June 10th, 2008
Prices up, consumption down–market economics working for gasoline consumers?
Yes, American gasoline prices have risen more than 30% in a year. Yes, consumption is now down in the U.S., year to year. Just under 4%. So maybe nobody ever said there was a one-to-one ratio. Bet if gasoline gets to $5 per gallon, consumption will drop another 4%? Of course, one thing the marketeers don’t calculate: who’s held hostage to gas prices, needing it to live, to work, to care for a family? How much is other consumption of goods off to pay for the necessary gasoline? We’ll never truly know.
But we do know even countries heavily into alternative fuel, like Brazil with its sugar-based ethanol, are still very much in the oil business. Brazil’s planning on six dozen more drilling rigs, many suited for deep water oil drilling. And we recently blogged about the addition of new refineries in Saudi Arabia and North Dakota to handle heavy crude with its higher sulphur content.
NOTHING DOING IN U.S. SENATE
The U.S. Senate today managed to not do anything on two energy-related bills. Because oil prices and gasoline prices are higher than a year ago the Senators feel compelled to be concerned. However, neither a new tax on oil company profits, nor the so-called global warming legislation is likely to even come up for a vote. Not this year anyway. The tax bill, BTW, was designed to compel oil companies to begin investing in alternative energy. Like trying to compel newspapers to run great newsites online. Oil companies are not very likely to seriously compete with themselves in a major profit center.
The global warming bill had all kinds of subsidy goodies for alternative energy, research and development, etc.
CRUDE QUESTION? HOW HIGH CAN IT GO?
Today the American-based futures market for crude oil went down. There were matching forecasts from US and International Energy agencies saying demand was falling, like people are buying less gasoline. But while the American economy is not so hot right now, growth continues apace in other parts of the world, especially in Asia. There experts are foreseeing $150 per barrel oil soon, and talking $180-200 per barrel in coming years.
It’s much easier to imagine higher energy prices in rapidly growing Asian economies because their labor costs are low, their pollution regs lax or unenforced, or both, some governments largely authoritarian. In short, higher oil prices are just part of the bigger picture of grow and spend. Let richer countries worry about the planet? Japan, of course, highly developed economically, is one large exception and it’s working seriously on developing alternative energy sources.
Japan is not only workking on their own alternative energy systems, they recently peldged $10 billion to go along with $5 billion from the World Bank. That’s going to help poorer countries build cleantech systems as well.
OIL FUTURES SPECULATION, AND SPECULATING ON THE FUTURE
It’s crucial to note that Asian energy anaysts are very open about how speculation in the oil market is driving some of the current high price. Does this signal international support for re-regulation of the petroleum futures market now based largely in New York and London?
And wouldn’t that simply drive the futures trading elsewhere? Just today there is talk of moving the crude oil futures trading to Dubai. You care to speculate on how hard it would be to regulate there? On the other hand, Dubai is not much of a military…. That’s a speculation for another time.
June 10th, 2008
Bulls in the corn field, beware! Ethanol from corn? Mooooo.
Those are market bulls of the two-legged sort similar to the ones currently jacking up crude oil futures. The next great investment bubble may focus on the fields of Iowa. Today’s Department of Agriculture numbers on the American corn crop (the world’s largest) are not encouraging for corn buyers, and that means more profit for agribusiness and that includes big oil. Sure makes you proud to be an American taxpayer so willingly subsidizing both the corn and oil industries. Corn’s currently worth than fifty billion dollars per year in the US, making it our #1 farm crop and worth double what the #2, soybeans, brings in.
The crop drop for corn: could be as much as 10% says the US Department of Agriculture. Problems this year from wet spring across the Corn Belt. Worldwide corn production is also going to be down this year. That’s bad news for livestock growers, and anybody who eats ham or an occasional BLT. First, they recall all the tomatoes*, now the price of bacon is going to get even higher. Of course, that means the corn futures are up.
CORN ETHANOL OVER ONE FOURTH OF CURRENT U.S. CROP
This new corn-down means investors may hesitate to plow more money into corn-based ethanol. Current estimates are that 4 billion bushels of corn will go into making ethanol biofuels this year. That’s more than a fourth of the less than 12-billion bushels now expected in the ‘08 harvest. It brings into sharper relief the food or fuel fight.
All this will keep VCs interested in Vinod Khosla and other biofuel investors. Khosla has said he expects financial success for next generaton biofuels not made from food stock. And if you follow the VC world you know that John Gage has left Sun for Kleiner Perkins to work on alternative energy and cleantech investments. Gage was the #5 employee at Sun. And I knew Gage over thirty years ago, before there was even a Sun. At that time he was a grad strudent at Cal and was trying to help my beknighted TV news department figure how to use computers in reporting the 1976 election returns. That was so long ago, so many ones and zeros have passed through the digital world since then. My point: Gage has always been interested in the next new thing, the next tech innovation that can change the game. Love oil or hate it, use it or avoid it as you will, but it’s clear the energy game is ripe for changing.
A HAPPY NOTE FOR BREAD LOVERS
They don’t make fuel out of wheat, yet. And the world wheat crop will increase this year. Once again the U.S. the biggest producer. That healthy production could help control prices on bread, and wheat beer, dietary staples where I live.
* Tomato note, a bit of green as well: locally I bought several nice organic tomatoes at the local growers market this morning but most dealers had sold out before noon. Tomato shortage! Bloody mess for bloody mary supply!
June 10th, 2008
Public vs. Private? Outspoken Congressman mulls government’s investment role in green tech
The kind souls at LimeLeap, a technology services company that has donned a green mantle as its new business mantra, have taken an item off my to-do list, which was to follow up on a green business roundtable that they hosted in Washington last month.
As I blogged, LimeLeap is spreading the word to local small businesses near the nation’s capital that you don’t have to have deep corporate pockets to go green. Apparently the first roundtable, Lime-Aid, drew about 40 businesspeople. The speaker was the outspoken Congressman Dennis Kucinch (D-Ohio), who spoke about several topics including how technology can contribute to a greener world.
The presentation was videotaped, and here are links to all four parts of the roundtable video on YouTube:
Part 1 (Set-up and basic thoughts about sustainability and how business “design” from both a physical and organization standpoint will play a role in green biz.)
Part 2 (Opinions about the decentralization of energy technologies and how businesses and consumers will play a role.)
Part 3 (Questions for the Congressman, starting with the role of the Environmental Protection Agency, how to inspire entrepreneurial activities and why energy bills that support massive utility companies are the wrong way to go in the future.)
Part 4 (More questions, surrounding where green tech funding will come from, the politics of green tech innovation; PLUS the wrap-up.)
Who do you think should pay for this stuff anyway?
June 9th, 2008
More oil refineries coming right up. Will this stunt cleantech growth?
Saudi Arabia is preparing to add more refineries in the next few years. And they plan to begin refining more of their less desirable, more sulphurous, crude oil. Saudi is aiming for an 80% increase in refining capacity. Most refineries in the world can now only handle light crude. The largest fraction of the world’s heavy crude deposits are in Canada, convenient for gas-guzzling Americans.
We’ve blogged in the past about some of the environmental problems raised by Canada’s rush to cash in on its huge supply of tar sands in the far north. You may think the crucial vote in South Dakota last week was its Presidential primary. Wrong! One rural county voted to build America’s first oil refinery since 1976. And it will convert Canada’s heavy crude into marketable products.
Who cares? Anybody who is concerned over greenhouse gas emissions. A recent report from a non-profit in Washington DC charges that heavy crude refining produces THREE TIMES AS MUCH GREENHOUSE GAS EMISSION as light crude. The report goes on to conclude that US refineries will be falling all over themselves to convert to heavier crude as the Canadian supply is huge and the raw stuff cheaper than light crude. This will be a fun problem for the next US President. Stop the dirty oil from Canada and watch gasoline prices sky-rocket further, price controls on oil and watch the supply dwindle to a trickle and business scream for help, or let ‘er roll and watch the emission levels increase.
Unless we enter a spell of cool, moderate temps, and China decides to stop growing its economy, the concern over energy prices and global warming will continue to heat up interest in cleantech. A few more oil refineries in a few more years are not going to suddenly give us $2 gasoline again. China is focusing more and more on cleantech for energy but there is so far to go. They are pushing for 15% renewables as their first national goal. It certainly means that cleantech ventures in China will get a piece of the global VC pie.
HOW MUCH CLEANTECH CASH IS NEEDED? $45T!?
The International Energy Agency is pushing for more cleantech, all over, all around. They recently estimated it would take $45 TRILLION worth of investment to begin to reverse the greenhouse gas emission problem by 2050. The way “Business Week” figures it: that’s just over 1% annually of the global GDP. But it also runs counter to a lot of the big money and big power aligned on the planet: oil companies, Russia, OPEC, Iran, Saudi Arabia and the little Mideast states, Canada, coal companies, Australia, major auto manufacturers. On the other side you have Japan, Germany, China, India, Brazil, American consumers, VCs. This will be a major culture clash eclipsing older topics like gay marriage and gun control in America. And this one will begin to define new economic and political aliances across the earth. It could finally lead to a nasty break between neighbors: Canada, US and Mexico. Canada and Mexico are both major oil suppliers to the US.
Oil or not, will become the biggest cultural split on the planet and many Mideast countries with big oil supplies will find themselves often on the outs with historical forces they cannot control. Will Saudi’s Wahhabis or Al Qaeda declare jihad on solar or nucelar power plants? Think of the great Hollywood thrillers this will engender.
June 9th, 2008
SCE adds to its solar energy portfolio in deal with eSolar
Everything around me is wilting today, including me. Therefore it seems apt for me to search around for something solar-related to write about.
Found this quick update from Southern California Edison, which bills itself as the leading purchaser (not provider) of solar energy, buying about 90 percent of the current U.S. solar production. SCE has just signed a contract for 245 megawatts of solar power that’s being produced through what it describes as the “first commercial effort using power tower solar thermal technology.” The project will be sited near Lancaster, Calif., and is expected to start producing power in 2011. The technology is produced by eSolar, which apparently uses shorter towers than other solar tower providers. Here’s some more information about its approach to solar towers.
For perspective, renewable sources contribute 16 percent of SCE’s total energy portfolio. It has contracts for 1,205 megawatts of wind-generated energy, 906 megawatts of geothermal, 354 megawatts from solar sources, 174 megawatts from biomass, and 226 megawatts from small hydro.
This photo from Wikipedia gives you a visual idea of how tower technology differs from the solar panel technology that’s been getting most of the ink this year. The photo is of the 11MW PS10 near Seville in Spain.
The towers use heliostats (mirrors) to track the sun’s course throughout the door and direct it into a receiver on the top of the tower. The captured sunlight is used to boil water, creating steam that works with a traditional turbine to create electricity.
June 8th, 2008
It’s official gasoline now over $4 per gallon average in U.S.
And that can only mean more interest and investment in clean tech. The AAA gas price survey topped $4 per gallon for the first time today.
Morgan Stanley analysts have already said crude oil futures should hit $150 per barrel by July 4th. And you thought I was kidding? Calpers’ big alternative energy investment starting to look like a no-brainer.
The high oil prices are going to reverberate across the political landscape. There are already Congressional and regulatory investigations into oil futures trading in the U.S. And the very pro-business “Wall Street Journal” is outlining the different oil policies proposed by the presumptive Presidential nominees of the two major parties.
June 8th, 2008
Two small countries thinking big, and green
Two small nations on opposite sides of the globe are building world class renewable energy proejcts. In Portugal they’re constructing what will become, temporarily at least, the largest solar generating plant on earth. It’s going into eastern Portugal near the town of Moura. This photovoltaic farm is being built in the sunniest spot in continental Europe. Portugal aims to generate over 30% of its own power from renewable sources by the year 2020. It’s already among the leaders in Europe. Here are the European top five, by percentage from renewable sources:
Sweden 2005 39.8%, target by 2020 49%
Latvia 34.9%, target 42%
Finland 28.5%, target 38%
Austria 23.3%, target 34%
Portugal 20.5%, target 31%.
Worst is the UK with less than 2% renewable, lagging even behind relatively impoverished Cyprus.
WAVE OF THE FUTURE?
In the southern hemisphere New Zealand is bereft of coal and oil. Like many island nations they are turning to the sea: wave power to be exact. One of the first projects to be deployed will be at Kaipara Harbor on the North Island. It would place turbines on the harbor floor and they would be driven by tidal flow.
It’s only one of several ocean-powered projects slated for New Zealand. The reports there take heart in the fact that an Irish company is now generating electricity with wave power in Scotland. The firm is OpenHydro which could be providing technology and components for the Kaipara project.
Here’s what OpenHydro says on their website: “Irish company OpenHydro has become the first tidal energy company to complete the connection of a tidal turbine to the UK national grid and commence electricity generation. This is a first for both the UK and Ireland and in doing so OpenHydro has now become one of the first companies in the world to reach this stage of technical maturity.”
This one generating turbine is in the Orkney Islands of Scotland. A much larger installation will begin in the Channel Islands of England’s south coast next year.
And here’s what their seabed turbines look like:
Courtesy:OpenHydro
June 8th, 2008
Best Buy will take it back. For free. In some places.
Electronics and technology retailer Best Buy is experimenting with a free consumer electronics take-back program at 117 stores in San Francisco, Minneapolis and Baltimore/Washington, D.C. Apparently, the company was prompted by a lobbying group called As You Sow, which encouraged it to adopt the program. (As You Sow actually pretty much forced Best Buy’s hand when it submitted a shareholder requesting that it test a free take-back program. That proposal has been withdrawn.)
Statistically speaking, the two organizations figure that only 12 percent to 15 percent of discarded electronics equipment is actually collected for recycling, refurbishment or reuse. As you doubtless know, more states are passing laws making it illegal for you to simply dump this stuff. And things should get REALLY interesting when the forced digital television broadcast transition happens next year.
June 7th, 2008
Waste not. ElectraTherm turns “waste” heat into an electricity source
A couple of months back, I reported about an IBM data center project in Switzerland that was shunting its excess heat “waste” toward warming up a public swimming pool. Along those lines, a company from Carson City, Nev., has come up with a commercial waste heat generator called the ElectraTherm Green Machine that takes heat created by other sources and harnesses it for a useful purpose.
The premise behind this thing is that it “recycles” heat of about 200 degrees Fahrenheit into electricity at a cost of about 3 cents to 4 cents per kilowatt-hours during the payback period and less than 1 cent per kilowatt hour later on, according to the company. ElectraTherm has installed the first production unit of its technology at Southern Methodist University, which the company figures can produce electricity to power 40 2,000-square-foot homes. Here’s a podcast from the company’s CEO that explains the gadget in more detail.
June 7th, 2008
Market disaster on Wall Street plays positive in Silicon Valley
You may think the U.S. is divided along political lines, perhaps you sense a rift in cultural values. But let me tell you that’s peanuts compared to the coming brutal high-stakes rift over the core of the US economy. Will it be Pentagon contracts, oil and gasoline? Or will clean tech make a clean sweep, led by companies that will become this era’s version of Amazon, eBay and Google?
When I blogged about oil prices and cleantech VC money on June 6, I had no inkling the stock market was going to swan dive into an empty pool. I had no inside information and I rarely even look at the financial news or websites, far too boring and depressing. The best way to summarize how the MainstreamMedia played the Friday oil price run-up:O-MY-GAWD.
So now oil is within dripping distance of $140 per barrel. And it wasn’t long ago I was marveling at a future that threatened us with $150 per barrel. I had no idea that could happen before the big Fourth of July driving holiday.
In light of the Wall Street nausea at the current US currency, unemployment and energy use trends, it is little wonder that the largest non-corporate investment fund in America is looking to get even greener. Calpers could hand over half a billion dollars to VC Vinod Khosla. No wonder the “Wall Street Journal” wants to see him disrespected, if not totally dismembered. At a time when GM is firing thousands, closing plants, the country’s largest pension fund is going green. Oh how unhappy Houston, Wall Street and Detroit must be feeling after the market debacle on Friday.
Of course, it’s long been true that cheap energy is the basis of the current Amrican economy. If expensive energy is our future, that will bring either economic disruption or a re-tooling of the American economy. Clearly we cannot muddle along on our current path, borrowing money so we can drive to the mall to buy stuff imported from China. Unless we just want to mortgage the whole nation to the Chinese capitalist/communist/authoritarian/proletariat regime. After Friday they probably think we’re a bad investment anyway.
A newsman since 1969, Harry Fuller has worked for CBS, ABC, CNBC Europe, CNET and was founding news director at TechTV. See his full profile and disclosure of his industry affiliations.
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