Here’s a phrase you might want to remember: necessity is the mother of invention.  Catchy, don’t you think?  What made me coin this phrase was watching last Sunday’s “60 Minutes” story about Saudi Aramco.  Among the many wonders of the guided tour hosted by the Saudi oil minister, Ali Al-Naimi, was a research lab where the Saudis are working to develop new ways to make oil into a cleaner burning and more efficient fuel. 

Clearly the Saudis are concerned about the future of their primary export.  They see the western world coalescing around new technologies for transportation that minimize, if not eliminate, the role of oil.  That vision is clearly not consistent with the best interests of the Saudi royals.  

So the Saudis are working to change both the reality and the image of oil.   It therefore makes perfect sense that the Saudi’s would host Lesley Stahl and her crew for a tour of their gigantic new fields, their super-high-tech production technologies, their western-style liberal social mores (within Saudi Aramco), and…yes, their very-high tech R&D efforts to improve the way oil works so it will burn cleaner and more efficiently. 

The Saudi selling proposition is simple.  Oil can be re-formulated into a fuel that - with the aid of new improvements in the way the internal combustion engine (ICE) works - cars won’t spew CO2 and will become far more efficient.  They aren’t selling it yet because they don’t have the product yet.  But if they - and the hundreds of companies around the world that are working on various approaches to achieving the same goals - ultimately succeed, they would have a pretty good chance to change the whole thinking of the “alternative energy” paradigm that is now ascendant in the U.S. and Europe.  

The Saudi plan is not so far-fetched as it might seem for several reasons.  First, we sometimes loose sight of the fact that oil is the most efficient, transportable, easy-to-handle,  low-cost energy source mankind has ever found.  So it’s not surprising that new ways might be found to wring even more value from it once the need to do so has presented itself.  Second, more improvements to the ICE and ICE-powered car are already coming on stream rapidly. Cars that get 40, 50, even higher miles per gallon are on the street now such as the Yaris, the Smart, and the Mini.  There is even a Mercedes diesel that gets more than 40 mpg.  Third, if you can avoid  adding a battery-powered element and stick with an ICE by itself you can probably save $10,000 of additional cost per vehicle.  Fourth, the ICE infrastructure is totally in place.  Continuing to use the ICE means no costs for battery manufacturing, recharging or exchanging infrastructure that would be needed world-wide.        

An example of the sort of ICE developments we may see in the coming years is a new fuel injection system developed be the Delphi Corporation that will be incorporated into the new Mercedes model C250.  It makes diesel fuel work far more cleanly and efficiently.  In announcing it, Delphi did not provide mpg numbers, but they say, “Overall benefits include a considerable reduction in emissions, more torque and power across all engine speeds, and significantly improved fuel economy and refinement.”   Significant improvement in fuel economy could mean anything but it would not be surprising to see greater than 50 mpg - maybe even 75 - given that diesels can now do better than 40 mpg. The Delphi press release is quoted below. 

The possibility of a clean, fuel efficient future powered by oil brings up a number of question that energy investors need to be asking.   First, might it not be a cheaper and faster solution to “oil independence” than battery based solutions that do not exist today in economical forms?  Second, if we could have a 100% - 200% improvement in fleet efficiency over a reasonably short period without requiring a new battery technology that does not yet exist, might not the global oil use be reduced faster and more steeply?  Perhaps the U.S. could go from its full-economy 21 mb/d usage to something on the order of 15 mb/d.  That wouldn’t eliminate Middle Eastern oil, but it would go a very long way toward mitigating the problem of oil dependency. 

But, you say, it takes 17 years to change over the fleet.  Well, what if government began to subsidize the purchase of super-efficient cars on a vast scale?  Remember, these are not hugely expensive cars to start with so with a large government rebate they would probably fly out the door.  Say the Obama administration decided to provide a $5,000 rebate for all cars that get over 40 mpg?  If that program resulted in 10 million highly fuel efficient cars per year - let’s say a 50 mpg average fuel efficiency - the cost would be $50B per year to the government, not a huge amount.  It would get 10 million new 50 mpg cars per year on the road.  Over eight years, that’s 80 million cars or about 40% of the fleet. If that were to happen, the price of oil might well stay contained over any reasonable investment horizon.  Such a program might also be a solution for both the U.S. auto industry’s viability and for the current economic downturn that is being caused in no small part by an important downturn in car sales.  

If the fleet could get 60 mpg just with new ICEs we could probably save 7 mb/d in the U.S. and 4 mb/d in the rest of the world - maybe more.  That would get us at least 2/3rds of the way toward the goals that might be achieved via an all-electric car solution.  And it could well be cheaper and quicker because there would be no new battery technology required. 

Add to this concept the fact that natural gas in North America has recently moved from an outlook of increasing scarcity to the prospect of having a hundred year’s supply due to new techniques for extracting it from shale and related deposits.  With abundant natural gas, people are initiating efforts to use more natural gas in transportation.  Some substitution is already happening in fleets of larger vehicles - trucks and busses.  NG substitution would tend to reduce global dependence on oil above and beyond the scenario described above. 

I recently wrote about the fact that oil now looks to be swinging between the extremes of plenty and scarcity.  That  essay  assumed business as usual.  It seems to me that with a radical restructuring of the car business based on  creative leadership in both the business and political realms it might be possible to find a sustainable happy medium for the price of oil.  I don’t say this will happen.  It would require a huge and concerted effort by business and government working together.  But it could be a game-changer, or at least a game-modifier, in terms of what we might reasonably project to be the expected future prices for oil.    

Here is the Delphi PR release: 

EQUITY ALERT (DPHIQ)
Monday, DEC 8th, 2008
+++++++++++++++++++++++++++++++++++++++++++++++++
Delphi’s Revolutionary Direct Acting Diesel Fuel Injection System Making World Premiere on New Mercedes C-Class
With More Torque and Power, Delphi Technology in Mercedes C250 Delivers Reduced Emissions and Improved Fuel Economy

PARIS — (Marketwire) — 12/01/08 — Delphi Corporation (PINKSHEETS: DPHIQ) has announced that, following several years of development in cooperation with Daimler engineering teams, the new Mercedes C250 CDI will premiere Delphi’s revolutionary Direct Acting Piezo injector.

The new Direct Acting Common Rail (CR) from Delphi represents a radical break-through in diesel injection technology as, for the first time, the injector needle is directly activated by the piezo stack, removing the hydraulic circuit and its associated lag and energy consumption. This change enables vehicle manufacturers to comply with future emission legislations while providing more power and uncompromised fuel economy.

“Today, Delphi surpassed a major milestone in diesel technology history,” said Jose Avila, general manager of Delphi Diesel Systems. “And there is no better way to write this new chapter than to be partnered with Mercedes-Benz, the company with the industry’s longest history in diesel engines.”

Delphi’s Direct Acting CR system uses a patented direct-acting concept in which the injector needle is set in motion directly by a piezo ceramic actuator instead of being moved via an electro-hydraulic circuit as with existing fuel injection technologies. The piezo ceramic actuator directly operates the needle valve of the injector for initial lifts, such as those obtained in pilot injections, and a motion amplifier is used to help complete the lift for large injections. This enables the injector to spray fuel into the combustion chamber faster, with much improved spray momentum and accuracy, at higher pressures (up to 2,000 bar). It also provides extremely fast opening and closing of the needle valve, independent of injection pressure. With needle velocities reaching above 3 m/s or 3 times faster than today’s servo systems, the system allows seven (or more) injection events per engine cycle. Delphi’s hydraulic circuit design makes best use of the characteristics of piezo ceramic actuators: high force and speed with efficient packaging.

Thanks to high-precision multiple injections of fuel, the fuel injection process can be adapted to all engine loads and speeds with greater accuracy, which has a positive impact on emissions, consumption and combustion noise. By offering the ability to control the needle opening rate electronically and independently of hydraulic constraints, the engine calibrator is able to satisfy the conflicting requirements of noise optimization and minimization of exhaust emissions without compromise.

At idle, the Direct Acting injector concept makes no perceptible noise above the engine itself, which is a remarkable achievement when compared with today’s servo piezo injection systems.

Moreover, thanks to the innovative actuation concept, the injector’s radically new operating principle is also completely leak free. So, no high-pressure fuel is wasted into a return flow back to the tank, saving up to one kilowatt of lost energy used by today’s servo systems and removing the requirement of expensive fuel coolers even at a rail pressure of 2,000 bar.

Overall benefits include a considerable reduction in emissions, more torque and power across all engine speeds, and significantly improved fuel economy and refinement.

“With its excellent injection performance, Delphi’s Direct Acting Common Rail is an attractive fuel injection system and a unique tool to meet ambitious development targets of future diesel engines and exceed customer expectations,” said Detlev Schoeppe, engineering director Delphi Diesel Systems.

The new C-Class’ unrivalled performance — the application of Delphi’s ground-breaking technology

The new Mercedes C250 takes advantage of Delphi’s revolutionary technology to offer drivers improved engine output and torque while reducing emissions and fuel consumption.

Mercedes-Benz’s completely-new four-cylinder diesel engine, named OM 651, celebrated its world premiere at the Paris Motor Show on the C Class. Ultimately it will be produced in three versions: 150kW, 125kW and 100kW — all with Delphi Diesel CR systems.

Tags: peak oil investments

This entry was posted on Tuesday, December 9th, 2008 at 6:12 pm and is filed under Energy Policy, FUEL EFFICIENCY, Price of oil, Saudi Arabia. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.