Weatherdem's Weblog

Bridging climate science, citizens, and policy

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Slow 2011 Hybrid Car Sales & $4 Gas

I’ve read numerous articles in the first week of the new year describing the “disappointing” sales numbers of hybrid and electric vehicles in the U.S. in 2011.  It somehow makes sense to declare a subsector industry dead after sales came in under expectations.  Interestingly, the same hybrid/electric naysayers didn’t have the same opinion when internal combustion car sales tanked a few years back.

Here is the latest article, written from the Detroit Auto Show.  It brings together a couple of salient facts which aren’t explored in any depth.

Hybrid sales waned as gasoline prices ebbed in 2011, declining to 2.2 percent of the market from 2.4 percent a year earlier, according to the research firm LMC Automotive. Meanwhile, sales of the Nissan Leaf electric car and the Chevrolet Volt plug-in each fell short of expectations.

Analysts do not expect the segment to grow significantly this year: the combination of gas prices below $4 a gallon and higher upfront costs for the cars is not attracting consumers.

I understand the higher upfront costs, especially in the continued economic malaise that most Americans are experiencing.  The $4 per gallon of gas is an interesting factoid to throw in there though, don’t you think?  After all, we’ve only visually seen $4 gas once so far.  Gas prices in 2011 came close to $4, but the magic `4` never appeared on signs.

Which brings me to the following: demand in 2011, especially the 2nd half of 2011, was multiple percentage points below demand in 2010.  Yet gas prices rose to close to $4 anyway.  It’s all supply and demand, you might say, especially demand in other countries which would lead to higher fundamental prices.  Well, oil prices shot up in Feb-Apr from $84 to almost $114 per gallon, then fell back below $80 by Sep (when gas prices were highest, despite slack demand in the U.S.).  Oil is trading at more than $100 per gallon again now, yet gas prices continue to decline.

No, there are more variables than simply supply and demand at play.  $4 gas represents an important psychological barrier for traders just as it does for gasoline consumers.  There is incredible pressure to keep prices from rising above that threshold because too few people can think critically: when prices pass the threshold, one trader panics, then most everybody else panics.  Consumers are just as irrational, however.  More than anything, they sense that $4 gas represents some kind of significant threshold, even though too few consumers can analyze at which threshold gas represents a significant point at which their household budget is adversely affected.  Moreover, consumers have an irrational desire to recoup additional costs of a hybrid/electric vehicle inside of 1 year.  Where are their similar demands for products they’ve been buying their entire lives?  It really doesn’t exist.

In 2000, Toyota sold 5,600 Prii in the U.S. (the 1st year available).  In 2011, Nissan sold 9,700 Leafs in the U.S. (the 1st year available), or 73% more units than the Prius.  75% more sales of just 1 new hybrid/electric is a very significant number.  Imagine if there were 73% more sales of a new kind of cell phone than a different cell phone 10 years after the first was introduced.  That would be touted as a wild success story.  The poor treatment of the hybrid/electric vehicle segment is pitiful.  Is there a long path toward 1.5 million electric vehicles on the road by 2015?  Yes, there is.  But you might want to share with the rest of the car industry that having aggressive 2015 goals is a really bad idea.  I doubt you’ll receive much of an audience.


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Oil Back Near $100/Barrel: Where Is The Demand?

The price per barrel of oil is back up near $100 as of the end of last week and through today’s trading.  According to the free-marketeers, that must mean gasoline demand has been through the roof.  Oops, not so much: demand is down -4.3% YoY, at 8671 M gallons vs. 9056 M a year ago, as noted at The Bonddad Blog.

Clearly, something other than just demand is and has been at work.  Oil trading is as much gambling as the stock market is.  All the volatility that consumers are affected by arises primarily from large amounts of bets placed on anticipated prices.

Why is this important?  As NDD notes, “This [oil’s price] is back above the recession-trigger level calculated by analyst Steve Kopits. Gas at the pump declined $.03 to $3.42 a gallon. Measured this way, we probably are still about $.15 above the 2008 recession trigger level.”  Those bets have real-world implications.  Recessions are easier to trigger when oil and gas prices remain high.

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News Survery 2/17/09: Oil, Afghanistan & Antarctic Station

Some recent articles caught my eye.  Here are three of them:

Crude oil is getting cheaper – so why isn’t gas?  Short answer first: greed.  Longer answer: the oil price reported in the media is West Texas crude.  It’s currently selling for less than other oil grades around the world.  The gas we fuel our vehicles with?  It’s processsed from that foreign oil.  The article actually mentions that refining capacity for West Texas crude is less than for other types of crude.  Why aren’t more refineries built?  Well, that would cost oil corporations money – money they’d rather see in executive bonuses and stock dividends.  Don’t think this benefits your retirement account.  As most of us are now aware, the only people who benefited from stock payouts were the already mega-rich.  That won’t change anytime soon.  So when you’re paying more than $2 per gallon again this year, keep in mind all the record profits the oil corporations posted last year.  The money that we’re all paying at the pump every day could go to building refineries and lowering the price at the pump, but it’s not.

Escalation of troops in Afghanistan.  I’d be happier to read news reports of large-scale, detailed plans to revitalize the infrastructure of Afghanistan.  At this point, I think troops are necessary.  But they’ll be worth less in the long-term if fundamental issues aren’t addressed at the same time.

New Antarctic research station is carbon-free.  It won’t stop deniers/delayers from further beating their dead talking-point horses, but this article is good news for realists.  The station uses wind mills, solar panels and water recycling … in Antarctica.  If buildings in Antarctica can be built as zero-emitters, do you think they can be built on the rest of the continents?  Darn right.

The only beef I have with the last article is its treatment of two separate facts.  Both are important (and correct) alone, but the writer did nothing to merge them coherently.  They are:

Scientists monitoring global warming predict higher temperatures could hasten melting at Antarctica, the world’s largest repository of fresh water, raising sea levels and altering shorelines. If Antarctica ever melted, world sea levels would rise by about 180 feet.

That would impact some 146 million people living in low-lying coastal regions less than three feet above current sea levels, researchers said.

On the path toward total Antarctic ice sheet melt (the continent itself can’t melt, by the way), sea levels would obviously rise 3 feet before they rose 180 feet.  So if a 3 foot sea level rise would impact 146 million people, what kind of an impact would sea level rises between three and 180 feet have?  More than the number indicated in the article.

A two-year old paper indicated over 400 million people for selected parts of the globe.  That’s bad enough.  When you factor in recorded sea-level rise amounts have already exceeded earlier estimates, that number is likely to be higher.  And what about the rest of the globe that the study didn’t examine, such as the west coast of the U.S. and most of Africa?

While the article could have benefited from some additional context, I was glad to see the information that did make it in.  We must rein in greenhouse gas emissions.  Millions of peoples’ livelihoods and untold numbers of plants and animals depend on it.

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In The News 10/24/08

A campaign volunteer for John McCain in Pittsburgh, PA made up a story about being robbed at an ATM, then being assaulted by the robber once the 6’4″ black man figured out she was driving with a McCain sticker on her car.  The story was ludicrous when it first came out, but that certainly didn’t stop propaganda outlets like Fox from running with the story as hard as they could.  Ashley Todd made up this disgusting story.  She filed a false police report after inflicting the wounds on herself.  Seriously, what has happened to the Republican party?

Lots of economic news again today.  First up: OPEC’s supply decision.  OPEC will cut production by 1.5 million barrels per day.  They think there’s too much supply in the system.  What they’re really saying is that $140 oil makes them more money than $70 oil.  That might sound like a “Duh” type of statement, but it should serve as a lesson to the pro-drilling crowd.  Any additional supply the U.S. might bring to market in 10 years will simply be taken off the market by OPEC.  That means we’ll pay more for gas (not less!) because OPEC wants more for its oil.  The drilling fetish folks are looking to grab some of the profit along the way.  What do we get out of it?

“Too-big-to-fail” insurance giant AIG has not just already blown through the original $85 billion loaned by the government (corporate welfare with taxpayer money), it’s nearly blown the additional $37.5 billion extension loan too.  It doesn’t stop there: AIG may ask for even more money.  Remind me again why American taxpayer dollars are bailing out firms when we’re not allowed to know where the money is really going.

Foreclosures are up 71% over last year’s level.  Nationwide, nearly 766,000 homes received at least one foreclosure-related notice in the last quarter, as reported by RealtyTrac.  Remember, RealtyTrac isn’t keeping track of foreclosures in 900 rural counties nationally.  The numbers could have been worse.  Many states have initiated foreclosure-delay programs.  Without additional work, I expect an artificial ‘explosion’ of foreclosures in this quarter.

Meanwhile, the number of new applications for unemployment insurance rose to 478,000.  People without jobs cannot pay their mortgages.  Corporations continue to announce massive numbers of layoffs.  The economy is going to continue to get worse before it gets better.

Cry me a freaking river.  The recession is beginning to hit rich folks’ golf communities.  People that live in the communities are not that upset about the decrease in their home values.  They’re upset because they can’t golf everyday.  They’re upset because they can’t hang out in the clubhouse all day.  These are some of the same people that are upset over inheritance taxes.  They don’t provide labor to the economy, and they think they’re so much better than the rest of us that they shouldn’t have to pay for their fair share of the nation’s infrastructure that they use.  Meanwhile, middle- and lower-class families are becoming homeless and jobless.  The fact that this article was even written is sad commentary on the state of our society.

Inside Colorado, a successful sale of bonds by the state will finance 12 construction projects on college campuses across Colorado:

1. University of Northern Colorado: Butler-Hancock Renovation

2. Colorado Northwestern Community College: Academic Building, Craig Campus

3. Colorado State University at Pueblo: Academic Resources Center Remodel

4. Colorado School of Mines: Brown Hall Addition

5. CSU Fort Collins: Clark Building Revitalization

6. Auraria Higher Education Campus: Science Building

7. Western State College: Taylor Hall Renovation and Addition

8. Mesa State College: Wubben Hall Expansion and Renovation

9. University of Colorado at Colorado Springs: Renovation of Science Building

10. Morgan Community College: Nursing, Technology & Science Building

11. Front Range Community College, Larimer Campus: Science Classroom Project

12. Fort Lewis College: Berndt Hall Reconstruction

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News Links & Discussion 9/2/08

Personal incomes fell in July by 0.7%.  Remember, inflation in June was over 9%.  Americans had 10% less buying power than they did before.  Republican economics at work!

FAA computer practices leave quite a bit to be desired.  Two computer centers are supposed to operate for the entire country?!  Similar systems in different industries require multiple redundancies.  The FAA has also had many problems with adequately staffing properly trained air traffic controllers.  That’s a trend that started under St. Ronnie Reagan’s union busting days.  Republicans argue that investing in new technologies would require (gasp!) raising taxes.  Because crashing planes and a crippled air system are so much more desirable.

Union members make more and have better health insurance.  Their wages and benefits are part of the reason why corporations and their Republican lackeys have always attacked unions so viciously.

The Arctic becomes an island.  For the first time in recorded history, the Arctic ice sheet can be circumnavigated.  This year’s 2nd lowest ice extent (so far) on record means it will take quite different conditions to build the pack back up to the 1979-2000 average.  What’s left is thinner and weaker than before.

EPA emission limits are rejected by a federal appeals court.  It is absurd to think that the EPA should be able to limit what emission targets states can set for themselves, as long as they aren’t higher than the federal standard.  This decision is yet another slap in the face to the Bush-friendly EPA managerial appointments.  Not that that will stop them from continuing to act like a-holes for the next 120 days.

Marilyn Musgrave wants more debate time with challenger Betsy Markey, who has led in polls since May for the CO-04 seat.  This is a direct reversal of the 2006 race when Musgrave refused to debate challenger Angie Paccione as she led in polls all the way to election day.  Don’t give her any chance, Betsy!

The Space Shuttle program could be extended past the currently planned retirement date of 2010.  NASA is rightfully concerned that the U.S. would then have no platform to get astronauts to the ISS and Low Earth Orbit until the Orion capsule’s planned 2015 service entry.  One of the things Iraq has shown us is that projects and policies aren’t about available money, they’re about political will.  There is no reason for NASA to be beholden to an increasingly contentious Russia for passage to a space station that American taxpayers mostly paid for.

Oil prices down and this is the money quote:

Stocks slumped more than $7 a barrel Tuesday morning as investors bet that the damage from Gustav was not as bad as had been feared. Prices also dropped due to the stronger dollar, which makes dollar-traded commodities cheaper for overseas investors. Additionally, investors continued to bet that global demand for oil is waning.

Isn’t it nice to know that we’re getting gouged at the pump while Wall Streeters bet on this and that and the other thing?  Also note that oil prices have fallen 25% off their high of $147.20 on July 11.  Has American demand fallen by 25% this year?  Has American supply risen by 25% this year?  Nope.  More importantly, global demand has in no way fallen this year. Neither has global supply.  Republicans keep talking about the “free market” and how it will lower oil prices.  Those prices weren’t supported by market fundamentals.  They were propped up by speculators that have been scared off by the threat of regulation introduction by the Democratic Congress.  The lesson: Republicans cause oil and gas prices to rise; Democrats cause oil and gas prices to fall.

Will future Gulf landfalling hurricanes weaken like Katrina & Gustav?  Joe Romm argues that with much warmer future oceans (based on a business as usual approach), hurricanes moving across the Gulf may not have to contend with cooler sea surface temperatures closer to land.  That would mean more devastating storm damage as storms would maintain some or much of their open-water potency.  Also of concern: warmer Mississippi waters and warmer delta waters that would allow stronger hurricanes to affect more areas inland from the Gulf.