oil and gas industry. In 2009, 95 percent of energy used in the global transportation sector came from petroleum. In 2030, Chatham House estimates this number could be as low as 60 percent. One interesting component of this actually comes from China. Chatham House argues that because their fueling infrastructure isn’t so tied into “legacy” fuels like gasoline, there is significant potential for them to be on the leading edge of alternative fuel adoption.

The report cites the increasing adoption of fuel-efficient vehicles like hybrids, Generation Y’s reluctance to drive cars and the potential for CNG powered automobiles as some of the largest drivers of peak demand phenomenon. Among the unintended consequences of reduced driving would be a significant drop off in tax revenues for municipalities that levy a gas tax. Reduced sales of fuel would naturally reduce revenues.

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Ask An Engineer: Natural Gas For Dummies Wed, 27 Jun 2012 15:49:48 +0000

Westport Innovations has just signed a second deal with General Motors to produce light duty natural gas engines, and it’s probably not the last time we’ll be seeing these kind of partnerships forming. Natural gas vehicles have been explored previously on TTAC, but the technology hasn’t been fully explored in-depth, aside from some well-informed comments in various articles.

As a fuel for vehicles (light duty as well as commercial vehicles), natural gas has a number of attributes which fit well with our current political narratives and economic realities

  1. Natural gas is 30-50% cheaper than diesel per unit of energy
  2. Abundant domestic supply
  3. Environmental benefits (lower GHG and tailpipe emissions)
  4. Significant reduction in CO2, CO, UHC, NOx, SOx and PM emissions versus conventional gasoline and diesel engines.

Natural gas can be used across the full spectrum of spark ignition (gasoline type) and compression ignition (diesel type) engines with the appropriate enabling technologies. While spark ignition natural gas engines have been available for quite some time (such as the NG powered Honda Civic), compression ignition natural gas engines have required further development. The difficulty is that while natural gas burns cleanly, it is less likely to auto-ignite (octane rating of 120-130), unlike diesel, which has a lower octane number. This quality of natural gas is advantageous for a spark ignition engine as it prevents detonation and allows for higher compression ratios, but makes it detrimental for a compression ignition engine.

Westport has devised a dual-fuel direct injection system to enable natural gas substitution in a compression ignition engine. The fuel injector at the heart of this system is able to inject both liquid diesel and gaseous natural gas in precisely metered quantities directly into the cylinder. In this system, the diesel fuel ignites as a result of compression as it would in a regular diesel engine. The combusting diesel fuel initiates the natural gas combustion. 93-95% diesel substitution is achievable according to public documentation. This innovation is directed at the heavy-duty diesel market which includes everything from transport trucks to locomotives.

One of the main criticisms is the lack of infrastructure surrounding natural gas. Compressed natural gas (CNG) is easier to store and transport than liquefied natural gas (LNG) so it is the optimal choice for light duty applications. LNG has a greater volumetric energy density but is more expensive to store, transport and ultimately use in a vehicle as it must be kept cold and pressurized to remain a liquid.

Vehicles like the Civic Natural Gas have a reduced range relative to a gasoline Civic, but commercial vehicles, like transport trucks, are emerging as one of the prime candidates for natural gas engines. Large transport trucks are a significant contributor to green house gas emissions and are on the road enough to make the conversion cost effective – though LNG, rather than CNG, would be the fuel of choice. A relatively small number of LNG filling stations placed along major transport corridors could meet their fueling needs and present a great way to thoroughly evaluate the technology. Less complex CNG stations could be added if the decision was made to target light duty vehicles.

Going “all in” on CNG/LNG is a little premature at this point, but the adoption of natural gas as a transport fuel is a good first step in reducing our emissions while other alternative technologies reach maturity. More in-depth discussion is always welcome in the comments.

“Ask an Engineer” is hosted by Andrew Bell, a mechanical engineer and car enthusiast. Andrew has his MASc in Mechanical Engineering from the University of Toronto, and has worked on Formula SAE teams, as well as alternative fuel technologies in Denmark and Canada. Andrew’s column will explore engineering topics in the most accessible manner possible.

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Hertz To Rent CNG Vehicles, Pilot Program Begins In May Thu, 12 Apr 2012 12:09:02 +0000  

If you’re traveling to Oklahoma City any time soon, Herz will give you the option of renting a Honda Civic or GMC Yukon that runs on Compressed Natural Gas.

Renters will be able to select from one of eight Honda Civics or two GMC Yukons that use CNG. The vehicles will have a Hertz Neverlost GPS System on-board that will assist with locating a CNG refueling station.

Oklahoma may be “flyover country” for coastal greenie types, but OKC is home to big natural gas producers, including Chesapeake Energy Corporation. The state also has 70 CNG stations that are already in use or about to come online. Launching a pilot project here is akin to launching an all-E85 fleet in Iowa. Hertz is, of course, playing up both the green angle and the fact that CNG is a domestically produced fuel.

Hertz already rents CNG vehicles in Italy and the UK, and CNG cars can be rented at a Hertz outlet at Oklahoma State University, but this marks the first time that the company has offered CNG cars at an airport location.

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Shell Can’t Pay Billion Dollar Oil Bill To Iran Sun, 25 Mar 2012 16:08:41 +0000


In the nice problem to have department, Shell is doing its very best (or so they say) to settle a $1 billion bill for about four large tanker loads of Iranian crude. The problem: Sanctions make payments to Iran hard if not impossible.

“Shell is working hard to figure out a way to pay. It’s very sensitive and very difficult. They want to stay on good terms with Iran, while abiding by sanctions,” a source told Reuters.

Shell was one of Iran’s top clients, along with France’s Total and Turkey’s Tupras. After sanctions on Iranian oil were declared, companies have until July 1 to take last deliveries of oil. Payment however is a whole different matter.

“It is now nearly impossible to use the banking system,” an oilman told Reuters. Payments had been hard for a while. Dubai banks used to be able to facilitate payment in and out of Iran, but this has stopped following pressure from Washington.

Isn’t this a problem we all would like to have?

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Will Natural Gas Prevent Us From Reaching A Better Place? Thu, 08 Mar 2012 16:56:18 +0000

A brief piece in the Wall Street Journal’s “Dealbook” discussed the potential of natural gas powered vehicles, largely as a way to stop falling prices for natural gas.

One hope for many natural gas producers reeling from collapsing prices is wider adoption of natural-gas-powered cars.

The biggest hurdle so far: lack of infrastructure to refuel them.

But Steven Mueller, CEO of Southwestern Energy, says if 10% of passenger cars were powered by natural gas, gasoline prices would fall by $1.60/gallon and gas producers would get 4 billion cubic feet/day in demand.

The global supply of natural gas is way up, thanks to shale deposits in the United States and other locales. Currently, the Honda Civic GX is the best-known CNG vehicle on sale currently. Buses, taxis and other commercial vehicles have been running on CNG for years, but Dodge is set to introduce a Ram Tradesman that can run on CNG – other work trucks have been converted to run on natural gas by their owners (at significant expense), but this looks to be one of the first OEM-engineered work trucks with this capability.

An NPR report (sponsored by a natural gas lobby group) touched on President Obama’s visit to a big rig factory, some of which were powered by natural gas. Obama proposed – you guessed it - tax incentives for alternative fuel vehicles, including natural gas. Natural gas vehicles aren’t that popular around the world, but have a certain following – Brazilian Fiat Siena taxicabs, LPG powered Volvos and the famous Panther platform Crown Vics and Town Cars that serve as taxi and livery cars in Toronto all exist, albeit in very small numbers.

Natural gas could potentially be a “black swan event” for the auto industry, a cheap, clean-burning fuel that could allow for both domestic energy independence and the continued hegemony of the internal combustion engine. Drivers wouldn’t have to worry about foreign oil, range anxiety or battery bricking.

The obvious problem is the lack of infrastructure. Natural gas filling stations are scant, to put it mildly. But there are rumblings (so far unsubstantiated – but keep watching TTAC for more info) that building filling stations, be it for hydrogen or other fuels, is easier and cheaper than trying to develop serious long-range, quick charging, sustainable and affordable battery technology. If this turns out to be true, then it suggests that electric cars will be forever relegated to “second car/commuter car” status.

A final note: Israel, home of Better Place and their battery swapping stations, is said to have enormous shale oil and gas deposits (so much for the joke about the Israelites wandering for 40 years and finding no oil). Aside from the obvious geopolitical implications, what kind of future would that leave for the Better Place program?


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Big Oil In The Crosshairs Of The German Government Tue, 24 May 2011 16:09:50 +0000

If you are a large company in Germany, there is no government agency that you fear more than the Bundeskartellamt. It’s the anti-monopoly police. Being audited by the Finanzamt, the German equivalent of the IRS, is considered paradise compared to being in the cross-hairs of the Monopol-Polizei. Europe’s large oil companies are in the cross hairs and are just about to be shot.

According to a three year study conducted by the agency, five large oil companies dictate the gasoline prices in Germany: Aral/BP, Shell, Jet, Esso and Total. Together, they hold 70 percent of the market and form a „market dominating oligopoly.”

Kay Weidner, speaker of the Kartellamt, confirmed to Auto Bild that the result of the study confirms “that there is such an oligopoly.”

The government agency does not allege price fixing – yet : „That is a different project,“ Weidner says ominously. According to the study, the big five have a price monitoring system. It makes price fixing superfluous. „Price fixing is against the law, copying prices is not,” said a manager of the oil industry.

Last month, a liter of super did cost €1.62, that’s $8.62 a gallon. There is pressure on the government to intervene, and the government seems to want to intervene.

Intervention begins at home: 57 percent of the price, that would be $4.91 a gallon, goes into the pockets of the German government as taxes.

Predictably, that was the answer of Big Oil: If the government wants lower prices, it should lower taxes, said Klaus Picard, Managing Director of the German Association of Mineral Oil Producers.


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German Buyer Strike Stops Ethanol Fri, 04 Mar 2011 08:51:00 +0000

German motorists won an important battle against ethanol. They used a downright un-German tactic: Widespread insurrection. They simply won’t buy the stuff. An edict handed down from Brussels ordered that Super has to contain 10 percent of ethanol. An alliance from Germany’s ADAC autoclub to Greenpeace said the new gasoline is a work of the devil, it is liable to ruin cars, and the environment. That didn’t impress Brussels.  But then, a buyer strike did set in.

Motorists in Germany shun the ethyl with ethanol and buy 98 Super Plus high-test instead, reports Das Autohaus from Germany. Refiners and gas stations are sitting on full tanks of unsold Super E10. On the other hand, there already are shortages of the more expensive, but also more energy-laden Super Plus.

Yesterday, gasoline companies pulled the emergency brake and declared that they would stop the roll-out of Super E10 in Germany. The pathetic petrol is only available in less than half of Germany’s gas stations.

Economy Minister Brüderle joined the fray and does what he does best: Run down the clock. He announced a “gasoline summit” where stakeholders should explain their position. No date has been set. At the summit, pretty much everybody will be against the bio-benzene: Customers don’t want it, auto clubs warn against it, environmentalists such as Greenpeace warn that the fuel will increase CO2 production. “E10 can ruin cars and the environment,” says Greenpeace.

The European Auto Maker Association ACEA is pouring gasoline in the fire by publishing compatibility lists that add to the widespread confusion.

Says the list: “It is important to note that the compatibility of vehicle with petrol depends both on the petrol octane rating and its ethanol content. The vehicle’s octane requirement must be met and the ethanol content of the petrol may not exceed the compatibility limit. In case of doubt, drivers are advised to contact their dealer.”

No wonder everybody avoids it like the devil the holy water.

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Alberta: EVs Could Kill Canada’s Oil Sand Mines, And Jobs Sat, 05 Feb 2011 12:57:44 +0000

Alberta is a province in Canada. A lot is agricultural, but what is much more important are the treasures beneath the soil. Alberta sits on more than 1.7 trillion barrels of bitumen, better known as oil sand. That’s about equal to the world’s total proven reserves of conventional petroleum. Canadians are troubled that EVs might ruin these riches.

Oil sand competes with electric vehicles in insidious ways: Electric vehicles are expensive. They only make sense when the oil price goes up. It costs money to extract the oil from the sands. The higher the price of oil, the more sense it makes to harvest the sands. At 2006 prices, 170 billion barrels were considered economically recoverable from the sticky sands. That put Canada’s oil reserves in second place behind Saudi Arabia. However, it represents only 10 percent of what’s there. The people of Alberta should be as interested in higher oil prices as the proponents of EVs, one would think: The higher the price, the more sand can be turned into oil. Instead, the people of Alberta are getting very nervous.

“Electric cars could make driving cheaper and cleaner, but also could put some Albertans out of work,” worries the St. Albert Gazette. “Cars are a major source of greenhouse gas emissions. Electric cars could take care of those emissions, but what would that do to the demand for Alberta oil?”

The Albertans are one step ahead of us. Instead of getting anxious about vanishing oil reserves, they get apprehensive about a sinking demand by a wide adoption of EVs. Which would put Alberta out of business. They still remember the 80s when oil became cheap and most of their mines closed. They became rich again by the middle of the last decade. Now, Canada is the largest foreign source of oil for the United States, supplying nearly a million barrels a day from oil sand, says the Gazette. Checking data by the U.S. Department of Energy, the number makes sense. However, it also makes sense to say that Canada only supplied 22 percent of the imported oil in one of the last months of 2010.

Be it as it may, reading the papers about the success of EVs, Albertans are worried about a bust cycle. People did what people do when they don’t know what to do: They assembled a panel of experts.  The panel will first meet next Tuesday in Edmonton.

Talk organizer and St. Albert resident Perry Kinkaide already sees a new boom ahead for Alberta: It could mean a new auto industry in Alberta, he suggests, as oil companies shift from using oil as fuel to oil as a starting product for lightweight electric car parts. “In the old days you needed to be near steel. In the new days, you may need to be where the oil is.” Comforting thoughts – for Albertans.

Axel Meisen, chair of foresight at Albert Innovates Technology Futures, toots in the same vuvuzela: “Alberta should think of other uses for petroleum than for fuel, such as carbon fiber. This light, strong material will be popular in electric cars, and could see use in bridges and other buildings.”

Al Cormier, the talk’s facilitator and executive director of Electric Mobility Canada, a national industry group that promotes electric vehicles, also sees no reason for alarm. EVs surely are the wave of the future and will lower the demand for oil, but “assembling an electric vehicle probably takes just as long as assembling a regular vehicle,” Cormier says, and he does not expect any job losses there. If the cars are assembled in Alberta.

The proceedings of the panel’s meetings will be available at

Now here comes an heretic thought: If EVs  indeed become wildly successful and kill the demand for oil so much that Alberta will have to close oil sand mines and take to assembling electric motors and plastic parts, does that mean that us Luddites can drive down to the gas station and say “Fill ‘er up” for, say, $1.80 a gallon?

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Reduced Ethanol Blender’s Credit Headed For Senate Vote Fri, 03 Dec 2010 18:38:37 +0000

It seems that yesterday’s optimism about a possible end to the ethanol “Blender’s Credit” may have been somewhat premature, as Senate Budget Committee chair Max Baucus has now proposed extending the 45 cents per gallon tax credit at the lower rate of 36 cents per gallon. The ethanol industry has expressed disappointment, but says it will accept the proposal. Which, given the fact that the Blender’s Credit is opposed by groups as diverse as Friends Of The Earth and FreedomWorks, seems like the reasonable step. And because the 36 cent per gallon extension is only good for a year, even if it is approved, this battle will rage on.

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Japan Trades Wastewater For Oil Sun, 19 Sep 2010 11:09:50 +0000

Oil and water supposedly don’t mix. Like a lot of conventional wisdom, this one is totally bogus. Without water, we wouldn’t have any oil. What do you think is in a supertanker when it goes back empty to Saudi Arabia or Prudhoe Bay? Water. It’s needed for ballast. Without it, the tanker would just pop out of the — water. About 60 million barrels of ballast water is shipped around the globe and is thrown away each day. Now, the Japanese have a better idea: They want to ship waste-water to oil-producing countries in the Middle East, and exchange it for crude oil. Say what?

Currently, sea water is being used as ballast. According to The Nikkei [sub], Japan’s Ministry of Economy, Trade and Industry wants to load waste-water on empty tankers and then bring back crude oil on the return trips. They are in talks with Qatar about that.

Why ship waste-water around the globe? While we are worried about peak oil, water shortages are becoming serious in the Middle East. Japan exported freshwater on trial base to Qatar from last summer to the beginning of this year. But at $0.16 to $0.31 per barrel of fresh water, the matter became too expensive. Now shipping something the Japanese would have had to clean and process anyway is a whole different matter. What’s more, there is a whole ballast water science. Can’t just fill the oil tank with it and pump it back  in the sea. You need to be careful about infesting other seas with critters at home abroad. The ballast water science is getting so complicated that one might as well use the water for something else than dumping it in the sea.

The Nikkei is quiet about what Qatar will do with the dirty water. They could use it for industrial production. Or they could process it in Qatar with cheaper energy and – yuck – drink it.

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The Truth About EVs: They Will Be Nuclear Powered Wed, 09 Jun 2010 12:57:48 +0000

“I want to make nuclear power generation ‘visible’ through electric vehicles,” says Takafumi Anegawa, a former nuclear engineer who works for Tokyo Electric Power Co.  He thinks that “electric cars are the best tool to help people understand the importance of nuclear power,” reports The Nikkei [sub].

Anegawa heads up  the CHAdeMo Association. With 236 member firms and organizations, the group aims to promote the installation of electric vehicle chargers. The group’s suggestions stand a good chance to make a method of electrical charging developed in Japan the global standard via the ECE.

Anegawa was one of the first promoters of electrical cars – to promote nuclear energy.

“Every time there is a problem at a nuclear power plant, people see nuclear power generation as something bad,” Anegawa said. He thought electric vehicles could change people’s perceptions.

People with green leanings may not want to hear it, but pretty much the only sensible way to produce the power needed to charge masses of electric vehicles would be nuclear. Burning fossil fuels simply moves the exhaust from the car to power plant chimneys. Hydro-electric, solar, or wind powered? Dream on.

In many countries of the world, there had been a moratorium on nuclear power. No new nuclear power plants had been built in the U.S.A. since the 1970s. In February 2010, the two new nuclear power plants had been approved, the first in 30 years. In Germany, building of new nuclear plants had been against the law for years, and Germany wanted to be nuclear-free by 2021. Now, nuclear power looks more and more like it’s here to stay.

Broad acceptance of electric cars, combined with what is happening off the coast of Louisiana, could very well become the impetus for a resurgence of nuclear power.

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Peugeot Goes Dddde Extra Kilometre Wed, 10 Mar 2010 12:40:58 +0000

The U.S. has its hypermiling. Europe has its hyperkilometreing. In a European orderly fashion, of course. Germany has its Sprit-Spar-Meisterschaft, formerly sponsored and dominated by Volkswagen, now sponsored and dominated by Toyota. France has the Peugeot Eco Cup.

This is a competition in which different Peugeot (surprise, surprise) models are driven by everyday drivers to see if they can meet or beat official fuel consumption figures. The cars were driven 1000km on French and Swiss roads in wintery conditions (that must have been a picturesque drive). The results of the 2010 Peugeot Eco Cup are in (via The Auto Channel).

The Peugeot 308 (which is the size of a Ford Focus or Toyota Corolla) achieved an impressive 89.95mpg. In close second was the model down from the 308, the 207 which got 87.10mpg. The third and fourth positions were the biggest surprises. The Peugeot 5008 (which came third) 84.77mpg and the Peugeot 3008 (which came fourth) got 79.10mpg. Both of these cars are big CUV’s. But these figures are small in comparison to the mpg figures which John and Helen Taylor from the UK got in their Peugeot 308. They achieved a world record breaking 126mpg.

Naturally, Peugeot wanted to extol the virtues of these figures, and Jon Goodman, MD of Peugeot UK did just that by saying “This project has proven two things; that there are a lot of people out there interested in doing their bit for the planet by stretching fuel economy to the max; and that this can be achieved in standard Peugeot … cars”

You may notice I’ve deleted a certain word from the quote. In case you are wondering, it starts with a “D” and ends in an “iesel.” All of these cars which achieved very good mpg figures all ran on diesel, that fuel which the U.S. isn’t overly keen on. And now that PSA and Mitsubishi aren’t tying up, there’s probably very little chance of them going stateside. For the history buffs: During the VW regime, the Sprit-Spar-Meisterschaft was always won in a Diesel. After Toyota took over in 2009, the winner’s car remained a closely guarded secret. All we know is that Klaus Wolter, the 2009 Sprit-Spar-Champ, received a Prius as a first prize. How he won it seems to be under NDA.

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Travel Advisory: Avoid Europe Mon, 22 Feb 2010 11:45:32 +0000

You don’t want to be traveling in or to Europe these days. In Germany, Lufthansa’s pilots went on strike this morning, grounding 3200 planes. “The largest strike in the history of German aviation” (Die Welt) paralyzed German air traffic, and caused jams on the ground as travelers switched from planes to trains and automobiles.

Meanwhile next door in France, a nation is running out of gas. Workers at the six refineries owned by the country’s biggest oil group, Total, have been striking for more than a month. The work stoppage threatens to spread “to the two French oil refineries owned by US group Exxon Mobil, where strikes are planned for Tuesday,” reports the BBC.

“The government will take measures to ensure that France will not be locked down,” Industry Minister Christian Estrosi said in a radio interview, without elaborating on how they will do that.

Setting the law of supply and demand on its head, the strike in France is being blamed for the fact that “oil prices topped 80 dollars a barrel on Monday as a strike at French energy giant Total rattled the market,” AFP says. Ah, there are also “concerns over Iran’s nuclear program.”

Let’s just hope that striking refinery workers in France will not resort to the ancient tradition to blow up their factory. It could really be – inflammatory.

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Hong Kong Battles Strange Ghosts In A Bottle Mon, 15 Feb 2010 14:07:43 +0000

While the world is trying to come to grips with pedal-gate, tiny Hong Kong is attempting an exorcism of its own gremlins: 18,000 (mostly Toyota Crown) taxis and 2,000 minibuses are propelled by LPG, liquefied petroleum gas. The gas is lugged around in a large tank housed in the trunk of the taxis, much to the chagrin of suitcase-schlepping tourists. The real problem is: The LPG mobiles are breaking down in wholesale fashion, China Daily reports. Hundreds a month.

The Hong Kong government set up a special task force to investigate. Nobody is blaming Toyota – this time.

Enraged taxi drivers point fingers at Sinopec, the mostly state-owned Chinese energy giant, which owns seven of the 12 dedicated LPG stations in Hong Kong. The drivers say, the Chinese gas is contaminated. The drivers boycotted Sinopec. The rivaling stations promptly ran out of gas.

Sinopec did react no different than car companies that are faced with unexplained ghosts. Sinopec pointed their fingers right back at the drivers and said they don’t maintain their vehicles properly.

Sinopec did their own testing of the gas, and found no problems. In the meantime, the Hong Kong government took samples and sent them to an independent laboratory in Germany for testing. Final results will be announced next week.

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Is A Gas Tax Hike Coming? Mon, 07 Dec 2009 20:18:26 +0000 Just stop talking about pay-per-mile! (

Ray LaHood seems to think so. He tells the Dallas-Fort Worth Star-Telegram:

The problem we have is, Congress wants to pass a very robust transportation bill in the neighborhood of $400 billion or $500 billion, and we know the highway trust fund is just deficient in its ability to fund those kinds of projects. The highway trust fund was substantial at one time but now with people driving less, and driving more fuel-efficient cars, it has become deficient. To index the federal fuel tax, that’s something Congress is going to have to decide. As we get into the reauthorization bill, the debate will be how we fund all the things we want to do. You can raise a lot of money with tolling. Another means of funding can be the infrastructural bank. You can sell bonds and set aside money for big projects, multibillion-dollar projects. Another way is (charging a fee to motorists for) vehicle miles traveled. The idea of indexing the taxes that are collected at the gas pump is something I believe Congress will debate. When the gas tax was raised in 1992 or 1993, in the Clinton administration, there was a big debate whether it should be indexed. At that time, they thought there’d be a sufficient amount of money collected. Now we know that isn’t the case. That is one way to keep up with the decline in driving, and more fuel-efficient cars.

LaHood stopped short of explicitly endorsing a gas tax hike, but he said it’s an issue that congress will have to take the lead on. And if it comes to a debate, let’s hope that indexing the gas tax for annual increases wins out. After all, LaHood has made it clear that he favors a pay-per-mile scheme which would require placing GPS tracking devices in all vehicles. Moreover, steady increases in the gas tax would accelerate consumer demand for fuel-efficient vehicles, actually helping automakers reduce their fleet average fuel economy numbers in a more organic fashion that CAFE mandates. The idea of indexing fuel taxes is said to be gaining support among transport policy analysts. In light of the threat posed by pay-per-mile, we’ll call that a good thing.

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Hyundai Offers $1.49/gallon Gas Guarantee Tue, 30 Jun 2009 15:27:32 +0000

Fresh off its widely-copied “Assurance Program,” Hyundai is reaching into its bag of tricks for a new gimmick. And found inspiration in Chrysler’s 2008 gas-price guarantee promotion. Automotive News [sub] reports that Hyundai will offer customers who buy or lease a new Hyundai between July 1 and August 31 the opportunity to lock in a $1.49 per gallon price for gasoline for one year or 12,000 miles. According to research publicized by Hyundai North American President John Krafic, “40 percent of potential new car buyers were staying on the sidelines due to uncertainty over gas prices.” But Chrysler’s promotion didn’t save the farm a year ago when gas price anxiety was at an all-time high. After all, at three dollars a gallon, the estimated savings on a base, four-pot Sonata aren’t likely to top $725. Has Hyundai’s success at selling cars based on America’s insecurities peaked?

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E85 Boondoggle of the Day: Water, Water, Everywhere Tue, 14 Apr 2009 13:38:35 +0000

Two recent developments have tarnished whatever green reputation ethanol has left. First, the news that corn-derived ethanol requires up to three times more water to produce than previously thought has cast a spotlight on the industry, especially in the dry west and southwest. A new study published by the American Chemical Society reports that previous estimates of water used to produce ethanol are inaccurate. The article’s abstract:

Prior studies have estimated that a liter of bioethanol requires 263−784 L of water from corn farm to fuel pump, but these estimates have failed to account for the widely varied regional irrigation practices. By using regional time-series agricultural and ethanol production data in the U.S., this paper estimates the state-level field-to-pump water requirement of bioethanol across the nation. The results indicate that bioethanol’s water requirements can range from 5 to 2138 L per liter of ethanol depending on regional irrigation practices. The results also show that as the ethanol industry expands to areas that apply more irrigated water than others, consumptive water appropriation by bioethanol in the U.S. has increased 246% from 1.9 to 6.1 trillion liters between 2005 and 2008, whereas U.S. bioethanol production has increased only 133% from 15 to 34 billion liters during the same period. The results highlight the need to take regional specifics into account when implementing biofuel mandates.

A common theme in the adoption of green practices is sustainability. As the authors state, the onus on the mandate-makers will be to determine if the the true cost of ethanol is worth more than the water used to produce it. In California, water is liquid gold.

For now, this may all be for naught. The second development is a one-two punch to the ethanol industry: the collapse of fuel consumption and the evaporation of business credit have left scores of ethanol plants high and dry. Sacramento-based Pacific Ethanol—who built three plants in three states and were once the darling of the industry, attracting investment from Bill Gates and the former Secretary of State of California—recently defaulted on a $250 million loan. Gates has dumped most of his shares which now trade at less than fifty cents on NASDAQ; and, in a further blow, rising corn prices threaten to squeeze what margin they have.

In an ironic twist, Big Ethanol’s savior may come in the form of Big Oil. The New York Times reports that Valero, the country’s largest independent refiner, is paying nearly $500 million for seven VeraSun ethanol plants. VeraSun filed for bankruptcy protection last fall. “It’s a good deal for Valero because they have to have ethanol in their blend mandated by the federal government,” said an energy analyst. “Ethanol is still a lousy business, but if you can buy the plants for cents on the dollar, it looks a lot better as Washington is likely to keep mandated production targets.”

Chevron (and Exxon), at 13+ times the capitalization of Valero, is sitting on a hoard of cash accumulated in the epic run up of oil on the markets. They can (and will) wait for more ethanol start ups to die off and, like pigs, gorge themselves on corn.

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Gas Prices Party Like It’s 1999 Mon, 22 Dec 2008 17:43:17 +0000 Don’t worry. The economy won’t hurt you. It just wants you to have some fun. To prove it, the price of gas continues to fall, now averaging $1.66/gallon according to USA Today. Officially, the last time prices were this low was in 2004, and prices are still dropping after hitting an all-time high this June at $4.11/gallon. The government’s weekly gas and fuel price update shows prices are at their lowest in the Gulf Coast and Rocky Mountain regions. Diesel prices are falling as well, hitting a national average of $2.42/gallon. Help keep downward pressure on fuel prices by finding the lowest local prices (with help from your federal government) here. And if you’ve got a dime you can listen to your V8 tonight. Freaky!

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Won’t Anyone Buy Some Oil? Thu, 18 Dec 2008 17:48:01 +0000 OPEC’s threatened 2 million barrel/day output cut has done nothing to halt oil’s collapse. The AP reports that Wednesday’s futures market dipped below $40/barrel for the first time since 2004. Markets are spooked by the realization that even mighty China is in a world of growth hurt at the same time as an unprecedented continued fall in US demand. US “demand for gasoline over the four weeks ended Dec. 12 was 2.7 percent lower than a year earlier.” “‘There’s just so much oil in inventory out there right now,’ said Michael Lynch, president of Strategic Energy & Economic Research. ‘Nobody wants to buy this stuff.’”

The demand collapse continues even though this year’s Dec. 8 retail price was $1.699/gallon, down 44% from last year’s $3.038. Watch out below, $1/gallon here we come since the wholesale gasoline futures market has January delivery gasoline at $1.0055. Retail prices slightly higher, your mileage may vary, see local dealer for details. Hmmm, it might be time for one last big road trip.

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OPEC Slashes Production; Crude Continues to Tumble Fri, 24 Oct 2008 19:44:43 +0000 The AP reports on the ongoing oil price collapse. “OPEC said at an emergency meeting Friday that it will slash oil production by 1.5 million barrels to stem the ‘dramatic collapse’ of oil prices, but crude prices plunged 7 percent anyway as financial markets spiraled downward across the globe.” In the face of OPEC’s proclamation, oil opening below $64/barrel this morning; down over half from the $140 highs of just a few short months ago. Even with the growth in China, India and the rest of Asia, the US still consumes a fourth of the world’s oil burn, and “U.S. demand is down nearly 10 percent during the past four weeks year on year.”   OPEC hopes to talk Russia into playing along with a supply squeeze, but Russia has problems of it’s own and typically goes her own way on these matters. Other oil producers are singing the blues (’cause they never thought they’d lose). “Iran, Venezuela and other OPEC members having suggested that for them, selling oil under $80 was a loss-maker, and Iraq on Thursday said it would have to rethink next year’s national budget if prices remain under that level.”  OPEC’s El-Badri is unsympathetic: “OPEC cannot bail out the problems of others.”  Words to live by.

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