“Be kind, for everyone you meet is fighting a hard battle” - Often attributed to Plato but likely from Ian McLaren (pseudonym of Reverend John Watson)

## Sunday, December 21, 2008

### Yet another look at alternative transport

At the risk of redundancy, I'll point out yet again that one of my most common internet haunts is the ecomodder web site. It's a fantastic place for knowledgeable discussion, news, and ideas regarding nearly anything connected with minimizing energy consumption (usual disclaimer, it should be energy conversion since energy isn't consumed). Today, there was a forum post about a new electric motorcycle.

I've posted before about alternative personal transportation, and most recently concluded that, for me at this time, it's impractical. Can this new development change my calculus?

The "Electric GPR" is apparently not yet available, however, one can be ordered at a retail price of $8,000. This is about 2.3 times the most recent cost of the Zapino I evaluated in my previous post. The aspect of the Electric GPR that makes it worth a look is its status as a street legal motorcycle and, at least as claimed by Electric Motorsport, freeway capable. Should it be actually so, I could anticipate a commute time approximately the same as the one I suffer in my Land Rover LR3 HSE. Readers may recall that one of the key negative factors in my evaluation of the Zapino was that it would have to be ridden on surface streets and thus would add dramatically to my commute time. As to specifics, the Electric GPR utilizes a lithium ion battery with a capacity of 3.3 kilowatt hours (11,880,000 joules - the amount of energy available in a little under a tenth of a gallon of gasoline). It powers a 50 volt Etek RT motor apparently manufactured by Briggs & Stratton. It's advertised as having a range of 35 miles in "power mode" and 60 miles in "economy mode." Obviously, since my freeway commute is a little over 30 miles, economy mode would be the ticket. I'm not able to determine whether economy mode means no freeway riding at 55 m.p.h.; if so, it's obviously disqualifying. Suppose that it's capable of commuting from my office and climbing the final (steep and long) hill to my house. Do I want to be on a California freeway in the far right lane at 55 m.p.h. on a 285 pound motorcycle that makes no noise? I have a very limited history with riding and no one would imagine that I'm an expert, so there would appear to be a very strong element of danger. Can extreme caution make this a controllable risk? I don't know. What about the economics? It's not so easy to estimate this, what with the extreme volatility of gasoline prices. This is obviously the largest factor in determining the return on investment in such an asset. Do I use$4.959 (or higher) as I paid in June, 2008 or $1.939 as I paid at my most recent fill up? I'm going to use$3.00. My personal belief is that, in the period of the next couple of years, that number will underestimate the average cost of gasoline and therefore my calculations will be conservative (in the engineering sense).

I would imagine that I'll use about 2.8 kilowatt hours of energy for a 32 mile trip. In order to replenish the battery, I'll have to use 3.3 kilowatt hours of electricity (assuming the charging system is 85% efficient). This will cost me about (because of the tiered system of electricity billing, I have to assume the worst case) $0.4330 for a cost per mile of$0.0135. The LR3 at $3.00/gallon would cost about$0.146/mile or a little over 10 times as much. Assuming I'd be able to use the motorcycle 180 days per year at 62 miles per day, I'd save about $4,600 per year. The LR3 is under warranty and thus maintenance costs are currently nil, so any maintenance or replacement reserve for the Electric GPR would be a pure cost with no offset. Since the warranty is only one year (!) I suspect that maintenance would not be negligible. But let's make a pessimistic assumption that it would cost$1,000/year. That would mean that it would take something on the order of two years and three months to pay for itself. This is a very simplistic way of looking at return on investment but it certainly indicates that, from a purely economic point of view, the purchase decision should be positive.

The thought of being obligated to ride a light motorcycle on California freeways to make an investment pay off is daunting, however, and I think that will turn out to be the determining factor.

## Sunday, December 07, 2008

Because we are consuming significantly less oil and that oil is much cheaper than it was a short six months ago, and because we import a large portion of the oil we use, one would expect a very large reduction in our monthly trade deficit beginning sometime around mid-summer of 2008. In most ways, this is a good thing though it's certainly the byproduct of some very bad economic conditions. Nevertheless, if we continue to import the same fraction of our oil as we did last summer, we should see a net reduction in trade deficit of something like $1.3 Billion per day, or just under$40 Billion per month. This is serious money, even by U.S. debt standards.

It's my opinion that immediate steps should be taken to invest this money in the things that will soften the blow. But since the money isn't really sitting in a pot but rather in the pockets of those who purchase fossil fuel (at any level), what method can be employed to "pool" this money? There are certainly a couple of ways. One would be to place a tax on fossil fuels in one form or another, and let the government determine how to fund the various projects that would be necessary to accomplish the goal of transition to a future of severely limited fossil fuel availability. As regular readers of my blog will know, I'm not a fan of government involvement, being a libertarian philosophically.

So, what else? I'm a strong believer in the innovative capabilities of the entrepreneur. Therefore, I would propose a program of incentivizing this type of entrepreneurial activity with tax incentives, research grants, regulatory encouragement, and team building. Now, I concede that this doesn't sound like laissez faire economics. But as I've mentioned in previous posts, our "this quarter's bottom line" corporate environment (with its consequent risk of shareholder lawsuits and loss of control to pirate capitalists such as Carl Icahn - see here or here) is ill-suited to undertake long term projects that throw off so-called "public goods."

How to evaluate the projects these policies would be meant to encourage? Well, this particular blog isn't about carbon footprints, but I think a good way to determine the extent to which a given project would be effective in reducing our need for fossil fuels would be to estimate the net reduction in CO2 emissions as a result of that project. I haven't worked out every detail (in case anyone hadn't figured that out) but I'd love to get feedback on this proposal. There really is no time to lose.

### A stunning drop

No one can have failed to notice the precipitous drop in gasoline prices. I keep complete records and try to always utilize the same pump at the same gas station for every fill up in an attempt to eliminate one possible variable from the data I gather. On June 17, 2008 I paid $4.959 per gallon for fuel. My most recent fill up was at$2.139 on December 3, and the price at that station has declined since then.

But oil prices have dropped from about $147/bbl to$40.81 currently. This is quite remarkable, and so I started doing a little research. A wonderful source for all things related to fossil fuel consumption in the United States is Energy Information Association web site. The link is for a summary page, going deep into the links can provide nearly any statistics one could want.

One revealing table concerns U.S. Crude Oil and Petroleum Products Product Supplied (Thousand Barrels per Day). This statistic stands at 17,796,000 bbl/day in September of 2008. In August of 2007, it was 21,434,000 bbl/day. This is a decline of 17%. Until recently, the question of whether the U.S. was in the midst of a recession was a matter of debate. While that debate seems to have been settled in the affirmative, such a drop in what is the life blood of, literally, every sector of the economy puts an exclamation point on this fact. And, in fact, this reduction in the U.S. amounts to about 4.5% of world wide fossil fuel consumption. Considering how exquisitely balanced supply and demand are, it is small wonder that the contracting economy and the consequent demand destruction for fossil fuel has resulted in a dramatic reduction in prices for forward contracts of crude oil.

What is to be made of this? In my opinion and as I first stated in a previous post, it is, in one sense, a huge opportunity. It gives us a chance (albeit a brief one) to start the process of retooling our economy (and our lives) for a time when cheap and easy energy is a thing of the past. How to do it?

As much as I chafe at his strident language and reject much of his finger pointing, some of the ideas of Jim Kunstler provide a constructive start. He recommends, among other things, rebuilding our intercity rail system and our local farming and manufacturing capabilities. I would add utilizing the (temporary) ability to purchase energy at bargain basement prices to utilize those manufacturing capabilities to invest in our energy infrastructure and localized energy production (bad word - energy is never produced but you know what I mean) and distribution.

But in a nation of Walmart consumers, self-satisfied and self-indulgent baby boomers, MTV, Fox TV, and Lil' Wayne watchers, Obama voters who think "now I don't have to worry about filling my car or paying my mortage" because the government will take care of them, so-called sports fans who brag that "if they (opposing fans) come into our house, they'll get a beer in their grill," what chance is there? I can only hope that Obama (as a point of information, I voted for Bob Barr) is able to parlay his wave of popularity into motivating his constituency (and those who aren't part of that group) to engage in the hard work of rebuilding our economy and our society.