Sunday, November 11, 2007

Hybrids vs. Oil Civilization

It's always a good idea to give back, so when I was approached by a student who found our hybrid research and wanted to conduct an interview, I was thrilled. Ideas started flowing and my thoughts deepened. I had no idea the answers to a handful of questions would run 7 pages and one of the common themes would be the end of our oil civilization based on thoughts in Stephen Leebs's book The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel.

So here's the fairly raw and edited once piece I will now upload here at the same time I email it back to academia (which incidentally seems like my destiny).

Q: Why do hybrids seem to have such a wide range of fuel efficiency?

They don’t; that’s a myth and numerical illusion. I estimate that all technologies experience about plus or minus 20% around the EPA ratings. Because drivers, driving and vehicle conditions are so diverse across our US population (fleet) of over 230 million cars and trucks, it looks like hybrids vary more, but they don’t.

Let’s compare some extremes to define a 20% range:
• +20% is a skillful driver, drafting behind a semi-truck, on the highway with no wind, rain or snow, on a level surface or slight downhill, with a maintained car or truck including minimum weight in the vehicle, maximum tire pressure, recent tune up and optimal running condition.
• -20% is just the opposite, stop and go city driving, hard on acceleration, hard on the brakes, tail-gating, windy, hilly, older car, tires a little low, needs a tune up, lots of junk in the trunk and not optimal.

So let’s apply the range to some vehicles to see the illusion:
• 2000 Honda Insight at 70 HWY + 20% = 84 MPG or +14
• 2006 Hummer H3 at 18 HWY + 20% = 21.6 MPG or +3.6
The hybrid above grabs everyone’s attention, but the Hummer isn’t that shocking. Funny, the numbers are the same +20%. Let’s look at the low end of the range:
• 2000 Honda Insight at 60 CITY -20% = 48 MPG or -10
• 2006 Hummer H3 SUV at 14 CITY -20% = 11.2 MPG or -2.8

The hybrid above suddenly looks like something is wrong, why only in the 40s on MPG whereas the 11.2 MPG doesn’t really stand out for an SUV. So the ranges are identical, from minus to plus 20%, but numerically, 48 to 84 looks wider than 11.2 to 21.6 MPG. It’s not! It’s the same 20% range.

Range in gas mileage has do with driving behavior and conditions not technology, but hybrids put up such large numbers, 20% looks like a lot more or less.

Q: Is the hybrid vehicle an intermediate step to gasoline free vehicles, or will future vehicles always require some gas?

Hybrids might be the LAST STEP before our oil civilization collapses! There is no energy source or technology that can replace the amount of power we use to drive our oil civilization. Oil and cars connect everything in our daily lives and oil tankers, diesel trains and trucks deliver everything we consume.

U.S. hybrids are often bought by baby boomers or elderly retired drivers who are buying their LAST vehicle, not intermediate step. Any the majority of those drivers usually come from the middle-class and wear hybrids to make a statement, not to wait for an electric or hydrogen car.

The future will probably look a lot like the past from a societal class point of view. The upper-class will continue to drive luxurious inefficient cars and trucks until there is a catastrophic war over oil or society breaks down. The rich will afford oil until the bitter end of haves and have nots. Hybrids won’t change this scenario.

The middle class has already bought into the hybrid as a last stop, not intermediate step. For the dozens of hybrid drivers I’ve interviewed and talked to, the only reason they might give up their beloved hybrids is to buy another one. Middle-class hybrid owners tend to love their hybrids, because saving money at the gas station in front of others actually matters (unlike the upper-class) and it happens in front of everyone else.

In terms of the lower classes, hybrids over $10,000 don’t matter. There a larger growing problem at work here. There’s a fleet crisis going on, and hybrids are more of a 5th or 10th car for many people that are about to buy their 1st cars and trucks. Let me count back, I believe that my 1st and only hybrid was $10,000 used and it was my 7th vehicle in my 20th year of driving; I come from a lower class in the rich America.

When will the billions living on a dollar a day be able to buy a hybrid? Never, if our oil civilization collapses. The problem is that the global population of cars and trucks is projected to triple by the time oil starts running out in a few decades: less oil and many more cars. How can our world afford an imbalance many times worse than today?

More than 5 or 6 human beings have never owned a car or truck. Many of those billions of customers are thinking about buying their first cars or trucks. They are buying entry level vehicles, like derivatives of the basic Corolla (the most successful vehicle in history with over 35 million units sold) such as the Vitz (Yaris) or even cheaper vehicles designed for first-time car buyers, like Tata’s $2,500 car from India.

If we all think back to our first car, the mileage it got and the technology under the hood, did it really matter in the purchasing decision? Probably not… The lower class wants what everyone else wants, a vehicle to get from A to B, a paying job, clothes, mobile phone, etc. Hybrids are off the radar screen, unless they come down below $10,000.

Hybrids are not a step for the world’s rich, a last step for the U.S. middle class and off the radar screen of 5 billion lower class citizens dreaming of their first rides. Our oil civilization will probably face a catastrophe long before the upper classes change their minds or the lower classes acquire enough wealth to buy hybrids.

Q: What will happen in the future to the automobile companies that are not producing hybrid vehicles?

The auto industry is the largest manufacturing industry in the United States responsible for at least 1 in 10 jobs. Globally, including related and supporting industries from suppliers to sales and service, the auto businesses are the world’s largest.

The impact of this massive operation will probably go along the lines of the civilization theory outlined above. The automakers that serve the upper classes will hold on until the end, putting out one or two hybrids to satisfy environmental critics.

BMW and Porsche are a great example. Both serve customers that can buy any technology they want, but they don’t want hybrids. So they recently announced a few SUV hybrids and targeted the environmental critics more than the customers. Again, the upper classes will continue to drive what ever they want, and it probably won’t be hybrid, electrics or alternative.

Of course there are celebrity millionaires that buy a few Toyota hybrids, but again, the goal is to make a statement and it’s probably a 25th vehicle in the driveway…

The middle class is really doing a job on the automakers. They support the ones that are doing a good hybrid job and criticize the ones that are falling behind. In this case, there has been some impact, because the middle class holds a lot of auto industry jobs, tends to vote actively at the same time paying taxes. So automakers, union bosses and politicians listen to the middle class.

I would argue that the middle class along with a few celebrities is responsible for the rise of the Prius, the current Union efforts, gas mileage legislation and other environmental movements right now. Can they overcome the upper class in control of the world’s biggest business? I don’t know, but I do know that over the past decade and rise of the hybrid fleet, the hybrid leading automakers have set record profits, are building factories, hiring people and paying taxes, while some of the laggards are putting up worst ever performances by any companies on Wall Street ever. So there has been an economic impact by the middle class, but it may not change the course of luxury automakers.

Again, hybrids really don’t affect the lower class. But companies like Tata Motors out of India and most Chinese manufacturers are experiencing a boom due to the industry-wide focus on smaller cars. Those companies aren’t producing hybrids, but are growing rapidly and may do just fine making cheap small cars and trucks.

So for the companies that do not and will not produce hybrids like let’s say Ferrari, it won’t really matter, hybrid, electric or not. The upper class will still have to put a down payment in at a dealership and wait two years for delivery of a vehicle that gets terrible gas mileage and costs the price of a house. For the middle-class, hybrids may play a key role in the automakers they serve and the initiatives they support. Finally the lower class will be served by automakers that focus on cheap, simple and small, not expensive alternatives such as hybrids or electric cars.

Q: What is the next break through in the hybrid industry?

From a technological stand point, it’s Lithium. Lithium is an element mined from the ground used to manufacture light yet high voltage (power) batteries. Many consider it to be a silver bullet because it provides a lighter vehicle (every few hundred pounds can earn a mileage point) without compromising power.

There is only one Lithium vehicle that I know of at this time, a Toyota Vitz (known Yaris in the U.S.) special edition. Most all hybrid-electrics today rely on Nickel, which has its own dirty little secrets. Toyota’s Nickel is mined from Canada creating a wasteland around the plant, shipped via oil burning ship to China for processing, then shipped again burning more fuel to Japan for making batteries, and then put into most of the hybrids on the road aside from the Camry Made in USA, and then shipped again to our ports, and trucked on diesel fuel to our dealership.

This dust to dust analysis was the basis behind the study that compared Hummers to Prius concluding that the Hummer was more environmentally friendly. There is some truth to buying locally to avoid the tremendous energy and environmental costs we tend to ignore from transporting everything we consume. Back to battery technology…

The other problem with Nickel battery technology is that oil companies hold some of the key patents and collect royalty money or make profits for every hybrid sold. Lithium shares many of these problems except the patents for high voltage batteries appear to be held by smaller start-up companies. But of course, those companies could be bought or already indirectly owned but the existing oil civilization power base.

In other words, oil money and power could easily control the next break through!

Lithium is a break through for not just hybrids, but electric cars, mobile phones, power tools and advanced technology like aircraft and aerospace. So it’s expensive, has lots of competition from other industries and is a limited resource, just like oil.

The main difference between Lithium and oil is the geopolitical makeup and what many tend to overlook reserves. The mining situation would move power to the Americas. North and South America together produce a slight majority of the world’s Lithium today, the rest is produced in the Australias and China.

Is there enough Lithium to go around? No, there is not enough Lithium to replace oil. There is not enough Lithium in the ground (reserves) to convert the projected two billion vehicle fleet coming on line in the next few decades. But there isn’t enough time anyway, the coming oil collapse will happen sooner than later. Even if the break through happened tomorrow, it won’t matter for the billion new car buyers coming into the market for the first time; as I argued before, the lower-class can’t afford Lithium anyway.

Lithium is the next break through in hybrids and electrics, and there is probably enough to serve a portion of the middle class home owners that can afford solar panels and buying expensive electrics as a 10th vehicle, but the upper class will continue to buy the benefits from Lithium, such as long battery life on a mobile phone, not the Lithium itself. As for the lower classes, it’s the same story as hybrids, Lithium probably won’t make it past mobile phones before our oil civilization collapses.

Q: What is your take on the incentives that consumers receive for purchasing hybrids (tax breaks, HOV access)?

This goes back to my firm belief that the middle-class is driving politicians in the United States to clean up the environment. It’s not because the upper class politicians care or don’t care about the environment, or want to get on board with the rest of the world, I argue that it’s about the votes.

The U.S. middle-class tends to be the most active voting demographic. They drive hybrids, write letters to politicians and complain openly to automakers.

So, the hybrid political phenomenon is really about garnering votes from a strong contingency that are all on the same side of many large societal issues. What more could a politician want? Large national issues where all the middle class hybrid drivers actively vote the same way from town to town.

Middle class voting hybrid owners won’t complain about tax breaks or privileges such as HOV access, BUT that is not why they bought hybrids. Remember that hybrid owners of American bought hybrids to save gasoline and mainly to make a statement.

From my research, it’s pretty clear that tax breaks and HOV access had nothing to do with WHY buyers lined up to buy, own, drive and wear hybrids. Political incentives had to do with power shift in politics away from oil powered by votes.

Q: How will hybrids affect the U.S. oil dependency in the future?

Globally, the hybrid fleet is estimated to save about 500,000,000 gallons of gasoline in its first decade. Gasoline is the primary product from oil aside from oil derivatives to make our roads, plastics, etc. Unfortunately, oil is also used to make diesel fuel, which delivers everything we buy at every store.

So even if we all stopped buying gasoline, daily life would require oil, and the rest of the world coming online buying a billion more cars and building more houses and buildings would exacerbate the demand beyond what we could save. In the global scenario, technology cannot beat human behavior and growth. So in the oil civilization collapse scenario, hybrid, electrics and most technologies are just buying time.

So it might be easier to think of a more local scenario. When the oil runs out, it’s not going to run out all over the world at the same time. The U.S. has already reached peak production, so we’ll run out earlier than other areas around the world. Japan never had and oil and in effect has already run out and imports 99% but also runs quite a bit of nuclear, I believe over 30% or maybe closer to 40%. Remember that making electricity is the #1 cause of carbon emissions, and that scenario may not fly here…

Back to gasoline, let’s take California as an example. It’s got the most hybrids in the world, one of the cleanest electrical grids and yet highest prices for gasoline. Californian gasoline can thank Alaska for the volume

Let’s think forward, oil is running out, for California that means Alaskan crude is going dry. That would mean California would have to fight other regions for let’s say foreign oil. In a free market, California will win because of its buying power, strong middle and upper class, and comfort with the nation’s highest gas prices.

So I’m thinking 10 dollars per gallon and the end of life in suburbia…hybrids or not…

During a gasoline shock in California, I can imagine that hybrid drivers who bought hybrids to save gasoline and make a statement will be proud of their actions. Most hybrid owners are very happy to hear that the global hybrid fleet has saved an estimated 500 million gallons of gasoline equivalent to 10 billion pounds of CO2.

The best thing about hybrids is strength in numbers. The impact of hybrids has to do with the size of the fleet, its approaching a million vehicles and growing rapidly. So in a sense, the fleet will save millions of barrels of oil that will be used for other purposes such as delivering and making everything we buy, or filling up airplanes to deliver emergency supplies to regions that have run out of energy.

Q: Will hybrid technology go into other industries?

That’s an interesting question because hybrids have already done that and come back. Porsche built the 1st hybrid before 1900. At that time, electrics dominated the market along with steam hybrids. So in the beginning, hybrids and electrics were the majority.

The convenience of the electric starter motor and the power and range of the internal combustion engine opened up America’s roads and the most powerful and most important industrial economy in the world. Hybrids entered other industries decades ago.

From the 30’s to the 70’s hybrids went into many industries including but not limited to military, transport, real estate, mining and aerospace. Some examples
• Oil-water (steam) hybrid ships that transport everything we consume
• Nuclear-electric hybrid submarines that delayed World War III
• Gas-electric hybrid homes and buildings that provide shelter for the modern world and workplace
• Diesel-electric heavy equipment that built our infrastructure and connected America together
• Chemical-electric spaceships that provided the satellite technology that brings us everything from Google Earth to TV

If you include gas-water electric power plants, hybrids power almost every industry and touch every part of our lives. Hybrids are compatible with any fuel source, such as gasoline, diesel, biofuel, E85, electricity, natural gas, nuclear and more. Hybrid vehicles recycle energy. Hybrids increase efficiency. Hybrids are not new and we use them everyday when we take a shower, cook a meal (gas-electric appliances and homes) or wash our clothes (gas-electric dryers).

Hybrids have been a part of most industrial industries for decades. They will continue to experience growth, deployment across more diverse fuel sources to save energy for our insatiable global demand.

Unfortunately, the oil and energy that hybrids save will be burned and consumed by other more inefficient areas of our oil civilization. They will not stop an oil war or the end of our oil civilization, but when measured as a global fleet, hybrids are making the largest impact towards recycling our world’s energy and showcasing efficiency!

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