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The Automotive Energy Revolution |
Editor’s Note: As you know, “energy
revolution” is a bit of a catch phrase for many floundering “alternative
energy” companies we see all over the Pink Sheets and the Bulletin Board.
But today’s article (originally published in Whiskey & Gunpowder ),
Byron King tells the real story behind the “energy revolution.” Enjoy…
“Turn the
Curve”
By Byron King
April 16, 2008
Every automobile on the roads of
the world reflects a long and complex chain of industrial production and
energy usage. Yet we live in a world where many of the highest quality
resources and energy supplies have already been exploited. And lower
quality resources are more expensive to extract and exploit, if they are
even available. So the world’s automobile industry is in the midst of a
revolution in both resource availability and energy consumption.
Thinking about Basic
Materials and Energy
Today the automobile business is
vast. It is a global industry that has evolved by leaps and bounds in the
100 years since Henry Ford made his famous remark in 1908 about building
“a car for the great multitude.” The worldwide customer base includes at
least a billion people — spread over six continents — who have income
sufficient to buy a car or small truck. According to figures assembled at
the MIT Sloan Automotive Laboratory, there are about 700 million
automobiles and light trucks in the world. About 30 percent of those
vehicles are in North America.
Every car requires steel, aluminum,
copper and lead. Each car requires rubber, plastic, and myriad of other
petroleum and natural gas by-products. And there is much else in the long
industrial ladder of automobile production. Just think in terms of the
energy that goes into processing materials, fabricating parts, building
components, assembling a finished product, and all the transportation
along the way. In addition to the basic energy and material resources that
go into manufacturing an automobile, the sheer number of vehicles reflects
a lot of fuel tanks to fill with gasoline and diesel. And this does not
even touch on the energy and resources that go into building road
systems.
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Automobiles and
Energy
The oil shocks of the 1970s — in
both price and availability — spurred improvements in auto energy
efficiency within the U.S. as well as worldwide. In the U.S., the increase
in fuel efficiency was related to rising costs for gasoline, as well as
government mandates for higher fuel efficiency dating from the late 1970s.
On average over the past 25 years, the typical power train of
gasoline-fueled automobiles in the U.S. has improved in efficiency by
about one percent per year according to data gathered by MIT. While
discrete, one percent improvements may not appear to be much, the compound
improvement in the typical U.S. automotive engine over 25 years has been
about 30 percent.
There has been even more progress in
the fuel efficiency of diesel engines over the past 25 years. Diesel power
trains are no longer the sooty, “knock-knock” devices that they were back
in the days of disco. Most cars sold today in the European Union (EU), for
example, are powered with clean-burning, fuel efficient, smoothly running
diesel engines. In fact, the demand for diesel fuel in Europe is such that
EU refineries routinely ship surplus gasoline to sell into the North
American market. And in North America the relatively low prices for
gasoline throughout the 1980s and 1990s discouraged the use of diesel
engines.
So there have been significant
improvements in automobile power train efficiencies over the past couple
of decades. But have these improvements translated into any overall
reduction in demand for fuel? No. In 2007 motor fuel consumption in the
U.S. was high as it has ever been. (Although according to the American
Petroleum Institute, demand for motor fuel may be at a plateau due to
price increases at the pump in 2006 and 2007.) In the past 25 years we’ve
seen more people driving more cars for more miles. But compounding the
fuel issue, the cars that people are buying and driving tend to weigh more
and offer higher performance.
The Future of the
Automobile
As I’ve said over and over again, we
live in a world of peaking oil output, and of energy and resource
scarcity. So the trend lines for fuel usage by automobiles simply cannot
continue for much longer. The first, most obvious sign is the rising price
for oil and by extension for fuel at the pump. Something has got to give,
and the energy markets are sending signals of long-term high prices for
motor fuel. Where do we go from here?
Well first, people and policy makers
have to realize that there is an energy problem. Everyone has to realize
that this is something permanent, going forward. “Peak Oil” will not pass
if we ignore it long enough. And no one can solve the problem just by
bellyaching about the rising price for gasoline.
It helps to view the age of the
automobile — and its future — as a systemic whole. And some social critics
are out in front of the broad discussion, with a sharp focus on the
automobile and what it has brought us as a society. James Kunstler, for
example, author of highly regarded books such as The
Geography of Nowhere and The
Long Emergency, believes that the car-dependent suburban
build-out of the U.S. may be “the greatest misallocation of resources in
all of human history.” That is, in an era of expensive energy and scarce
resources, a car-dependent culture has no real future and is in fact a
hindrance to progress in other directions. That is quite a viewpoint,
well-presented by Kunstler in his writing. It’s depressing, but it sure
gets your attention.
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And criticism of the automobile
culture is not confined just to social commentators like Kunstler. Another
remarkable indictment comes from no less an automotive insider than Prof.
John Heywood, the director of the MIT Sloan Automotive Laboratory. He has
stated that “cars may prove to be the worst commodity of all.” According
to Prof. Heywood, cars are “responsible for a steady degradation of the
ecosystem, from greenhouse emissions to biodiversity loss. What’s worse,
even if we improve vehicle efficiency, turn to fuel hybrids or make rapid
advances in hydrogen-based fuel technologies, the scale for slowing down
the degradation may run to the decades. Turning the curve won’t be
easy.”
You can agree or disagree with the
broad themes of Jim Kunstler or John Heywood. But there’s no argument with
one of Prof. Heywood’s points. Wherever we are going, it will not be easy
to “turn the curve.” Looking forward, the oil just is not there to fuel
cars in the future in the way that we did it in the past. So a lot of
people are going to have to do things differently.
Worldwide, the automobile industry
has seen the handwriting on the wall. Fuel is expensive, and is getting
more so with each passing year. So the industry has invested tens of
billions of dollars in improving engine and power train efficiency. In
addition, auto designers are coming up with new ways to eliminate weight
and drag. (At higher speeds, up to 70 percent of the energy used to turn
the wheels on a car goes just to push the air out of the way of the
chassis.) The auto industry is looking towards different sorts of fuels,
and moving towards what is called fuel-flexibility.
Hopefully this will lead us to a
great new investment in the car of the future.
Until we meet again…
Byron
King
P.S.: While we wait for the car of
the future — and to “turn the curve” — there are great opportunities
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both protect yourself and profit during the “Full-on Oil War of 2008.” It’s all right
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Editor’s Note: As always send any
questions or concerns to us at jim@pennysleuth.com. Although we may
not be able to respond to all questions, we carefully read and consider
them.
