Defrosting your gas mileage

It turns out that if you turn your defroster on in a hybrid vehicle, you're gas mileage drops like a stone. That's the conclusion of this writer who tried three hybrids and got similar results. Air conditioning is also bad for gas mileage, but that's true with conventional gas engines as well.

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Is it time to put a floor under oil prices?

It may sound ludicrous to suggest putting a floor under oil prices, but there are three good reasons to consider it. First, oil companies are reluctant to spend money on exploration and development because they have been burned again and again by slumps in price in the previous 20-year bear market in oil. If the resulting increased production can delay a peak in world oil production even a few years, this extra time could help facilitate a non-catastrophic energy transition by increasing the amount of time we have to build an alternative energy infrastructure. Second, a floor under prices would ensure a robust market for alternative and renewable energy. Third, higher prices would encourage energy conservation. If people know that oil prices will NOT go down regardless of future supply, they will act accordingly. (The poor could be given rebates or tax credits to soften the blow of higher energy prices.)

Many mechanisms can be used to achieve this, but perhaps the most elegant is the variable import fee. If the minimum price of oil was set at say $50 a barrel, then when oil falls to $42 a barrel, an $8 a barrel fee kicks in. The money generated from such a fee could go toward financing the energy tax credits for the poor and tax incentives for the installation of wind and solar power, for example.

The political prospects for such a fee are better than you might think. Domestic oil and gas producers will support it because it puts a floor price under their production. Environmentalists will support it because it means large investments in alternative energy, but especially if that alternative energy is renewable and clean. Defense hawks will support it as a way to reduce our vulnerability to oil imports. Doves will embrace it as a way to avoid war over oil. Advocates for the poor will go along with it if the burden on the poor is eased by credits.

No doubt a bunch of ideologues will oppose it as "unjustified intervention" in the free markets. I'm not sure they would prevail if the proper coalition could be brought together. There are too many enticing goodies in an oil import fee. And, the fact that it would be good for the country might help, too.

No doubt other countries could do something similar. If the strategy were applied worldwide or at least by say, the United States, the European Union, and Japan, it might just work as advertised.

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It's worse than I thought...

The story on ethanol just keeps getting getting worse. Some recent calculations show that ethanol yields one unit of energy for every six units used to make it. This is far worse than previous studies have shown, studies which also found ethanol production to be a net energy loser. Beware of biofuels! They look green, but they come out the other end with a lot of oil and natural gas added indirectly.

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Coal peak?

If oil and gas production peak within the next decade or two, the obvious fallback will be to coal. Coal reserves worldwide are vast, but there are two reasons to believe they won't last very long if coal again becomes the biggest fossil fuel energy source. First, coal will be used not only to produce electricity, but also as a base for making liquid fuels. That means we will use it up faster, a LOT FASTER, than we are today. Second, like any resource, the best quality coal has been mined first, that is, the coal with the highest energy content. As we mine more and more of it, we can expect the energy yield per unit to steadily decline and then plummet. This piece on From the Wilderness explains the problem in more detail.

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Catastrophic riches

The oceans may hold more energy in the form of methane hydrates--essentially, natural gas locked in ice--than all the energy in all other types of fossil fuel including conventional natural gas. As several countries race to figure out how to safely mine the stuff--it tends to explode--the worry is twofold: 1) Finding a fabulous new cache of hydrocarbon energy will only encourage faster global economic growth and result in huge additional releases of carbon dioxide into the atmosphere, and 2) accidentally venting vast amounts of unburned methane into the atmosphere, a greenhouse gas with 20 times the potency of carbon dioxide, will surely lead us down the road to catastrophic global warming. (For more on the methane/global warming link, click here.)

Even this so-called "clean-burning" fuel has carbon in it, enough to make things much worse. On the other hand, intelligent planning could make it the promised "bridge fuel" to a future of renewable energy.

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'Eating Oil'

Norman Church outlines the deep dependence of our worldwide food system on fossil fuels in this exhaustive piece on PowerSwitch. Besides the usual litany of pesticides, herbicides and fertilizers all being made from fossil fuels, he zeroes in on things urban folks tend to overlook: water and transport. Water has to be pumped to irrigate many of our crops and that requires considerable energy. Then, of course, produce must go from farm to processor to wholesaler to retailer. And, there are added energy inputs at each level of food processing and handling. On the issue of transport, he points out that organically raised farm produce is much more energy efficient until it enters the global marketplace which transports it long distances in packaging made from petrol.

What would it take to wean ourselves from a food system so totally committed to fossil fuel use? Church thinks we will soon find out.

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Can it be?

Investment advisors are supposed to follow the markets closely because their living and the well-being of their clients depend on it. Instead, what they do is to follow other investment advisors so as not to sound out of step with the conventional wisdom. After all, most don't want clients calling them up and saying, "But, you're the only one who's recommending this."

Donald Coxe, chairman of Harris Investment Management in Chicago and author of an investment newsletter called Basic Points, is one of those rare advisors who actually follows the markets. He's been saying for four years that commodities and industrial materials companies were the place to be, a view that was treated with great skepticism by all but the most perceptive readers. (He claims his readership reached its lowest point when he suggested that the NASDAQ was a sell at 5,000.)

Coxe has turned out to be spectacularly on the money, and so it's worth paying attention to somebody who actually pays careful attention to the markets instead of the noise coming out of other investment analysts' mouths. In his latest newsletter he conveys shocking, but not entirely unexpected news:

...the combination of the news that there's no new Saudi Light coming on stream for the next seven years plus the 27% projected decline from existing fields means Hubbert's Peak has arrived in Saudi Arabia. The Kingdom's decline rate will be among the world's fastest as this decade wanes. Most importantly, Hubbert's Peak must have arrived for Ghawar, the world's biggest oilfield, and Wall Street's most-cited reason for assuring us month after month that oil prices would plunge because there were so many billions of barrels of readily-available crude overhanging the market.

The Street's perception was a tad outdated: OPEC had 15 million b/d of excess capacity in 1986 when the Saudis decided to rein in OPEC cheaters and head off further development of major projects abroad, including the North Sea and the Alberta oil sands. By 2002, OPEC's unused capacity was down to the one million b/d range, which is, effectively, too tiny to give the cartel the power to set prices.

The grim news from Ghawar has been replicated in the world's #2 field, Mexico's Canterell. Its production entered decline last year, and the Pemex people say there's nothing much they can do to halt its decline. The North Sea had a bad year, with significant production declines for both Norway and the UK. Declines from existing fields will be temporarily offset as a few new fields, such as Buzzard, come on stream later in this decade, but the pattern is clear: North Sea wells age faster than the hardy Scots whose prosperity is so dependent on them.

Houston energy investment banker Matt Simmons has been pounding the table saying that if Saudi Arabia has peaked, then the world has peaked. Coxe doesn't claim that the world has peaked, but then he doesn't predict smooth sailing either.

(Via lowem.)

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Why ethanol futures have no future

If trading a futures contract in a commodity that has no future sounds like a contradiction, it is. Proponents of ethanol as motor vehicle fuel love to tell you that it will get us off imported oil. What they fail to tell you is that it takes more energy to produce ethanol than the ethanol yields. Therefore, what ethanol's supporters are saying is a logical impossibility. In fact, we're subsidizing the production of ethanol with energy from oil and natural gas!

For that reason it seems to me that the newly created futures contract for ethanol will have a relatively short shelf-life.

(Via Triple Pundit.)

Bonus joke:

Do you know how to make a small fortune in the commodities markets? Answer: Start out with a big fortune.

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How's your herring?

Herring are little silvery fish which are a major food source for fish and marine mammals. (Humans like me sometimes eat them, too.) Their precipitous decline in the Puget Sound area in Washington state has scientists worried. The decline was from an estimated 10,000 tons in 1994 to just 808 tons in 2000. What could be causing the decline? The scientists want to know.

A sudden drop in the population of any species is a serious warning sign of stress in an ecosystem. These kinds of drops are being recorded regularly for all types of species, plant and animal, around the world. Will we listen to the message those declines are trying to tell us?

UPDATE: Today must be sardonic mood day. All my posts include actual parodies or self-parodies. Peak Energy picked on this news and does a nice job of skewering the Bush administration in his parody of the story.

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News Flash: Author casts doubt on Earth's seasons

If you've been following the flap over Michael Crichton's anti-global warming screed disguised as a novel--it's called State of Fear--you'll get some laughs from this piece of parody on RealClimate. RealClimate is a blog run by real climate scientists who attempt to correct bad information in the media about climate issues. Normally, they stick to science. But, I guess there's only so much a climate scientist can take before he or she breaks down and writes a piece of humor designed to explode the puffed up notions of grandeur and certainty emanating from a bad novelist who knows little about climatology.

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