Tight Oil From Shale

There's a lot of giddiness over fracking of tight oil from shale rock.   Hydraulic fracturing is allowing oil companies to capture oil from old reservoirs or deposits that were once considered uneconomic in shale rock formations all over the world.   In the United States, this kind of production is reducing oil imports and, some say, may one day make the United States an oil exporter again.

One of the reasons this is happening is indeed because of this new (fracking) technology.   But another reason is because oil prices are high enough to make hard-to-get oil worth getting.
But does that really mean there will be decades of abundant oil?   Does that mean the U.S. will become an oil exporter?

I'm not a geologist but I'm pretty sure there isn't an infinite supply of oil on this planet.   By that I mean, you don't just get more oil from a reservoir forever just by spending more money to develop it.  In other words, oil pumped versus dollars spent does not look like Figure A, to the right.   Figure B, on the other hand, has a 50:50 chance of being correct, as I understand it, because some reservoirs did not give up more than a third of the oil with conventional drilling techniques.   That's why horizontal drilling was developed.  That was supposed to get at the rest of the oil.  So, maybe two thirds of the oil was ultimately recovered.   Which brings us to figure C.   My suspician is that what's left to be recovered by fracking the rock underground is the last third of the North American oil, and not the sort of mammoth deposits we all (including me) want to believe are there to be mined.   Fracking has simply allowed us to access them and to suck them out at a great rate.

Like the light bulb that flares up before it burns out, fracking my be these reservoirs' great last gasp.

Green Cars

I want to save the planet but I still need to drive a car.   What kind should I buy?

These days, on the spectrum of all-gas to all-electric, with diesel and natural gas somewhere in there, it gets quite confusing.   Throw in how the fuel is produced, as in how the electricity was generated for instance -- from dirty coal or from renewable hydro-electric, or whether that gasoline was refined from so-called "dirty oil" -- and it really becomes hard to know what's best.   If that wasn't enough, if you really wanted to take into account the total lifecycle emissions from your choice of car, you'd want to consider the energy that it took to produce the car and the energy that it will take to dispose of it.   Ready to throw your arms up in futility?   Not so fast.

Let's start breaking down this problem in reverse.   How much energy the car took to build and how much more it will take to properly dispose of or recycle it will correlate very highly with how expensive it is (before government incentives and tax breaks).   While electric cars operate "green", they sure are complex and cost a lot to produce.  A cheap and fuel-thrifty econobox, on the other hand, is much more "green" from this point of view.

Don't waste your time worrying about whether your gasoline was made from dirty oil or not.   What's really important is how much renewable fuel it contains.   If that "fuel" is electricity, it's important to know whether it comes from a coal plant or a hydroelectric generating station.   This article in the New York Times really explores this issue in terrific detail (Green Electrics).

Finally, if your car runs on electricity, it's not emitting CO2 or any harmful pollutants.   If it's a gas guzzler, it's at the opposite end of the spectrum.   And, of course, if it's a fuel sipper, like a miserly Ford Fiesta, for instance, then it's somewhere in the middle.

This graphic tries to illustrate the relationship between these three variables in vehicle-fuel choice.

The sweet spot, which lies in the middle, at the intersection of the three sets of vehicles doesn't exist yet -- at least not as a car.   It's called a bicycle! 

Summer Has Arrived in Canada

A few months ago, on December 1, I wrote about how unusually warm it was for December in my part of Canada.   As I write this we've had nearly two weeks of practically summer-like weather, and it's still not even spring!   In fact, we've had one of the warmest winters ever, with perhaps three minor snowfalls, where the snow melted the next day.

Call me crazy, but if this isn't global climate change, I don't know what is.

Anyway, the daffodils are sprouting, the insects are out, I hear crickets in the evening, and barbecue season is already here.  

While most Canadians celebrate -- and who can blame them -- I bet this wacky weather is catching even climate scientists by surprise.   I bet their models are still too conservative in predicting how quickly things will change.

As we bask in this warmth I wonder what summer will bring.   Forest fires?   Heat waves?    Tornadoes?   Insect infestations?   Disease?   According to scientists, there'll be a price to pay for summer in March.   We just don't know how much and when.

Rising Gas Prices: How High Will They Go?

Gas prices are rising steadily and the summer driving season hasn't started yet.   Everyone wants to know what's going on?

First, don't believe all those media reports about new oil discoveries, Arctic oil, Brazilian oil, spare capacity in Saudi Arabia, lots of new oil coming on stream from Iraq, now that the war is over, yada yada yada.   Fact is, every year we lose about 4% of our existing production capacity, so we have to run hard just to stand still.   All those new Buicks that are being sold in China have to run on gasoline, just like all the Land Rovers in India, and all the Fords in Russia, etc.  So demand for transportation fuels and petroleum is increasing, especially now that the Great Recession that started in 2008 is finally receding.



Hard to believe gasoline sold for a few pennies years ago



In North America and, in particular, in the United States, the economy seems to be improving.   That's great news but, unfortunately, it means that U.S. demand for petroleum is about to take off.   On top of that, U.S. demand for gasoline will take off and that's significant because U.S. refining capacity is inadequate.   Not only will the price of oil increase, the price of gasoline made from that precious oil will increase even more!   Oil men call that the "crack spread": the difference between gasoline and crude oil; a kind of profit from the refining operation.   In oil parlance, the crack spread is increasing.

Bottom line:  Get used to high gas prices.   How high?   Well, if they're around $4 a gallon where you live now, expect at least another $1 a gallon this year if the economy continues to improve (if GDP grows at a rate of 2.5%).

The Case for Electric Vehicles

GM just reduced production of its "Volt" electric car due to slower than planned or hoped for sales.   Is that a harbinger of things to come, like the cancellation of the electric car at GM (again)?   Maybe.   But I certainly hope not.

I was proud to hear that a good friend of mine, an old college buddy, just purchased a Volt.   He might as well live his values, he said.   Good for him!   Good for us, I thought.   But we'll need a lot more Volts and Leafs on the road to help with the problem of energy security and global warming.

Just today I heard that Canadians waste 25 million litres of fuel a year idling through drive-thrus, and they emit 16 kilotonnes of CO2 a year in the process.   That sounds like a lot of waste to me.

After Fukushima the Japanese have shut down nearly every reactor and are scrambling to make the lost electricity from fossil fuels.   And in Germany, where they have voted to shut down their nuclear reactors after Fukushima, the plan is to turn to coal -- yes, coal, the dirtiest but most abundant fuel there is -- as they transition to renewables.   Did I mention they said, "transition"?   Right.

Can we afford to keep running our transportation sector on fossil fuels too?   I think not.   I think that, to offset dirty fuels in the production of electricity(some say natural gas could be as troublesome as coal in the final analysis, when it comes to global warming), I say we'll need all passenger vehicles running on electricity.   That way, at least the pollution source will be the power plant and, with any luck, we'll have figured out how to catch the CO2 emissions from it.

What will it take to get people to buy electric cars?   How about $6 a gallon gasoline?

As soon as the American economy comes back off life support (off fiscal and monetary stimulus), as soon as the unemployment statistics start improving, as soon as consumers start spending a bit more, and as soon as the backlog of foreclosed properties starts to diminish, the "green shoots" that the Obama administration thought it saw in 2010 will surely have finally arrived and Americans will start driving again!   And when they do, oil prices and already strained American refining capacity will yield record high gas prices.

That's when electric cars will suddenly make more sense for more people.  And that will be a good thing. 

Mexico City Smog

I knew that Mexico City, with a population of  21 million residents (metro area), a place rich in history and undergoing magnificent changes, is plagued with smog.   I flew into Mexico City last week and got a first-hand appreciation of just how much smog it has.   As we were descending during the last five minutes of our flight, I felt the urge to reach for my camera.  There, off to the right, were a couple of mountains protruding through the cloud cover -- except that, on closer examination I realized what I was viewing wasn't cloud, it was smog.   Through it I saw the silhouette of buildings, and other vaguely distinguishable city sights, including downtown skyscrapers.

Mexico City lies at 7940 feet elevation, in a largely windless bowl, a perfect place to trap polluted air.   You know the area doesn't get a lot of wind because, while most airports align their runways in at least two different directions to account for changing winds, Mexico City's airport features two parallel runways which could have been placed in just about any direction, so far as wind is concerned.  In Mexico City's airport, other factors like surrounding mountains were probably more limiting than wind velocity.

While Mexico is growing richer as a nation, there are still a lot of old cars and commercial vehicles, many more than 30 years old, built before fuel injection and advanced emission controls.   The problem with this is that a pre-1985 vehicle in new condition emits perhaps 25 times the pollutants that a 2010 or later model vehicle.  But 30 year-old vehicles are pretty well worn out and not running like new.  Most of them are emitting 50, 60, perhaps 100 times the pollutants a modern vehicle emits.   That means that a vehicle population made up of, for example, just 10% older vehicles is acting as if there were six times as many cars on the road, in terms of harmful pollutants (90 + 10x50 = 590 ~ 600 instead of 100 if all cars were late model ones).   If that weren't bad enough, in Mexico City, 26% of the vehicles are old ones, most featuring carburetors and no catalytic converters.

If there ever was a place on earth that could use a "cash for clunkers" program, it's Mexico City.  

New Car Quality

They say you shouldn't judge a book by its cover but, over the years, I've noticed a loose correlation between new car quality, as judged by JD Power and Consumer Reports, and how tight and uniform the gaps are between the various body panels of a car.

At this year's Toronto Auto Show I paid close attention to body panel fit.  What I found was that, in general, it's been improving dramatically over the years.

The gaps on this Kia Optima are uniform throughout the car.

The Japanese manufacturers used to have the tightest and most uniform gaps in the business.  I'd say that award now goes to the Koreans.  Both Kia and Hyundai had the best gaps in the show.  Next came the Japanese and the Americans.  In third place was the European manufacturers.   In reality, though, I found variations within each group.  For instance, while BMWs had nice gaps, some Volvos did not.   Not that I think it has a lot to do with it yet, but Volvo was sold by Ford to Geely Automotive Holdings Group of China in 2010.

The worst gaps in the show: a ZL1 Camaro priced at an eye-popping $63,000.  In fact the gap between the driver's door and the front fender panel was so bad it looked like the door was slightly open when in fact it was closed!

Notice how the gap on this Volvo starts out tight, widens
near the middle, then ends tight again.

Why are body gaps important bell weathers of quality?  Because sometimes they indicate poor stamping plants and equipment like molds and dies which, in turn, may be indicative of a manufacturer that's struggling, financially, or isn't prepared to invest in better equipment, people and training to make it right.  Poor gaps may also indicate similar people issues on final assembly lines.   Either way, a manufacturer that's not paying attention to this highly visible area, especially if a car is ordered in white, is a manufacturer that is probably missing a few other areas in the quality department.

Next time you're shopping for a new car, make sure you check for tight, straight gaps!