SOLAR TODAY Blog

CIBC World Markets, the Canadian-based international bank, has just released two very sobering forecasts.

Getting Off the Road: Adjusting to $7 Gas in America predicts $200-per-barrel oil by 2010. By 2012 Americans will cut their miles driven by 15%, as 57 million commuters crowd onto overtaxed public transport systems. Sales of oversize vehicles — SUVs and light trucks — will plummet 50%.

What will that do to the economy? Oil and Growth: That 70s Show Rerun predicts it will drive inflation and therefore higher interest rates. The result will limit real annual growth to about 1% — what economists call stagflation, where unemployment rates and inflation rates drive a rising “misery index.”

The only bright spot will be continued spectacular growth in renewable energy and electric transport. Better invest now.

As gasoline prices inch beyond $4 per gallon nationwide, the mainstream press has taken notice of hypermilers like Wayne Gerdes — obsessives who squeeze fuel for every inch it’s worth. NPR and The New York Times have done pieces this week. These folks boast of getting over 100 miles per gallon on the highway in a Prius, or over 200 in an old Honda Insight.

The techniques? Obviously, the car should be well-tuned, with properly-inflated tires. You want to keep engine revs low and speed under the limit. It helps a lot to kill the engine at stoplights and in traffic gridlock (hybrids do this automatically).

More questionable moves, in terms of safety and legality: rolling stops at stop signs, coasting downhill in neutral and with the engine off, cruising through corners without braking, drafting trucks and buses.

I’d love to get 100 mpg, but I can’t run out and buy a Prius. I got 32 mpg on the last tank in the ‘96 Subaru, which is pretty good for a car with all-wheel drive. That tank included a 150-mile round trip mostly on highways and several days of commuting around town. In town I turn the engine off at stop lights (during daylight hours only) and upshift early to keep revs under 2000 rpm, or even 1500. On the highway I’ll admit to coasting in neutral (but with the engine idling). I wouldn’t draft a big truck (truckers hate that) but I do believe in reducing drag due to air resistance. To monitor drag, I’ve installed an airspeed indicator, with the pitot tube protruding through the grill. I feel less guilty about high speed if I know I have a tailwind.

If I were really serious about this I’d put in a manifold pressure gauge, which tells more or less directly how much mass (of fuel-air mixture) you’re pushing into the engine at any moment.

Rex Tillerson, chairman and CEO of Exxon-Mobil, yesterday beat back a mild revolt by an alliance of Rockefeller family members and some institutional investors.

Exxon earned $40.6 billion last year, making it the most profitable corporation in the known universe.

The dissenters want Exxon to take a long-term view, and develop products and services that may keep it profitable as the company’s oil reserves become depleted. They asked that the chairmanship and CEO positions be split up so that the board of directors could take a broader view of the energy business.

Tillerson said, in effect, that there’s nothing wrong with the company’s current narrow focus on the extraction and sale of oil and gas. The majority of stockholders supported him.

What’s interesting about this story is the light it sheds on the tensions within any corporation. In most public companies, managers are rewarded for generating short-term profits, and full-time stock speculators can take advantage of that reality. Long-term investors are better-served through management by long-term objective, and by managers who can see where a company should be 10 or 20 years out.

U.S. courts have held that the fiduciary duty of a corporation is to maximize profits for stockholders. This is why smaller, more agile companies, owned by families or entrepreneurs or based in other lands, are responsible for more meaningful technological change.

During the mid-20th century, the railroads insisted that they were in the railroad business, and didn’t have to worry about competing with other modes of transportation. The result? Airlines and the Interstate highway system destroyed their passenger base. The environmental costs have been severe: Railroads are about twice as efficient, in energy terms, as airlines, and produce about one-third the atmospheric pollution per passenger mile.

Exxon — the double-cross company — is now faced with the same issue: Is it an extractive company or an energy company? This decision isn’t final. It’s pretty clear, though, that an oil company’s policy choices have social and environmental effects far beyond the narrow interests of its stockholders. –Seth Masia

As oil prices spiked to $135 a barrel, the International Energy Agency will report in November that accessible oil reserves, worldwide, fall short of previous estimates. So says The Wall Street Journal.

Oil fields today produce about 87 million barrels a day. The IEA, a consortium of 26 developed industrial nations, previously estimated that production will rise to 116 million barrels a day by 2030. Now, the Journal reports, IEA experts think, oilfields may produce only 100 million barrels a day in 2030.

The shortfall will be felt long before that. Recent IEA data suggest that as early as 2015, demand for oil may exceed production by 12.5 million barrels a day.

12.5 million barrels contains the power equivalent of about 21 terawatt hours. Realistically, one terawatt of new clean-energy capacity would fill that need and keep the world economy growing. The challenge and opportunity for renewable energy — particularly carbon-neutral transportation technologies — will be to make up the petroleum shortfall. –Seth Masia