Odd solar power?

[Polish_Silver]

Oil vs Nuclear

We cling to the optimistic hope that new technologies will allow ever more difficultly reached oil supplies to be exploited to compensate for supply losses in depleting oil fields, and for conservation technologies and practices to be developed and deployed fast enough to allow demand to adjust to rising prices without producing a global economic catastrophe.

Isn't this an argument for building ton's of nuclear reactors?

Nuclear is the only technology proven to be a viable large scale replacement for coal and non-automotive uses of petroleum.

As for automotive uses, everyone except the farmers can live in a high rise condo.
Problem solved.

[DSpencer]

Re: Odd solar power?

Why would the oil companies (actually refiners and fuel retailers) care what a fuel is taxed at? They just collect the fuel taxes and remit them to government.

My phrasing might not be clear. I was referencing this statement: "A CNG vehicle gets twice the mileage per dollar than a vehicle that runs on highly taxed gasoline."

My point being if I sell gasoline to power cars and you sell CNG to power cars, then it puts me at a disadvantage if gasoline is taxed at 80% and CNG is taxed at 0% (obviously hypothetical tax rates). I understand the concept of taxes being paid by the consumer, but unless the demand is perfectly inelastic then they will care what the tax rate is and they will care even more if a more viable alternative surfaces and is taxed at a much lesser rate.

So my ultimate point was: is it possible no major player will enter the CNG market if they are relying on the cost competitiveness that is partially a result of government tax policy that can change at any time. Particularly, if there are competitors who will see to it that CNG does not maintain its tax advantaged status?

[c1ue]

Re: Odd solar power?

My phrasing might not be clear. I was referencing this statement: "A CNG vehicle gets twice the mileage per dollar than a vehicle that runs on highly taxed gasoline."

This is probably not relevant to your clearly rhetorical question, but the reality is that the gasoline tax is never going away. That tax is where revenues are obtained for the Federal Highway Fund. If anything, at some point CNG will get it too.

[GRG55]

Re: Oil vs Nuclear

Isn't this an argument for building ton's of nuclear reactors?

Nuclear is the only technology proven to be a viable large scale replacement for coal and non-automotive uses of petroleum.

As for automotive uses, everyone except the farmers can live in a high rise condo.
Problem solved.

Even the farmers can move into a high rise

http://news.nationalgeographic.com/n...lly-grown.html

High-Rise Farms: The Future of Food?
John Roach
for National Geographic News

[GRG55]

Re: Odd solar power?

My phrasing might not be clear. I was referencing this statement: "A CNG vehicle gets twice the mileage per dollar than a vehicle that runs on highly taxed gasoline."

My point being if I sell gasoline to power cars and you sell CNG to power cars, then it puts me at a disadvantage if gasoline is taxed at 80% and CNG is taxed at 0% (obviously hypothetical tax rates). I understand the concept of taxes being paid by the consumer, but unless the demand is perfectly inelastic then they will care what the tax rate is and they will care even more if a more viable alternative surfaces and is taxed at a much lesser rate.

So my ultimate point was: is it possible no major player will enter the CNG market if they are relying on the cost competitiveness that is partially a result of government tax policy that can change at any time. Particularly, if there are competitors who will see to it that CNG does not maintain its tax advantaged status?

If I understand correctly you are making the assumption that CNG can be sold as a viable private vehicle surface transport fuel independently competitive with the current distribution and retailing of motor gasoline and diesel. This is where you and I differ I suspect. The "oil companies" have no reason to be concerned about competition from natural gas based transportation fuels or what level of taxes the government decides to put on them. Here's why.

Despite the energy cost advantage, thus far CNG, LPG and LNG conversions for light vehicles have been largely limited to fleets. There are all sorts of companies in Canada and the USA that engineer and market the conversion equipment and systems for liquid propane, CNG, LNG, enhanced diesel combustion using natural gas derivatives, and so forth. Here's links to just two: T. Boone Pickens' Clean Energy Fuels in California and CleanFUEL USA in Texas. You'll notice they target fleets. For a good reason.

There is no possible way that it will ever be economic to set up a distribution chain to sell CNG or gas derivative fuels to millions of individual car owners independent of the currently installed base of retail motor gasoline outlets.

Among other factors, the existing fuel sellers have the best locations...and that cannot be replicated. That is something that McDonald's, Starbucks and others have known for some time. Once McDonald's reached saturation with their conventional storefronts in most of their markets in the USA and Canada, in order to keep growing sales they started forming joint venture partnerships in the early 1990s with the major gasoline retailers in each region because of their prime locations and traffic. It was a marriage made in heaven. The gasoline refining and retailing business in mature markets is very challenging, with highly cyclical margins [imo gasoline refining & retailing in the USA is second only to commercial airlines as a poor investment]. The profits flogging a cup of "designer coffee" far exceed the profits selling a gallon of gasoline. [Just a historical footnote...in the 1980s/90s the largest gasoline retailer in the USA Midwest, and neck-and-neck with Shell nationally, was Chicago-headquartered Standard Oil of Indiana (Amoco). McDonald's Corporation is headquartered in nearby Oak Brook, Illinois. Not surprisingly the proximity of the two head offices resulted in one of the first such JVs. Nearly 20 years ago I had the opportunity to meet and question a McDonald's VP who was involved with formulating that strategy and the negotiations].

In the same way as Big Macs or Decaff No-Fat Venti Lattes, the only feasible way to achieve viable large scale market penetration for natural gas based fuels to serve millions of individually owned private cars is to piggyback onto the existing fuel retailing infrastructure. But at this point, as Gulf Oil CEO Joe Petrowski told EJ, even that is not an economic proposition. [For those that are not aware the Gulf Oil founded in 1901, built using Mellon family financing, that explored for, produced, refined and marketed petroleum (and was once one of the famed "Seven Sisters") disappeared when it was bought by Standard Oil of California (Chevron) in 1985. The Gulf Oil that exists today holds brand rights and is predominantly a fuel wholesaler/distributer and retailer (2000+ outlets) headquartered in Massachusetts. If there is a company in the USA that would want to broaden its economic fuel choices for its customers it should be Gulf Oil. That it does not find natural gas based fuels a viable business growth opportunity speaks volumes.]

[thriftyandboringinohio]

Re: Odd solar power?

GRG55, you sum it all up nicely for today's market conditions for any alternative automobile fuel, including CNG.
The future, though, might change things.

As Peak Cheap Oil unfolds, the gasoline retailers may find CNG more attractive as gasoline climbs to unaffordable prices - they need a product to sell.
The natural gas industry is and always will be strongly attracted to the automobile fuel market because it is so huge and so profitable.

If and when the gasoline retailers decide to add CNG fueling compressors, the natgas companies will jump at the chance.

The thousands of little nagging details of the fueling compressors and the vehicle components are nearly settled now with these fleet projects, so we'll have the technology all worked out and ready when the day comes that the auto fuel market decides to sell CNG. That is not an accident; I worked on some of the early alternative fuel demonstration projects, and our goal was to prove it can work and get everything figured out and ready for when the need arises.

[Thailandnotes]

Re: Odd solar power?

Most of the natural gas stations in Thailand are out from population centers because that's where the available land was. Part of the solution to distribution problems is solved by cars that can switch over to gasoline when the natural gas runs out.

Here's a good blog post from http://rankexploits.com/musings/2012...g-in-thailand/

We stopped for refueling 15k outside of Bangkok. Driver asked us all to disembark, said it was Thai regulation during fueling. The hood was lifted and a fueling hose connected.

Fuel was compressed natural gas. The station sold CNG at 6 pumps and business was brisk.There were other vans like ours, taxicabs, and pick-up trucks. I talked to one of the pick-up drivers who said that CNG was so cheap, he had converted his Toyota pick-up to burn it. The gauge on the dispenser read 200 bar/3,000 psi.

Our van also burned 91 Gasoline and had automatic fall-over to gasoline if it ran through its supply of CNG. Driver said this didn’t happen very often because there were enough CNG stations on the routes he drove.It appears that all motor-fuel is subsidized in Thailand but especially CNG. In addition to CNG, LPG (Propane), diesel (Number2), two grades of straight gasoline plus 4 more of various proportions of gasoline-ethanol, and even straight ethanol are available – but not all at every station.

CNG is sold by the kilogram at 8.5 Baht/kg. Gasoline is sold by liter and was in low Baht 30s/L when we were there. Diesel was 28 Baht/L. Figuring Baht at $0.032 shows that CNG was $0.272/kg, and gasoline over $1.0/liter.

Using CNG to Gasoline Equivalent of 2.267kgCNG=1 Gallon of gasoline, price of CNG is equivalent to paying $0.61/gallon for gasoline. At $1.00/L, Thai gasoline costs $3.80/Gal – quite a difference. Read here for Gasoline gallon equivalent

CNG is produced by a government owned refinery and there are plans to raise the retail price by 70% over the coming year to 14 Baht/kg. Producer says that cost of production is 16 Baht/kg. CNG in Thailand could be sold profitably for a bit over $1.15 per gasoline gallon equivalent.

Read Here for a more detailed discussion of fuel types in Thailand.

[GRG55]

Re: Odd solar power?

GRG55, you sum it all up nicely for today's market conditions for any alternative automobile fuel, including CNG.
The future, though, might change things.

As Peak Cheap Oil unfolds, the gasoline retailers may find CNG more attractive as gasoline climbs to unaffordable prices - they need a product to sell.
The natural gas industry is and always will be strongly attracted to the automobile fuel market because it is so huge and so profitable.

If and when the gasoline retailers decide to add CNG fueling compressors, the natgas companies will jump at the chance.

The thousands of little nagging details of the fueling compressors and the vehicle components are nearly settled now with these fleet projects, so we'll have the technology all worked out and ready when the day comes that the auto fuel market decides to sell CNG. That is not an accident; I worked on some of the early alternative fuel demonstration projects, and our goal was to prove it can work and get everything figured out and ready for when the need arises.

No doubt the future will change things. I just wish I was better at knowing in which ways exactly...

You and I both know it's not a technology barrier. Natural gas derivatives vehicle fuel has been around a long time in various forms. Italy and Turkey, as only two examples, import large quantities of propane specifically for the vehicle fuel market. In 1985 I was a superintendent with a Big Oil company, and our entire fleet of several dozen light trucks had been converted to dual-fuel gasoline and propane, as we supplied the latter from our own operations and it was a material operating cost savings (our typical vehicle would clock 65k-80k miles per annum). THe city of New Delhi forced the conversion of all buses, taxis and tuk-tuks (3-wheelers) to CNG in the spring of 2001...I travelled there before and after that change and the air pollution effect was dramatic. Cairo has been trying to do something similar.

The energy content of gasoline is about 36 MJ/litre. Propane is about 26 MJ/litre. At 200 bar (just under 3000 psi) the energy content of CNG is under a quarter that of gasoline, and a third that of propane. The weight of the CNG tank (several hundred pounds) will reverse years of hard-won, expensive weight saving efforts on the part of automotive engineers (the filament-wound, composite tanks are lighter but horrifically more expensive). When I look at the whole picture I get the sense that CNG in the USA and Canada (both vast countries) will be niche markets in urban areas only, where travel distances are short and there is ready access to refueling stations. Could turn out that the real competition for CNG is not conventional gasoline or diesel, but electric vehicles going after the same niche...

[Polish_Silver]

Petrowski & CNG: snow job!

* Gulf Oil CEO Joe Petrowski told me can't ask shareholders to invest $200,000 per service station to add CNG service when there are virtually no vehicles that run on CNG, and vehicle manufactures cannot ask shareholders to invest $1 billion plus in CNG vehicle development when there are no CNG service stations to fuel them.

There are already 536 CNG fueling stations in the US. No problem near any major population center. As the CNG cars become popular, more stations will be added.
Petrowski is just another wimp asking for a government dole. $200k is peanuts compared to the total cost of building a gas station. "CNG vehicle developement" is a trivial change to the engine parameters. Honda already has a cng Civic which I have ridden in. Cars in New Zealand have been running on CNG for decades. It is not new or unproven technology. There was significant development cost for the Nissan Leaf, Chevy volt, etc. (Much higher engineering cost than for a CNG car) CNG cars are refueling at truck stops, some fraction of which already have CNG equipment.
My friend told me he bought his own CNG compression system for $5k.
(couldn't find that on google though!)

[Ghent12]

Re: Odd solar power?

It's a serious question. From someone, who by the way, is very well versed in petroleum industry economics. But I am certainly open to having my apparently obvious deficiency corrected.

Fire away...

Sorry for the bellicose question, but it struck me as odd that anyone could believe the fallacy that "taxes are just passed on." The consumer would pay the tax, sure, but that artificially increases the price of the product. Any given firm selling any given product or service would only want a price increase if they reap the differential in revenue, and they would only be willing to raise the price if they thought they could charge that much and maximize profits. A tax on any product, even "necessary" ones, necessarily skews the supply/demand dynamic by directly raising the price and subsequently reducing demand for the product. People care about prices, and that's a fact. Consumption taxes suppress demand, and that is exactly why any company would, on purely economic grounds, resist a tax on their products. They may support or resist taxes for political or other reasons, however.

[c1ue]

Re: Odd solar power?

As we go down the list of alternatives -- CNG, LNG, hydrogen, etc. -- and do a similar analysis we arrive at the following conclusion: 100% of all manufactured oil substitutes for liquid fossil fuels combined cannot be manufactured quickly enough to compensate for a 5,772 cubic feet per second consumption rate of our oil endowment.

I fully agree with this statement, but CTL was never meant to replace the entire US oil consumption load. Equally so the other 'alternative fossil fuel' technologies.

What they can do, is smooth the road into a lower oil consumption economy - over say 50 years rather than over 20.

The second point is: the alternative energy plays as they stand now and in the near future are even worse. It would require 305 million acres to grow enough ethanol to replace the entire US gasoline consumption. This is more than 350% more than exists right now.

If we assume 1 square meter of solar panel will produce 300 kwh per year - a very optimistic assumption outside of say, Arizona - it would require around 12.5 billion square meters of solar panel to supply the entire US. Sure, that's only around 4800 square miles of land, assuming zero spacing and what not. (note that Europe and the US average around 1000 to 1200 kwh per meter per year of sunlight, but after actual conversion, the energy yield is going to be much less hence the 300 number).

Wind? A single well placed 1 MW wind generator will output around 1.75 million kwh per year. To replace the entire US electricity consumption, we'd need over 2.1 million of them. To put this in perspective: Coal is still the largest single source for electricity generation in the US. There are 600 coal fired electricity plants right now.

All of these technologies do have a place - how large is debatable - but there is clearly much improvement both that can occur and that needs to occur before the massive spending for buildout. And to be fair, despite the large numbers put out by Solyndra and Miasole and their like, the government spending to date is nowhere near the scale necessary for either TECI or a partial alt-e rollout.

At the same time, spending billions for production of outdated and uncompetitive alt-e technology does nothing but populate the best alt-e solar and wind sites with junk.

As for those who say we can do it with conservation: Read the EIA annual reports.

Consumption of oil for transportation is the largest sink for oil use, but residential usage is only a fraction of that. A lot of the oil you and I use is by those companies shipping the goods we buy in the stores, fueling the delivery of the Amazon stuff we buy, moving the fuels which power the plants which provide our electricity, water, sewage, and what not.

A realistic method to reduce US oil consumption by 50% involves gigantic societal scale changes - not least being the removal of the US suburb and increasing population density by 2x or more.

[aaron]

Re: Odd solar power?

Perhaps you are over-estimating it?
The issue is not that Americans will not cut back on energy use---> we have been doing it for half a decade at least... it is that if Americans cut back, it is still a drop in the overall bucket. It does not matter if I walk to avoid the 2 mile commute to the store when, in that time, 2 new automobiles have been created in China. Or, god forbid, some village feels like they are entitled to an electric water pump in Africa.


I also agree that we will not go all Mad Max in the near term. People start to revolt when their kids are hungry. As long as we have a HUGE savings account of food, which we do in the form of corn ethanol, the country should stay relatively stable. People are already having fewer kids; with less opportunity, there will be fewer immigrants (the baby machines) as well. Lower population will alleviate the stresses on the environment.

I wonder what the stable level of population will be in the United States in 100 years.

[Polish_Silver]

Petrowski lacks numbers!

.. ., the only feasible way to achieve viable large scale market penetration for natural gas based fuels to serve millions of individually owned private cars is to piggyback onto the existing fuel retailing infrastructure. But at this point, as Gulf Oil CEO Joe Petrowski told EJ, even that is not an economic proposition.

I agree that CNG will be sold via the existing gas stations, for the reasons you state.

What I don't agree with is that this requires government subsidy to solve a "chicken and egg" problem. Petrowski claims the $200k /station is too high. It costed over $1M to build a Mc Donalds in the early 1990s So $200k is peanuts. I don't see how Petrowski could get this wrong, but $200k is not the reason.

CNG is targeting fleets because that is where it is most profitable. You go after low premium markets later. That is just good thinking.

[EJ]

Re: Petrowski lacks numbers!

CNG is targeting fleets because that is where it is most profitable. You go after low premium markets later. That is just good thinking.

No. You sell to fleet markets if your product is never going to be used outside a prescribed range. This makes busses that run on short, predictable, regular routes the ideal CNG target customer. Next are delivery vehicles.

Note that cab companies are the worst target customer. You never know when a fare wants to take a highly profitable two hour ride that's outside the range of CNG refueling stations. Those are the fares that keep cab companies and hacks in the black.

The last adopter of CNG vehicles will be rental car fleets.

Any vehicle that runs on gasoline or diesel has unlimited range. There is always a station to go to before you run out of fuel.

Not so CNG or hydrogen. If you drive your CNG or hydrogen fuel car too far in the wrong direction you need a tow truck that runs on gasoline or diesel. That fact makes them a non-starter for all but alternative fuels fanatics.

Electrics have greater recharge availability but you have to wait. I drove a Nissan Leaf in LA and was impressed with the experience. The owner, who was at our Thanksgiving celebration, ironically works in procurement at an oil refinery. He told me the car gets 80 miles on a charge. No bad for a commuter car. After rebates, not terribly expensive, either.

[thriftyandboringinohio]

Re: Petrowski lacks numbers!

No. You sell to fleet markets if your product is never going to be used outside a prescribed range. This makes busses that run on short, predictable, regular routes the ideal CNG target customer. Next are delivery vehicles....

The early demonstration projects I worked on used that exact thinking. They were at transit bus fleets and package delivery fleets because the vehicles refueled only at home base, and were repaired only at home base.

There is another good reason to do research on transit bus fleets - lack of private profit motive. The bus fleets are already publicly funded and can withstand some increased cost and trouble imposed and paid for by the same government that pays almost all the costs anyway. City buses use the same drive trains as large over-the-road trucks, so engineers can work out the bugs on city buses, then transfer the polished results to the cost-sensitive private trucking fleets.