Topic: A scary strategic problem - no oil

[Thucydides]

Bob Zubrin on Methanol. I'm a bit astonished, since my understanding was that much of modern car's fuel systems are incompatible with methanol, but that is obviously not the case here. (Anyone who is thinking of trying this experiment had better carefully check their car's specifications, you might not have such an easy time).

Since unconventional oil production has exploded and the availability of hydrocarbons is no longer in doubt for decades to come (if not longer), the case for methanol is not quite as compelling as Zubrin is advocating. OTOH methanol is a valuable industrial chemical, so ramping up inexpensive methanol production may have other benefits.

http://www.nationalreview.com/articles/print/284560

Methanol Wins
It’s time to open up the Open Road with H.R. 1687.

On August 2, I published an open wager on National Review Online. I offered to bet up to ten people $10,000 each that I could take my 2007 Chevy Cobalt, which is not a flex-fuel car, and, running it on 100 percent methanol, get at least 24 miles per gallon on the highway. Since methanol averages less than half the price of gasoline — and can readily be made from coal, natural gas, or any kind of biomass without exception — this would demonstrate superior transportation economy from a non-petroleum fuel that is producible from plentiful American resources.

Unfortunately, no one took the bet. That fact alone says a lot. Of the 7 billion people on this planet, there are about a million or so who know a great deal about cars. Clearly, not one of them was sufficiently doubtful that it could be done to put his money on the line. Although it left me short a nice chunk of easy cash, the refusal of anyone to accept my challenge should have settled the matter. But some people, while refusing to take the bet, still demanded that I conduct the test anyway. I did, and here are the results.

First, I ran the car on 100 percent methanol. This required replacing the fuel-pump seal made of Viton, which is not methanol compatible, with one made of Buna-N, which is. The new part cost 41 cents, retail. In order to take proper advantage of methanol’s very high octane rating (about 109), I advanced the timing appropriately. This dramatically improved the motor efficiency and allowed the ordinarily sedate sedan to perform with a significantly more sporty spirit. As measured on the dyno, horsepower increased 10 percent. With these modifications complete, I took my Cobalt out for a road test. The result: 24.6 miles per gallon.

When I first made the bet, many commentators thought that I would aim for high-efficiency performance with high-octane fuel by increasing the compression ratio of the engine (which is how race-car drivers using methanol have done it for the past half-century). However, with modern cars using electronic fuel injection, this is unnecessary. Instead, the necessary changes to the engine can be made simply by adjusting the Engine Control Unit software. Thus, except for switching the fuel-pump seal as noted above, no physical changes to the car were required.

Other critics commented that while I might be able to achieve good fuel economy, the idea was impractical because the emissions would not be acceptable. In response, I had the car tested for emissions with 100 percent methanol (M100), 60 percent methanol (M60), and ordinary gasoline (i.e., E10, which contains about 10 percent ethanol), and for comparison, did mileage tests for these alternatives as well. The results of all these tests are shown in the table below.

It can be seen that, far from failing to meet emissions standards, the Cobalt running on methanol was extremely clean, beating both the strict Colorado emissions standards and the national EPA averages by an order of magnitude. The complete elimination of carbon-monoxide emissions when using M60 is particularly remarkable — so much so that I initially thought it was an experimental error caused by faulty equipment at the emissions test station. I tested it again at a different station and got the same result.

Returning to the subject of fuel economy, this can be evaluated by dividing the miles per gallon by the pre-tax spot price of the fuels in question in order to obtain the pre-tax miles per dollar shown in the table above. It can be seen that when methanol is used, fuel-economy improvements of 40 percent can be achieved. (The spot price shown in the table is the New York Harbor spot price of gasoline and the non-discounted Methanex spot price, both averaged over the past year.)

These results should not be too surprising. Methanol contains about half the energy content of gasoline, but its high octane allows it to be burned more efficiently, and thus obtain two-thirds of the mileage. The fact that the Cobalt could easily be made to use it should be no shock either: While not a flex-fuel car, the Cobalt uses the same E-37 computer and the same engine as GM’s HHR, which is a flex-fuel car. In fact, all GM cars sold in the U.S. for the past five years use either the E-37 (for small cars) or the equally flex-fuel-capable E-38 (for larger cars), and so all are capable of flex-fuel operation provided they are programmed correctly. The same is true at Ford, whose cars, whether flex-fuel or not, indiscriminately use the same “black oak,” “green oak,” or “silver oak” computers. Without question, the same must be the case for European and Japanese cars as well, since all are sold in Brazil, where flex-fuel capability is mandatory.

There was a time when adding flex-fuel capability to an automobile increased its cost by about $100. This is no longer true. Now almost all new cars already have flex-fuel hardware, and could easily be marketed as flex-fuel vehicles. Yet the automakers have failed to do so. This is an extraordinary disservice to the nation, because it is preventing us from meeting our fuel needs using our own resources. The United States has only about 4 billion tons of oil reserves, but over 270 billion tons of coal, unknowably vast supplies of natural gas, and by far the world’s most powerful agricultural sector — all of which could be used to produce methanol. Yet instead of being able to put these assets effectively to use to meet our transportation needs, we are being forced to buy 5 billion barrels per year of imported oil. At $100 per barrel, this is costing us $500 billion per year, a deduction from our GDP equal to that required to support 5 million jobs, at $100,000 annually per job.

The Open Fuel Standard bill (H.R. 1687) would remedy this situation by requiring automakers to activate the flex-fuel capabilities of their vehicles. This would open the market to fuels producible from plentiful domestic resources not under cartel control, free us from looting by OPEC, create millions of jobs, slash our deficit, reduce the flow of income to the Islamists, and cushion us from counter-effects should forceful action be required to deal with threats such as the Iranian nuclear-bomb program. Introduced by Reps. John Shimkus (R., Ill.) and Eliot Engel (D., N.Y.), its current bipartisan list of sponsors includes liberals such as Jim McDermott (D., Wash.), Allyson Schwartz (D., Pa.), Steve Israel (D., N.Y.), and Howard Berman (D., Calif.) to conservatives Dan Burton (R., Ind.), Roscoe Bartlett (R., Md.), Tom Cole (R., Okla.), and Allen West (R., Fla.), as well as many in between. It is a bill clearly in the national interest, and should be supported by everyone from left to right.

By eliminating the artificial incompatibility between the vehicles we drive and the fuels we can make ourselves, the Open Fuel Standard bill will unchain the Invisible Hand, creating a true free market in vehicle fuels. Those reluctant to embrace it need to answer the following questions: In whose interest is it that Americans should continue to be denied fuel choice? In whose interest is it that America’s vast natural-gas, coal, and biomass resources remain unusable as a source of liquid vehicle fuel? In whose interest is it that America continue to give hundreds of billions of dollars each year to foreign potentates bent upon our destruction, instead of paying our own people to make fuel out of our own resources? In whose interest is it that a foreign cartel retains unlimited power to raise the cost of our fuel? In whose interest is it that we remain in the power of our enemies? Finally, should their interests be allowed to prevail, or should ours?

The fault, dear reader, is not in our cars, but in ourselves, that we are tributaries. We can set ourselves free, but action is required.

— Dr. Robert Zubrin is president of Pioneer Astronautics, a member of the Steering Committee of Americans for Energy, and author of Energy Victory: Winning the War on Terror by Breaking Free of Oil. His next book, Merchants of Despair: Radical Environmentalists, Criminal Pseudoscientists, and the Fatal Cult of Antihumanism, will be published by Encounter Books in February.

editor’s note: This article has been amended since its initial publication.

[Thucydides]

Swimming in a sea of hydrocarbons, and why it is so difficult to access them (hint; it isn't a technical or technological problem). From a Canadian perspective, a huge increase in supply might actually "strand" the oilsands as being too expensive to economically access, and the generally lower prices of petroleum products will decrease our ability to make the $C a strong "petrodollar". Lots of graphics, please go to link:

http://www.powerlineblog.com/archives/2011/12/americas-vast-energy-resources.php

America’s Vast Energy Resources

For a long time, the Left has gotten away with underselling America’s energy resources. The old chestnut that the U.S. uses 25% of the world’s oil but only has 2% to 3% of the world’s oil reserves has been repeated endlessly by Barack Obama and many others. This claim fooled millions of people who didn’t understand that in the U.S., “reserves” means petroleum that is 1) legally available for development, and 2) profitably extracted at current prices. So if Democrats would stop preventing drilling, we could vastly increase our “reserves,” as legally defined, overnight.

Happily, the publicity that has recently been given to massive shale oil and natural gas deposits in North Dakota, Pennsylvania and elsewhere has awakened many Americans to the fact that our energy resources are truly vast–greater, in fact, than any other country’s. The point is driven home by a new report that has just been released by the Institute for Energy Research. IER describes the problem (and the opportunity) bluntly:

    Access to affordable, abundant energy is, fundamentally, a means of freedom. But for those seeking to create a crisis that provides an opportunity to direct the way we live, work and act, affordable, reliable, abundant, domestic energy is a threat. In a very real sense, the more energy we have, the less power they will have. Energy abundance ends the justification for central energy decision-making.

The report is worth reading in its entirety, but here are a few graphics that sum up the bottom line. First, North American oil; click to enlarge:

Natural gas:

And coal:

This graphic compares North America’s recoverable oil with the world’s total “proved reserves.”

There is much more, but let’s end for now with this beautiful map of America’s shale gas resources:

The IER report pinpoints the obstacle to millions of new jobs and the creation of vast wealth that will be shared by all Americans in the form of lower energy costs:

    As it turns out, many of the problems of energy scarcity and rising costs in the United States have been caused by the government itself. In 2004, the U.S. Department of Energy issued a report that outlined many of the policy and regulatory constraints that impact domestic energy production. While the report focused on natural gas specifically, many of the laws and procedures also represent roadblocks to any form of safe and responsible energy production. The list of energy barriers included the following policies, all of which can limit access to U.S. resources, increase delays related to exploration and production, and/or increase costs of development:

The list of statutes and other legal impediments that follows is three pages long. Only liberal politicians stand between the American people and development of our vast energy resources.

STEVE ADDS:  John–how could you leave out my star turn in the video our IER pals did to accompany the report?

[Thucydides]

Good news for a change:

http://metanoodle.blogspot.com/2011/12/our-world-is-safer-thanks-to-shale-gas.html

Our world is safer thanks to shale gas find. Energy independence for China and the US.

The US is re-approaching energy self-sufficiency thanks to gas and oil from the Bakken, Haynes and Marcellus shales. It may even export a surplus.
Now China may also reach energy independence. This week PetroChina and Shell report finding major supplies of shale gas in Sichuan province. This bring China's reserves to 1275 trillion cubic feet by US estimates.  Test wells are working. Picture on the right shows Chinese investment.

The world is safer .
The mighty won't be held for ransom over energy.
Some of the reasons for having military adventures and bases in foreign lands will disappear.
 
Self-sufficiency will defuse war flashpoints that oil must pass through.  Think of Arab oil coming out of the Hormuz strait, under they eye of bellicose Iran and think of the narrow strait of Malacca off Singapore that China relies on.  What if it didn't  matter much what the corrupted mullahs are up to in the Persian Gulf?

As Walter Russell Mead says, "Vast reserves of energy resources at home make armed conflict over resources abroad far less likely." 

[Thucydides]

Oil is an excellent high energy density fuel for portable and mobile applications, but electrical generation is another issue to be addressed:

http://news.uchicago.edu/article/2011/12/13/small-reactors-could-figure-us-energy-future

Small reactors could figure into U.S. energy future
By Steve Koppes
December 13, 2011

A newly released study from the Energy Policy Institute at the University of Chicago (EPIC) concludes that small modular reactors may hold the key to the future of U.S. nuclear power generation.

“Clearly, a robust commercial SMR industry is highly advantageous to many sectors in the United States,” concluded the study, led by Robert Rosner, institute director and the William Wrather Distinguished Service Professor in Astronomy & Astrophysics.

“It would be a huge stimulus for high-valued job growth, restore U.S. leadership in nuclear reactor technology and, most importantly, strengthen U.S. leadership in a post-Fukushima world, on matters of nuclear safety, nuclear security, nonproliferation, and nuclear waste management,” the report said.

The SMR report was one of two that Rosner rolled out Thursday, Dec. 1, at the Center for Strategic and International Studies in Washington, D.C. Through his work as former chief scientist and former director of Argonne National Laboratory, Rosner became involved in a variety of national policy issues, including nuclear and renewable energy technology development.

The reports assessed the economic feasibility of classical, gigawatt-scale reactors and the possible new generation of modular reactors. The latter would have a generating capacity of 600 megawatts or less, would be factory-built as modular components, and then shipped to their desired location for assembly.

The U.S. Department of Energy funded the reports through Argonne, which is operated by UChicago Argonne LLC. The principal authors of the report were Rosner and Stephen Goldberg, special assistant to Argonne’s director.

The reports followed up a 2004 UChicago study on the economic future of nuclear energy. The 2004 study concluded that the nuclear energy industry would need financial incentives from the federal government in order to build new plants that could compete with coal- and gas-fired plants.

The first report, “Analysis of GW-scale Overnight Costs,” updates the overnight cost estimates of the 2004 report. Overnight costs are the estimated costs if you were to build a new large reactor ‘overnight,’ that is, using current input prices and excluding the cost of financing.

It would now cost $4,210 per kilowatt to build a new gigawatt-scale reactor, according to the new report. This cost is approximately $2,210 per kilowatt higher than the 2004 estimate because of commodity price changes and other factors.

Struggling restart

At the Center for Strategic and International Studies event on Dec. 1, CSIS president and CEO John Hamre said that economic issues have hindered the construction of new large-scale reactors in the United States. The key challenge facing the industry is the seven-to-nine-year gap between making a commitment to build a nuclear plant and revenue generation.

Few companies can afford to wait that long to see a return on the $10 billion investment that a large-scale nuclear plant would require. “This is a real problem,” Hamre said, but the advent of the small modular reactor “offers the promise of factory construction efficiencies and a much shorter timeline.”

Natural gas would be the chief competitor of nuclear power generated by small modular reactors, but predicting the future of the energy market a decade from now is a risky proposition, Rosner said. “We’re talking about natural-gas prices not today but 10, 15 years from now when these kinds of reactors could actually hit the market.”

The economic viability of small modular reactors will depend partly on how quickly manufacturers can learn to build them efficiently. “The faster you learn, the better off you are in the long term because you get to the point where you actually start making money faster,” Rosner noted.

Small modular reactors could be especially appealing for markets that could not easily accommodate gigawatt-scale plants, such as those currently served by aging, 200- to 400-megawatt coal plants, which are likely to be phased out during the next decade, Rosner said. An unknown factor that will affect the future of these plants would be the terms of any new clean-air regulations that might be enacted in the next year.

An important safety aspect of small modular reactors is that they are designed to eliminate the need for human intervention during an emergency. In some of the designs, Rosner explained, “the entire heat load at full power can be carried passively by thermal convection. There’s no need for pumps.”

Getting the first modular reactors built will probably require the federal government to step in as the first customer. That is a policy issue, though, that awaits further consideration. “It’s a case that has to be argued out and thought carefully about,” Rosner said. “There’s a long distance between what we’re doing right now and actually implementing national policy.”

The full reports can be downloaded at the Energy Policy Institute website: http://epic.uchicago.edu/page/publications-and-presentations.

Small reactors would be suitable as  heat and power sources for bases, and perhaps as powerplants for ships as well (although something like an SSN would need the energy resources of a full scale nuclear poweplant; this is why the SSn idea fell down; all the costs of a nuclear reactor with few of the benefits)

[Thucydides]

Improved solar cells. Just breakng the 31% barrier is pretty important (and only really expensive and highly refined cells can do that today):

http://www.utexas.edu/news/2011/12/15/dark_state/

Discovery of a ‘Dark State’ Could Mean a Brighter Future for Solar Energy

Dec. 15, 2011

AUSTIN, Texas — The efficiency of conventional solar cells could be significantly increased, according to new research on the mechanisms of solar energy conversion led by chemist Xiaoyang Zhu at The University of Texas at Austin.

Zhu and his team have discovered that it's possible to double the number of electrons harvested from one photon of sunlight using an organic plastic semiconductor material.

"Plastic semiconductor solar cell production has great advantages, one of which is low cost," said Zhu, a professor of chemistry. "Combined with the vast capabilities for molecular design and synthesis, our discovery opens the door to an exciting new approach for solar energy conversion, leading to much higher efficiencies."

Zhu and his team published their groundbreaking discovery Dec. 16 in Science.

The maximum theoretical efficiency of the silicon solar cell in use today is approximately 31 percent, because much of the sun's energy hitting the cell is too high to be turned into usable electricity. That energy, in the form of "hot electrons," is instead lost as heat. Capturing hot electrons could potentially increase the efficiency of solar-to-electric power conversion to as high as 66 percent.

Zhu and his team previously demonstrated that those hot electrons could be captured using semiconductor nanocrystals. They published that research in Science in 2010, but Zhu says the actual implementation of a viable technology based on that research is very challenging.

"For one thing," said Zhu, "that 66 percent efficiency can only be achieved when highly focused sunlight is used, not just the raw sunlight that typically hits a solar panel. This creates problems when considering engineering a new material or device."

To circumvent that problem, Zhu and his team have found an alternative. They discovered that a photon produces a dark quantum "shadow state" from which two electrons can then be efficiently captured to generate more energy in the semiconductor pentacene.

Zhu said that exploiting that mechanism could increase solar cell efficiency to 44 percent without the need for focusing a solar beam, which would encourage more widespread use of solar technology.

The research team was spearheaded by Wai-lun Chan, a postdoctoral fellow in Zhu’s group, with the help of postdoctoral fellows Manuel Ligges, Askat Jailaubekov, Loren Kaake and Luis Miaja-Avila. The research was supported by the National Science Foundation and the Department of Energy.

For more information, contact: Lee Clippard, College of Natural Sciences, 512-232-0675; Xiaoyang Zhu, professor, 512-471-9914.

Science Behind the Discovery:

Absorption of a photon in a pentacene semiconductor creates an excited electron-hole pair called an exciton.
   
The exciton is coupled quantum mechanically to a dark "shadow state" called a multiexciton.
   
This dark shadow state can be the most efficient source of two electrons via transfer to an electron acceptor material, such as fullerene, which was used in the study.
   
 Exploiting the dark shadow state to produce double the electrons could increase solar cell efficiency to 44 percent.

[Thucydides]

While I am sckeptical of LENR (which just seems to be "cold fusion" with a cool new acronym), evidently Royal Dutch Shell thinks this is worth looking into. If it does pan out, then distributed energy and the dismantling of the "grid" is a possibility. (Personally, I would place my bets on modular fission reactors putting out several hundred Mw as the first option, Thorium salt reactors as the second option and compact aneutronic fusion reactors like Focus Fusion or Polywell as a distant third; these have strong theoretical and engineering work behind them):

http://blog.newenergytimes.com/2011/12/16/shells-interest-indicates-major-shift-for-lenr/

Shell’s Interest Indicates Major Shift for LENRPosted on December 16, 2011 by Steven B. Krivit

Royal Dutch Shell, plc, one of the largest energy companies in the world, is interested in exploring low-energy nuclear reaction research as a possible game-changer in the energy business.

Two Shell scientists, Anitha Sarkar and Gilles Buchs, with the backing of the Shell GameChanger program, are looking for opportunities to work actively with LENR experts, according to a brief introduction the researchers prepared.

Edward Beardsworth, a venture capitalist at Jane Capital Partners in San Francisco, introduced the researchers to the field in a message to the CMNS e-mail list today.

“At my request, they prepared the attached biographical sketches and description of what they bring to the group. They are both located at the company’s research and development offices in the Netherlands,” Beardsworth wrote. “I believe their fresh and enthusiastic approach will lead to good contributions to the field.”

According to its Web site, Shell GameChanger “helps move ideas to reality by sponsoring entrepreneurs to develop their ideas into a product that can be introduced to the marketplace.”

“Specifically,” the site says, “we look for innovative ideas that address a demand or significant problem in the energy industry and have the potential to change the game.”

The Shell researchers, according to the document provided by Beardsworth, offer the following to the field:

 - Broad expertise in wide variety of energy conversion systems
 - Access to significant group of Shell surface science and catalysis experts
 - Access to key related disciplines: thermodynamics, physics, electrochemistry, computational chemistry,   heat exchange, etc.
 - Shell GameChanger program, (www.shell.com/gamechanger) rapidly funds initial proof of concept testing for revolutionary innovation
 - Significant expertise and track record of development and scaling-up and from lab-scale to commercial unit of a wide range of complex energy technologies.

This is not the first time Shell has looked into LENR research. In 1995, Shell sponsored LENR research at the French laboratory Laboratoire des Sciences Nucléaires at the Conservatoire National des Arts et Métiers (CNAM). This research showed high-quality LENR work, and the research paper provided the expected level of professionalism in a scientific communication.

The researchers found a small ratio of excess heat compared to the input electrical power in both light- and heavy-hydrogen experiments. However, the experiments demonstrated a sustained period of steady excess-heat production. The hydrogen experiment produced 16 megajoules during a 39-day run, with a mean excess-heat production of 4.7 Watts from a 150 Watt electrical input.

Consistent with the extensive body of LENR research, the CNAM researchers found no significant levels of dangerous radiation from neutrons, X-rays or gamma rays. The researchers failed to find nuclear signatures consistent with the amount of excess energy produced. They did not, however, check for isotopic shifts or transmutations, and they did not use solid-state nuclear track detectors to look for alphas or bursts of spallation neutrons.

The current Shell initiative follows an inquiry from the United States intelligence community into LENR. Both news items are powerful indicators that 2012 is the year that LENR will move forward into serious technology research.

]

[Thucydides]

Old fashioned tech taken for a new spin: converting coal to liquid fuel with much higher efficiency. Germany used the FT process in WW II and South Africa used the FT process during the apartheid era, so improved versions of the process will allow any nation with coal reserves to create liquid fuel if there is no other alternative:

http://www.sri.com/news/releases/122011.html

SRI Research Identifies Environmentally Friendly Process to Make Coal-Based Liquid Fuel
coal to liquid

Menlo Park, Calif. — December 20, 2011 — Research from SRI International has identified a promising new way to produce liquid transportation fuels from coal without consuming water or generating carbon dioxide. Based on data from bench-scale tests, SRI engineers estimate that the capital cost for a full-scale plant using SRI’s process would be less than half that of a conventional coal-to-liquids (CTL) plant that uses a process called Fischer-Tropsch synthesis (FTS). FTS produces only a small fraction of the hydrocarbons needed for fuel and requires extensive recycling.

SRI’s new process uses natural gas to provide the hydrogen needed to convert coal to syngas (a mixture of carbon monoxide and hydrogen). Syngas is first converted into methanol, which can then be efficiently processed to make transportation fuels.

Using natural gas eliminates the need to add water as a source of hydrogen, reduces the need to add energy to drive the gasification reaction, and results in the use of a smaller gasifier. In conventional CTL approaches, energy is supplied by burning a portion of the coal feed, which then produces carbon dioxide. SRI’s approach makes it economical to use carbon neutral electricity, such as nuclear, hydro, or solar as a source of additional energy.

"The implications of this research are expansive, including enhancing US energy security through the use of domestic carbon sources," said Robert Wilson, Ph.D., director, Chemical Science and Technology Laboratory, SRI International. "The process can also dramatically reduce the environmental footprint associated with alternative transportation fuels."

SRI performed a series of analyses to examine the environmental impact of the technology under several scenarios. Based on these analyses, if diesel were produced using biogas as the source of methane, the resulting product would qualify as an alternative fuel under the revised Renewable Fuels Standard of the Energy Independence and Security Act of 2007. The Act requires alternative fuels to meet a standard of 50-percent reduction of greenhouse gas emissions compared to other fuels.

The SRI process was recently presented at the 28th Annual International Pittsburgh Coal Conference in a presentation titled, "Coal Gasification with Methane Reforming: A Novel Environmentally Benign CTL Process" by Ripudaman Malhotra, associate director of SRI’s Chemical Science and Technology Laboratory.

The effort or project depicted is supported by DARPA under Contract No. HR0011-10-0049. The views and conclusions contained in this document are those of the authors and should not be interpreted as representing the official policies, either expressly or implied, of the Defense Advanced Research Projects Agency or the U.S. Government.

About SRI International
Silicon Valley-based SRI International, a nonprofit research and development organization, performs sponsored R&D for governments, businesses, and foundations. SRI brings its innovations to the marketplace through technology licensing, new products, and spin-off ventures. Commemorating its 65th anniversary in 2011, SRI is known for world-changing innovations in computing, health and pharmaceuticals, chemistry and materials, sensing, energy, education, national defense, and more.

[Thucydides]

Improvements in efficiency should never be discounted:

http://vtt.fi/news/2012/12012012.jsp?lang=en

One third of car fuel consumption is due to friction loss

12.01.2012

Fuel consumption and emissions can be reduced with new technology

No less than one third of a car’s fuel consumption is spent in overcoming friction, and this friction loss has a direct impact on both fuel consumption and emissions. However, new technology can reduce friction by anything from 10% to 80% in various components of a car, according to a joint study by VTT Technical Research Centre of Finland and Argonne National Laboratory (ANL) in USA. It should thus be possible to reduce car’s fuel consumption and emissions by 18% within the next 5 to 10 years and up to 61% within 15 to 25 years.

There are 612 million cars in the world today. The average car clocks up about 13,000 km per year, and in the meantime burns 340 litres of fuel just to overcome friction, costing the driver EUR 510 per year.

Of the energy output of fuel in a car engine, 33% is spent in exhaust, 29% in cooling and 38% in mechanical energy, of which friction losses account for 33% and air resistance for 5%. By comparison, an electric car has only half the friction loss of that of a car with a conventional internal combustion engine.

Annual friction loss in an average car worldwide amounts to 11,860 MJ: of this, 35% is spent in overcoming rolling resistance in the wheels, 35% in the engine itself, 15% in the gearbox and 15% in braking. With current technology, only 21.5% of the energy output of the fuel is used to actually move the car; the rest is wasted.

Worldwide savings with new technology

A recent VTT and ANL study shows that friction in cars can be reduced with new technologies such as new surface coatings, surface textures, lubricant additives, low-viscosity lubricants, ionic liquids and low-friction tyres inflated to pressures higher than normal.

Friction can be reduced by 10% to 50% using new surface technologies such as diamond-like carbon materials and nanocomposites. Laser texturing can be employed to etch a microtopography on the surface of the material to guide the lubricant flow and internal pressures so as to reduce friction by 25% to 50% and fuel consumption by 4%. Ionic liquids are made up of electrically charged molecules that repel one another, enabling a further 25% to 50% reduction in friction.

In 2009, a total of 208,000 million litres of fuel was burned in cars worldwide just to overcome friction; this amounts to 7.3 million TJ (terajoules) of energy. Theoretically, introducing the best current technological solutions in all of the world’s cars could save EUR 348,000 million per year; the best scientifically proven solutions known today could save EUR 576,000 million per year, and the best solutions to emerge over the next 10 years could save EUR 659,000 million per year.

Realistically, though, over a period of 5 to 10 years of enhanced action and product development measures could be expected to enable savings of 117,000 million litres in fuel consumption per year, representing an 18% reduction from the present level. Furthermore, in realistic terms, carbon dioxide emissions could be expected to decrease by 290 million tonnes per year and financial savings to amount to EUR 174,000 million per year in the short term.

Drivers can influence fuel consumption

A driver can significantly influence the fuel consumption of his or her car. A reduction of 10% in driving speed, e.g. from 110 km/h to 100 km/h, translates into a 16% saving in fuel consumption. Slower speeds also allow for higher tyre pressures; an increase from 2 bar to 2.5 bar can translate into a 3% saving in fuel consumption.

VTT and ANL calculated friction loss in cars worldwide using a method that incorporated total crude oil consumption and fuel consumption of cars, the energy consumption of an average car, and the energy that an average car uses to overcome friction.

Friction losses were accounted for in the subsystems of a car – tyres, engine, gearbox, brakes – and also in its components, such as gears, bearings, gaskets and pistons. The friction losses caused at friction points and lubrication points were also considered.

The study was conducted at the Metal Products and Mechanical Engineering strategic competence cluster in the DEMAPP programme, co-ordinated by FIMECC Oy, where practical solutions for minimising friction loss are also being developed. The study was funded by the Finnish Funding Agency for Technology and Innovation (Tekes), VTT and FIMECC Oy, and the Argonne National Laboratory, Department of Energy (Chicago, USA).

The recent research report on friction loss in cars and the potential for reducing energy consumption and carbon dioxide emissions was published in the Tribology International scientific journal. The article can be accessed here: http://dx.doi.org/10.1016/j.triboint.2011.11.022

[Thucydides]

Green fail. Ontario can look forward to something like this as well, since our energy policies seem to have been modeled after Germany:

http://www.eike-klima-energie.eu/energie-anzeige/germanys-green-energy-supply-transformation-has-already-failed/

Germany’s Green Energy Supply Transformation Has Already Failed!

Energy expert Dr. Guenter Keil has closely examined Germany’s energy policy of shifting away from nuclear and fossil fuels and over to renewables. What he finds is a bleak picture. Years ago Germany ambitiously embarked on transforming its energy supply system, and hopes to supply at least 80% of its energy needs through renewable energies by 2050, and thus become a moral leader on environmental responsibility for the rest of the world.

To do this, the former Socialist-Green coalition government, led by Gerhard Schröder, enacted the so-called Renewable Energy Feed-In Act (EEG) in 2000. This Feed-In Act requires electric utilities to buy all renewable energies, such as solar and wind power, from all producers at fixed, exorbitant rates and to feed it into the power grid for a period of 20 years. This has led to a boom as thousands of homeowners, businesses, and investors have installed thousands of megawatts of solar and wind power capacity over the years. The current Conservative-Liberal government, not to be outdone by its predecessor, is also gleefully pushing the Feed-In Act to the limit.

Weather-dependent supply wreaking havoc on the power grid

The problem is that these energy sources are weather-dependent and thus their sporadic supply is starting to wreak havoc on Germany’s power grid and is even now threatening to destabilize power grids all across Europe. The other problem: the power grid needed to distribute the decentrally produced green power is simply not there yet. They forgot to build it! So far, after tens of billions of euros spent on renewable energy systems and higher prices for consumers, not a single coal or gas-fired power plant has been taken offline. To the contrary, old inefficient plants have been brought back into service in an effort to stabilize the grid.

In a panic reaction, Germany shut down 8 nuclear power plants

To make matters worse, in a fit of panic and hysteria, the German government shut down 8 of its older 18 nuclear reactors in the wake of the Fukushima disaster, thus removing a very cheap and stable supply of power and further pushing the grid to the limits. Before the shutdown of the nuclear reactors, Germany had been a net power exporter; today it is a net power importer and is at times severely straining neighboring power grids. To compensate for the missing nuclear power, the government is now heavily promoting even more weather-dependent wind power, which is further destabilizing the German and European power grids. A solution to the problem of storing electricity is still at least a generation away.

The question of course is how could such absurd decisions have been made to begin with? Were there no experts involved in the planning of the new power generation infrastructure? The answer obviously is no. Power executives are viewed as evil, dirty and greedy polluters, and thus were never really consulted. They could not be counted on to give the politically correct solutions. Therefore the decision to shut down the German nuclear power plants and to massively support renewables was done unilaterally by the government, without consulting the power executives or even neighboring countries.

Offshore wind parks, but no transmission lines to industrial regions!

Now that the damage is spreading, Germany’s utilities are now struggling to keep the grid stable and to fill in the power gap left by the shut-down of nuclear reactors. To do this the German government has ordered the installation of large-scale wind parks in the North and Baltic seas, in addition to the re-commissioning of mothballed, inefficient coal-fired plants. This overall energy production transition from nuclear and fossils over to “renewables” is dubbed by German officials as the Energy Supply Transformation. Construction of the offshore wind parks is now progressing rapidly. But there’s just one problem: the huge high voltage power transmission lines needed to bring their power to Germany’s industrial heartland to the south are missing! More than 3000 km of these lines are needed, but are nowhere near in sight. The government forgot about those too!

Activists groups blocking grid expansion

Building the power transmission lines quickly across the landscape will be a virtually impossible task. Activist groups have long since organized and are effectively blocking their approval and construction. So far only a measly 214 km have been built. As a result, surplus wind power cannot be delivered to the markets, and thus either has to be destroyed, dumped on the market at “negative prices”, or wind park owners are simply ordered to stop generating. No problem though - paragraph 12 of Germany’s Energy Feed-In Act requires electric utilities to pay for the electricity that they ask not to have produced! Technically, there is an incentive for wind parks to destabilize the grid.

Eventually all these costs add up and in the end they get passed along to the consumer. Under the bottom line, consumers have to pay more and more, and for a lower and lower quality supply. German industry is getting nervous and surveys show that many are leaving Germany, or are planning to do so. They no longer view Germany’s power supply as reliable.

In a death spiral…”will fail spectacularly”

Dr. Guenter Keil’s report focusses in detail on the amazing absurdities of Germany’s Renewable Energy Feed-In Act and the country’s utopian Energy Transformation. The government, through intrusive meddling and ballooning bureaucracy, has maneuvered Germany’s energy supply system into a vicious death spiral: the more the government intervenes, the greater the mess becomes. And the greater the mess becomes, the more the government intervenes! Dr. Keil concludes:

“Germany’s energy transformation has already failed. For Germans, the outlook is bleak. …the planned mismanagement is heavily damaging the economy and will fail spectacularly some years later because its economic and social costs will have become unbearable. The question remaining open is how many billions of euros will have to be destroyed before a new energy policy (a new energy transformation?) picks up the shattered pieces.”

So it’s no wonder that according to a survey of experts from 21 national committees by the World Energy Council, 0% said they could imagine their own country completely taking over the German political approach. An equal number believe Germany will reach its stated targets.

Germany’s model will serve as a classic lesson on how not to handle energy production and management.

Michael Limburg; with thanks to Pierre Gosselin from notrickszone for excellent translation support

Dr. Guenter Keil was a scientific employee at the Technical University of Munich / Fraunhofer Society, as well as Project Support at the Federal Research Ministry.

[exabedtech]

Clearly too early to call any 'renewable' anything more than a supplement to existing energy sources but the fact remains that fossil fuel sources are becoming more and more expensive. 
While the German experience seems to be a failure for all other than the solar industry, the status quo simply won't cut it.
I don't think anyone outside of the tinfoil hat crowd thinks we will run out of oil, but our extraction costs will certainly hit a point, if they haven't already, where they dampen any hope for a return to the economic growth we saw in the past decade.
In the end, supply and demand rules IMO and this will force major changes in the ways we live.  Let's all take a moment and thank the Alberta Oilsands!!!!  That will be our 'shock absorber'  as the world adjusts over the next 100 years to a new and largely unknown reality.

[Kirkhill]

Climate expert says coal not oilsands real threat
From the CBC yesterday

....if all the hydrocarbons in the oilsands were mined and consumed, the carbon dioxide released would raise global temperatures by about .36 C. That's about half the total amount of warming over the last century.
 
When only commercially viable oilsands deposits are considered, the temperature increase is only .03 C.
 
In contrast, the paper concludes that burning all the globe's vast coal deposits would create a 15-degree increase in temperature.
 
Burning all the abundant natural gas would warm the planet by more than three degrees....

....He said the real message is that the world has to start limiting its use of fossil fuels.
 
"This idea that we're going to somehow run out of coal and natural gas and fossil fuels is really misplaced. We'll run out of human ability to live on the planet long before we run out of them. (Kirkhillian Interjection:Half Time Gentlemen!  All Chaaaange! The new message now is: We're not running out of fuel....but we're still very naughty people and need to find virgins to flog or some such).


"I have always said that the tarsands are a symptom of a very big problem. The problem is dependence on fossil fuels."

Meanwhile:
Canada threatens EU over oil sands emissions rating
From the Globe and Mail today

...The directive seeks to reduce the carbon footprint of fuels by 6 per cent over the next decade. It places fuel from most so-called “conventional” oil into a category with a carbon value of 87.1 grams per megajoule. Fuel derived from oil sands – or “natural bitumen” – is assigned a value of 107, 23 per cent higher. Fuel from oil shales, such as those in Estonia, is also given a higher number, at 131.3, while liquid fuels made from coal are 172.
 
The EU has stuck by those numbers. In a letter sent to Mr. Plunkett, Ms. Hedegaard argued that, “when looking at the production weighted average for oil sand feedstocks, it is clear that their GHG emissions are higher than for other feedstocks.”...
 
....It’s not clear, however, how EU member states will treat the directive at the vote this week. “From what I understand, it’s close to 50-50 at the moment,” said Darek Urbaniak, a spokesman for Friends of the Earth. .....

And why would our green-tinged eurocrats be swithering over making a decision on those nasty oil sands?  Why it seems that their own petard has hoist them.

Biodiesels pollute more than crude oil, leaked data show
From Euractiv.com 27 January 2012.

In its recent review of the Fuel Quality Directive, the EU proposed a default value of 107g CO2 equivalent per megajoule of fuel (CO2/mj) for oil from tar sands, as compared to 87.5g CO2/mj for crude oil, reflecting the greater environmental harm that its production causes.

Yet while advanced ‘second generation’ biofuels comfortably outperform fossil fuels in the EU’s new data, palm oil is ascribed a value of 105g, soybean 103g, rapeseed 95g, and sunflower 86g, once ILUC is factored in.

The data propose ILUC-incorporating CO2/mj values for biofuels as follows:

Palm Oil - 105g
Soybean – 103g
Rapeseed – 95g
Sunflower – 86g
Palm Oil with methane capture – 83g
Wheat (process fuel not specified) – 64g
Wheat (as process fuel natural gas used in CHP) – 47g
Corn (Maize) – 43g
Sugar Cane – 36g
Sugar Beet – 34g
Wheat (straw as process fuel in CHP plants) – 35g
2G Ethanol (land-using) – 32g
2G Biodiesel (land-using) – 21g
2G Ethanol (non-land using) – 9g
2G Biodiesel (non-land using) – 9g
Biodiesel

Isabelle Maurizi, a spokesperson for the European Biodiesel Board, told EurActiv that data such as the leaked biofuels values, and recent reports by the EU’s Joint Research Centre, the European Environmental Agency, and the International Food Policy Research Institute, were not consistent with research in the US.

“We do not recognise the validity of the science due to discrepancies in the results. The science is not grounded yet and is still immature so we would favour incentives in policy-making rather than punitive proposals,” she said.

Any application of the leaked values could severely hamper the ability of biodiesel manufacturers to enter into the EU’s new biofuels certification plan, announced last August.

Now, I am firmly on record as opposing any policy that promotes the burning of any carbon generated on arable land (there is no waste in farming)...but, it is fascinating to note that our "Allies" in the fight against the EU's "science" include the very Greenies that the EU is promoting.

Strange, and amusing, bed-fellows.

[Thucydides]

High fuel prices are a political, not a resource problem. President George W Bush cause a collapse in prices by signing an executive order opening up major areas for drilling and exploration in 2008; this administration has relentlessly closed off Federal land to drilling and exploration, stopped Keystone XL and several refineries have closed during this administration:

http://hotair.com/archives/2012/02/29/chu-to-congress-were-not-interested-in-lowering-gas-prices/

Chu to Congress: We’re not interested in lowering gas prices
posted at 11:00 am on February 29, 2012 by Ed Morrissey

Hey, at least Energy Secretary Stephen Chu gave an honest answer.  When asked by Rep. Alan Nunnelee whether the Obama administration wants to work to get gas prices to come back down, Chu replied that they’re not focusing on that — and that higher gas prices mean more of a push for the alternative energy sources the administration wants to push:
“We agree there is great suffering when the price of gasoline increases in the United States, and so we are very concerned about this,” said Chu, speaking to the House Appropriations energy and water subcommittee. “As I have repeatedly said, in the Department of Energy, what we’re trying to do is diversify our energy supply for transportation so that we have cost-effective means.”

Chu specifically cited a reported breakthrough announced Monday by Envia Systems, which received funding from DOE’s ARPA-E, that could help slash the price of electric vehicle batteries.

He also touted natural gas as “great” and said DOE is researching how to reduce the cost of compressed natural gas tanks for vehicles.
High gasoline prices will make research into such alternatives more urgent, Chu said.

“But is the overall goal to get our price” of gasoline down, asked Nunnelee.

“No, the overall goal is to decrease our dependency on oil, to build and strengthen our economy,” Chu replied. “We think that if you consider all these energy policies, including energy efficiency, we think that we can go a long way to becoming less dependent on oil and [diversifying] our supply and we’ll help the American economy and the American consumers.”
The Heritage Foundation jumped all over Chu’s comments:

As shocking as his remarks are, they shouldn’t come as a surprise. Chu has a long record of advocating for higher gas prices. In 2008, he stated, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Last March, he reiterated his point in an interview with Fox News’ Chris Wallace, noting that his focus is to ease the pain felt by his energy policies by forcing automakers to make more fuel-efficient automobiles. “What I’m doing since I became Secretary of Energy has been quite clear. What I have been doing is developing methods to take the pain out of high gas prices.”

One of those methods is dumping taxpayer dollars into alternative energy projects like the Solyndra solar plant. Another is subsidizing the purchase of high-cost electric cars like the Chevy Volt to the tune of $7,500 per car (which the White House wants to increase to $10,000). In both cases, those methods aren’t working. Solyndra went bankrupt because its product couldn’t bear the weight of market pressures, and Chevy Volts aren’t selling, even with taxpayer-funded rebates. What’s the president’s next plan? Harvesting “a bunch of algae” as a replacement for oil.

Meanwhile, the Obama Administration is seemingly doing everything it can to make paying for energy even more painful by refusing to open access to the country’s oil and gas reserves and blocking new projects that would lead to the development of more energy in America. Case in point: the president’s decision to say “no” to the Keystone XL pipeline, a project that would have delivered hundreds of thousands of barrels of oil from Canada to Texas refineries, while bringing thousands of jobs along with it.

And while Chu gave an honest answer that actually matches the actions taken by this administration, Heritage notes that Obama has offered nothing but double-talk on gas prices:

Sensing impending political fallout from the high cost of gas, President Obama last week spoke on the subject and attempted to deflect blame for the pain. He said that there is no quick fix to high gas prices and the nation cannot drill its way out of the problem, but as Heritage’s Nicolas Loris writes, the president ignored reality and dished out a series of half-truths. Among them, the president claimed oil production is its highest in eight years, that increasing oil production takes too long, and that oil is not enough. Loris writes that while production is up on private lands, unrealized production on federal lands and offshore could have yielded even more output, increasing supply and driving down costs. If the president had said “yes” to Keystone, oil could have reach the market quickly. And as for the president’s push for alternative energy, those sources simply cannot stand the test of the market.

Even before Chu spilled the beans, Democrats have begun pressing Obama to start taking gas prices seriously:

Congressional Democrats are ramping up pressure on President Obama to tap the Strategic Petroleum Reserve (SPR) to prevent rising gas prices from threatening the economy and their election-year prospects.

They are growing anxious that the price of fuel could reverse their political fortunes, which had been improving due to signs of growth in the economy.

Republicans have hammered Democrats on the price spike, repeatedly noting that gas prices — now at $3.72 per gallon for regular — have doubled since Obama won the White House.

I guess Democrats in Congress don’t see this as a feature rather than a bug in Obama’s energy policies.  The RNC came out with a video slamming Obama for high gas prices, but I suspect they’ll be rushing a new video to publication featuring Chu’s “who cares” attitude.  Otherwise, this is a pretty effective 1-minute spot, and it might start showing up on TV broadcasts soon:

[GAP]

World's cheapest gas: Top 10 countries
 Article Link

While Americans and Europeans  bemoan the cost of gasoline at the pumps, people in some other parts of the world enjoy filling up their tanks cheaply thanks to subsidies provided by wealthy, oil-rich governments. But fuel subsidies tend to benefit the rich (who own motor vehicles) more than the poor. The IMF estimated that 65 percent of the fuel subsidies in Africa benefit the richest 40 percent of households (2010). Only 8 percent of the $410 billion in government fuel subsidies worldwide went to the poorest 20 percent of the population (International Energy Agency - estimates, 2010).

The British insurance firm Staveley Head has released the latest list of the world’s gas pump prices. Here are the 10 cheapest countries on Earth to fill a gas tank.
Countries and information listed on link

[Thucydides]

And Rex Murphy on why oil production is so important to Canada and the world:

http://fullcomment.nationalpost.com/2012/03/17/rex-murphy-oil-sands-are-a-triumph-for-the-human-environment/

Rex Murphy: Oil sands are a triumph for the human ‘environment’
Rex Murphy  Mar 17, 2012 – 5:55 AM ET | Last Updated: Mar 16, 2012 2:47 PM ET

I’m lucky to be going to Fort McMurray, Alta. this weekend with colleagues from CBC Radio’s Cross Country Checkup. I have a great wish to see what the green Jeremiahs deem to be the greatest blot on the visage of Mother Gaia, and to meet some of the soulless folk who work there. After all, environmentalists might ask: Who would take a job on a site that threatens the destiny of the planet, except people whose souls have been bought off with oil-company lucre?

Outside Fort McMurray, it is impossible to escape the furor over the Alberta oilsands. Its product is routinely described, lazily and slanderously, as the dirtiest on the planet. The Premier of Ontario, a province that owes much of its prosperity to its huge automobile industry shivers when he looks at Alberta, mutters about the dark forces of the “petro-dollar,” and implied (until he was scolded and half-recanted) that somehow Ontario’s fretful financial state is Alberta’s fault.

It’s almost a fantasy disconnect. Dalton Mcguinty can throw billions at General Motors and urge the feds to do the same, all to save the automobile industry. He ignores that four decades or more of Ontario’s prosperity wasn’t founded on windmills: It was based on gas-guzzling cars and trucks.

Down in the States, Fort MacMurray is the green lobby’s ultimate bogeyman. Environmental groups raise money by attacks on the oilsands. Fort McMurray and the Keystone XL pipeline that would take its bounty south. This rhetoric has even made it into presidential politics. The shameless and high-gloss National Geographic put out a hit-issue deploring the oilsands as the ultimate “polluter.”

Are Canadians falling for this propaganda, too? The bounty of our country has made us complacent, even smug, about the resource extraction that makes it possible. Canada is at the very forefront of the world’s developed nations. Our schools, hospitals, universities, arts and industries are at the very top of the chain — all because we have the energy to drive an economy that can support these great boons.

Yet how easily we bite the hand that feeds us. “Environment” has become a narrow, bitterly focussed word turning exclusively on hurts or despoilations of nature, magnifying the slightest alteration or disturbance of “the natural” as an unspeakable sin.

There is another wider, larger, humane dimension to the environment — larger and more vital than any reference to landscape. That is the human and social element, the business of supplying reasonable support for workers and their families, towns and communities, and ultimately wealth for the entire nation. We owe something, it is true to the rocks and trees. We also owe something to human beings as well.

In my view, this is the first and deepest justification for Fort Mac and the oil industry. Jobs are essential for the human environment — for a woman’s or a man’s sense of self-reliance and independence. By this, I mean the right to be able to obtain what you need for yourself and your family from what you have honestly earned. Being able, because you are employed, to stay off welfare, to turn aside from handouts — this is good for the environment of human dignity.

It mightn’t have the smug appeal of a panda face, and you will not see it on the vivid posters of the Sierra Club or Greenpeace, but having a job and earning a living is a great thing. Those who have been out of work know what a cruel “environment” that is — an emotional and psychological assault of frightful power. So we should celebrate some of the contributions that the oil sands have already made to the fundamental human environments of so many Canadians.

I have thought, and thought again, of my own province of Newfoundland, caught in the great calamity of the fisheries’ close-down in the 1990s, and how providential it was that “out West,” an oil economy was booming at the same time. Many Newfoundlanders (and Maritimers) migrated there in a time of real need.

Great social misery was averted because of the oil boom and Newfoundland’s related offshore developments: Thousands of divorces never happened, thousands of families didn’t break up, thousands of men and women didn’t fall into the trap of depression and worse, which so often attends long-term unemployment — because there was a great oil industry that allowed them the wherewithal to feed their families. It is a great story of modern Confederation: How Alberta, in particular, modified and mitigated the misery of Newfoundland — and other places.

I can summarize the entire case very simply. The environment is not just what you see on green posters. It is not just sunsets and tall trees. It is also the people living in it. And people need energy, and people need jobs. Projects such as the oilsands, which supplies both in abundance, should be celebrated for its cutting-edge technological and scientific prowess. It is Canada’s great national project for the 21st century. I look forward to the trip.

National Post

Rex Murphy offers commentary weekly on CBC TV’s The National, and is host of CBC Radio’s Cross Country Checkup.

[E.R. Campbell]

Here, reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail, is an article about energy independence for the USA:

My emphasis added
http://www.theglobeandmail.com/globe-investor/investment-ideas/features/taking-stock/saudi-america-heads-for-energy-independence/article2373074/

‘Saudi America’ heads for energy independence

BRIAN MILNER

From Monday's Globe and Mail
Published Sunday, Mar. 18, 2012

Now that the U.S. economy is showing signs of life after debt, President Barack Obama has decided it’s safe to hold up his administration’s less than stellar economic record as a selling point on the campaign trail. But one big dark cloud still hovers overhead: the steadily rising price of oil in general and gasoline in particular.

Oil prices are plainly headed in the wrong direction for an economy still in the early stages of recovery and reliant on energy imports. Benchmark Brent crude closed in on $125 (U.S.) a barrel Friday, a hike of more than 30 per cent so far this year.

But what really scares sitting politicians in an election year are sharp jumps at the pumps. U.S. retail gasoline prices rose again last week, to a national average of $3.83 a gallon, an increase of more than 55 cents so far this year. In half a dozen states, including politically important California and New York, the price is already north of $4. Canadians would be delighted to be paying the equivalent of only slightly more than $1 a litre. But Americans are fuming.

The good news for President Obama and his brain trust is that these price trends won’t continue.

“What we’ve had is a tight [oil] market,” says economist Philip Verleger Jr., who has devoted much of his long career to digging deep below the surface of oil and other commodity markets. “I think it is in the process of unwinding.”

Mr. Verleger, who recently recommended that the U.S. government release oil from its strategic reserves to ratchet up pressure on Iran, dismisses that country’s threats to disrupt Mideast shipments. He also notes that U.S. gasoline consumption has been falling at an accelerating clip – 5.5 per cent in January from a year earlier, 7 per cent in February and probably more than that in March.

The U.S. really behaves like three different countries when it comes to oil – the East Coast, West Coast and the vast middle, which he calls “Saudi America”, stretching from the Appalachians in the east to Utah in the west. “ ‘Saudi America’ is moving very quickly to energy independence,” says Mr. Verleger, president of Colorado-based research firm PKVerleger LLC. Refiners in the midwest have more gasoline than they know what to do with. “By summertime, a wall of gasoline is going to be working down the Mississippi, pushing on refiners down there.”

All of which will ease pressure at the pump.

But even bigger changes in the market lie just down the road. That’s because the U.S. is in the midst of a remarkable transformation that will end its dependence on foreign imports, including Canadian oil, much faster than anyone realizes and give its manufacturers a huge comparative advantage over competitors from China and other high-cost energy markets.

Mr. Verleger has circled November, 2023, as the magic date, exactly 50 years after then president Richard Nixon called for the U.S. to meet all its own energy needs by 1980. Now, the shale gas explosion and increased production from offshore and unconventional oil sources in the U.S. heartland are turning the impossible dream into reality.

“It is a very good news story for the [U.S.] economy, leaving the [presidential] campaign aside,” says Mr. Verleger, who retired last year as a professor of strategy at the University of Calgary. “And it’s a good news story for Canada, if you respond quickly and realize the best thing that ever happened [to the industry] was Keystone getting delayed.”

The U.S. Midwest is awash in crude and natural gas supplies, “so what are we going to do with the Canadian oil? The smartest thing the Canadians could do is take a look at the rapidly changing energy situation in the United States and realize that what you’re doing is pumping oil into the middle of the United States and it’s just going to sit here. We could have a situation of $1 a gallon gasoline in Houston and $5 a gallon in New York City. And there’s no way for the stuff to get out [of the country]. We don’t have any export ports.”

The solution for Canada: Expand the necessary pipeline and port capacity and steer the production to Asian markets. But in the meantime, “we’ll keep seeing the Canadian exports coming into the U.S. market, because they have no place else to go. What’s going to happen is that the price gap between U.S. and world prices is just going to get wider and wider and wider.”

Getting back to the here and now, the world market has faced a series of disruptions in recent months, including lost output from Nigeria, the bankruptcy filing of Europe’s biggest refiner, PetroPlus, and the surprising fallout from the European Union’s decision to impose sanctions on Iranian oil.

The actual oil embargo doesn’t take effect until July and is expected to have minimal impact on the global market – and even less, if the U.S. taps the surplus in its strategic reserves. But the sanctions have already taken a big chunk of the world’s tanker fleet out of the market, because operators can no longer obtain the costly insurance they need from European underwriters to cover cargos of Iranian crude, even if they pick up the oil in Egypt, where it is shipped via pipeline.

Traders have been scrambling to locate other supplies since the curbs went into effect in January, while major Asian importers continue lobbying the EU for an exemption. It’s far more serious than any Iranian military threat, Mr. Verleger says. “The sanctions on the insurance side are really a big deal.”

Don't fuss about Keystone, it's a sideshow for US political consumption; the Northern Gateway pipeline is the one that matters and it's the one upon which we, Canadians, need to focus our attention.

[Thucydides]

For people like you and I looking to ease the pain of high prices while still being able to get around, automakers are now on the verge of releasing three cylinder engines to the North American market:

http://www.latimes.com/business/autos/la-fi-autos-three-cylinders-20120317,0,4405998.story?track=lat-pick

Automakers see three-cylinder engines as the next big thing
Car companies are beginning to test the U.S. market for three-cylinder engines, which offer better mileage and more power than in the past.

By Jerry Hirsch, Los Angeles Times
 
March 16, 2012, 6:01 p.m.

Imagine a car that gets more than 40 miles per gallon in everyday traffic and 50 on the highway — and it isn't an expensive hybrid and it doesn't require special fuel.

Get ready for a new generation of cars equipped with surprisingly powerful three-cylinder engines that, according to early reviews out of Europe, have both the zip and zoom Americans expect in the four-cylinder compact sedans they buy today.

"This engine is a game-changer," Steve Cropley of Autocar magazine, a British publication, said of the three-cylinder Ford Focus that just went on sale in Europe. "You barely hear the thing start, and it idles so smoothly you'd swear it had stalled."

Better yet for power enthusiasts, "this lean upstart makes some bigger engines look puny," wrote Phil McNamara of Car, another British magazine.

Automakers are starting to test the waters for how such vehicles will sell in the U.S. market. Ford Motor Co. said it will have a three-cylinder Focus or Fiesta for sale here by the middle of next year. Mitsubishi plans to launch a compact car with a three-cylinder engine sometime in 2013.

BMW, known for its full-throttle, throaty engines, is developing a three-cylinder power plant that could show up in its U.S. offerings in three to five years. Volkswagen and Nissan also are working with three-cylinder engines, but there's no word on whether or when they will hit the U.S. market.

Automakers are proceeding cautiously because previous efforts to pack tiny engines in cars for the U.S. market mostly sputtered.

In the 1990s, Suzuki sold the Swift, and General Motors Corp. sold its version of the same vehicle under the Chevrolet Metro and Geo Metro names. While the cars' fuel economy was among the best in the industry, drivers complained that they were noisy and struggled going uphill.

The Smart Fortwo is the only three-cylinder car still being sold in the U.S., but it's not a popular model. It is a tiny two-seater without much power. And because it requires premium gas, its fuel economy, at least as measured by how much money is spent on gas annually, is only slightly better than that of much larger vehicles with far stronger four-cylinder engines, such as the Honda Civic and Hyundai Elantra.

To be attractive to today's drivers, any vehicles with such small engines must be sure "not to compromise performance or fuel economy," said Rebecca Lindland, an analyst with IHS Automotive.

That's why automakers are packing more power — as measured by horsepower and torque — into these new engines.

The car companies are encouraged by how quickly Americans have downsized from larger engines to four-cylinder power plants. Almost half, or 47%, of the cars sold last year had four cylinders, according to auto information company Edmunds.com. That's up from 34% in 2007. Many small sport utilities, and even some larger ones such as the Ford Explorer, also come in four-cylinder models.

"Three cylinders shouldn't be much of a stretch," said Dave Sullivan, manager of product analysis for automotive consulting firm AutoPacific Inc.

Downsizing engines is part of an auto industry strategy to meet federal fuel economy standards that require the combined industrywide fleet to average 34.1 mpg by the 2016 model year, and a proposed 54.5 mpg by 2025.

Because of the way the Environmental Protection Agency calculates fuel economy for the window stickers on new vehicles, any vehicle that has a fuel economy of more than 37 mpg in combined driving probably will meet the 2025 standard.

"Everything is on the table right now with the new fuel economy standards," said Monty Roberts, a BMW spokesman.

Ford's tiny gas-sipper has the footprint of a laptop computer.

The new 1.0-liter EcoBoost three-cylinder — the smallest engine Ford has ever built — is turbocharged and patterned on the same technology used in much bigger vehicles, including Ford's F-150 pickup truck. The engine will pack 100 to 125 horsepower, depending on the configuration. British drivers will pay about $400 extra for the engine over the base five-door Focus.

Its horsepower and torque outputs are equivalent to or better than many 1.6-liter, four-cylinder engines now on the market, said Derrick Kuzak, Ford group vice president of global product development.

Both Ford and BMW are said to be developing even more powerful three-cylinders — engines that could pack upward of 150 ponies, making them stronger than many of the four-cylinders that come in cars today.

Ford is shipping two of the three-cylinder Focus models to its Dearborn headquarters, where next month the North American marketing team will start to evaluate how U.S. drivers might view the car. Engineers will review technical aspects, looking to see what modifications might need to be made.

Engine sound will be one of the things engineers will be sure to consider as they ready the new three-cylinder engines for the U.S. market, said Sullivan of AutoPacific. Small engines can sound tiny and cheap to some American consumers. BMW and Ford's Lincoln division are both using the internal audio systems of vehicles to enhance engine sound in larger vehicles.

"This could be used on a three-cylinder engine to make it sound like an inline four-cylinder engine or a V-6 via the speakers in the car," Sullivan said. "If you could offer a 175 HP inline three that sounds like a V-6, would you buy it?"

[Thucydides]

This could equally be posted on the "Making Canada Relevant economic superthread" or the US Economy (or Election 2012) threds as well. Removing perverse incentives from the marketplace will do far more to affect fossil fuel prices than anything the government can do:

http://opinion.financialpost.com/category/fp-comment/

Lawrence Solomon: Free global gas prices
Lawrence Solomon  Mar 23, 2012 – 9:39 PM ET | Last Updated: Mar 23, 2012 9:45 PM ET

There is a silver bullet for lowering gas prices: a return to a free market in gasoline.

The Republican presidential candidates blame high gasoline prices on President Obama’s failure to approve the Keystone XL pipeline and to drill drill drill. Obama blames Iran for heightening tensions in the Mideast, touts alternative energy, and claims no silver bullet can lower gas prices.

Both sides have a case but both come up short. There actually is a silver bullet, and it would lower gas costs by more than either imagines, for the U.S. and the rest of the industrialized world. The silver bullet is a free market in gasoline, something that was abandoned almost a century ago, when the auto industry convinced governments to finance roads through a gasoline tax, and something that subsequent government interventions have further distorted. A return to a free market would not only dramatically raise the supply of gasoline, as the Republicans claim, but would also reduce the demand, as many Democrats desire. The combination of higher supply and lower demand would whiplash gasoline prices downward.

Step one in restoring a free market in gasoline is removing its punishing taxes — levies of about 40¢ per gallon in the U.S. over and above the sales taxes that normally apply and much more in Canada and Europe. The road-building rationale for these extraordinary taxes will soon be ending in any case, both because governments now realize that they won’t be able to raise enough money in future through gas taxes to meet motorists’ needs and because modern toll road technology allows for true user fees for roads, based on the specific costs of using specific roads. When consumers pay for their gasoline at the pump, they should be charged the market price for gasoline, no more no less.

[Thucydides]

While the current prices are quite steep ($1.31/l today in Pet), the longer term veiw is promising. Sadly, political rather than physical or technical considerations are distorting the market, so supply and demand have not been able to be reconsiled and prices adjusted to reflect. The longer term political and strategic picture also looks more promising, as an era of relatively cheap and abundent energy should increase prosperity and lower tensions around the world:

http://opinion.financialpost.com/2012/03/30/lawrence-solomon-a-world-awash-in-oil/

Lawrence Solomon: A world awash in oil
Lawrence Solomon  Mar 30, 2012 – 10:32 PM ET | Last Updated: Mar 30, 2012 11:22 PM ET

Comments Email Twitter   
inShare
   


Middle East will go back to being an obscure backwater

Today, the Middle East is in the news daily — we hear of strife in Syria, in Iran, in Israel and Palestine. Ten or 20 years from now, conflicts in the Middle East will count for less in the world’s scheme of things, just as the daily conflicts that now occur in Africa get short shrift, despite Africa’s far greater loss of life. Twenty years from now, the Middle East could be about as important as it was at the turn of the previous century — before its oil was discovered — which was not very important at all.

The Middle East will attract scant attention in future, not because the region will have run out of oil — it will have found much more — but because the rest of the world will also be awash in oil. As supplies increase, oil depreciates in price, as does the political value of its purveyors.

To see the future of oil, consider the present of natural gas. Until recently, many thought the West was running out of gas — most of the easily accessible natural gas finds were being depleted, making the West reliant on ever more distant, ever more difficult reserves to exploit. The U.S., the world’s biggest natural gas importer, began to build ports to receive liquefied natural gas from distant continents in the expectation that it couldn’t import enough from Canada and Mexico.

Then everything flipped. New technologies emerged to extract gas from shale and other rock formations. Because these so-called unconventional technologies — fracking is the best known among them — proved cheaper than obtaining gas from the harder-to-find “conventional” sources, and because shale gas is plentiful, the unconventional became the norm. Thanks to fracking, the U.S. has suddenly become the world’s largest producer of natural gas, creating a massive glut that has more than halved the price of natural gas. Those liquefied natural gas ports that the U.S. was building to import gas will now be used to export gas.

A glut will soon also materialize in Europe, another major natural gas importer, where massive finds of shale gas in the U.K., in France, in Poland, in Ukraine and elsewhere will be slashing the cost of energy. So too with China and other major energy importers — the world is now awash in shale gas and will remain so for many decades, if not centuries.



The oil story is following a script similar to that of natural gas, with “unconventional” sources of oil overtaking distant, harder-to-exploit conventional sources. Until recently, “unconventional” mostly meant oil from Canada’s plentiful tar sands, which made Canada the single largest supplier to the oil-dependent U.S. No longer. Unconventional now also means shale oil and oil from other rock formations, much of it in the U.S., which has by far the world’s largest store of shale oil. The U.S. has become the world’s fastest growing oil and gas producer, it will soon be self-sufficient in oil and it is already a net petroleum product exporter.

China, another major importer, may also become an exporter, given that it has the world’s second-largest store of shale oil. All told, some 38 countries in every continent in the world have 4.8 trillion barrels of shale oil, making oil a ubiquitous commodity that gives every region of the world the wherewithal to be energy self-sufficient.

With the world awash in oil and gas, and Western nations no longer dependent on the energy exporting countries of the Muslim Middle East, the countries of the Middle East will revert to being seen as exotic and backward curiosities in the eyes of Westerners, as they have been through most of the last 500 years. Accelerating this diminution in status will be a likely collapse in oil prices.

Although shale oil technology is still in its infancy, much of the U.S. shale oil can be developed inexpensively, at a cost comparable to the US$50 to US$60 per barrel cost of tar sands, which has itself been dropping. The trend down in shale oil costs is likely to continue over the coming years. Israel, which has some 250-billion barrels in one basin near Jerusalem alone, an amount comparable to Saudi Arabia’s reserves, expects to develop its oil at a cost of US$35 to US$40 per barrel. Should the world price of oil drop to this level — which happens to be the average price over the last two decades — the halving in oil prices will have mirrored that of natural gas. In the process, today’s Middle East energy exporters will have been bankrupted and their autocrats ousted.

Saudi Arabia, for example, now depends on petroleum for 80% of its budget, 45% of its GDP and 90% of its export earnings. A dramatic decrease in oil revenues would render the next generation of Saudi rulers incapable of maintaining the lavish payments needed to appease the Saudi clerics, let alone the social welfare payments that have kept the Saudi populace at bay, such as the US$130-billion in instant benefits conferred upon Saudi citizens last year to tamp down dissent during the Arab Spring. This artificial country, carved out of the Ottoman Empire after World War I by the British and given to the Saudi clan, would then likely break up, to once again be ruled along tribal lines. But few in the West would then take much notice.

[Thucydides]

Cheap energy is the result of the application of thought, and economic growth, while immensely accelerated by cheap energy, is a result of the application of clear thought to problems:

http://opinion.financialpost.com/2012/05/10/the-end-of-thought/

The end of thought?
Special to Financial Post  May 10, 2012 – 10:50 PM ET | Last Updated: May 10, 2012 10:51 PM ET

Jeff Rubin forgets that knowledge, not cheap oil, brings growth

By Philip Cross

Jeff Rubin is the kind of guy I want to like. He made a remark in 2005 about sheiks and mullahs controlling oil supplies that provoked his handlers at CIBC, where he was chief economist for 20 years, to send him on a course to heighten his sensitivity and political correctness. If my former employers at Statistics Canada had been nearly as skittish, I could have spent much of my 36 years there taking courses. Anyway, the course apparently had its desired effect on Rubin, as his new book on The End of Growth is as politically correct as it gets when it comes to decrying our addiction to autos and suburbs, our indifference to climate change, and ultimately our grubby materialism.

This book is an extension of his previous work, in which he predicted high oil prices were here to stay, and would fundamentally alter how and where we live and work. In this book, he extends this thesis to claim that permanently high oil prices will permanently cripple economic growth. The book notes that this may not be all bad, since the end of growth would reduce greenhouse gas emissions, although I think for most people that would not take the sting out of being unemployed. We are told the end of growth may even be good, since some studies supposedly have found happiness and incomes are not closely linked. Whenever I hear that argument, I recall the saying, “People who don’t think money can buy happiness don’t know where to shop.”

For an economist, Rubin displays a distressing lack of knowledge of how economics works, something surprisingly common in the profession. He repeatedly says the way to discourage energy consumption is to raise its price, which would be true if price was the only relevant variable. But look at the data on gasoline consumption by Canadians. Even as the price of filling up the tank rose over the last decade to record levels, Canadians kept buying more gasoline. Why? Because they could afford it, partly because the plunging cost of heating homes with natural gas capped the total energy bill to households and mostly because incomes rose.

This income effect, as economists call it, also explains why global oil consumption has risen steadily over the last decade. China, India and other rapidly developing countries can afford higher oil prices, which they regard as a small price to pay for their rapid economic growth. Indeed, it is this very acceleration in oil consumption that has sustained higher oil prices. While supply has risen, notably with the expansion of Canada’s oil sands, it has struggled to keep up with demand. Energy consumption fell only in countries like the U.S. at the worst of their recessions, because the impact of shrinking jobs and incomes reinforced, rather than offset, the impact of higher prices.

Rubin’s almost exclusive focus on high oil prices ignores falling prices for other types of energy, notably shale gas, and the opportunities for substitution. What scares me about the high price of oil today (and not all oil prices are in triple digits) is not its impact on economic growth, but the arbitrage opportunities it creates, both within the market for oil and between oil and other sources of energy. This is why you can’t open a business paper without reading a story about new pipelines to move lower-priced oil from the interior of North America to the higher-priced peripheries, or about converting coal-fired power plants to natural gas, or about using natural gas in vehicles. Rubin claims “a magical new power source isn’t waiting in the wings to solve Japan’s energy problems.” Don’t tell that to companies trying to build liquefied natural gas terminals on the B.C. coast to ship our cheap gas at $2 per million BTU to Asia, where it trades for $16. Sounds like magic to me.

Historically, the high price of a once-dominant energy source did not lead to the end of economic growth, but to the shift to new and ultimately cheaper energy sources. When Britain began to run out of wood as its primary energy source, it developed its coal resources. When coal prices soared in the mid-19th century, leading to what today would be called Peak Coal and the inevitable Royal Commission into coal’s prospects, the world miraculously discovered petroleum. And then we developed electricity, gas and nuclear power as new energy sources. The rule is that cheaper energy will drive out more costly alternatives. If that happens before we can fully exploit the oil sands, the Athabasca region will revert to being a desolate landscape of interest only to moose and the occasional trapper, forgotten by the environmentalists who are so determined to slow its development.

More than its shaky analysis of energy prices and supplies, the bigger problem with The End of Growth is Rubin’s lack of understanding of the ultimate sources of economic growth. Economic growth took off over the last couple of centuries not because of cheap oil but because of the rapid increase in the exchange and creative use of knowledge. As Matt Ridley concluded in The Rational Optimist, “a billion pages of knowledge make up the book of human prosperity.” Of course, one of the first areas where we applied this knowledge was finding new energy sources to lower its price, and we’ll undoubtedly do that again.

But more fundamentally, economic growth comes from exchanging our knowledge and extending it to new areas, notably technology. The owner of one of today’s cellphones has access to better mobile communications than the president of the United States had 25 years ago, and if it is a smartphone, more information than the president had access to 15 years ago. The low and falling cost of communicating ideas and information by mobile phones, the Internet and satellite are stimulating growth more than it is being deterred by the cost of moving people and things.

The role of knowledge in economic growth is so paramount that predicting The End of Growth is tantamount to predicting The End of Thought. After reading this book, maybe we are closer to the latter than I imagined possible. Keep me away from courses that heighten sensitivity but dull the ability to do sound economic analysis.

Financial Post
Philip Cross is the former chief economic ­analyst at Statistics Canada.

[Thucydides]

If this is true, this single formation has the potential to crash world oil prices. This can have positive effects (marginalizing the Middle East and cutting off major revenue sources to Russia and other hostile nations), as well as negative effects (Canada's multi billion dollar investment in the Oil sands will have been effectively negated, and our reliance on oil revenues will also negatively impact the Canadian economy until substitute areas are developed). Since the formation is mostly under Federal lands, it is off limits for exploration under the current Administration, but a future administration can open it for exploration at the stroke of a pen (and the markets will react with astonishing speed):

http://www.powerlineblog.com/archives/2012/05/we-are-swimming-in-oil.php

We Are Swimming In Oil

America has more fossil fuel resources than any other nation. Russia is second, Saudi Arabia is third. On Thursday, a representative of the Government Accountability Office testified before the House Science Subcommittee on Energy and Environment that the Green River Formation alone–it is located at the intersection of the states of Colorado, Utah and Wyoming, and mostly underlies federal lands–contains as much oil as the entire proven reserves of the rest of the world combined. America is uniquely blessed in its energy resources. Two questions remain: 1) will Obama finally abandon his moronic two percent claim, and 2) will Obama, in a possible second term, block the development of the resources that can assure America's economic supremacy for generations?

[Brihard]

If this is true, this single formation has the potential to crash world oil prices. This can have positive effects (marginalizing the Middle East and cutting off major revenue sources to Russia and other hostile nations), as well as negative effects (Canada's multi billion dollar investment in the Oil sands will have been effectively negated, and our reliance on oil revenues will also negatively impact the Canadian economy until substitute areas are developed). Since the formation is mostly under Federal lands, it is off limits for exploration under the current Administration, but a future administration can open it for exploration at the stroke of a pen (and the markets will react with astonishing speed):

http://www.powerlineblog.com/archives/2012/05/we-are-swimming-in-oil.php

Thucydides,

In short, no it doesn't have that potential.

Green River is a shale oil formation, like the Bakken formations in Alberta/Sask/Montana/North Dakota, or the Devonian-Mississippi in the eastern U.S. Shale oil is more expensive to develop than conventional oil plays. It's subject to a great deal of scrutiny and environmental lobbying, and there are technological and political risks that make it a riskier capital investment than conventional oil plays. As a result, it's not economically viable below certain per barel prices. Further, these plays take a long time to prove, to develop, and to bring online. Only sustained high oil prices allow a permissive environemnt in which to attract investment capital.  It's really not dissimilar in the larger sense form the oil sands.

If a president made the 'stroke of a pen' tomorrow, we might see meaningful production in eight to ten years. And production would only expand at a rate sufficient to keep oil prices pretty much steady.

[FSTO]

Thucydides,

In short, no it doesn't have that potential.

Green River is a shale oil formation, like the Bakken formations in Alberta/Sask/Montana/North Dakota, or the Devonian-Mississippi in the eastern U.S. Shale oil is more expensive to develop than conventional oil plays. It's subject to a great deal of scrutiny and environmental lobbying, and there are technological and political risks that make it a riskier capital investment than conventional oil plays. As a result, it's not economically viable below certain per barel prices. Further, these plays take a long time to prove, to develop, and to bring online. Only sustained high oil prices allow a permissive environemnt in which to attract investment capital.  It's really not dissimilar in the larger sense form the oil sands.

If a president made the 'stroke of a pen' tomorrow, we might see meaningful production in eight to ten years. And production would only expand at a rate sufficient to keep oil prices pretty much steady.

Actually Bakken is partially located in Manitoba not Alberta.

[Thucydides]

While it is true that there are technical reasons to expect production from shale oil plays to be slow, the forward markets will react with extreme speed. President George W Bush signed an executive order opening up drilling in 2008 which collapsed the price of oil within five months, despite the fact there was no appreciable production due to new drilling during that time frame.

The reason which will trump other all other factors is American domestic politics. With the current US economy essentially stagnant, low workforce participation and 10% unemployment (U3), developing the formation would provide a desperately needed economic boost to any Administration. Coupled to that is the bonanza in oil royalties once the play is developed, which would put a huge dent in the $15 trillion + debt. Restoring finances and the AAA credit rating of the United States will also pay long term political dividends.

There will be considerable political pressure to develop the formation, and regardless of who wins this election, I think it will more than overcome the pressure from "Green" crony capitalists and environmental groups.

[Brihard]

FTSO, sorry- you're right. The Exshaw formation's been dubbed the 'Alberta Bakken' due to the similarities, but you're correct that they're distinct.

Thucydides- I agree that these formations will be developed. I'm not so sure that we'll see a crash in oil futures prices. Bush's lifting of the offshore drilling ban opened up development of conventional offshore oil that was not dependent on high prices to be feasible. Permitting unconventional/tight oil plays would simply be a first step. Those plays would not be economical if oil prices dropped precipitously; consequently there's no impetus for a crash in oil prices. Such a crash would in and of itself eliminate the market conditions making such increased production and secure domestic supply possible in the first place. There may be a slight drop in price, but nothing precipitous.

[DBA]

FTSO, sorry- you're right. The Exshaw formation's been dubbed the 'Alberta Bakken' due to the similarities, but you're correct that they're distinct.

Thucydides- I agree that these formations will be developed. I'm not so sure that we'll see a crash in oil futures prices. Bush's lifting of the offshore drilling ban opened up development of conventional offshore oil that was not dependent on high prices to be feasible. Permitting unconventional/tight oil plays would simply be a first step. Those plays would not be economical if oil prices dropped precipitously; consequently there's no impetus for a crash in oil prices. Such a crash would in and of itself eliminate the market conditions making such increased production and secure domestic supply possible in the first place. There may be a slight drop in price, but nothing precipitous.

Oil sands, oil shale etc while more expensive than a lot of conventional production is still in the $30-$40/barrel range which provides solid profit even if oil drops to $50-$60/barrel. Add in less risk of getting tangled in regional wars (middle east) or nationalizations (South America) and it's a pretty solid investment to hedge against riskier and potentially more profitable production sites.