The Truth About Cars » peak oil The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 24 Jul 2014 17:47:59 +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 » peak oil 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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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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German Govt. Study Warns Of Dire Post Peak-Oil Crisis: End Of Free Markets And Democracy Thu, 09 Sep 2010 15:39:28 +0000

Here’s a cheery study on the effects of Peak Oil, which is widely considered to be happening…right about now (throw in a few more hours/months/years depending on how big of an optimist/denialist  you are). Der Spiegel got their hands on a confidential study commissioned by the German military, which has not yet been sanitized approved for publication. It’s a bit explosive…might get the civilian population riled up and all. It warns of shifts in the global balance of power, the decline of importance of western nations (oil importers), as well as “the total collapse of the markets” and…gulp…even worse. Let’s go talk about 1970 Boss 302 Mustangs. The study, by the aptly named Future Analysis Dpartment of the Bundeswehr Transformation Center, is not the only European Chicken Little:

“The (German) leak has parallels with recent reports from the UK. Only last week the Guardian newspaper reported that the British Department of Energy and Climate Change (DECC) is keeping documents secret which show the UK government is far more concerned about an impending supply crisis than it cares to admit.According to the Guardian, the DECC, the Bank of England and the British Ministry of Defence are working alongside industry representatives to develop a crisis plan to deal with possible shortfalls in energy supply. Inquiries made by Britain’s so-called peak oil workshops to energy experts have been seen by SPIEGEL ONLINE. A DECC spokeswoman sought to play down the process, telling the Guardian the enquiries were “routine” and had no political implications.”

The German report assumes that Peak Oil is happening while we argue this point endlessly, and that the effects will “be felt 15 to 30 years later”. Here are the key points:

  • Oil will determine power: The Bundeswehr Transformation Center writes that oil will become one decisive factor in determining the new landscape of international relations: “The relative importance of the oil-producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading powers.”
  • Increasing importance of oil exporters: For importers of oil more competition for resources will mean an increase in the number of nations competing for favor with oil-producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, “this could result in a more aggressive assertion of national interests on the part of the oil-producing nations.”
  • Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. “The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts,” the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. “Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the 1970s, will once again come to the fore.”
  • Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. “Shortages in the supply of vital goods could arise” as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. “In the medium term the global economic system and every market-oriented national economy would collapse.”
  • Relapse into planned economy: Since virtually all economic sectors rely heavily on oil, peak oil could lead to a “partial or complete failure of markets,” says the study. “A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis.”
  • Global chain reaction: “A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil,” says the study. “It is likely that a large number of states will not be in a position to make the necessary investments in time,” or with “sufficient magnitude.” If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it’s so tightly integrated into the global economy.

The article makes the following prediction: oil importers like Germany will increasingly suck up to exporters like Russia, Saudi Arabia and Iran regardless of the effects on other countries (Israel, Eastern European countries, etc.), or other once-important moral or social imperatives, like…never mind. Shall we talk about the Nissan Leaf instead of the Mustang?

Der Spiegel;

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The China Syndrome: 50 Million Cars A Year? Fri, 05 Feb 2010 10:50:10 +0000

Yesterday, we reported that China wants to be a market of 20m cars in 2012. We didn’t predict that, just reporting the news, ma’am.

A hue and cry ensued:  “Can’t be!”

Commentator ohsnapback, who’s forte is lawyering, a much more complex field than economics, prognosticated an immediate burst of the Chinese bubble, with a mega tonnage of more than 100 times of our housing bubble.  The argument was promptly defused. After all, China doesn’t borrow money. They lend it. Mostly to the U.S.

Then, commentator ra_pro rolled out the really big ordnance: “As I said many times previously: Demography is Chinese destiny as it is Japan’s.” If people would only stop prattling on about demographics, and would check their data first.

Kindly compare age distribution Japan 2020 with age distribution China 2020.

For a real shock, compare age distribution Japan 2050 with age distribution China 2050.

For added spice, factor in that the last Chinese census (it was taken in 2000 and never really finished) is considered as deeply flawed.

Conservative estimates say that around 200m people are living off the books in China, more than the whole population of Japan.

A huge chunk of children have not been reported at all, wrote Daniel M. Goodkind of the U.S. Census Bureau. A correct count of births is the lifeblood of demographic projections. If you miss more than a quarter of the children born in any given year, your projections will be off by 25 percent for generations to come.

Not to worry: If China has something in abundance, then it’s people.

The population bomb turning out as a dud, the sustainability squadron was launched: “There isn’t enough space, water, air or oil to sustain Chinese expansion of 20 million cars per year for a very long time,” quoth ra_pro.

Funny, when Americans bought 17m cars a year, where were the people who said “there isn’t enough space, water, air or oil to sustain expansion of 17 million cars per year for a very long time?” Actually, that number still is a wet dream in Detroit and DC. Our own Ed Niedermeyer pointed out in the New York Times: only if the “salad days of 2000″ are bested, the tax payer will ever have a chance to get his or her money back from GM. Dream on.

Now, for the really scary part. There are more than 800 cars per thousand people in the U.S., more cars than people with drivers’ licenses. In China, there are only some 76 cars per thousand in China. In most developed countries, the number is between 500 and 600 per thousand.

“They’ll never get there,” I hear someone say. “The poor farmers will ride bicycles and oxcarts forever.”

Not so fast.

In Poland 20 years ago, a car was something for the powerful party elite. Today (actually, by end of 2008) there are 420 cars per thousand in Poland.

So for when will we grant China the same standard of living (or at least driving) as the people in Poland? Many Chinese would object at this point. I have to go to Poland on occasion – not that I’m looking forward to it – and last time I was there, the mayor of a good sized town complained that they didn’t have the money to light the Christmas tree on central square. The local KTV in any Chinese village is an orgy of neon all year round.

420 cars per thousand, in China that comes out to a total of 550m cars on the road, if the 1.3b population is correct. Or 630m cars, if the more likely 1.5b population is right. Let’s stick with 1.3b pop and 550m cars, in order to avoid even more anxiety.

How many cars do Chinese have to buy to get to the level of Poland in a reasonable amount of time? Let’s ignore popular wisdom that Chinese cars fall apart the minute you drive them off the lot, and let’s assume a really low scrapping rate. To make calculation easy, let’s call it 500m more cars needed.

(Don’t hyperventilate. That’s only twice the number of cars on the road than in the U.S. and the U.S. has only 1/5th or so of the population of China.)

So how much time do we give China to reach the same standard of living (or driving) as Poland in 2008? 10 years? (Many Chinese would loudly object.) That’s 50m cars per year. Yes, 50,000,000.

You think that’s impossible? Ok, then let’s give the Chinese 20 years to catch up with Poland. (Many Chinese would take to the streets at this point, something the Chinese government really would not appreciate.) That’s 25m cars per year.

Still impossible?

Hint 1: Beijing, a city of 17m people, already has 4m cars. 240 cars per thousand. Poland had 265 cars per thousand in 2000. Shanghai has so many cars that the city has to limit growth by auctioning off license plates. People want to drive so badly, that they pay more for a plate in Shanghai than for some new cars. By the way: The population of Beijing and Shanghai, added together, roughly equals the population of Poland.

Hint 2: A gallon of gas of dubious quality costs $4.45 in Beijing. Using the ever so popular purchasing power conversion, it would feel more like $8. (The junior secretary, who gave me the 8 RMB/liter rate, makes $300 a month – I’m no slave driver, it’s the going rate.) And nevertheless, they are buying cars like there is no tomorrow. An unsaturated market does that.

But what about the gasoline?, a publication definitely beyond suspicion of promoting worldwide wastage, recently pointed out: “The president of China’s Innovation Center for Energy and Transportation has said that Chinese officials are drafting new mileage standards that would require an 18 percent improvement in fuel economy by 2015. New cars in China already average about 35.8 mpg and under the new rules, would be required to get 42.2 mpg by 2015. The new U.S. standards require an average mgp of 35.5 by 2016.”

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15m Or More Cars In China. How It Affects Peak Oil And Global Warming Tue, 12 Jan 2010 10:50:27 +0000

It’s definitely official now. The last word in Chinese vehicle sales has the China Association of Automobile Manufacturers (CAAM,) and the CAAM has spoken. Vehicle sales in China last year rose 46.2 percent to 13.64m units. This is not surprising, but it is nonetheless reassuring that the 13.6m number TTAC had reported last week was only 40,000 short. It is equally official that China is the world’s largest auto market, ahead of the U.S.A. by 3m units, more or less.

Vehicle sales in December alone rose 91.7 percent from a year earlier to 1.41m units in China, the CAAM said. Passenger car sales jumped 88.7 percent in the last month to 1.1m units. Full-year 2009 China passenger car sales are up 52.9 percent in 2009 to 10.3m. If passenger cars alone would count, then the truck and SUV happy USA would look like a 3rd world country: According to Automotive News [sub], only 5.7m new “passenger cars” drove off U.S. dealers’ lots in 2009, slightly more than half of what the Chinese bought.

Will the sales boom continue in 2010? Not as mad as in 2009, expects the CAAM. The manufacturers association expects growth to continue at a more moderate pace of 10 percent. This would mean 1.36m units in additional sales, or a total of a little less than 15m. Merrill Lynch is a little more bullish and thinks that the Chinese market will grow to 15.5 million vehicles this year, the Nikkei [sub] reports. A horrific thought to those who are scared that Chinese will use all our oil, and that melting polar caps will destroy the value of our waterfront properties. Wait, it’s getting worse.

China is known for low-balling their projections. By the end of 2008, the CAAM had projected a moderate rise of 5 percent for 2009. A little later, the target was revised to 10m cars for the year. Double, sometimes triple digit growth rates put that target in the round file.

Dong Yang, executive vice president and secretary general of the China CAAM pointed out that auto sales in China over the past 15 years have grown an average 16.7 percent annually. In the worst times of carmageddon, 2008 sales were still up 6.7 percent from a year earlier. Previously, Rao Da, general secretary of the China Passenger Car Association, had said that auto sales in 2010 could grow by another 20 percent so long as China’s economic recovery continues and oil prices stay stable. The CAAM plays it safe and projects 10 percent.

Anyway you slice it, China should close out 2010 with 15m, 16m, or more cars sold.

Since comments about peak oil and pollution are being cued up as I type this, some items to remember:

Air quality: The faster smoke belching vehicles are replaced by modern cars, the better for the environment. Beijing doesn’t allow anything less than Euro 4 into the city, with amazing results for the air quality. China-wide, Euro 4 will go into effect this year. To get the polluters off the road, China is stepping up its Cash for Clunkers program in 2010, and offers between US$733 and $2635 to those who retire their old cars. Increasingly, high polluters will be banned from big cities. Before Beijing was declared off-limits to high-emission vehicles (brand marked by a yellow tag,) they were responsible for 50 percent of the pollution.

Peak oil: According to Edmunds, China is targeting a fleetwide average of 42.2 mpg by 2015. Edmunds: “That’s almost 19 percent more than the 35.5 mpg corporate average fuel economy by 2016 that President Obama announced for the U.S.” Fuel economy for China’s new-car fleet (including SUVs and minivans) already averages 36.8 miles per gallon. In the U.S., the present CAFE standard is 27.5 mpg for cars, 23.1 mpg for trucks.

Now who’s the biggest oinker of ‘em all?

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