[Ming]

Time to electrify the economy

By George S. Farra / Woodley Farra Manion Portfolio Management
Posted: June 16, 2008

www.indystar.com

The increase in the price of oil and gas at the pump have been startling, leaping more than 100 percent for oil in the past year and 50 percent for gasoline. The call for an end to the United States’ dependency on oil to move its economy has reached pitch levels.

Some call for conservation, which has the downside of limiting economic activity, while others want more drilling within the country’s borders. Environmentalists and residents of the states affected by more drilling are obviously opposed to this measure. Given the impact on the future growth of the economy, and therefore U.S. stock prices, what can we do?

Many alternatives to oil-based gasoline have been touted and researched. Diesel has better fuel economy but remains dirtier and is now more expensive than gasoline. Corn-based ethanol sounds like a good solution until you see the impact on food prices and its limitations in terms of mileage and energy output.

Hydrogen has potential but would require a massive change in the filling station infrastructure to accommodate it. (We have over 500,000 filling stations, thousands of miles of pipelines and tanker trucks, all geared for the delivery of gasoline). These and other fuel alternatives are more based on benefits yet to come and will not have an impact on today’s transportation costs.

The best hope for breaking the oil addiction and keeping food on the table and not in the gas tank is electricity.

The technology for a truly electric car, one that is re-charged by plugging it into a simple wall outlet, is around the corner. The power and range of the latest generation of lithium-ion batteries promise to deliver up to 80 miles of driving range on the electric charge alone, sufficient for most daily commutes.

Adding a small gasoline engine to the mix to serve as a portable generator guarantees a driver will not run out of power away from home. Sound idyllic? GM is preparing the Chevy Volt for delivery to showrooms by 2010, and other manufacturers are rushing to do the same.

Article Continues: http://www.indystar.com/apps/pbcs.dll/article?AID=/20080616/BUSINESS/80616063/1003

 

[jfnz24]

One thing that I have yet to hear is how the US Electric Grid would handle all of these new vehicles, in addition to all current demands. As the blackouts over the past few years have taught us, the electric grid is also in need of some serious upgrading.

 

[jckjds]

I think it is hugely important to get electric cars on the roads. However, I think that it is going to take more than that to fix all of our energy problems.

Foremost, we need better conservation measures. People need to be encouraged and incentivized to use less energy - in their cars, in their homes, in general. I think that one of the biggest helps would be (1) to encourage people to live closer to work and (2) to improve mass transit in areas where mass transit could be practical and beneficial. The horsepower wars need to stop. There is a reason that 4 cyl engines dominate the mid-size car market -- most people don't give a ***** about 0-60 times. If the car can behave competently at highway speeds, then great. To be sure, there can and should still be some niche performance cars, but not every vehicle needs to have a 300 hp V-6. I'd be willing to bet that a small displacement DI v-6 with mileage competitive with most I-4's would be a bigger seller than huge displacement 300 hp V-6's available in many cars now.

Once we have minimized our energy use, then we will need several different energy sources -- to ultimately meet those needs. Electric cars should be a huge portion of that, but I believe there will still be ICE cars -- at least for the next several decades. Obviously the growth of electric cars will curb oil consumption, lowering prices and extending the available supply. Furthermore, even moderate ethanol blending/use will further assist with cost and supply issues. Hydrogen and electricity will probably be long-long term solutions, but the ICE will still be around for a long time.

In the near term, we should be tapping every possible oil source that we can. The sooner we are capable of meeting at least some of our oil needs, the better off we will be. As long as exploration is combined with alternative and renewable fuel development, then such exploration would merely be a short term stop-gap solution to a serious problem. Failing to start the process of exploration now will screw us in the future -- as it takes a substantial amount of time to develop new oil fields/off shore drilling areas.

 

[377Z]

I have concern for the grid as well.

Hopefully it will lead to upgrading the grid, though that will be expensive.

 

[Saturn69]

One thing that I have yet to hear is how the US Electric Grid would handle all of these new vehicles, in addition to all current demands. As the blackouts over the past few years have taught us, the electric grid is also in need of some serious upgrading.

Because the majority of those vehicles would be charged at night when there isn't so much demand on the grid and, at which time, the energy being created by burning coal or natural gas or whatever, is being wasted. They don't fire up the plant in the morning when people need electricity and shut it down when people go to bed. I must say, for my neck of the woods, what blackouts?

P.S. Why is it someone always asks this question? Do they not remember the many, many times before when it was answered?

 

[drew630]

Knowing GM's luck the oil "bubble" will burst and people won't be as concerned with fuel economy anymore... at least enough to pay the price for a Volt. Just a thought....

 

[jkennedy293]

There was an article out last year where Lutz quoted the DOE in stating that the power grid in its current form could handle around 1.5 million vehicles charging up at night.

 

[jeep2c]

There was an article out last year where Lutz quoted the DOE in stating that the power grid in its current form could handle around 1.5 million vehicles charging up at night.

Which isn't really that many in the scheme of things... spread across GM/Toyota/Honda/Chrysler (I don't think I've seen ford announce intentions to build a plug-in).

That's 375k each, and if the cars have about a 10 year life-cycle that's only 37k/year in sales for each automaker as a sustainable amount for sales.

 

[Saturn69]

No one is saying that all 247,421,120 cars in the U.S. will be replaced all at the same time with electric cars, thereby sending us into the Dark Ages (literally...as in black out). A little bit at a time won't hurt. Putting a solar-powered charger on the garage would help, too. We have time to shore up the electrical grid where it is weakest, this isn't going to happen this Saturday at 11:03 a.m.. Don't be a Panic Monkey.

 

[eaton53]

P.S. Why is it someone always asks this question? Do they not remember the many, many times before when it was answered?

And you have answered the question of why the Volt is out there so early.

Every Volt article that allows comments gets comments from those who can't grasp concepts like "charging off peak" and "on board generator".

GM needs this time to educate the masses. The more the Volt's kept secret the more misunderstood it will be.

 

[DaJudge]

I could easily see a solor panel on the side of my garage putting electricity into storage batteries all day, them moving the stored electricity into my Volt over night. May not fill it but would certainly help and be free solar energy.

 

[usa1]

Sounds great, but then consider you need to burn something to make the electricity. Coal is a nice abundant local resource, but the climate change winds are blowing that fuel source away because of the evil of CO2. The same people that hate coal happen to hate nuclear too because they watched the "China Syndrome" when they grew up.

What does this leave us with? Solar cells and wind power? Sorry folks, but the costs are still many multiples too high and don't scale well or work for a large portion of the day.

Everyone agrees we need to do SOMETHING about breaking the oil addiction, but NOT ONE politician is being honest with people when they say conservation and alternative power sources can solve the problem. A program that balances investments in alternative wind/solar power with conservation AND WITH increases in local energy sources like coal, nuclear, oil from places like ANWR is what is needed.

Mark

 

[Saturn69]

Sounds great, but then consider you need to burn something to make the electricity. Coal is a nice abundant local resource, but the climate change winds are blowing that fuel source away because of the evil of CO2. The same people that hate coal happen to hate nuclear too because they watched the "China Syndrome" when they grew up.

What does this leave us with? Solar cells and wind power? Sorry folks, but the costs are still many multiples too high and don't scale well or work for a large portion of the day.

Everyone agrees we need to do SOMETHING about breaking the oil addiction, but NOT ONE politician is being honest with people when they say conservation and alternative power sources can solve the problem. A program that balances investments in alternative wind/solar power with conservation AND WITH increases in local energy sources like coal, nuclear, oil from places like ANWR is what is needed.

Mark

Oh God, here we go with the more-pollution-due-to-electric-cars crap. The other 'bad penny' of the electric car discussion posts has finally turned up.

The coal is being burned and polluting every night, whether we use it or not, meanwhile the electricity that is being generated is not being used. That is a waste of fuel. Plugging in 1 million electric cars - which is like, 1/270th of the number of cars in the U.S. - will put some of that wasted coal/oil/natural gas that we're using anyway.

 

[Ronald McChevy]

There was an article out last year where Lutz quoted the DOE in stating that the power grid in its current form could handle around 1.5 million vehicles charging up at night.

I saw a study once that stated the grid could handle tens of millions of plug-ins, assuming they all charge overnight. I'll try to find it.

 

[tholland]

I think the US needs to drill first and ask questions later. Urgency can certainly speed up developing new technology, but a virtual gun to the head hasn't exactly provided clarity as to how to proceed with the energy problem

 

[Saturn69]

I think the US needs to drill first and ask questions later. Urgency can certainly speed up developing new technology, but a virtual gun to the head hasn't exactly provided clarity as to how to proceed with the energy problem

No, but $4+ per gallon gasoline sure has.

Don't drill, conserve. Drilling isn't the panacea everyone wishes it to be. Unless the bottom drops out of oil, the price isn't going to go down anytime soon, regardless of whether or not we tap ANWR.

 

[tholland]

No, but $4+ per gallon gasoline sure has.

Don't drill, conserve. Drilling isn't the panacea everyone wishes it to be. Unless the bottom drops out of oil, the price isn't going to go down anytime soon, regardless of whether or not we tap ANWR.

Hence the term "virtual". I was referring to gas and oil prices... but they really have only produced a panic effect so far... there is no real advancement toward a national energy policy. And you are correct... conservation helps, but it won't solve the problem alone... the US needs to cut down on oil imports and the best way to do that is to use the vast amounts of oil reserves within and off it's shores.

 

[eaton53]

Sounds great, but then consider you need to burn something to make the electricity. Coal is a nice abundant local resource, but the climate change winds are blowing that fuel source away because of the evil of CO2. The same people that hate coal happen to hate nuclear too because they watched the "China Syndrome" when they grew up.

What does this leave us with? Solar cells and wind power? Sorry folks, but the costs are still many multiples too high and don't scale well or work for a large portion of the day.

Everyone agrees we need to do SOMETHING about breaking the oil addiction, but NOT ONE politician is being honest with people when they say conservation and alternative power sources can solve the problem. A program that balances investments in alternative wind/solar power with conservation AND WITH increases in local energy sources like coal, nuclear, oil from places like ANWR is what is needed.

Mark

Frankly, I could give a flip what they burn as long as it's domestic.
The use nuke here and have for a long time. Too bad we can't get some more of that.

the US needs to cut down on oil imports and the best way to do that is to use the vast amounts of oil reserves within and off it's shores.

Naw, we'll just let the Cubans / Chinese do it.
Although I'd be cool with it if we could point at that and then go drill just off the coast of Saudi Arabia...

 

[PA Dweller]

I think it is hugely important to get electric cars on the roads. However, I think that it is going to take more than that to fix all of our energy problems.

Foremost, we need better conservation measures. People need to be encouraged and incentivized to use less energy - in their cars, in their homes, in general. I think that one of the biggest helps would be (1) to encourage people to live closer to work and (2) to improve mass transit in areas where mass transit could be practical and beneficial. The horsepower wars need to stop. There is a reason that 4 cyl engines dominate the mid-size car market -- most people don't give a ***** about 0-60 times. If the car can behave competently at highway speeds, then great. To be sure, there can and should still be some niche performance cars, but not every vehicle needs to have a 300 hp V-6. I'd be willing to bet that a small displacement DI v-6 with mileage competitive with most I-4's would be a bigger seller than huge displacement 300 hp V-6's available in many cars now.

Once we have minimized our energy use, then we will need several different energy sources -- to ultimately meet those needs. Electric cars should be a huge portion of that, but I believe there will still be ICE cars -- at least for the next several decades. Obviously the growth of electric cars will curb oil consumption, lowering prices and extending the available supply. Furthermore, even moderate ethanol blending/use will further assist with cost and supply issues. Hydrogen and electricity will probably be long-long term solutions, but the ICE will still be around for a long time.

In the near term, we should be tapping every possible oil source that we can. The sooner we are capable of meeting at least some of our oil needs, the better off we will be. As long as exploration is combined with alternative and renewable fuel development, then such exploration would merely be a short term stop-gap solution to a serious problem. Failing to start the process of exploration now will screw us in the future -- as it takes a substantial amount of time to develop new oil fields/off shore drilling areas.

These are good solutions, but the best solutions would still allow us to drive what we want, live in the kind of house we want/where we want, etc. I live in a house that is twice as big as the last one but we save $1000 on electricity a year. So I believe it's possible to continue living the way we do without making sacrifices. This is the easiest way, but again IMO the best way will allow us to make no changes to our lifestyles, and I believe it is possible.

Tell me why we can't drive large, powerful, and roomy vehicles equipped with electric engines that can use little to no fuel? Why does it have to be drive a Geo or a Prius?

 

[stillen]

No, but $4+ per gallon gasoline sure has.

Don't drill, conserve. Drilling isn't the panacea everyone wishes it to be. Unless the bottom drops out of oil, the price isn't going to go down anytime soon, regardless of whether or not we tap ANWR.

Drilling means we have more control over our energy supply than they meaning middle eastern countries which is a GREAT thing.

Prices would stabilize and come down some.

So Drill drill and DRILL go after coal even Mcain says its time to drill of the our coast.