December 28, 2010
$5 Per Gallon Gasoline In US In 2013?

John Hofmeister, former president of Royal Dutch Shell's US business unit, says gasoline in the United States is headed to $5 per gallon in 2 years and in 10 years shortages will become severe.

But former Shell executive John Hofmeister offered a more aggressive estimate, saying Americans could be paying $5 a gallon in two years. And he predicted that sometime between 2018 and 2020, supply and demand will become so out of balance that gas stations in several regions of the country will simply start to run out.

"I think it's going to be a cumulative problem that won't happen suddenly," Hofmeister, who now heads Citizens for Affordable Energy, told FoxNews.com.

$5 per gallon by early 2013? That seems too soon. Count me skeptical. I'm reminded of another oil price prediction that did not pan out. New York Times columnist John Tierney is about to win a bet with the late Matt Simmons about the price of oil.

I called Mr. Simmons to discuss a bet. To his credit — and unlike some other Malthusians — he was eager to back his predictions with cash. He expected the price of oil, then about $65 a barrel, to more than triple in the next five years, even after adjusting for inflation. He offered to bet $5,000 that the average price of oil over the course of 2010 would be at least $200 a barrel in 2005 dollars.

$200 per barrel oil was not in the cards because the world economy could not afford $200 per barrel oil. The world economy would go into recession if oil prices went that high and demand would slacken. We can't get to a sustainably much higher oil price without a few changes:

  • Shift more current uses of oil to other energy sources. That way more parts of economies are less vulnerable to oil price spikes and oil demand does not dip due to recessions.
  • Add less price elastic users of oil. This is happening in China, India, and other developing countries. China has a large number of people who use fairly small amounts of oil as compared to the size of their economy. In fact, China gets 68% of its energy from coal with the rest split across other sources. Whereas the world overall gets about 27% of its energy from coal and 33% of its energy from oil.
  • Decreases in oil production.

With the Chinese now producing a few million more cars per year than the United States they are on a trajectory for much higher oil demand. Add in rising oil demand in OPEC and I can see how the world economy will be able to support much higher oil prices in the future. But the needed economic development that widens the base of oil demand to create the bigger inelastic demand takes time to build up. We can't get to much higher prices sooner without a sharp decline in production.

Share |      Randall Parker, 2010 December 28 10:52 PM  Energy Peak Oil Adaptations


Comments
Fat Man said at December 29, 2010 3:21 AM:

Natural gas has run from $4 to $6/Million BTU for the past year. A gallon of gasoline has 125,000 BTU. So energetically, NG is a lot cheaper than petroleum, and it must therefor cap the price of petroleum.

D. F. Linton said at December 29, 2010 6:45 AM:

You should add substitution to your list of the effects of rising oil prices. Long before $200 per barrel, sources like coal to liquids and other synthetic fuels would be profitable. At $200 per barrel, even corn ethanol would be profitable without subsidies.

JP Straley said at December 29, 2010 7:17 AM:

SASOL, the relatively inefficient production of gasoline-grade hydrocarbons from coal would be workable at far less than $200. Likewise, the US has oil shale, and lots of it.

Having said that, it still makes sense to work on the demand side. The US population grows three percent a year, virtually all of it due to immigration. We can grow right past all the work-arounds and fixes.

JP Straley

PacRim Jim said at December 29, 2010 10:01 AM:

Is the $5 inflation-adjusted?
We pay about 10x what we did in the 1960s for gas, but in constant dollars it's about the same. The $0.30 per gallon then is about $3 now, because of inflation.
Unless that's taken into consideration, the story might be misleading.

wcw said at December 29, 2010 1:36 PM:

Wasn't gasoline at retail already at $5 for a while, during the crack-spread bubble a few years back?

bbartlog said at December 29, 2010 4:49 PM:

The thing is that using the short-term elasticity of demand, which really is quite low (like 1/4), to extrapolate large price movements, fails because there isn't that much money available. A 5% drop in supply may increase price 20%, but if you then look for a 100% price increase in response to a 25% drop in supply, you realize that overall people can't afford to increase the amount they spend on oil by 50% while getting 3/4 as much. It's not exactly a saving grace, more like a diagnosis that something else must give way.

Randall Parker said at December 29, 2010 4:51 PM:

Fat Man,

Since oil prices started to go up after the 2008 financial crisis the ratio of oil prices to natural gas prices has diverged from historical averages. This has been a surprise because of how long the divergence has lasted and how big it has gotten.

It takes a lot of capex to lower that ratio. Substitution isn't cheap. It makes sense that oil normally costs more per BTU because oil is more useful for transportation. To use natural gas to make liquid fuel ends up costing a substantial fraction of the natural gas's energy, near half if memory serves. Plus, plants for doing that are pretty expensive. Companies do not invest in them unless convinced the ratio of oil to natural gas prices will stay high for a long period.

D.F. Linton,

The key (still debated) question about corn ethanol is what is ratio of energy return to energy invested (EROEI). I've read claims it is 1.3. That's pretty low. If we take away the subsidies for corn ethanol how much would get produced? My guess is a lot less. How much will get produced at $200 per barrel oil? We'll find out eventually.

wcw,

I'm in California (which has expensive gasoline) and never saw $5 per gallon gasoline. It might have gotten that high in the southeast after Hurricane Katrina. I do not know.

bbartlog said at December 29, 2010 4:53 PM:

As for the $5 gas, I could believe it if that's *not* inflation adjusted. But somewhere around there is also the threshold where I would expect some changes to the regulatory regime surrounding conversion to natural gas, which would act as a relief valve once it's allowed to be done cheaply in the USA.

Randall Parker said at December 29, 2010 7:12 PM:

BTW, oil has 5.8 MMBTU per barrel. So divide oil by 5.8 to get the cost of 1 MMBTU. 90/5.8 = $15.51. That's over 3 times the price of 1 MMBTU of natural gas.

If that ratio persists as oil prices rise even higher the incentive will exist to move more energy uses from oil to natural gas. But most of the easiest stuff to shift has already been shifted. Natural gas cars might grow in popularity when gasoline hits $5+ per gallon.

Fat Man said at December 29, 2010 8:52 PM:

"Since oil prices started to go up after the 2008 financial crisis the ratio of oil prices to natural gas prices has diverged from historical averages. This has been a surprise because of how long the divergence has lasted and how big it has gotten."

The stories that I have read attribute the change to the abundance of domestic gas because of the use of the new fracking technology in the shale gas fields. I have no idea if that is true or not. But if the current price ratios hold up it must shadow the oil market.

Lobo Solo said at December 30, 2010 5:50 AM:

I still don't understand why it isn't mandated that all gasoline vehicles be flex-fueled vehicles. Then a person could have the option of gasoline, ethanol, or methanol. Since methanol is usually cheaper than gasoline per BTU without a subsidy, it would move us to a methanol based economy. And methanol can be made from any biomass.

bbartlog said at December 30, 2010 7:52 AM:

'why it isn't mandated that all gasoline vehicles be flex-fueled vehicles'

Because that would be retarded. In order to achieve adequate switching capacity in the vehicle fleet (even assuming that we have the knowledge to plan this correctly in a top-down fashion), only some vehicles need to be able to use more than one fuel. Adding the capability to all vehicles would be a vast unnecessary expense. Ideally we would want the biggest users of fuel to be the ones able to switch, so that we got the biggest flexibility for the smallest amount of capital expenditure (i.e. flex-fuel installs). In this case it looks like the market would solve the problem quite well, since these same users would be the ones with the biggest incentive to be able to adapt to a changing fuel-price regime.
Natural gas, on the other hand, is currently competitive as a fuel. One of the barriers to switching (from what I understand) is that installing a conversion in an existing vehicle requires a certified mechanic, and this certification costs $10,000... per make and model (and for all I know year). Obviously there are other problems, like filling station infrastructure and reduced vehicle range, but they are not insurmountable.

'Since methanol is usually cheaper than gasoline per BTU without a subsidy'

I am very skeptical that methanol has historically been cheaper than gasoline (especially if we remove the tax from gasoline, since that is in effect a subsidy for methanol in this context). *At the current time*, it's possible that it is cheaper per BTU (I am not going to go check); however, if so, then this is because of the unusual divergence in nat gas and and oil prices. Your comments about biomass notwithstanding, methanol is normally produced from synthesis gas, which is itself normally derived from the methane in natural gas. So if methanol is cheap right now, it's because the feedstock is cheap. Seems though that it would make more sense to just burn the natural gas for fuel rather than steam crack it and reform it into methanol; granted methanol is a very nice fuel, but those extra processing steps will cost you.

Chris T said at December 30, 2010 10:11 AM:

A lot of operators who have fleets operating from a central hub have been switching or are considering switching to NG or electric. UPS has been experimenting with a wide variety of options and the USPS is also considering electric.

Kent Gatewood said at December 30, 2010 12:53 PM:

18 wheeler at 125,000 miles a year (single driver)?
5 mpg?
$80,000 conversion cost?
25,000 gallons a year?
$3.50 price difference $5 Diesel versus natural gas?
11 month payout?
Stations?

Randall Parker said at December 30, 2010 7:15 PM:

Kent Gatewood,

Were are you coming up with your numbers? In particular, does it really cost $80k to convert a truck to run on natural gas?

Given that the trucking industry is very driven by economics. I assume they'd make a big move to natural gas if the financial numbers came out supporting it. Is the problem a big conversion cost to get truck stops to have natural gas refueling?

Chris T,

Big central hub operators doing single city deliveries are probably best suited for a shift to natural gas. When oil goes up into the triple digit territory and stays there I think we can expect to see a lot of conversions by them.

More broadly, what I expect to see is more of a fragmentation of the fuels used for transportation. Electric power, natural gas, and diesel fuel will all make in-roads against gasoline.

Lobo Solo said at December 31, 2010 6:28 AM:

Right now, depending on your source ... methanol is selling for up to $1.35/gal ... and that's up from about $0.90 per gallon in August. Since methanol is has about half the BTUs of gasoline that means that the equivalent price in August would have been $1.80/gal for gasoline (add 20 cents or so for the various taxes depending on your state) and it would have been the equivalent of $2.00/gal for gasoline ... Were you paying more than $2/gal in August? Currently the avg price across the US for gasoline is about $3.00/gal (prices range from $2.70 to $3.30 depending on location) so methanol and gasoline are about even now. When price is higher than the equivalent gasoline price ... switch! And that's the beauty of a flex-fueled car ... switch to the cheaper fuel at will!

It cost the Auto Industry less than $150 to make any gasoline vehicle coming off the line capable of running on E85. There are roughly 9 Million flex-fueled vehicles already on the roads and GM/Ford/Chrysler pledged that at least 50% of their production will be flex fuel capable by 2011/2012.

Remember, the manufacturers must make the cars for the Brazilian market flex-fueled (up to E100) ... Brazil is out in front of us on this one. They aren't sending money to nations that finance terrorists every time they fuel up.

And it's all about flexibility! If a person wants to burn straight gasoline ... no problem ... gas price goes up and want to burn E85 or M85 ... no problem.

It's also about security and the economy. If we burn methanol made in the US then the money stays in the US and we don't have to worry about protecting the oil lanes. It reduces the trade deficit and puts money back into the US economy ... It's win-win for the US.

Lobo Solo said at December 31, 2010 6:37 AM:

@Kent,

The problem with NG is it takes a HUGE tank to carry enough NG to make it usable. I can't even imagine the size of tank it would take to get even half the range that trucks now get on diesel.

I speak from experience. In Mexico, NG (actually its butanol I think) stations are very common because people drive by to fill the tanks for the stove in their houses. A friend of mine has an NG pickup. It has a pretty tank that we figured holds about the equivalent of 10 gals of gasoline. He is constantly having to stop and get fuel. Many of the fruit trucks there are NG but they don't need to travel far in one day. NG it is a common fuel but I don't think any of the 18-wheelers there use it. It would just reduce their range and force them to stop more often for fuel.

Nick G said at December 31, 2010 10:43 AM:

the ratio of oil prices to natural gas prices has diverged from historical averages. ...It takes a lot of capex to lower that ratio.

Traditionally both oil and NG were used for a wide variety of industrial/commercial purposes (like process heat, or electrical generation), and I/C users could switch very easily between the two. Those users provided the arbitrage between oil and NG that closely linked their prices. On the other hand, I think recently that almost all of those users have switched to NG, and so the link has broken.

corn ethanol is what is ratio of energy return to energy invested (EROEI). I've read claims it is 1.3.

The important thing is liquid fuel return on liquid fuel invested: diesel is only about 20% of the energy input. 60% of the energy input is process heat, which can come from much cheaper sources: NG, coal, cattle-lot methane, ag waste, etc.

Chris T said at December 31, 2010 12:44 PM:

The important thing is liquid fuel return on liquid fuel invested: diesel is only about 20% of the energy input. 60% of the energy input is process heat, which can come from much cheaper sources: NG, coal, cattle-lot methane, ag waste, etc.

Exactly, one can get away with an EROEI of less than 1 for oil as long as the energy you're using to extract it is relatively abundant (and not also oil). In that case, all oil is doing is acting as a battery.

Bruce said at January 1, 2011 11:53 AM:

In BC Terasen, the large NG company, is now planning to support LNG/CNG fuelling stations on fleet operators properties.

http://www.terasengas.com/_AboutUs/News/NGVFuellingStationsLM.htm

http://www.terasengas.com/_AboutNaturalGas/NaturalGasVehicles/default.htm

I think this sale is the result of the above plans:

"Westport Innovations Inc. (TSX:WPT / NASDAQ: WPRT), a global leader in alternative fuel, low-emissions transportation technologies, today announced that Vedder Transport Ltd. of Abbotsford, British Columbia has issued a purchase order for 50 Peterbilt 386 liquefied natural gas (LNG) trucks featuring Westport HD Systems. Vedder Transport Ltd., a division of the Vedder Transportation Group, specializes in the transportation of Food Grade products in a bulk liquid or dry state and offers dedicated and irregular route, truck load and less than truck load freight services throughout Canada, and between Canada and the United States."

http://www.prnewswire.com/news-releases/westport-announces-vedder-transport-order-for-50-peterbilt-lng-trucks-powered-by-westport-hd-systems-112240494.html

Westport HD is the key, with heavy duty deisel-replacement engines.

http://www.westport.com/products/westport-hd

Nick G said at January 1, 2011 2:26 PM:

In that case, all oil is doing is acting as a battery.

A quibble - we should remember that this is a metaphor: the energy inputs to ethanol don't actually end up in the ethanol - the energy in ethanol is entirely solar power.

Engineer-Poet said at January 2, 2011 10:43 AM:
Long before $200 per barrel, sources like coal to liquids and other synthetic fuels would be profitable.
Replacing US oil imports with CTL would require more than tripling US coal mining.  This is Not Going To Happen, and relying on it is insane.  Converting NG to liquid fuel at 45% efficiency is also insane.
At $200 per barrel, even corn ethanol would be profitable without subsidies.
Corn ethanol depends on nitrogen fertilizers (natural gas), process heat for mashing and distilling (more NG), and diesel for chemicals, cultivation and irrigation.  The US's current acreage is substantially dependent on mining fossil aquifers at steadily increasing cost in energy, much of which tracks the cost of oil.  This is the cause of the "receding horizons" problem which also affects oil shale; the issue is EROEI, and cannot be solved by higher oil prices.  We need a minimum EROEI of about 8 to run society, and even doubling corn's EROEI leaves it short by a factor of 3.

LNG is a partial solution, at least for heavy trucks.  Methane can be co-fuelled into diesels at up to 80% with relative ease.

You'll see a post on TOD soon about refinery gains.  These are gains in product volume caused by cracking denser molecules into lighter ones, but there is also a certain amount of energy input to the process from hydrogen, which is produced from natural gas.  The heavier the crudes (or bitumens), the larger the processing gains.

Bruce said at January 2, 2011 11:23 AM:

EP: Whay does it have to be all or nothing?

Mine coal for oil as well as start the process of converting the biggest users of diesel to NG. Keep all that money in the USA for every barrel of oil replaced by coal and NG. As the number of NG stations increases and the technology gets cheaper and more efficent, more new trucks and cars will get sold with NG as the primary fuel.

Take every penny about to be squandered on subsidizing wind and solar and spend on NG technology and coal to gasoline technology.

Build some Thorium reactors too to make up for the coal being diverted to liquid fuels.

Bruce said at January 2, 2011 11:25 AM:

"the energy in ethanol is entirely solar power."

Except for the fertilizer and fuel in the tractors, transporating and distilling process.

And the unfortunate side effect of increasing the price of food. Which might cause more energy use as cheaper foreign grown food is shipped in.

Engineer-Poet said at January 2, 2011 9:41 PM:
EP: Whay does it have to be all or nothing?
Because it makes zero sense to build 50-year assets like a major chemical industry when it costs far more than the alternatives which will obsolete it by about 2025.  Li-ion batteries will be competitive with petroleum shortly, and we can get 3-4 times the mileage out of coal via electricity than by making liquid fuel.

LNG as co-fuel for heavy trucks makes sense, CTL and GTL do not.

Build some Thorium reactors too to make up for the coal being diverted to liquid fuels.
Just use thorium to get rid of coal entirely, and a lot of the natural gas too.  You can do chemistry with process heat at molten-salt reactor temperatures; the possibilities are beyond most people's appreciation.  Converting sewage sludge into light gases is just the beginning.

Bruce said at January 2, 2011 11:11 PM:

EP: Rare Earth Metals will be unavailable well before 2025. 66lbs of them in a Prius. Kiss electric cars goodbye. Coal and NG will be left. Lots of both.

Engineer-Poet said at January 3, 2011 5:27 AM:

Induction motors, Bruce.  Switched-reluctance motors.  The original EV1 had motors made of steel and batteries made of lead; if GM could build a non-gold-plated version today, it would sell like crazy.

Nick G said at January 3, 2011 8:55 AM:

"the energy in ethanol is entirely solar power." Except for the fertilizer and fuel in the tractors, transporating and distilling process.

Again, the energy in the tractor fuel, tanker fuel, and distillation doesn't end up in the ethanol. The chemical energy in the ethanol comes almost entirely from photosynthesis (one could possibly argue that the energy in the nitrogen fertilizer ends up in the corn, but that's a small % of the chemical energy).

Does that affect the low E-ROI? Not directly. But we should be clear that the idea that ethanol is a energy transporter is a metaphor. In theory we could make all of the processes involved in making ethanol much more efficient, and raise it's E-ROI dramatically. In practice, of course, that's not easy. Distillation, for instance, has been perfected over many decades, and it's efficiency won't rise quickly. But still...

Bruce said at January 3, 2011 9:18 AM:

EP: "Induction motors"

Way too heavy.

As it is, wind is running at less than 2% capacity in the UK when it is really cold. A monumental squandering of money.

LL said at January 3, 2011 10:22 AM:

Substitution will come come from several directions at once.

Direct substitution with Natural Gas. Look up the Honda Civic GX! Also as mentioned conversion of Trucks and other cars to run on Natural Gas.

Sasol's methods will provide an another form of substitution, where NG and Coal are converted to liquid fuels, and can function as a drop in replacement for gasoline and diesel. Biodiesel and ethanol will fall into this category as well, hopefully next generation production techniques with Algae, cellulosic ethanol and others like bio-butanol will improve its scalability.

Plug-in Hybrids and electric cars will also provide substitution via the electric grid. Power will come from a mix of renewable, coal, nuclear and Gas. This is at the back-end so depending on political will the ratio of that mix will change over time, but either way the power will come out of an outlet.

We can even substitute our form of transportation. Move to more high speed and light rail, buses, bicycles etc...

Even increasing the average mpg of the cars we drive will have an effect.

As each of these things become more prevalent, the impact of $5 gas will be much lower. While we wait for dramatic revolutionary technologies, often it's small incremental gains that make the biggest difference.

Chris T said at January 3, 2011 11:07 AM:

Rare Earth Metals will be unavailable well before 2025.

Why is this? Rare Earth Metals aren't as rare as their name suggests. Demand was low prior to this decade and China managed to monopolize the market by producing an oversupply in the 90's and early 00's. Now that demand and the price is rising, previously mothballed mines are being brought back into operation and exploration is getting underway.

James Hansen said at January 3, 2011 11:08 AM:

Just raise the gax tax by $2 per gallon and voila, we have $5 per gallon gas.

Bruce said at January 3, 2011 11:46 AM:

Chris, there are no rare earth processing facilities in the USA. Even the small amount of REE's that may be mined in the USA will have to be shipped to China to be processed. Who knows if the Chinese processing plants will want/need or be allowed to do so.

"The United States does not possess the separation and production facilities needed to complete the rare earth supply chain; thus any current rare earth mining requires shipping those minerals to China for final processing before returning to the U.S. for incorporation into military and technology applications. This is both economically vulnerable and more costly than developing a domestic rare earth supply chain."

http://urbanmining.org/2010/11/18/the-u-s-can-still-compete-in-the-rare-earth-space-if-it-acts-soon/

On top of that the US mine about to repoen will be shipping its REE's to Japan. And the company will need to 530 million just to get the mine up and running to produce 20,000 tons a year .... when demand will be rising 20,000 tons a year and China will be dropping its exports each year.

http://af.reuters.com/article/metalsNews/idAFSGE6B60CU20101207

Chris T said at January 3, 2011 2:05 PM:

Bruce - In which case there is ample market incentive to build and operate such a plant in the United States. The wild card is environmental regulation.

Engineer-Poet said at January 3, 2011 2:15 PM:
"Induction motors"

Way too heavy.

Induction motors weren't too heavy for the EV-1.  The AC-150 drivetrain gets 150 kW out of 50 kg, and it's the better part of a decade old.  The new Buick Lacrosse with the BAS II system uses an induction motor/generator.  Buick does not give the weight of the motor in its specifications, but it fits in place of the alternator so its bulk and weight cannot be too much larger.

You can BS, Bruce, but you won't be believed.  Your credibility and a dollar will buy you coffee at 7-11.

bbartlog said at January 3, 2011 4:37 PM:

We can mine and process rare earths in the US if it becomes important. The Chinese have taken over the market thanks to lax environmental regulations, cheap feedstock/processing chemicals, and an educated workforce - and as long as they are selling you probably wouldn't want to compete with them. But if they stop we can do it here. The extraction chemistry is generally a pain in the ass but it is not formidable from a theoretical standpoint.

Moneyrunner said at January 3, 2011 5:21 PM:

$5.00 GAS!
Why isn't the MSM asking what Obama is going to do about this?

Or is this part of the plan?

Like bankrupting utilities that use coal?

To save us from Global Warming ... uh ... Climate Change ... err ... Global Climate Disruption. It's nothing that $5 gas and skyrocketing utility bills won't solve.

At least it's a plan.

Bruce said at January 3, 2011 5:26 PM:

EPP: Please provide some document that lists the amount of REE in the examples you provide.

I've provided links to my examples: 66lbs in a Prius. A metric ton in a wind turbine.


Chris, its a slow, expensive process. Read the news, companies are getting desperate. You cannot remake an industry overnight despite what EP fantasizes.

Road To Commercial Rare Earth Production: "Historically this is a 5 – 12 year process at a typical cost of $500 million to $1 billion."

http://www.reitausa.org/storage/Challenges%20Facing%20New%20Global%20Rare%20Earth%20Separation%20Plants.pdf

Bruce said at January 3, 2011 5:27 PM:

EPP: Please provide some document that lists the amount of REE in the examples you provide.

I've provided links to my examples: 66lbs in a Prius. A metric ton in a wind turbine.


Chris, its a slow, expensive process. Read the news, companies are getting desperate. You cannot remake an industry overnight despite what EP fantasizes.

Road To Commercial Rare Earth Production: "Historically this is a 5 – 12 year process at a typical cost of $500 million to $1 billion."

http://www.reitausa.org/storage/Challenges%20Facing%20New%20Global%20Rare%20Earth%20Separation%20Plants.pdf

Jay Manifold said at January 3, 2011 6:05 PM:

While I concur that substitutes like the ones being argued about in the above comments will undoubtedly be developed in some form, I wonder how much transportation energy use will be conserved in the form of telecommuting if gasoline prices were to rise significantly.

It is my (possibly incorrect, and in any case unsourced) understanding that some 3/5 of the American workforce is in jobs which neither involve the movement of physical objects nor require face-to-face customer contact. Nearly all of these people could work remotely, subject to the degree of enlightenment of their management -- even with some reduction in productivity, since their employers could reduce the amount of physical workspace they now maintain.

The average American commute was 32 miles round-trip as of 6 years ago, and the average mpg rating was close to 25. (32 mi/day) / (25 mi/gal) * (240 days/yr) * ($3/gal) = $~920/yr; increasing the price of gasoline to $5/gal raises this to over $1500/yr. These two amounts are, respectively, 2.5% and 4.1% of the national average wage index for 2005 of $~37,000.

I hypothesize that telecommuting will become much more popular if and when the fuel costs of commuting exceed 5% of typical salary, especially as employers become more aware of how their labor costs are reduced by the lessened need for facilities.

Uriel said at January 3, 2011 6:31 PM:

First, the man said that in 2010. Two years + 2010 = 2012. NOT 2013.

Besides, he's wrong. It'll be here by July.

Uriel said at January 3, 2011 6:43 PM:

Remember, .. July.

It's got little to do with economics, little to do with supply & demand. It has to do with Federal energy policy and Fed monetary policy.

"•Shift more current uses of oil to other energy sources." What, like make PLASTICS out of something else? Or, perhaps we'll all be buying electric cars -- with electricity prices that will INTENTIONALLY "Necessarily skyrocket" as a result of Federal REGULATION. Even if they wouldn't "skyrocket", were you expecting the turnover of the entire American automobile fleet in one year?

Sorry, friend. The agenda is the destruction of the American economy while redistributing as much wealth as possible from the "MIDDLE CLASS" (NOT the "rich") to the poor -- not within America, but GLOBALLY. You call yourself "FUTUREpundit" and you can't even read the writing that's been on the wall for two to four years. If you're neither on board with the agenda, nor prepared for its consequences, YOU WILL BE CRUSHED! Bye-bye past-future-pundit.

Uriel said at January 3, 2011 6:49 PM:

HOLY CRAP, commenters. You're arguing a dead letter. The U.S. economy is no more. Economics no longer applies. The United States is no more. We are entering a PLANNED ECONOMY. Have you all been in a coma or something? You're in for a rude awakening this year.

Randall Parker said at January 3, 2011 7:27 PM:

Jay,

Telecommuting: Managers are mostly highly averse to not being able to walk into your office to interrupt you about their immediate need while you are trying to get productive work done. At least that's my experience (and not just with managers either).

The problem I see: How to measure worker productivity? Depends on the task. If, for example, you've got someone who does phone tech support you can measure how many calls they handle and, with a computer interface to enter support case data, count how many issues they close. So for some jobs I can see management going along with a lot more telecommuting.

I expect very high gasoline prices to be handled several different ways:

- Telecommuting as you suggest.

- Set up satellite offices near where people live or move divisions of companies. So move work to near people. I heard the US government has such satellite offices around DC and so some workers do shorter commutes some days of the week and longer commutes when they need to attend meetings. With smaller companies I can imagine companies just picking up and moving to very near where their most valuable employees work.

- People move closer to their jobs. This'll happen gradually.

- People switch to closer jobs. This will happen as well, especially for people who get laid off.

- Lower oil usage vehicles: Shift to smaller cars, hybrid, pluggable hybrid, pure electric cars, motorcycles, bicycles.

I expect mass transit to play only a small role in the adjustment to Peak Oil. Mass transit's role in Europe is greatly exaggerated. In almost all Western European countries cars account for over 80% of miles traveled in spite of much higher gasoline prices in Europe. Really.

Engineer-Poet said at January 3, 2011 9:58 PM:

How many times do we have to tell Bruce that there's no significant amount of REE's in an induction motor before he shuts up?

Randall, I suggest banning him.  He's either a troll or he's lost it; he contributes nothing.

annoyed said at January 4, 2011 3:31 AM:

Two things: Due to the lower energy density of nat gas, a larger fuel tank is required for equvalent range. Where are you going to put that tank in the 'clown cars' some in govt seems to want us to have? A vehicle with a fuel tank taking up most, if not all, of the cargo/passenger capacity won't sell. Same for one that requires you to stop every 100 or so miles to refuel. Live in a cold climate?, Figure on plugging in your car every night (block heater) to have enough heat to have the nat gas system operate. They ice over in cold/damp conditions. Neighboring business has a propane fuel forklift, 40deg/40% humidity means get out the heat gun to fire up the lift in the am. Second: as to the ability to process/ manufacture NEE magnets, the plant in the U.S. was sold. To the Chinese. They took the whole thing back to China; a couple of years ago iirc.

Engineer-Poet said at January 4, 2011 7:02 AM:

Note:  you're conflating CNG and LPG.

Due to the lower energy density of nat gas, a larger fuel tank is required for equvalent range.
The same is true of hydrogen, only more so.  A vehicle designed from the ground up for CNG would probably have tubular tanks built into the passenger-compartment floor; they would be far stronger than a conventional floor.

Dual-fuel systems are a possibility for retrofits.  Do you care if you only get 100 miles on a fill of gas if you refill in your garage every night?  Do you care if the system takes up 3/4 of the trunk if you can take it out for long trips?  You don't need to replace all liquid fuel use, you just need the option.

Figure on plugging in your car every night (block heater) to have enough heat to have the nat gas system operate. They ice over in cold/damp conditions. Neighboring business has a propane fuel forklift
Two very different things there.  Conventional LPG systems heat the liquid to vapor and carburete the vapor; those systems can ice up if there's insufficient heat.  CNG is a different thing (though moisture is going to be an issue in any system which throttles high-pressure gas), and engines which use LPG direct injection won't have issues related to intake icing.

LPG has a high octane rating to begin with; the cooling effect from direct injection of LPG will boost it further, allowing much higher compression ratios and efficiency.  Hyundai is marketing such engines at home and in Australia.

Bruce said at January 4, 2011 12:02 PM:

EP: "How many times do we have to tell Bruce that there's no significant amount of REE's in an induction motor before he shuts up?"

How many times do I have to ask for evidence (when all you do is send out fantasies based on cars that no longer exists).

"Randall, I suggest banning him."

That is a traditional greenie response when asked for evidence.

How many hybrids are actually produced each year? 500,000 - 1,000,000? 66lbs of REE per Prius. 66,000,000lbs = 33,000 tons which is 1/4 of the worlds supply.

Global car production = 51,000,000

Switch to all hybrids ... we need to increase REE supply by a factor of 12.5X.

An unconvenient truth.

Engineer-Poet said at January 4, 2011 1:11 PM:

Induction motors are made from high-silicon steel, conductors, and insulation.  Where, pray tell, would REEs be used?

You're the one asserting a positive (induction motors need REEs).  If you weren't a worthless troll, you'd support it.

At least you can't claim that induction motors are too heavy... in this thread, at least.  I'd bet you'd use the same lie anywhere else nobody had already called you on it.

Nick G said at January 4, 2011 2:35 PM:

Doesn't the Leaf use an induction motor?

Jay Manifold said at January 4, 2011 4:57 PM:

Randall -

Telecommuting has many variables. The three main ones I see operating are corporate culture, individual management style, and exogenous economic pressure. Entire corporations, a notable example being IBM Global Services, not only tolerate telecommuting but aggressively promote it. Individual managers everywhere vary in their attitudes from rejection to total acceptance to a nuanced, situational approach. Employers, and mine is among them, with acute needs to control costs find it exceedingly useful to lease out their built-to-suit office space to other companies and send their own workers home with laptops and high-speed data connections.

I suspect that, in the event of a steep increase in commuting costs, telecommuting will be only one (albeit the plurality) component of a suite of spontaneously developed responses, many of which cannot be explicitly anticipated.

"Uriel" -

Whatever you are, I'll buy you a plate of barbecue on 7/31/2011 if gasoline in my neighborhood is above $5/gal. My neighborhood's easy to find, because I post under my real name, since I'm a real person with a real job.

Hell, I'll throw in a beer.

Bruce said at January 4, 2011 8:58 PM:

REE are used in NiMH batteries, such as the ones in the Prius.

"Nickel-Metal-Hydride (NiMH) batteries are the latest form of rechargeable batteries used in hybrid cars, as well as many other everyday electronic devices like mobile (cell) phone, music players and laptop computers. The rare earth metal, lanthanum, is an important constituent of the anode used in this type of battery."

"Applications of NiMH electric vehicle batteries includes all-electric plug-in vehicles such as the General Motors EV1, Honda EV Plus, Ford Ranger EV and Vectrix scooter. Hybrid vehicles such as the Toyota Prius, Honda Insight, Ford Escape Hybrid, Chevrolet Malibu Hybrid, and Honda Civic Hybrid also use them."

Ooops. There goes EP's EV-1 example.

http://reviews.cnet.com/8301-13746_7-20024741-48.html

Engineer-Poet said at January 4, 2011 9:39 PM:

Trust Bruce to bring up a battery technology not being used for EVs; they're all going Li-ion, not NiMH.  The GM BAS II in the Lacrosse uses a Li-ion battery.  Toyota has been planning a switch to Li-ion for some time.

If we weren't so charitable, we could consider Bruce's posting of disinformation about batteries in use to also be lying.  Then again, he may just take in too much talk media.

Bruce said at January 5, 2011 8:51 AM:

EP: " they're all going Li-ion, not NiMH"

No, they aren't.

"While rivals rush to install lithium ion batteries in hybrid vehicles, Toyota, the hybrid leader, says it may stick with older-generation nickel-metal hydride batteries for as long as another decade."

http://reviews.cnet.com/8301-13746_7-20024741-48.html

"The market-leading Prius uses large amounts of rare earth materials in its electric motors and batteries. Each engine uses 33lbs (15kg) of lanthanum and 2lbs (1 kg) of neodymium. Two other rare earth elements, terbium and dysprosium, are also added to the alloy to preserve neodymium’s magnetic properties at high temperatures."

http://www.kidela.com/kidela/rare-earth-metals-hybrid-cars


Any Lanthanum in the GM BAS II EP?


The BAS was a total failure by the way: "Unfortunately, GM’s BAS system was so mild that it was unable to show any worthwhile fuel economy gain"

http://www.autosavant.com/2010/08/04/gm-to-re-introduce-mild-hybrids-in-late-2011/


EP's examples turn out to be somewhat fake. Either they use REE in the battery (EV1) or use them in the motor (BAS II).

Engineer-Poet said at January 5, 2011 9:32 AM:

BAS II uses an induction motor/generator, Bruce; no REEs.  You're lying again.

Or just an ignorant jerk.  Here, have some education you're free to ignore:  an induction motor is just

  • A transformer
  • With a shorted secondary winding
  • Whose primary and secondary change position/phase with respect to each other.
That's it.  If there were any REEs required for induction motors, they'd be required for every transformer too.

Feel free to browse the Wikipedia entry on induction motors for edification.  (I doubt Bruce will, but other readers without a physics/EE background wondering if he has his head up his ass may want to double-check.)

Bruce said at January 5, 2011 10:09 AM:

EP: You lied about the EV1 not useing REE's, when in fact it used NiMH batteries.

BAS II: " The system consists of a 115 volt lithium-ion battery pack, a 15kw electric motor capable of adding 15 horsepower of assist while accelerating"

Where is the evidence that the BASS II has no REE's?

Besides, the BAS II won't solve the gasoline crisis: "GM expects the eAssist LaCrosse to deliver a class leading fuel economy of 25 mpg city and 37 mpg highway"

37mpg ... not a hybrid. Not gonna save anyone any gasoline.

EP: A joke.

Bruce said at January 5, 2011 11:45 AM:

EP: Do you have to be so foul mouthed when your arguments are exposed as lacking in substance or truthfulness?

Engineer-Poet said at January 5, 2011 11:56 AM:

EV-1 started with lead-acid batteries, which some people said were superior (esp. in hot weather).  Nothing about it needed NiMH, so no REEs.

Where is the evidence that the BASS II has no REE's?
The eAssist power pack contains the lithium-ion battery pack...
The motor-generator is a high-performance, compact induction motor that is liquid-cooled for increased performance and efficiency.

the BAS II won't solve the gasoline crisis
Nobody said it would.  But you're asserting that the technology in it doesn't exist.  It's already old hat, and we have already made EVs with it.

Because of your flagrant dishonesty, I'm afraid I'm going to have to go to the Debate Flow Chart.

    1. Can you envision anything that will change your mind on this topic?
    2. If one of your arguments is shown to be faulty will you stop using that argument (with everyone)?
    3. Are you prepared to abide by basic principles of reason in discussing this topic?
    NO:  This is not a discussion.  I will not talk to you about this topic.
    YES: Continue.
  1. I will talk to you about this topic providing the following rules are obeyed:
    1. Do not introduce new arguments while another argument has yet to be resolved.
    2. Do not move on to another argument if it is shown that a fact you have relied upon is inaccurate.
    3. Provide evidence for your position or argument.
    4. Do not argue that you do not 'need' evidence.
    Did you breach any of these rules in the discussion?
    • YES:  You cheated.  The discussion is terminated.
      • You are deemed to have conceded all opposing arguments up to this point.
      • You forfeit any right to complain about the discussion.
      • NO:  CONGRATULATIONS!  This is how rational human beings exchange ideas.
You have already committed multiple violations of 1.2, 2.1 and 2.3.
Do you have to be so foul mouthed when your arguments are exposed as lacking in substance or truthfulness?
You're the one making false assertions such as repeatedly claiming that induction motors are full of REEs.  I'll quit calling you a dirty lying son of a bitch just as soon as you stop being one.
Bruce said at January 6, 2011 7:57 AM:

Look EP, imaginary cars from the past or future are not argument winners. BAS was a failure. BAS II will probably be a failure as well. Even if BAS II gets into production for 2012, it won't save any gas.

As for your demented flowchart .... ha ha ha. What a nutbar.


On a side note, it looks like India will be self-sufficient in NG thansk to Shale Gas.

"According to sources, the New York-listed Schlumberger, which is carrying out a comprehensive shale gas pilot project for state-owned ONGC in the Damodar Valley basin, has made an initial gas-in-place estimate of 300-2,100 trillion cubic feet (tcf) in Indian shale gas basins. In comparison, Reliance’s KG D6 field has proven reserves of just 7-8 tcf.

“Such resources have the potential to move the Indian gas market from gas-constrained to gas-balanced, if not turn the country into a gas-surplus one,” an official with Schlumberger told FE."

http://thegwpf.org/energy-news/2161-shale-gas-revolution-reaches-india.html


The BAS II won't solve any energy crisis. Shale Gas already has solved it. But idiots like EP ... make me shake my head in wonder at their stupidity.

Engineer-Poet said at January 6, 2011 8:20 AM:

Violation of 2.2.

Bruce said at January 6, 2011 9:15 AM:

Israel is now going to be self-sufficient in NG too.

http://www.csmonitor.com/World/Middle-East/2011/0106/Israel-giddy-over-new-offshore-gas-find

EP, the old adage "When you're in a hole, stop digging." applies to you ....

Engineer-Poet said at January 6, 2011 11:27 AM:

Violation of 2.1, and completely irrelevant to the USA to boot (not that I don't root for Israel against all its enemies).

So far you've failed to cleave to 1.1 and 1.3, and arguably violated 2.4 by attempted burden-shifting.  That, I believe, is a clean sweep.

Every time you're caught in a lie ("induction motors are too heavy", "BAS II is full of REEs") you just move to another assertion without ever admitting you were wrong.  There's no point talking to you.  Randall probably keeps you around for amusement; in his place, I wouldn't.

Bruce said at January 6, 2011 3:03 PM:

EP: BAS II doesn't exist yet. Its a fantasy in your deluded mind. How do you know whats in it? I mean, you claimed EV1 had no REE's, and it did.

But go ahead, keep digging ...

As for Israel/India and Shale Gas in general, it has meaning in the USA. Natural will stay really, really cheap. There are vast quantities just recently discovered and even more undiscovered and in hydrates.

Engineer-Poet said at January 6, 2011 4:43 PM:

It's really stupid of you to lie when the record is right here for anyone to see:

The original EV1 had motors made of steel and batteries made of lead
NiMH was the second generation, not the original.  Long past time for you to be banned.

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