Yesterday I had hit on the situation going on with the automakers. Originally, I had intended to include some other stories, but the first piece was large enough (perhaps too large?) that I realized that I had to push the other pieces. Well, as promised, we got some interesting stuff. First on the auto front a cool piece on zero emission cars. Next we got fallout from biofuels and water preservation. Third, it seems the Chinese aren't so thirsty for the black stuff right now. Lastly could the current woes Australia's mining sector tell us something?
Hydrogen cars reach a milestone....no really..literally!
Hot damn, this is what I'm talking about when I have arguments with my more right-leaning friends about alternative fuel autos. Here we have a cross country tour with nine...count 'em nine different hydrogen cars going from the Forest City to the City of Angels! Yahoo (well actually Reuters) has a cool piece on this. Yes, the stuff is still early in development, but this shows that not only have we made progress, but possibly that if the will was there, we could see production.
The goal, as the article points out, was to showcase the need for refeuling stations. So far we've had this odd "if you build it they will come/ chicken or the egg" situation tossed in with a dose of skepticism. Fuel companies won't build the refueling stations without customers, and the automakers won't go full blast without refueling stations; well, actually its a bit more than that for the automakers, but you get the idea.
LOS ANGELES (Reuters) - Hydrogen fuel cell cars from nine automakers completed a 13-day cross-country trip this weekend, in the first such mass U.S. crossing for vehicles powered by a zero-emission technology still in its infancy.
As firsts go, the event, which ran from Portland, Maine, to the Los Angeles Coliseum, probably would not qualify for the record books. There were stretches without hydrogen fueling stations when the vehicles were carried on flatbed trucks, the longest from Rolla, Missouri, to Albuquerque, New Mexico.
But then one of the goals of the "Hydrogen Road Tour '08" was to demonstrate the need to build more fueling stations if the nascent technology is to develop, said Paul Brubaker, administrator for research and innovative technology for the U.S. Department of Transportation.
There are about 60 hydrogen stations in the United States, and only two are open to the public without prior arrangement.
- excerpt from "First mass U.S. crossing for hydrogen cars completed", Reuters/Yahoo, 2008.
Sixty stations, with all the money these companies make you'd think they would build more. But, then again, can you blame them? Though companies like GM and Volkswagen are still in the development stage, building only a few 100 here or there. Even the Japanese haven't pushed up production to matching anything near what they produce for petrol-based autos. Perhaps this is were government can come in and help consumers. We all want environmentally clean autos, maybe the government can give consumers subsidies like I hear Germany does for solar panels for homes.
I'm not saying hydrogen is the only answer to fueling our cars and mass transit. There are many wonderful technologies coming to the forefront, and they all should be encouraged to proceed further in development. Indeed, perhaps as consumers, we should have a multi-source situation when it comes to energizing our mode of transportation?
We really need to take the lead on this. Other countries will be rolling out serious initiatives on alternative fuel cars soon, and once again America is going to play catch up. I don't know about you, but I'm tired of playing catch up. I want us to lead the way!
Is Ethanol the boa constrictor of farming?
We all know now that biofuels were one of the reasons for the big run up in the price of grain. But are grain-based fuels like Ethanol taking away much needed nutrients like water from crops destined for food? The Agence France Presse is reporting on such a situation.
Global food needs are expected to roughly double by 2050, at the same time as climate change and dwindling oil reserves are pressuring countries to set aside ever more land for producing biomass to replace greenhouse gas-emitting fossil fuels.
These parallel global trends risk colliding with "the water-constrained biophysical reality of the planet," according to SIWI, which hosted the the World Water Week in the Swedish capital last week.
"Almost every increase in water used in agriculture will affect water availability for other uses, including that needed to keep ecosystems healthy and resilient in the face of change and perturbation," the institute said in a recent study.
According to Lundqvist, the global population today uses around 4,500 cubic kilometres of water each year to cover all water needs, including for agricultural irrigation, urban use and for energy production.
- excerpt from "Biofuels, food crops straining world water reserves", Agence France Presse, 2008.
I can already hear conservatives like Limbaugh and others say "see, I told you so! Good ol' fashioned fossel fuels wouldn't have these problems!" Of course, he'd be wrong, as pollution from such a source of energy is killing us in more ways. But getting back to the main issue, as the population grows the demand for more food and thus arable land will only continue to grow. The developing world's economy is also crying out for more fuel to continue their growth, and biomass fuels will begin to look more appealing each day.
Its more than grain-based fuels as well, I've once saw someone on television make gasoline from some sort of seaweed! So, allowing me to put on my pessimist hat on for a brief second, this is more than dire consequence for farms. Water seeping away from grasslands and other such plants would also eliminate more feeding grounds for various animals. In many places, these areas provide natural barriers serving as flood protection. All this is, besides our own food, is now at risk.
But while we can ultimately control the usage of farmland in places like Canada, Europe, and the US, can we say the samething in the developing world? As sources of petrol start to disappear, nations looking to move from developing to developed status will seek these biomass. The Chinese and the Indians, during the Doha Round, complained that proposed environmental regulations (like cap and trade) was nothing more than the West trying to halt their economies. Can you imagine what countries like these will say if we start demanding they cut back on ways to fuel their electrical grid? I'm sure many will see the potential calamity, and head 'em off at pass by looking for more alternative solutions.
Conditions for mega droughts are appearing more and more every day. Scientists already predict one for the Southwestern United States, and there are probably more sites around the world as well. Arable land is losing ground to encroaching desert. In the US, there are signs already appearing in the Great Plains. China is slowly being enveloped by it's Gobi desert. Now all of this wasn't because of biofuels. Yet, without conservation and proper management/regulation, the development of an alternative fuel to help the world could actually lead to a larger disaster.
I'm reminded of two questions my father asked me once. We've got so many people on Earth, have we passed our capacity for maintaining our numbers? What happens if we can't?
The Dragon has had enough of a certain black tea....for now.
The Financial Times is reporting that China's two largest oil companies, Sinopec and PetroChina has stopped purchasing petroleum. Indeed, it turns out they ain't even using much of the stuff they bought! Of course, longer term, expect them to return to the market.
China’s state-owned oil companies are likely to stop imports of refined products such as diesel and petrol next month after a nine-month buying spree that has left stockpiles overflowing, one of Asia’s largest refiners said.
“Since China started whipping up imports in November last year, 25 per cent to a third of our diesel exports have gone there,” said Wilfred Wang, chairman of Taiwan’s Formosa Petrochemical (FPCC). “But this market will disappear next month.”
His remarks confirmed market expectations of an imminent end to a buying binge from Sinopec and PetroChina that has supported refining margins in the region but has been suspected of being out of line with end demand.
- excerpt from "China’s petrol buying spree poised to end", Financial Times, 2008.
Not looking to lose face before the Olympic spectators with visions of lines forming at the local refill station, China went into buying overdrive this past Summer. Now that I think about it, that would partially explain why Crude Oil jumped to as high as $145. If that Taiwanese refiner is on the spot (and I suspect he is), China could've pulled back on the purchasing last month. That would coincide with the recent fall that started in the futures contract.
While they start to consume what they purchased, China (and India) are on the fast track of establishing more refining capacity. This will allow them to get more more fuel. China was one of the pillars holding up oil prices. Take that and the fact that the global economy is cooling down, prices for crude could set to fall further.
Don't get all joyful though. Be wary because the longer term oil-goes-to-$200 fundamentals are still there. Until a proper utilization of alternative energy for personal and mass transit happens, we're going to continue to use that slick stuff. Increased refining capacity or not, China will go through it's recently acquired stock of petroleum and will be on another buying spree. Now, as prices continue to decline, the smart thing would be to start buying up our own reserves. Slowly, don't want to tip off the speculators. Winter is coming, and we may have the possibility to avert another season of high home heating bills.
Why you may be paying more for metal-based products next year
Copper, nickel, zinc, all considered hard to get (not rare, like Gold, but difficult in mining), and used in products we take for granted. But perhaps as early as this year or next January, products utilizing these, and even other base metals, could be going up in price. As if inflation wasn't already being goosed up by rising food prices, now possibly add the iPod and stapler! Well, OK, maybe not the iPod, but staplers are still in demand! A good source of the raw materials comes from Australia.
The good folks over there have been a proven source for a very long time, whether downs and ups in these commodities. For the past several years, they've been on the up, riding on the commodities bull. Yet, as the Wall Street Journal is reporting, they are now becoming a victim of their own success.
The turnaround highlights an important change in the world's mining industry. A few years ago, demand was rising so quickly, and supply was so tight, that almost any new project seemed attractive.
Since then, costs have surged and demand has started to wane. As a result, analysts say, some of the newer and higher-cost mines coming online are likely to struggle to deliver returns -- even if demand for commodities continues to boom. Costs for miners vary widely depending on location of the mine, quality of the ore and local tax regimes, making it difficult for investors to pick out which projects could face risks in the new environment.
It may seem odd that some mines don't work at a time "when there seems to be a world-wide shortage of minerals," says Neil Boyd-Clark, a portfolio manager at Fortis Investments in Australia. But "times are more difficult than they were a while back."
- excerpt from "High Costs Dig Into Mine Profits", Wall Street Journal, 2008.
Essentially, the costs associated to these bullish commodities has caught up. A few years back when I was visiting California, I went to one of those prospector tourists sites, you know where they let you panhandle for supposedly gold (all I got was a few pebbles and some dead bugs). Anyways, you learned that outside of a few lucky individuals, the real winners of the gold rush were the suppliers of things like those panhandles. As the gold fever increased, so did prices for those items. Eventually miners figured costs were too high and not much gold was being discovered, and things collapsed. This is the sorta thing you're seeing here.
These companies are actually in a squeeze, as many have committed themselves (and their shareholders and royalty-collecting governments) to some of these digs. Yet the price of the stuff being mined has dropped considerably. The commodities bull run isn't over, as the WSJ noted, but analysis for the costs associated to the price they thought they would get are now obsolete. In a way, it's almost like what the average middle class person is going through; a sort of stagflation, where income-producing assets are falling, yet costs are rising. The largest cost increase, it seems was energy.
At the end of the day though, these companies will do the one thing they always do, pass the cost on to you. That giant industrial park known as China will continue producing goods, and continue buying those precious minerals, folks like BHP Billiton figure. Manufacturers will see their materials costs rise, they in turn will raise have raise their prices. Everyone soon becomes that panhandler salesperson.