Monthly Archives: December 2018

Electric Cars – Imminent Adoption or Pie in the Sky?

Electric pie in the sky is the promise of electric cars. Adoptive technology is fast paced. It took decades to go from the origin of the 110v electric grid to adaptation of same in the average household. My own parents did not even get access to electricity until I was two years old. But cell phones, computers, etc. were adopted quickly. Some claim that the electric car will result in a rapid transition.

The notion that we will quickly transition to electric (E cars) cars is a speculative claim. A blogger claims that E cars will soon be perfected and people are waiting to convert to them as soon as the technology allows. He claims it will be about 2020 – 2024 when we see a surge in E car buying. I would aver that won’t be the case. The industry projects a slow increase of about 10% market share each decade and even that pace is not being made. Why?

Cost, what else? The E car is very expensive. The battery is short lived and many touted to run 150 or more miles are lucky to make 100 miles between recharges and recharging may take hours. This defeats the very purpose of having an auto for immediate and rapid deployment in the event you need it. The battery also is an electrical hazard to first responders in an accident and these autos burn up even quicker than do a gasoline engine auto.

I drove to Denver recently. It is 800 miles one way. I drove back without laying over and filled up twice from Denver. With an E car, I would have had to pick a longer route to get to refueling stations and then the fill process takes some time. And almost certainly could not cover the 800 miles as quickly.

The fuel of the future may be hydrogen which will run in an internal combustion engine (ICE) with virtually no modification. The problem with hydrogen is storage. How do you store hydrogen? It is a very small molecule and will literally leak out of a steel container. The fuel cell concept is intriguing but may be too complex to implement economically, at least yet. That is also the argument of E car proponents. Some hybrid system may result with electric power operating the vehicle but an on board generator providing the “juice.” Hydrogen might result in zero emissions yet provide long distance capability. Developing a container that will hold hydrogen seems a solvable engineering problem.

Today we have a ready alternative to gasoline. It is propane or natural gas. The emissions are much lower and the liquefied natural gas diesel, in particular, is very efficient. And the adoption of this technology is slowed by a lack of stations to fill up. Again, the idea that E cars will be rapidly adopted fails to account for the lack of electricity, the same reason rural farms did not adopt electricity. There was no grid to tie into and for E cars there is no power stations nor technology allowing for rapid fill up and long range driving. And propane vehicles, including farm tractors have been around for 60 years plus. Yet it did not get the widespread adoption that E car advocates assume is a given. In fact, electric automobiles were found over 100 years ago but simply was an idea before its time.

Solar, Wind, and the Electrical Grid

The truth about the electric grid is that power cannot be stored with any efficiency. Wind and solar power are lame excuses which cannot deliver electricity when needed, only when the wind blows or the sun shines. Requiring utilities to take wind generated electricity destabilizes the grid.

Proponents claiming wind and solar can provide most of our electrical needs are ignorant of the way the grid and electricity works. A century ago electricity could be generated by wind, but was stored in wet cell batteries and used only to power a dim light or two or perhaps a radio. By midnight the power generated in a day was long exhausted and any light after that would have to be generated by a hand crank generator. Barely enough to charge today’s cell phone, it wasn’t going to come close to generating enough to power a television, refrigerator, or central heat and air.

Even in any “off the grid” application, the only way you have a refrigerator was using propane, something still used in small RVs to this day. Cooking by wood? Oh, we call that biomass. (below, my “biomass” processor runs on gasoline…I want the solar model.)

How ridiculous. Europe generates substantial electricity by avoiding coal only to burn wood instead. Not because wood does not pollute or emit carbon dioxide, rather because the EU has declared wood “carbon neutral”. Really. Then coal, which is only biomass as well, should be deemed carbon neutral. It is like pretending wine doesn’t come from grapes.

Wind and solar cover the high plains in ugly forests of hilltop white turbines whose synchronized nature blinks uniformly in red strobes throughout the night. It has turned the plains into a hideous bird killing mine field of subsidized wasted energy.

Energy is not readily stored. It can only be stored by siphoning off surplus generating capacity to pump water to higher elevations, then release as needed into the hydroelectric system. Power is regulated by turning on and off the generators in plants where base load and peak load can be controlled, otherwise known as hydroelectric or coal or natural gas fired plants. Wind is mandated to be purchased by the grid and they cannot pay for it, even if forced to idle the wind generator to avoid literally overheating the grid system, utilities must pay for that wind power, use it or not. And wind is, on average, higher at night than day, it generates at a time of day when it is not needed. Also, look at the photograph of the wind towers I took in Greensburg, Kansas in 2018. Do you think these are made from wood? Metal? Of course not. They are made from hydrocarbon-sourced materials. Never mind I have ignored the bird butchering aspects of wind generation. Go to western Oklahoma or Kansas and see if you find an raptors near these farms.

Solar, on the other hand, is more predictable in dry climates. But in all climates it can predictably be perfectly worthless after dark. In fact, as the sun rises, solar power slowly powers up to its mid-day peak. After that, it wanes with the setting sun and just as peak demand starts, solar stops.

As both solar and wind increase and are constructed courtesy of the taxpayers subsidy largess, the management of the grid becomes ever more difficult. And energy costs are doomed to track that of Europe where electricity is roughly three times more expensive for no other reason that to subsidize the construction of roof top solar, solar farms and wind farms. Take off all subsidies and no wind farms would be built and electricity costs will drop. Until we can solve the storage problem, neither solar or wind are viable nor can they stand on their own merit. And if storage technology involves huge amounts of lithium or other rare earths, then stripping the salt flats of the desert or mining for lithium remains a very environmentally challenging environment to claim some moral high ground for “renewables” use.

The better alternative has been around for 50 years plus. That is nuclear power. It is carbon free, safe and can ramp up and down as demand needs. Why do we have such a phobia about its use?

Prices, Petroleum, & Gravity

The sudden collapse in oil prices was predictable although few of the pundits were willing to say so. The public understanding of such is even less than the so called experts. It’s about supply and demand. Moreover it is about the supply and demand for what is sold as “oil”. So let’s define petroleum first.

Oils are graded on the basic of specific gravity ranging for low thick “heavy” oils which may have gravity of 10o or less.  This is referred to as the API gravity. (API = American Petroleum Institute) It is an inverse scale. While dimensionless, 10o oil is the “gravity” of water. Numbers lower are heavier than water, numbers higher than 10o are lighter than water.  Oil sands found in Canada and elsewhere are very thick oils, less than 10o gravity. Asphalt has an API gravity of only 8o. This thick mush must be thinned with much lighter crude oils to average out to a range that the refiners prefer to get the best prices.

Shale oil plays produce light oils – often lighter than 60o gravity, some even as light as 90o. By comparison, gasoline has an API gravity of 50o.  Therefore to make gasoline a refiner needs oil that has a gravity lower than gasoline or it must be blended with heavy oil to create an artificial “intermediate” grade of oil.  West Texas Intermediate (WTI), a benchmark oil, has an API gravity of 39.6o.  And North Sea Brent oil is somewhat lighter than WTI, but has a higher sulphur content.

All the shale oils are light. It is simply not possible to squeeze larger molecules of oil out of dense shale rocks, hydraulically fractured or not, and thus the boom in oil in West Texas and elsewhere, has created a huge supply of very light crude oils but the old legacy medium weight oils needed to make gasoline are actually in decline. This is one reason we still import oil. It is also why Canada would like to build the Keystone Pipeline so they can mix the horribly thick oil from the tar sands with the very light shale oils to create this artificial blend of “medium” oil.

To create this blended oil costs money, so if 50% heavy and 50% light oil, the end result is not 100% medium weight. Some part of the crude may be consumed in the process of blending. The heavy oil in Canada is bringing barely $15 per barrel. Likewise, the very light oils, above that of the gravity of gasoline, are also discounted in the market. Therefore, they are selling oil as much as 30% below the benchmark prices such as WTI. And production of light oils produces huge amounts of natural gas, which has glutted the natural gas market.

So when you hear about WTI priced at $55 a barrel, keep in mind, the price of light oils may be $30-40 a bbl. And, the heavy oils even lower. So now about those gasoline prices.

Locally, I am seeing gasoline sell for $1.90 to $2.15/gallon. We were $2.60 and above only weeks ago. So we have seen the price of gasoline fall by 20-25% and crude oil pricing falling about the same percentage. But if you subtract the typical taxes from gasoline- which are on a per gallon basis, the price fall of gasoline is much greater. Then locally, again, it would be $1.40 to $2.10, or 33%. This reflects the fact that these blends create a differential in pricing, so the refiners may choose to use regular WTI rather than buy blends unless the blends are discounted even more. It is all about the cost of refining the “best” oil into the most useful and valuable products. This also explains why the differential between diesel and gasoline has expanded.

So the issue isn’t just a straight line relationship between oil prices per barrel and gasoline prices per gallon, but is a result of blending supplies to maximize the profit to the refiner. So we must import oil while exporting lighter and heavier oils, or to blend these two into a more marketable property.

With OPEC threatening to reduce production by 1,000,000/bbl. they will squeeze prices upward for the kind of oil our refiners need to make gasoline and similar products. Our exports may offset the cost but in the long run, it is likely to increase the price of gasoline to American consumers. Frankly, it is a complex business. And the cost of crude oil relates to supply of the right kinds of crude.

The recent increased drilling in W. Texas isn’t really helping the supply of intermediate grades of oil. And hedge funds buying into the oil and gas industry are speculating by backing winners and losers. But with the huge investments, the question comes is whether or not a real profit will be realized or whether investor machinations are creating the kind of volatility we have seen in recent oil prices. Importantly, do the investors and “energy banks” even know or understand the real mechanics behind oil. Certainly they are not going to get that information from the “trades” – those industry magazines which are more cheerleader for their advertisers than information sources for real investors.

A few years ago, Arthur Berman, running a column in World Oil magazine, criticized the economics of the shale gas play, predicting it to falter. He was dead to nuts on his prediction, but angry advertisers forced World Oil to fire both Berman and his editor. How can you rely upon information meant only to make these promoters and money men look good? You can’t.