Game Changing Battery Technology: Is It Here Now? Nearly every oil observer - Simmons, Maxwell, Jeff Rubin, many others, and least of all myself - see oil prices rising in 2 - 5 years, probably to new heights, if the global economy continues to recover.   That’s based on pretty accurate visibility of new oil supply over the next 5 - 7 years, fairly certain rates of decline in old fields, plus assumptions of demand growth rates for OECD, developing, and oil exporting economies.   I provided my own version of this …

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Credit conditions continue to tighten and in the real economy boom times are quickly turning to bust.  Economists expect to see a continuing series of dismal economic reports on GDP, employment, corporate profits, etc.  Behind the statistics will be more disappointing events, a veritable shoe  store of shoes getting ready to drop.  Here’s a list of coming attractions offered as perspective on what may be in store.

The Car Shoe

On the front burner, obviously, is a required “resolution” to the U.S. auto industry’s decades of mismanagement.  The money’s running out and …

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U.S. driving mileage is running 89 billion miles per year less now than it was a year ago according to analyst Mark Perry.  The resulting savings in oil usage at 20 mpg and 43 gallons of gas per barrel of oil is a reduction of only 284,000 barrels per day due to less driving.  That’s not nothing but measured against either the 21 mb/d of U.S. oil usage last year or the 85 mb/d of global use last year, it is not earth shaking.  It represents only a 1.3% …

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The car business is being wrenched into its future by forces beyond its control.  One force is the destruction of demand for its current product offerings because of the bursting of the credit and housing bubbles combined with consumers’ knowledge that rapid technological developments are on the horizon.   This potent combination means consumers who do not absolutely need a new car (the vast plurality of all OECD consumers) don’t need to consider buying one.  Their disposable income and feelings of being wealthy have both been cut off at the knees.  …

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Will the world run short of lithium as electric and electric-assisted cars use li-ion batteries?  That is the speculation debated in the article posted below:  October 31, 2008 4:00 AM PDT Electric-car race could strain lithium battery supply Posted by Martin LaMonica 40 comments The headlong rush to create electric cars for green-minded consumers may come with a significant economic and environmental cost. Lithium ion batteries–the same used in electronic gadgets and laptops–have become the preferred battery type for plug-in hybrids and …

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Stocks are clearly in panic mode; prices no longer correlate remotely with valuations.  My son asks me as the market tanks another 500 points who is buying.  Someone has to be buying. It’s a brilliant question.  I suppose the answer is that people who think the price being offered discounts all the risks of continued panic are buying.  So the price must be dramatically lower - that’s the only price able to find a buyer. 

What started the stock market tanking is the global credit market chaos about which we seem …

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U.S. car companies face some important near term hurdles, including a developing recession combined with the rapid evolution in motor technologies that is making people reluctant to buy a new car with “last generation” technology.   Growing numbers of consumers will wait to buy until the next new thing is on the lot and proven out - and this could hold back car sales for several years.  Not least of the problems weighing down American car companies in particular is a dealer network that has no concept of courtesy, convenience or …

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Hugo Chavez would like nothing more than to sell all his oil to some customer other than the U.S.  That way he both gets his revenue and hurts his energy.  He seems to have found his customer - China.  As the report below describes, Venezuela, which has ramped up its China oil sales to 250 kb/d so far, is planning on 500 kb/d in 2009 and 1 mb/d by 2012.  Since the Venezuela currently is the fourth largest supplier to the U.S. at 1.1 mb/d and since exports …

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Some time long ago in a strange land that used to be called the United States of America - sometime before Bush 43, Cheney and Rove decided it didn’t matter if we were united or not as long as their team had the power - back in that hard-to-remember time before this Crewe came along - we had a “balanced budget” and were “generating surpluses” in the Federal budget. 

Al Gore thought we could do even better - he understood that the budget was not really balanced or generating a …

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Pete Peterson, the former Treasure Secretary and co-founder of The Blackstone Group, has donated $1 Billion of his IPO receipts to a fund devoted to trying to save America from drowning itself in debt- a sort of super-Common-Cause (of which he was also a co-founder).  One project of the fund is a traveling road show of “Town Meetings” on the subject of America’s apparent desire for financial self destruction.   Another is the recently released feature documentary on the subject called I.O.U.S.A. which has a lot of Town Meeting footage …

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Russia’s adventure in Georgia followed by Bush’s advancing the timetable for putting “defensive” weapons in Poland, followed by…  Well, this could keep on going for a while.   Nobody has any appetite for a hot war but it looks like a cold one is here.  Bush is like a jilted lover - he thought he saw Putin’s soul but the calm glint in Vlady’s eyes was only naked ambition slaked by his knowledge that Russia is gaining the advantage every day according to their bank deposit records.  I think Putin …

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The economy, the stock market, and our understanding of the future direction for energy and transportation may all be on the brink of major changes .  This letter will open a discussion of these ideas. 

A Very Tough Month

Before turning to the future, I must confess that the immediate past month was  most painful for the EIS portfolio.   Oil prices hit a violent downdraft in July, which especially impacted my “options on futures” strategy.  It declined in value by about 33%.  Since the purpose of these options is to provide portfolio …

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The following report from Asia Times Online points to another example of strategic trade by China.  “Looking to fill the vacuum created when the Russians returned home from the five former Soviet Central Asian republics of Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan, and the roubles dried up, China is now making moves to become the new Central Asian superpower.”

China’s interest in these poor Muslim countries is primarily their fossil fuel resources.  Once again we see China wrapping up a supply of oil before it can hit the …

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A well-respected Dutch consultancy supported by substantial corporate interests including Shell has issued a report that warns of severe oil price shocks starting in 2010.  As my readers know, I have been suggesting a similar time frame for severe oil shortages based on my reading of predictions for supply constraints by many analysts and by the Wikipedia Megaprojects works. I have not analyzed the report in depth but my reading of the summary found aspects that were confusing.    For example, the report blames Mexico and Russia …

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  China’s Power Crisis Deepens as Coal Supply Dwindles (Update1) By Wang Ying July 29 (Bloomberg) — China, the world’s second-biggest energy consumer, is facing a deepening summer power crisis that may persist into the winter months, the nation’s dominant electricity distributor said. State Grid Corp. of China, which more than 1 billion people rely on for power, said electricity shortages have worsened because of inadequate coal supplies. Forty-six percent of the power stations connected to the distributor’s grid have coal stockpiles below the “caution line,” or …

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