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.

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?

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?

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.

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.

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 www.abctech.ca.

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?

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.

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.

“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.

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.

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.

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.

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.

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?

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.

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.

The Wall Street Journal is calling attention to the massive cash piles sitting around the offices of big oil re: falling stock prices. The solution to this problem? “Mr. Flannery argues that Big Oil will need to put cash into acquisitions to restore the battered share prices.” ExxonMobil alone is sitting on $39b despite buying back its own stock at a rate of $8b per quarter (it’s repurchased $218b of its shares over the past several years). General Motors’ total market capitalization of under $5b, and falling, makes it a target. OK, they have a few liability “issues.” But what’s good for GM is good for ExxonMobil. By deferring two months of its own stock buy backs ExxonMobil could gobble-up the world’s once and future king of cars. Think of the synergy! From exploration through production, marketing and finally right out the tailpipe; a truly global and integrated oil monster. Chevron, never one to be outdone by its sister company (both were once part of Standard Oil), is said to be eyeing Ford. With plunging demand dragging oil prices from $140 per barrel down to around $90, something must be done! Or not.