Energy Strain Has Moved

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Michelin Electric Car Revolution

Michelin, the tire company, has introduced a concept that places an electric motor in each wheel of a vehicle. Each motor is responsible for turning the wheel in which it is located. This allows car designers to use what would typically be a centralized motor compartment for pretty much anything they want. Designers could place batteries in the engine compartment instead of having to find odd battery locations when using the traditional central motor car design. This also allows car designers to not use the engine compartment at all if desired.

Michelin's 4 electric motor design is reported to be roughly 90% efficient which is a 70% increase over typical gasoline engines. Plus like your typical electrical vehicle each tire's motor collects unused energy when the vehicle is braking, etc... to recharge the batteries. This design is going to be available in a vehicle from Opel sometime around 2011. Opel's vehicle is estimated to sell in the $25,000 to $37,000 range.

Could this out of the box design be just what the electric car needs to become mainstream? Who knows but I am truly happy to see a company think outside of the box when designing what many say will be the vehicles of the future.

See Treehuger article for more information.

Understanding the Low Prices of Oil and Gasoline

Oil prices have fallen from over $147 per barrel (42 gallons) in July of 2008 to $64 during this Friday’s trading. I was in Houston at the end of the week and drove by some gas stations that were selling unleaded regular for under $2.26 per gallon. This price looked shocking to me as I have become accustomed to the price of motor gasoline costing at least $3.50 per gallon and even $4 plus per gallon like it was this summer. So the question becomes, what is causing these low gasoline prices?

There are dozens of factors that cause the price of motor gasoline to fluctuate, as we are aware. Let’s look at the most important factors in conjunction with the current news to see if we can figure out what is causing the low price of oil.

Long Term Factors:

• Oil Supply
If new reserves of oil are found, and can be brought online at a rate faster than existing oil fields are being depleted, the supply of oil will increase and the price will fall. If new oil supplies are not found or new extraction technologies fail to offset the aging of the fields, oil production will fall and prices will increase.

There hasn’t been much in the news about oil supplies in the last few years. There have been no new large supplies of oil brought online in recent months. There have been no new discoveries that will substantially increase supply in the next six years. There have been no substantial new innovations in production/extraction technologies. Government reports show oil supplies looking very flat since the summer of 2005.

• Intensity of Oil Usage and Technology
If technology is invented that makes oil less useful or desirable at its current market prices, oil demand will drop as the other inventions take its place. If technology is invented that makes oil more useful to the economy, oil prices will rise.

There have been no substantial changes to the oil technologies that are powering our economy. No new engine designs or significant agricultural breakthroughs have been reported. Even positive news on oil efficient technologies has been scarce. Boeing has been promising 787s that are supposed to save 20% fuel, but not one has been delivered.

Intermediate Factors:

• Annual Cycles of Demand
Each year, the demand for oil changes as the year progresses. Demand for finished products is highest in the summer during driving season and demand for crude is usually highest while the heating oil inventories are being built up and there is still pre-winter driving demand.

Currently we are at the low point of demand. Driving season is over and heating season has not really started.

• Amount of Economic Activity
Oil demand is a direct result of economic activity. As long as there is no new technology to supplant oil for many necessary parts of our economy, oil will be required in direct proportion to the economic activity. Think of a small business. If delivering $100 worth of pizza requires $10 of gasoline, delivering $90 of pizza will only require $9 of gasoline. If business picks up to $110 worth of pizza, about $11 of gas will be required to deliver it.

Consider some recent news:

“Feds to slash interest rates as recession looms”
“Chrysler to cut 25% of salaried workers”
“NorthWest Airlines loses 317 Million dollars, announced schedule cuts”
“Trading in Austrian Airlines halted”
“Airlines see load factors drop despite capacity cuts”
“Southwest loses $120,000,000 first loss in 17 years, will cut unpopular flights”
“Gainey Trucking can’t pay owner”
“Canadian truckers face losses from diesel fuel shortage”
“UPS faces precipitous declines on overnight shipping”

Short Range Factors:

• Speculation
Speculation tends to increase the volatility or the size of the price cycles; it also therefore increases the height of the highs and the depth of the lows. The reason for this is simple. If a speculator sees that each day for a year the price of gasoline is $3.00, there is no way for him or her to make any money from buying or selling it. He would just end up buying it, sitting on it, and selling it again at the same price, making no money and wasting his time. The speculator makes his money when the price deviations increase. If the price is dropping, he sells what he has and increases the market supply, causing the price to go down further. If the price is going up, he buys more to sell at a later time. Deferred selling shrinks the available market supply and raises prices.

Consider this quote from www.marketwatch.com in an article about how OPEC is on its own as investors flee from oil speculation:

“This time, however, OPEC is on its own. With speculators fleeing, the cartel is going to have to build a floor under oil prices through disciplined production cuts. This isn't a group known for discipline, however. And given the wheezing global economy, OPEC has only an outside chance of pushing prices back up to $100 a barrel even if they manage to significantly slash output.”

From this and similar articles, it is clear that investors are selling oil positions due to both the oversupply and subsequent price drop, as well as the fact that they need money to cover losses in other areas of the falling market. This causes the price of oil to drop even further, but can only continue until investors sell off all of their positions. After this, the price of oil will begin to rise even if speculators do not buy again.

• Weather
The weather can affect both the supply and the demand of oil. Unusual weather events can be things like extreme cold snaps in the Northeast Unites States, resulting in the demand for heating oil to increase substantially. Conversely, very mild winters cause decreased heating oil demand. On the supply side, weather can decrease supply by preventing the transportation of oil from the point of production to the consumer or refiner.

Searching the news about the weather, it looks as though the weather has been very friendly to the price of oil. There have been no weather-related reasons for declines in supply or evidence that demand has strayed from the seasonal norms in the last few months.

• Accidents and/or Malicious Destruction
Accidents or malicious destruction of petroleum equipment that is necessary for petroleum production can cause oil supplies to drop and prices to increase.

There has been no substantial accidental or malicious damage to the petroleum infrastructure in the last few months.

Conclusion:
The current low price of oil is caused primarily by what economists call “demand destruction.” That is, as economic activity winds down, the demand for oil drops and the market verges on a glut in supply. The price will stay low and most likely go lower as long as the following continues:

The weather stays good.
There are no accidents or attacks on the petroleum infrastructure.
The speculators continue to sell.
The economy continues to decline.

The last one is the most important because the health of our currently configured industrial economy is directly related to how much oil is being consumed--much like your car requires fuel in proportion to how much work it does. Let’s hope that we can get the economy going well enough again to bring on some unprecedented high prices. If not, we will be dealing with more economic disaster and unemployment.

Daniel J Swanson
dswanson@danswanson.com

The Power Grid Unable to Meet Our Needs

Wind energy is undoubtedly a flourishing alternative energy that will see much more growth, especially as it's cost-per-watt continues to become more and more competitive with fossil fuels and other alternative energy sources. It is without a doubt that wind energy is going to play a major role in electricity generation in our society. People like T. Boone Pickens are major supporters of wind energy. Pickens wants to build the largest wind energy farm in the world in west Texas, but without some investments into the power grid, major wind energy farms, like the one Pickens wants to build, will be delayed or never built. The power grid gridlock is not only going to effect T. Boone Pickens monstrous wind farm, it will effect many newly proposed wind farms and it is already effecting currently operating wind farms like the Maple Ridge wind farm in upstate New York. The Maple Ridge farm has had to stop electricity production several times because the power grid was unable to properly distribute electricity. So what are we going to do if we are going to continue building solar and wind farms? Our only option is to upgrade the power grid so that it can properly distribute the electricity we generate.

The power grid is a large connection of electrical lines that is intended to keep electrical outages at a minimal and to maintain smooth, steady flow of electricity throughout the grid. Power companies can route electricity to different portions of the national grid in order to meet energy demand. The problem with the grid is that it is very outdated and is reaching it's maximum capacities because America's demand for electricity continues to grow. Both wind and solar energy plants are typically built in secluded areas with smaller populations because the power grid is so outdated it is becoming very difficult to route this power back to the populated areas of the country. The power grid is often described as a highway system. Like a highway system there are major highways, called backbones, smaller highways and "normal" roads. The power grid lacks "smarts", and because of this, it is running into trouble with properly routing electricity correctly and proportionately. With the extra power generation from wind and solar many of the grid backbones (major highways) are becoming congested with an excess of electricity. This is forcing some alternative energy sources to have to shut down and halt their production of energy; a good example of this is the Maple Ridge wind farm in New York state (Source Link).

The power grid is in need of substantial amounts of investment in order to adequately handle new forms of energy generation. Modernization is absolutely necessary if we are to increase the use of wind and solar energy in our country. Many companies are looking into ways to make the grid "smarter". Many argue that the biggest downfall to the power grid currently is the lack of an operating system, maintaining and monitoring the power grid. With the use of advanced monitoring devices for the home consumers can monitor their power usage and costs. These type of monitoring feedback systems can be implemented into the power grid by the utility companies themselves, which gives them better feedback of the actual electricity demands. Many utility companies offer this type of system currently and some utilities are offering discounts if you install this type of system. The need for this type of bidirectional communication within the power grid is completely necessary in order to improve efficient and distribution.

Another major component of the power grid is to maintain a smooth, steady flow of electricity at all times. With the increased use of solar, wind and even wave power, the electrical grid's power generation can experience greater fluctuations. In portions of the country, days may go by where there is little sun. With very little sun comes very little electricity from solar plants. In order to combat this several companies are looking into different methods that can be used to store energy for usage at a later date. Energy can be stored using: batteries, hydrogen, compressed-air, flywheels, magnetically and pumping water. One storage method that seems to be gaining a lot of speed is compressed-air. Compressed-air allows utilities to store energy during off-peak times and then to use that compressed air at a later date to generate electricity. Several methods are used for storing the compressed air, one method is to use underground caverns and another such method is to use storage tanks. The beauty of compressing air for storage is it doesn't use a valuable resource like water that is in very limited supply. Air is available in any location and an air-compressor storage can be relatively efficient at roughly 70%, if properly maintained. Superconducting magnetic energy storage and thermal energy storage both are expected to have efficiency ratings of above 95%. Thermal energy also has a very high efficiency rating and is getting a lot of attention because unlike superconducting magnetic energy storage is a much less complex storage system. Thermal designs typically use molten salt to store heat that can later be used to generate electricity. The other major player in energy storage is battery storage. Batteries can achieve efficiency ratings of 90% or greater, but batteries typically have a relatively short lifespan and producing batteries can be an energy intensive process. Batteries are readily available and functional. Because of the longevity of batteries and the amount of energy needed to produce and dispose of it, it makes them a poor long term storage choice unless improvements can be made in these areas. Personally if I had to choose, I would place my bets on thermal and compressed-air storage systems, they offer high efficiency ratings and are rather simplistic systems.

Another major step in upgrading the power grid is updating the electrical lines. Many areas of the country are experiencing bottlenecks due to electrical lines having reached their maximum capacity. This is similar to the problem that T. Boone Pickens is experiencing in Texas. Pickens though is offering to invest in a portion of the cost to upgrade the power grid in order to get his massive wind farms built and online. With the use of a smart power grid, electrical storage methods and improved transmission lines we will see a much more efficient and scalable national power grid.

"Green Collar" Jobs

Report: $100 billion would foster 2 million green jobs

According to the above cnet news article if the government would invest 100 billion in creating green tech jobs we would be able to create roughly 2 million jobs. Here is how the 100 billion dollar investment would be broken down: about 50 billion would be tax credits to businesses and homeowners, 46 billion would be in direct federal spending and about 4 billion would be in loan guarantees. All of this investment would equal to about the same amount spent on the recent economic stimulus package, according to the cnet article. This would have been money better spent. It could give people something they actually want and need, a job, instead of a "stimulus" check that probably wouldn't even last a month.

The jobs created from an investment like this would range from generating new technologies to progress the use of biofuels, alternative energy sources, etc.. to jobs that would update current infrastructures like buildings, the power grid, rail, etc... to be more energy efficient.

Now I am not sure if all of this job creation would truly happen but our country has to invest into this stuff eventually if we want to avoid economic collapse so doing this now should help. Plus maybe we can get at least some of those 2 million jobs at the same time. I just fear that this investment would go to technologies that have little or no hope, like ethanol or a hydrogen vehicle. Now hydrogen potentially has a spot in our future as an energy storage source but we will save hydrogen for a future post.

Advancing Wind Power

GE is looking into several technologies that would advance wind energy in two ways: efficiency and reliability. GE is looking at using carbon composites, instead of fiber glass, as a material for wind turbine blades. GE is also looking at using different shaped blades in order to catch more wind, which will could allow the blades to rotate at slower wind speeds. Using carbon composites will give the blades increased strength which will allow the blades to operate at faster wind speeds as well as the ability to generate more energy. With the combination of longer blades, increased strength and different blade designs, GE hopes to increase the amount of energy generated from turbines without having to significantly increasing the size of the turbines. Increasing the size of the turbines means more raw materials, like steel, which also means more cost to GE and to their customers. GE hopes to keep costs down as much as possible while still increasing energy production from a wind turbine, this is important in order to keep wind energy an important, cost effective alternative energy source.

One of the biggest downfalls to wind energy, like solar, is the lack of consistency that can occur. Because wind turbines require the wind to create energy, if the wind is not blowing very hard or at all you are looking at less or no energy being produced. This can create disturbances in the power grid and power outages in areas of the country. Typically natural gas plants are used as backup power because natural gas plants can begin producing electricity relatively quickly and inexpensively when compared to other power plants, like coal. Due to the inconsistencies that can occur in wind power generation some are against wind power, while others have embraced wind as a viable energy producer. Supporters of wind acknowledge that it is not a perfect energy source, no energy source is flawless. Instead of giving up on wind energy they are developing methods that can be used to help improve the consistency of wind. GE is researching smart turbines and looking at ways to help develop a smart power grid to help alleviate this problem. GE hopes to you use software to find the best placement of wind farms and placement of turbines within a wind farm. GE is also looking into electronic control devices that would feed the power grid more efficiently and effectively. GE believes that if they can improve the turbines and the delivery of the power into the grid that many consistency problems can be largely improved. Others are looking at ways to store excess energy that can be used during times of limited wind or high energy demand. Companies like Energy Storage and Power are developing compressed air energy storage solutions. Basically a simplistic explanation of a compressed air energy storage is this: excess energy from the grid would be used to compress air that is stored in a storage tank. When the power grid is asking for more power than what is being produced the compressed air would be released from the the storage tanks and used to create energy. Now naturally there is some energy loss during the conversions but some of this excess energy is wasted anyways so at least this is a way to harness it at a later time.

Solar Being Put to Use!

I know this is an older article but I wanted to post something about it anyways (click on article title for link). California, whether you consider it good or bad, is forcing utilities, like PG&E, to have at least 2o percent of their power generation from renewables by 2010. PG&E is planning on installing two large scale solar plants to generate 800 megawatts of electricity. Both plants should be up and fully operational by 2013. This is enough power generation to support roughly 250,000 homes a year, not too shabby.

I know some people disagree with California (or any state) demanding that power utilities have a certain amount of renewable power but I myself find this to be one of a few ways to get renewable power generation increased. You can also give tax credits, for example. I do commend PG&E on their efforts here, solar power is going to be a big part of our future and installing such a large scale plant in very adventurous and costly. I hope this can create and example and trend for more companies to build renewable power generation plants, instead of coal, natural gas, etc.... We can not continue in our old ways or society is going to feel tremendous pains.