December 2013 - Page 2 of 2 -

Energy Trends: The latest on oil and gas, fracking, fuel prices, and the future of OPEC

Oil and gas fields in North America are getting a lot of attention this year as a source for more transportation fuel – keeping gasoline and natural gas prices down and reducing imports of foreign oil. It’s Here’s the latest news and market trends to follow on where all this appears to be heading……

The US company credited with combining horizontal drilling and hydraulic fracturing (fracking) – which is thought to have unleased the current energy boom in North America – just made the largest US oil and gas industry transaction for the year. Devon Energy Corp. has acquired GeoSouthern Energy’s assents in Eagle Ford Shale, a prolific oilfield in South Texas. The $6 billion cash acquisition brings in 53,000 barrels of oil equivalent per day and 82,000 net acres with at least 1,200 undrilled locations. Those reserves may have as much as 400 million barrels of oil equivalent. About 10 years ago, Devon acquired Barnett Shale in Texas, which is credited for helping create a nationwide glut of natural gas – keeping the prices down.
The US is poised to become one of the leading sources for natural gas exports overseas. Under the current US regulatory structure, natural gas has to be converted to its liquid form and loaded into tanker ships. That means building liquefied natural gas (LNG) terminals that are expensive (about $5 billion per export facility), controversial, and difficult to get approved by the US Dept. of Energy and Federal Energy Regulatory Commission.
California Gov. Jerry Brown is getting heckled by environmentalists for permitting fracking in the state. Brown is credited for being stringent on renewable energy powering electricity in the state and for supporting alternative fuel vehicles and electric vehicle charging stations. He’s also been criticized for signing a bill into law this fall that will oversee fracking operations. Senate Bill 4 requires oil producers to notify people leaving near wells, conduct groundwater monitoring, and providing more disclosure on chemicals used in fracking. Environmental groups want to see fracking stopped altogether and say that the bill is way too lenient. Several other states are seeing similar political and litigious battles being fought over fracking, while the federal government is keeping a low profile on it for now.
OPEC’s power over oil prices is diminishing. With huge growth in US shale and Canadian oil supply – and the easing of sanctions on Iran – analysts think there will be a sizable boost to global output. The OPEC cartel of Middle Eastern, Latin American, and African oil producing nations, are worried that the profit margins won’t be as good as they were in years past. While meeting last week in Vienna, they decided to maintain their 30 million barrels per day production volume at least through May of next year.

Fuel economy in America: The latest ratings

For those following fuel efficient and alternative fuel vehicles, two news items came out this past week that were worth paying attention to. Fuel economy ratings on new vehicles sold are increasing again after dropping for two months. The corporate average fuel economy rating reached 24.8 mpg in November – still down from the all-time high of 24.9 mpg recorded with August new vehicle sales in the US. Given that gasoline prices have softened this year, it is impressive to see the fuel efficiency rate go back to increasing.

The fuel economy numbers are being tracked by the University of Michigan Transportation Research Institute (UMTRI), which has been keeping score on CAFÉ numbers since October 2007. Fuel economy is up 4.7 mpg since that time, and improvements in greenhouse gas emission reductions were also acknowledged in the study.

In still more analysis of fuel economy and emissions, the US Environmental Protection Agency and Department of Energy have updated their annual rating for the most fuel-efficient cars now available on the market. Every single one of the top 10 is powered by electricity or a hybrid version with electric and gasoline power. The Chevrolet Spark EV, which gets the equivalent of 119 mpg, topped the list. The Nissan Leaf moved back to number four, and the Chevrolet Volt was number nine. The list of plug-in electric vehicles is getting longer in the US – it’s a lot more than the Leaf and Volt these days.

Toyota has two of the models on the top 10 list (actually there are 11 models overall since the Prius Plug-in tied for number 10 with the Ford Fusion Energi); The Toyota RAV4 EV is the other one on the list. Ford had two plug-ins models – the previously mentioned Fusion plug-in hybrid and the Focus Electric. Chevrolet had two models – the Volt and the fairly new Spark EV. The Tesla Model S with the 85 kilowatt hour power pack made the list at No. 8 (which some people would holler over). The Honda Fit EV finished at second place, the Fiat 500e came in at third, the Mitsubishi i-MiEV was number five, and the Smart ForTwo in coupe and cabriolet versions was number six.

Plug-ins have been getting kudos in high-level ratings this year – even though the competition is tough from fuel efficient gasoline small cars, clean diesel engines, and hybrids.

Big Picture: Bankruptcy judge speeds up Fisker court procedure, Amazon delivering packages by aerial drones

US Bankruptcy Judge Kevin Gross would like to see the Fisker Automotive bankruptcy procedure speeded up. The troubled automaker may be sold by January 3 under a fast-track schedule approved by the Wilmington, Del., court judge. The bankruptcy filing took place on November 22, and the typical asset bidding process is being circumvented. Fisker said the process already happened when the US Dept. of Energy held an auction for the $168.5 million loan that it made to Fisker. An affiliate of Chinese company Hybrid Tech Holdings LLC won the auction and only paid $25 million for the Fisker assets. The judge admitted it was an unusual process but seems to agree that the auction process has been moving along. Creditors will also have access to a December 10 hearing that will decide whether a disclosure statement from Fisker has enough information for creditors to decide whether to oppose the liquidation plan.

Amazon will be dropping off your orders from the sky. You thought driverless cars accessing our roads by 2020 sounded pretty far out? How about aerial drones delivering packages for Amazon.com within the next five years? Amazon CEO Jeff Bezos unveiled the robotic airplane project on Dec. 1 during the CBS program “60 Minutes.” The vehicles could deliver up to five pounds in a 10-mile radius of Amazon’s 96 warehouses within 30 minutes, Bezos said. Bezos thinks it will be very green – much better than driving trucks around.

Nissan is working with NRG Energy’s subsidiary NRG eVgo to expand its electric vehicle charging station Freedom Station chain across Washington DC. Through this plan, eVgo is intending to develop a comprehensive fast charging network in the greater Washington area with charging stations at Dulles Town Center in Loudon County, Arlington County, and District of Columbia at Van Ness. In addition, two stations are currently being constructed in Rockville and Towson in Maryland alongside other sites under development stages across the Washington metropolitan area.

Check out the new zero emission vehicle (ZEV) Guidebook – a resource for California cities and counties to find where electric vehicle chargers and hydrogen stations are being installed. It comes from Governor Brown’s recent Executive Order that calls for California’s major metropolitan areas to complete infrastructure plans, improve permitting and complete other actions to accommodate ZEVs by 2015.

Installed an electric vehicle charger in your garage and you want a federal tax credit? Then you’d better do so by December 31, after which the credit expires. The credit covers 30% of the cost of purchase and installation, up to a maximum of $1,000, for installing an electric-car changing station in a private home. This means using Form 8911 with the tax filing due by April 15 of next year. There will also be expiration on that date of a 10% credit for the purchase price of an electric motorcycle or three-wheeled vehicle.

Mahindra Group has created an electric racing division and signed an agreement with Formula E Holdings. It’s now the eighth team to join the new FIA Formula E Championship. “Mahindra Racing” was a natural chain events, Mahindra said, since it’s been involved for some time in the production of EV through its Mahindra Reva Company. Mahindra Racing, if approved, will join in the Formula E championship with Andretti Autosport, Dragon Racing, Asia’s China Racing and Super Aguri and European teams Drayson Racing, e.dams, and Audi Sport ABT.

Inside the minds of car shoppers: The latest on green car surveys and branding trends

Sales of plug-ins, hybrids, natural gas vehicles, and other alternative fuel vehicles (AFVs) are comparatively small when looking at overall new vehicle sales in the US. Still, they’re grabbing a lot of attention from media and marketing analysts lately, especially if you add in diesel-engine vehicles. While some will scoff at the idea of “clean diesel,” these cars are growing significantly in US sales numbers; diesel is about 55 cents more expensive than gasoline at retail stations, but the cars (especially from German automakers) are getting great mileage and performance. Here’s the latest coverage on how car buyers are perceiving AFVs……

Follow the money: A recent survey by AutoTrader.com says that the top reasons shoppers would consider purchasing an AFV are less emotional and more practical, with three of the top five being related to saving money. “Better fuel economy” came in first at 70%, followed by “Cost of savings on gas” at 56%, “Cleaner emissions” at 37%, “Better for the environment” at 28% and “Federal Tax Credit” at 24%. The survey measured consumer attitudes on a range of fuels and technologies including diesels, hybrids, electric vehicles and plug-in hybrids. The study also found that perceptions about battery life/range are working against hybrid and plug-in vehicles. Diesel is facing concerns about the fuel expense, the cost of the vehicles, and potentially high cost of maintenance.

Luxury buyers: Phoenix International’s recent finding on AFVs found that luxury SUV consumers and non-luxury car consumers have the most interest; hybrid and electric vehicles are in the non-luxury car category, so that wasn’t a surprise in the survey findings. What about luxury SUVs? Diesel SUVs have been growing in popularity, which seems to have opened the door for car shoppers to consider alternatives, along with the perception that AFVs partially embody the latest in automotive technology. Phoenix International finds it very interesting that Tesla Motors is going after all of the luxury market by adding its upcoming Model X – an electric SUV – to its model lineup next year.

As for branding: In the AutoTrader study, for all the automakers who offer AFVs, seven had high awareness among survey respondents: Toyota, Honda, Ford, Lexus, Chevrolet, Nissan, and Volkswagen. When asked which automakers they would identify as leading in the space, Toyota came out on top with 48%, Honda came in second with 28%, and Ford made third place with 25%.

As for sub-brands: Green Car Reports made a very convincing point that the way automakers are marketing green sub-brands aren’t clicking very well for name retention. The article gives readers a test – to read a list of sub-brands for automaker green technology offerings, then scan a list of automaker brand names, and then accurately connect the dots. Here’s the correct answers: BlueEfficiency – Mercedes-Benz; BlueMotion – Volkswagen; Drive-E – Volvo; EarthDreams – Honda; EcoBoost – Ford; EcoTec – GM; EfficientDynamics – BMW; Hybrid Synergy Drive – Toyota; PureDrive – Nissan; and SkyActiv – Mazda. Ford’s EcoBoost has stuck with many minds along with Mazda’s SkyActiv; Honda’s EarthDreams and Toyota’s Hybrid Synergy Drive stand out a little bit. The other ones seem pretty forgetful (at least for this writer).

Intelligent transportation cleaning up some of its inherited problems

For those engaged in “intelligent transportation” campaigns to improve highway safety, reduce air pollution, and save us from ever-increasing traffic congestion, it ain’t all about new. Vehicle-to-vehicle (V2V) communications, vehicle-to-grid (V2G) power, telematics, and connected car technologies, are capturing imaginations and gaining broad support. Older, existing intelligent transportation systems have been in place for years and will continue to play their part – creating many problems and opportunities. Examples of older technologies that most of have seen include in-road sensors, cameras, above-road detectors, and message boards telling us how many minutes it will take to connect to the next highway or airport. Some of it has been problematic and wearing thin; intersection cameras have been getting stalled out after a few lawsuits. In-road sensors are not delivering what they used to. Government-funded traffic management systems are facing a slew of problems, and contracts are starting to get outsourced more to private enterprise.

California is losing its highway sensors – 34% of the 27,000 sensors (9,000) are offline, up from 26% in 2009. These sensors have been an integral part of the state’s intelligent transportation system that was designed years ago to detect traffic congestion and send out crews to clear out a collision. Losing a third of the sensors has not been a good sign for intelligent transportation goals. ‘‘[It] is not an acceptable number, really,’’ California’s top transportation official, Brian Kelly, told The Boston Globe.

These have been built into roads through in-road sensors called “loops,” because of their shape. Some of the loops were cut during construction, some were yanked out by copper thieves, and many have died of old age. These blind spots show up as strings of gray on the colored freeway maps overseeing Los Angeles and Ventura counties.

There’s been limited highway space and funding for new lanes, so loss of traffic sensors have failed to produce the real-time traffic maps that are growing in demand. Private traffic mapping services are being relied upon by drivers. The California Department of Transportation gives away data from its loop sensors to Google and other companies; the department also pays Google for a traffic map that incorporates its own data as well as information the company gets from vehicles and cellphones whose owners have agreed to share location data.

California and other states are looking at wide range of real-time traffic data offerings. For example, Michigan’s transportation department pays Inrix Inc. about $400,000 annually for data to populate its Mi Drive map. Inrix said the company has contracts with 25 state transportation departments. Utah estimated about 20% of its highway loops don’t work; the city of Austin, Texas, says that 75% of the loops in the area aren’t working anymore. State highway and safety agencies will likely continue to watch for technology innovations and drum up the funding to make the best investments.