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Tuesday June 30, 2009

NYMEX crude oil prices rise above $73 on USD fall, Nigeria attacks

NYMEX crude oil prices rose to the highest in 8 months, set for its biggest quarterly gain since 1990, as the US dollar declined and militant attacks in Nigeria raised concern that supplies may be disrupted. Shell shut a field after an attack by Nigerian rebels, disrupting supply from Africa's largest producer. The rebel group MEND said it attacked the oil field near Shell's Forcados oil export terminal and set it ablaze.

Oil prices jumped as much as 2.6% in New York as investors sought commodities as a hedge against inflation. Crude oil prices for Aug 2009 delivery rose to $73.38 per barrel. Oil has risen 64% since the beginning of 2009, rebounding from $32.40 on optimism that the global economic recession is easing. China raised domestic fuel prices today by as much as 11% to encourage refiners to produce more fuels amid higher crude costs. Meanwhile, live gold prices rose to $941.42 per ounce, gaining for a third quarter. Copper headed for its best 6 months in 22 years.

- Some people have been talking about the S&P 500's Golden Cross, but relatively fewer people have been talking about crude oil's own Golden Cross : the point on the chart where the 50-dma does a crossover above the 200-dma moving average line. I've mentioned it before back in Mar 2009. If crude oil prices continue on the present trajectory it looks like we are all set to go. For the short term, it would be bullish if oil prices could maintain $70 and continue to aim for $75. $100 oil remains a hurdle at this point, but do keep an eye out for that in the longer term.

(2009-06-30 19:30:35 SGT) [Energy] Permalink

Singapore electricity rate to go up 6.93% from July 2009

This article belongs to the Singapore inflation watch story arc.

channelnewsasia.com :

After two quarters of downward adjustments, Singapore household electricity tariffs will go up by 6.93% or 1.25 cents per kWh from 1 Jul 2009 to 30 Sep 2009. Electricity supplier SP Services said the increase is due largely to higher average fuel oil prices from April to June, which hit S$76.24 per barrel, up 26% from the previous quarter. The tariff is calculated based on a new formula which kicks in next month, under which Singapore electricity rates for the next quarter will be based on the average fuel oil prices in the preceding three months instead of the prices in the first month of the previous quarter.

- You know, I haven't even heard of this slightly wacky first-month-of-previous-quarter formula to determine Singapore electricity rates until relatively recently. For years I had been assuming that they were using some form of 3-month moving average, or 90-dma, of fuel oil prices, which being the refined product would tend to be linked to and slightly higher than crude oil prices. After all that would just have been common sense. Guess it took quite a few years for the implementation to catch up with the common sense.

But let's see what might happen if we were to take common sense to its logical conclusion, given the following factors, that :

a. Singapore electricity prices are determined by natural gas prices, since :
b. natural gas is currently used for 80% of Singapore's electricity production
c. natural gas prices are related by formula to fuel oil prices
d. fuel oil prices are naturally related, as a refined product, to crude oil prices.

Hence, logic dictates that electricity prices should be linked in real-time to live oil prices and that is exactly the direction that we seem to be heading. Now, as a peakoiler, part-time crude oil trader and general observer, I am rather used to crude oil's stomach-churning volatility, ranging from the record-breaking highs of $147.27 back in July 2008 down to the lows of $32.40 in Dec 2008 and now more than doubling back up again to the $70 range barely 6 months later. It would be interesting to see how society reacts when the price signal of electrity rates moves from the current leisurely 3-monthly rate to the more rapid 30-minute pace that is being proposed. Those who are watching crude oil prices on a second-by-second basis (you know who you are) would probably shrug and think nothing of it, but to everyone else it could seem like some kind of roller-coaster ride.

Of course, the pro-market people would say that this is a very fair and market-driven price mechanism, and I would have to tend to agree with them. But I would like to see how the government explains to the good common folk, the non-crude-oil-trading citizens, exactly how speeding up their lives by 4320 times (do the math) would help us all in the long run. I'm all ears.

(2009-06-30 15:40:23 SGT) [Energy] Permalink

Saturday June 27, 2009

GM Chevrolet Volt test drive ahead of schedule

bloomberg.com :

General Motors, racing to emerge from bankruptcy, said it has conducted the first pre-production Chevrolet Volt test drive on 23 Jun 2009, more than a week ahead of schedule. New vehicles reach the pre-production stage once the parts and design are largely complete. The Volt is due in showrooms in November 2010. Vice Chairman Bob Lutz said the Volt will cost about $40,000.

The Chevrolet Volt is GM's most visible effort to offer a more fuel-efficient lineup to meet new US regulations. GM is counting on the sedan to compete against the Toyota Prius hybrid. The Chevrolet Volt plug-in hybrid is designed to drive 40 miles (64.5 kilometers) solely on battery power. After 40 miles, an on-board gasoline engine keeps the battery charged, or the car can be plugged in overnight into a household outlet.

- With crude oil prices on the move (live oil prices are currently flirting with the $70 level), this is a pretty good time for GM to make this announcement. Also, it *is* rare to hear of a technological product, especially one as complex as the Chevrolet Volt must be, to be actually ahead of schedule. All the more so, in the ongoing race to determine the next generation of cleaner and greener vehicles on America's roads, with the other contenders being the new upcoming electric cars from Nissan and Renault, as well as the next generation of improved hybrid cars from Toyota and Honda.

(2009-06-27 20:36:58 SGT) [Energy] Permalink

Thursday June 25, 2009

Tesla Model S electric car gets $465 million federal funding from Obama Administration

wired.com :

The Obama Administration will lend Tesla Motors $465 million to build an electric car and the batteries to propel it. It's one of three loans totaling almost $8 billion that the Department of Energy has awarded to spur the development of fuel-efficient vehicles. Ford gets $5.9 billion to retool 11 factories in 5 states. Nissan will receive $1.6 billion to refurbish a factory in Tennessee to produce electric cars. The Obama Administration has announced that it is raising average fuel-efficiency standards from 27.5 miles per gallon to 35 miles per gallon by 2016.

Tesla CEO Elon Musk said the Tesla Model S could share components with Mercedes sedans now that Daimler has taken a 10% stake in Tesla to develop the Smart EV. Musk said Daimler's investment in Tesla coupled with the federal loan and revenue from the Tesla Roadster leaves the company "in pretty good shape" financially, and the Tesla Model S could be on the road by end-2011. Ford said it will have an EV by 2011. Nissan plans to put an electric car in showrooms next year, with its Tennessee factory employing 1,300 people and building 50,000 to 100,000 cars at full production.

- And to think that some of us were concerned about Tesla's finances not that long ago. Good to see the Obama Administration do something better, for a change. Better to throw $400 million at an electric car maker who will bring forward the state of the art in automotive technology than to throw $400 billion at those financial black holes who call themselves banks. Looking forward to the next generation of plug-in hybrids and electric vehicles.

(2009-06-25 12:56:25 SGT) [Energy] Permalink Comments [1]

Wednesday June 24, 2009

Synthetic trees aim to capture CO2 from the air

edition.cnn.com :

Scientists in the US are developing synthetic trees capable of collecting carbon around 1,000 times faster than the real thing. As the wind blows though plastic "leaves," the carbon is trapped in a chamber, compressed and stored as liquid carbon dioxide. The technology is similar to the carbon capture methods at coal power plants, however the "synthetic tree" can catch carbon anywhere. Professor Klaus Lackner of Columbia University says it is highly efficient for its size compared to a wind turbine. Lackner and his colleagues have developed a sorbent that uses a relatively small amount of energy to release the CO2 and is not prohibitively expensive.

Lackner's colleague Professor Wally Broecker says most people still don't recognize the magnitude of the task the world faces in reducing global carbon emissions, and it was likely that one day urgent action would need to be taken. "Each unit would take out a ton of CO2 a day - which would be the amount of CO2 produced by 20 average automobiles in the U.S.A. And the cost of each unit would be about the cost of a Toyota."

- Amongst the various CO2 capture techniques that have been proposed, this looks like an interesting approach. Whether it scales or not (or if it gets Richard Branson's stamp of approval) will have to be seen, particularly regarding the issue of carbon storage. I'm a little leery about the CO2 storage part however, whether in liquid form or whatever it may be. It would make more sense if some economic use could be found for it, for example as CO2 injections to increase oil well pressure with the tertiary oil recovery method. With that, we're back to the old "find the nearest oil field" game once again.

Virgin CEO Richard Branson was talking about scrubbing a billion tons of carbon dioxide a year. A billion tons. Compared to that, the scale of nuclear waste, especially with reprocessing, looks positively miniscule, which is great, except for the political posturing part. Well, it's time to look past political posturing. The world needs all the solutions it can get, whether it's a transition to an electric car fleet, renewable energy, nuclear energy, carbon capture and storage. Anything and everything that can work, we've got to look into it.

(2009-06-24 13:21:44 SGT) [Env] Permalink Comments [1]

Tuesday June 23, 2009

Nissan snubs hybrids, to build over 100000 electric cars per year from 2012

reuters.com :

Nissan has sought to knock down the hybrid hype. "We do not put electric cars and hybrids in the same category," Nissan CEO Ghosn told shareholders. "Hybrids are fuel-efficient technology. EV's are no fuel. Hybrids are an optimisation of combustion engines. EV's have none. Hybrids reduce emissions by 20-30%. EV's have none."

Ghosn stressed that Nissan and Renault were the only carmakers with a mass-volume EV strategy to date, saying he was optimistic that they would proliferate with crude oil prices at $67 a barrel even in a global recession. Nissan and Renault are due to launch 3 electric cars each by 2012. Nissan will build more than 100,000 electric vehicles a year when it starts US production of the zero-emission vehicles at its Smyrna, Tennessee plant in 2-3 years.

- One has to be careful about taking Nissan's statements at face value. The point being, Nissan has completely missed two, and now coming to three entire generations of hybrid car technology and is now trying to play catch-up to its larger rivals Toyota and Honda. Nissan is a little late to that particular game, some 10-15 years after the two pioneering car-makers initiated their hybrid programs, hence it is no wonder that Nissan is pooh-poohing hybrid vehicles.

On the other hand, it will be interesting to see how the battle for the next-generation of green vehicles shapes up. Of course, at the higher end of the market there are models such as the Tesla Roadster and the Tesla Model S, but if we are talking about family cars that ordinary people would actually buy, we would be talking about the mass production models. In this mass market segment, it is starting to look like a three-way race between the likes of Toyota and Honda with their solidly practical though evolutionary subsequent iterations of their hybrid car models, Nissan and Renault with their electric car designs, and GM-Chevrolet, if they still feel up to the task, with their Chevrolet Volt plug-in hybrid.

(2009-06-23 20:53:13 SGT) [Energy] Permalink

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