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DrumBeat: April 30, 2007
Posted by Leanan on April 30, 2007 - 8:10am
Topic: Miscellaneous
A New Perspective on Climate Change
Recently I joined 10 of my colleagues on a military advisory board to the CNA Corporation in releasing a report that determined climate change presents a national security threat to the United States. One of the key findings in our report was that “climate change, national security and energy dependence are a related set of global challenges.”I’ve been aware of the relationship between national security and energy for some time as a result of my military experience. The new element for me was the added stress brought about when climate change is added to this mix.
Interior to propose expanding offshore drilling
The Interior Department has put the final touches on a five-year plan to expand oil and gas drilling in the Gulf of Mexico and offshore from Alaska and Virginia.
U.K.: Gas shortage warning as Government fails to act on storage
The failure leaves Britain’s energy policy looking threadbare and comes only months after Greenpeace successfully challenged the Government over failing to consult on plans for new nuclear power stations.Gas storage is increasingly crucial to Britain’s energy needs because the country is moving to become dependent on fuel imports as the North Sea becomes exhausted. But the legacy of being able to rely on the North Sea means that the country has very little storage capacity.
Someone at PeakOil.com dug up these clips of gas shortages in Africa:
Ziguinchor - Gas Shortage
Venture Capital Rushes Into Alternative Energy
Money is flowing into alternative energy companies so fast that “the warning signs of a bubble are appearing,” according to a report on investment in clean technology by a New York research firm, Lux Research.
Analysis: Fight rages over Iraq oil law
Discussions turned contentious among the more than 60 Iraqi oil officials reviewing Iraq's draft hydrocarbons bill last week in the United Arab Emirates.But the dispute highlighted the need for further negotiations on the proposed law that was stalled in talks for nearly eight months, then pushed through Iraq's Cabinet without most key provisions.
9 freed after Ethiopian oil attack
Seven Chinese oil workers and two Africans kidnapped during a rebel attack on a Chinese oil field near the Somali border were released Sunday.
Employees Threaten to Halt Petrobras Operations in Brazil
Workers at Brazil's state-owned oil and gas company, Petrobras, announced Thursday that they will go on strike halting operations in all of the giant's production units.
Ecuadorian troops win more power to end protests
Ecuador will increase the powers of security forces to break up demonstrations which can shut down output from oil facilities in the Amazon rainforest, leftist President Rafael Correa said on Friday.
Australia - Coal subsidies far outweigh funding for renewables: Greenpeace
Greenpeace has accused the Federal Government of spending billions of dollars on the coal industry and failing to subsidise cleaner energy sources.
ConocoPhillips Draws Attention in Defying Venezuela Over Oil Fields
ConocoPhillips (COP) raised eyebrows in Venezuela this week by skipping an event where it could have signed over the rights to run its local oil operations to state-owned oil firm Petroleos de Venezuela SA, or PdVSA.Industry watchers said the slight could mean Conoco is preparing for a legal battle if new contract terms offered in Venezuela's ongoing oil nationalization don't meet the firm's expectations.
U.S.-Chinese Cooperation in the Middle East Should Be Deepened
China isn't comfortable. The country's spectacular growth over the last two decades has made it ever more thirsty for energy, but policymakers are not sure they can secure their energy supply into the future. Rather than gain confidence as the United States has stumbled in the Middle East, many Chinese take U.S. problems in the region as a sign of Chinese vulnerability as well. Some in the United States feared China would soon stand out as a rival to U.S. influence, but in recent months, the Chinese government has shown an interest in being helpful. That cooperation needs to be deepened.
Russia to Get Dividend in Sakhalin-2 Deal
In addition to ceding a controlling stake in their flagship Sakhalin-2 project to the Russian state gas company last week, Royal Dutch Shell PLC and its partners also agreed to pay a substantial annual dividend to the Russian government as part of a deal to salvage the $20 billion venture, according to people familiar with the situation.
Nigerian Oil Production Remains a Wild Card
Nigerian oil production appears to have weathered post election tensions so far, but the tinder box nature of politics in the country suggests that a deterioration, if it comes, will be sudden.
Hydrogen fuel-cell cars in dealer showrooms by 2015, say industry experts
"I think people were a little bit naive then about how long it takes to get a technology into a car and then into the hands of a consumer," says Noordin Nanji, vice-president and chief customer officer at Ballard Power Systems, the Vancouver-based fuel-cell pioneer."You can't just put a new technology into a car and start selling it. It takes time."
Indian project shows solar power affordable-U.N.
A solar power project in India supplying electricity to 100,000 people will be widened to other developing nations after showing that clean energy can be cheaper than fossil fuels, a U.N. report said on Sunday.
The heat is on for greenhouse gas methane
Government policies and a U.N.-backed system of emission credits is proving a money-spinner for investors, farmers and big polluters such as power stations wanting to offset their own emissions of greenhouse gases, particularly carbon dioxide (CO2).The reason is simple: methane is 23 times more potent than carbon dioxide in trapping heat in the atmosphere and it is relatively simple to capture the gas from animal waste, landfills, coal mines or leaky natural gas pipes.
Canadian District Energy Association's 12th Annual Conference & Exhibition
Through the use of renewable fuels and highly efficient generating technologies, district energy is today's clean energy solution for communities across Canada. District Energy plays an important role in extending the benefits of renewable energy, constructing green buildings, urban planning, brownfield reclamation, supporting social housing, and encouraging economic development. For these reasons, more and more communities across Canada, and internationally are choosing district energy to meet their economic, conservation, and energy supply goals.
U.S. and China criticize climate report
The United States and China want to water down a proposed plan for fighting climate change, arguing that action to reduce greenhouse gases will be more costly and time-consuming than scientists claim.
US recognizes warming threat but drags feet on remedies
As the world's largest emitter of carbon-dioxide, the United States has shrugged off blame for global warming and continues to question recommended methods for slowing down the trend.
Qatar Oil Minister: High Price Due To Geopolitics, Not Shortage
Crude oil prices, which have rebounded to September highs, are mostly supported by geopolitics, not tight crude oil inventories, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said Sunday."We have no indication of any shortage of supply," Attiyah said in a telephone interview. He added, therefore, there isn't any reason for OPEC to meet soon to review its oil output policy.
Road collapse creates driver nightmare
Transportation officials said they already had added trains to the Bay Area Rapid Transit rail system that takes commuters across San Francisco Bay, and were urging people to telecommute if possible.In preparation for rush hour, Gov. Arnold Schwarzenegger authorized funding so that ferries, buses and the rail system could carry commuters free of charge during Monday's commute.
State officials said motorists who try to take alternate routes Monday instead of relying on public transportation would face nightmarish commutes.
Apocalypse later ... maybe: Once-strident commodities letter more subdued about oil
There was a time when I could rely on Outstanding Investments for a resounding apocalyptical quote. How about this, from two years ago: "... For every SIX barrels of oil currently consumed, only one new barrel is discovered. And that number is getting worse there were only 13 major oil finds (over 500 million barrels in reserves) in 2000, six in 2001 and two in 2002. There hasn't been any major oil discovery since then! And when the reality of higher prices hits with full force and I think it's coming very, very soon no one is going to find it more difficult to swallow than the spoiled, overconsuming United States. The crisis is truly devastating in scope and could end life as we know it in the United States."
Slick way to address oil thirst
Oil is the oxygen of our economy. What would happen if oil supplies dried up?That's the story behind a new computer game launching today, "World Without Oil" at www.worldwithoutoil.org. This game, which can be played for free over the Internet, isn't purely make believe. It's meant to draw attention to the real possibility of an oil shock and what our country and the world have to do to prepare for it. The ideas that people come up with for surviving in a post-oil world in the game could actually pay off in real life if they lead to less consumption and more alternative sources of energy.
Korea: Surging Oil Prices Send Gasoline Up Yet Again
Soaring international oil prices have pushed up local gasoline and diesel prices, as well as city gas and electricity fees. The price of Dubai crude oil jumped to US$63.9 (US$1=W929) per barrel in April from $61.5 last year due to political instability in the Middle East and a shortage of oil reserves in the U.S., the world’s largest oil consumer.
Carolyn Baker: Super-Imperialism: The Shameful Legacy Of Liberal Democrats
When super-imperialism is fully understood, the “mystery” of illegal immigration will immediately be resolved. It is as if the international corporatocracy of world dominance functions like a giant broom sweeping the dispossessed into the United States where they are greeted by the domestic corporatocracy and further exploited as wage-slave laborers with all the accoutrements of “the good life, huaraches exchanged for vinyl sandals made in China and corn tortillas supplanted by “happy meals.” One can only wonder what this government’s policy will be when the dire consequences of Peak Oil and climate-chaos drought hit the fan. What then will be America’s border policy? Today, gorging itself on cheap labor, the corporatocracy sucks up taxpayer money to build meaningless border fences that it knows will not deter the illegal workers it needs, but when Walmarts have weeds growing in their parking lots and thousands of meat packing plants have shut down because only the very wealthy can afford to remain carnivorous, we will see how many new immigrants will be allowed to inhabit the U.S. and consume the last drops of its water and oil.
Pakistan: Drastic energy-saving measures on the cards
The government is set to introduce this week drastic measures for energy conservation, including closure of commercial activities after sunset and possibly two weekly public holidays, to overcome the energy crisis in the country.
Uganda: Uma Singles Out Transport, Energy As Priority for Govt Action
Ugandan manufacturers have singled out the dire transport conditions and the energy crisis as the most daunting to their businesses. They have expressed frustration at the pace of work by the government to rectify the problems. In its proposals to the government for consideration in the 2007/08 budget, the Uganda Manufacturers Association (Uma) has outlined several measures to allow them remain competitive in the country and in the region.
Power Rationing to Continue Today
Costa Rica's energy crisis continued to be felt Friday and Saturday as residents in some parts of country dealt with power outages, and more rolling blackouts are planned for today, according to the Costa Rican Electricity Institute's (ICE) Web site.
Nigerians lose N128bn yearly as power crisis worsens
Over $1-billion (N128-billion) is lost annually by Nigerians and businesses from the crippling power supply crisis, according to data from the Bureau of Public Enterprises (BPE).The loss stems from the extra costs incurred in providing alternative sources of power both by corporate organisations and small businesses as well as idle times during blackouts.
Germany to Become World's Most Energy-Efficient Country
The German Environment Ministry this week unveiled a set of highly ambitious proposals that would lead Germany to become the world's most energy-efficient country in the coming years.
Trend could spell trouble for malls
The American mall, with its department store anchors, culinarily challenged food courts, concrete shells and native denizen, "the mall rat," is becoming an endangered species.One anchor mall is being built in 2007 and none are planned for 2008.
What is being built in massive quantities are "off-the-mall" retail and urban-friendly, largely upscale, open-air lifestyle and mixed-use retail centers.
Developer sees green in Belvedere community
Construction is set to begin on a massive new environmentally friendly development on a 207-acre historic property just north of Charlottesville.The Belvedere project off East Rio Road in Albemarle County eventually will feature more than 700 energy-efficient homes in a walkable, mixed-use neighborhood.
'Perfect Storm' Brewing for San Diego's Water Supply
San Diego's two largest water sources -- the Colorado River and the Sierra Nevada range -- are at their lowest levels in decades, raising concerns that the arid region may face water shortages as soon as next year.
"At least we knew who the enemy was then," he said. "It's not so simple now."
Venture Capital Rushes Into Alternative Energy
The WSJ's lead article today is
A couple of paragraphs:
I'd be interested in when others think the Great Unwind will take place. I worry that it will be quite soon.
Very good question Gail. No man knoweth the day or the hour?
I talk about collapse of the debt market in Our Fiinite World: Is This a Problem?, posted today on TOD. It can also be found on my blog.
My vote is still for the next 8 months. Sometime between NOW and January 2008.
Two main reasons -
1) Housing market meltdown - massive number of resets OCT-DEC 07 (did I say massive!)
2) Oil prices (contingent on KSA response before June) and Hurricane season
You could also add, evaporating USD exchange rate, hidden inflation numbers, stock market bubble records(US, Canada, China, etc) and skyrocketing personal and national debts.
The next few months will be exciting in a terrifying way.
"housing market meltdown"
It hasn't "melted" very much so far. And the softness that we've already seen has not systemically affected anything. Why? I thought this (paraphrased) comment by R. Doll of BlackRock ($400B hedge fund) was interesting: "...exports are up double digits, and exports are larger than housing...". Many people have talked about housing, but few have talked about this larger segment. People have a tendency to focus on the spectacular but fail to keep perspective sometimes.
"oil prices"
This quote from Ritholtz was also interesting: "Earnings trends...energy companies up 64%...financials up 15%...excluding those two sectors, net income has actually fallen 3.59% on a year-over-year basis".
While everyone has focused on housing, energy is preparing to blind-side the market. Wall street is solely focused on "liquidity" driving the market -- they need to be looking at the black "liquidity" that gets pumped out of the ground. And yet today appears to be the day to call alternative energy a "bubble"!
I agree...the wavefront of housing market collapse is not yet publicly apparent...it will be soon enough.
And Oil will trump the deck.
Game, set, match. 2007 will be pivotal.
A orderly declining dollar could keep exports rising and jobs OK, and therefore housing from actually "collapsing". Pimco's Bill Gross calculated that the Fed would need to lower mortgage rates by only 1.2% to re-balance the housing market. So housing "bears" may continue to be frustrated.
This seems sort-of like the Westexas/RR debate -- the bears may be right, but for the wrong reason. :-)
W: How is your orderly declining US dollar going to affect US gasoline prices?
Gas prices will soar based on supply/demand, currency translation will probably have little effect (personally, I think the dollar is going to rise anyway relative to assets).
I'm just saying that the conventional wisdom over the past couple of years was that the housing bub was going to kill the economy. This started with "The Economist" a while back. After being wrong for a long time about that, now (most?) bears, I believe, have shifted to the "liquidity driving the market higher" argument -- which I feel is a "capitulation" at what is now probably a market top.
Anyway, the "earnings trends" quote above clearly flies in the face of the liquidity argument. Is "private equity" going to buy every non-energy non-financial public asset in order to "re-structure" the bottom line with debt? I hardly think so.
W: Can't agree with you on the US dollar, but you might be right re the housing bubble.Few have commented on the effect of dramatically increased immigration to the USA in the next 10-15 years. This will provide a prop to housing, while somewhat countering the boomer retirement bulge. The added benefit for the investor-controlled political system is dramatically lower real wages.
OK now we're loggin'
It's a shooting gallery. The US economy is lined up in the crosshairs with several shooters waiting their turn. If US consumers change their habits markedly the companies dependent on that income sector suffer . Hence their employees/economy/housing market and so on. Look at the story on Ford and GM this month. I believe the April sales numbers were termed 'awful'. They need to adapt yesterday.
High gasoline price is the bullet today. Score one hit to the automakers. The refinery bottleneck is taking the pressure off WTI (and the world market) for now. When the refiners improve ultilization then
The tale of Two Crudes
comes back into play. Crude price becomes the bullet. World crude market comes home to America again. Inflation of everything crude is made into. Since the US imports and uses the product high on the per capita list it's currency will have to take a hit. Rinse, repeat and wait for demand destruction. Great.
How hard will America fight to keep things just like they are today? Will the paradigm ever shift in time? Asked another way, how important are those snicker doodles, mutiple daily trips to the mini-mart, and that high speed en masse migration to and from the entertainment event. How much will we be willing to pay of our blood and treasure before we change? B/C however much that is, that is exactly what Peak Oil will extract from us.
I predict (1) the biggest ugliest recession in several generations due to various factors mentioned, (2) followed by a ramp up in solar projects and battery powered vehicles that will essentially fix our energy situation forever. There is some additional risk on the downside, if politicians behave badly, or if the public panics in some unpredictable way.
The battery technology for the cars will be ready (A123 and Altairnano) in a couple of years. Folks are overly-pessimistic about replacing our "oil-consuming capital stock" (i.e. Hirsch Report).
Altairnano is a fraud and VERY bad joke. Expect zero from them. Not enough time to go into the details.
A123 is for real, but it is a MAJOR step from handtools to EVs !
I prefer EVs that can operate indefinitely WITHOUT ANY BATTERIES AT ALL, and are much more mechanically efficient that GMs Volt for example.
http://upload.wikimedia.org/wikipedia/commons/a/a5/CarrolltonStreetcarAp...
Best Hopes,
Alan
What makes you say fraud?
Several things. They have changed their name multiple times (gold mining a few times), and they still list their industry as "Drug - Other" in Yahoo financial listing.
Endless money pit for decades.
No real products shipped (some joint PR with other fraud companies), no serious partnerships with real companies (A123 has these).
Etc.
Alan
Couple of points:
* According to investor relations only 1 person from the "old days" is still connected with the company. The company has completely changed from the old mining technology days. I've read every 10-K going back to 1997 to understand Altair's story, and it actually makes sense. The key event was when Altair bought the original nano technology patents from BHP Billiton, and subsequently hired away 18 employees (including PhDs) from BHP's research facility in Reno in 2000.
* Altairnano has partnerships with Alcoa's AFL division, Sherwin Wllliams, AES Corp ($14B utility company, which has a small equity interest in Altairnano, and one of their VPs in on Altairnano's board of directors).
* Altair's CEO, Dr. Gotcher, worked for Avery Dennison and led Avery's teams that created and commercialized the Duracell On-Cell tester battery label.
* Although Altair has only shipped 10 battery packs to Phoenix for their electric truck. Altair plans to ship 200 of them in 2007.
* Yahoo's profile information is extremely misleading. One of Altair's applicatons for their nano Titanium dioxide is medical.
(I do own shares)
Their PR releases are quite misleading (all I have investigated), I REALLY question their technology and what I have seen of partnerships (Sherwin Williams was interested in super small white paint particles, not batteries) pales in comparision to A123.
I do not like the company as an investment and I discount every (misleading) PR release.
I have written the company off as being of any interest. A long history of fraud and fleecing investors under 8 different names.
I would NEVER plan for the future based on promises from them.
Best Hopes for Reality Based Planning,
Alan
So far everything that I've investigated has turned out legit. Altairnano is trying to make progress in 4 divisions, each of which involves their nano Ti technology. This makes following the PRs perhaps difficult, but not misleading. I counted 9 analysts on the last conference call (including Cowen & Co., W R Hambrecht, Thomas Weisel, Merriman, LPL Financial, etc). I don't think that they'd waste their time on a fraud.
That old stuff about different names, mining interests, and mining technology was divested and eliminated years ago.
The battery specs are for 30% lower energy density than conventional Li Ion at room temperature, but in all other respects is far superior. In my opinion, it's superior to A123.
*IF* you believe their specs.
I do not.
You apparently do,
Best Hopes that I am wrong,
Alan
I was probably too optimistic regarding remaining Saudi reserves. I argued that Saudi Arabia, in 2006, was at the same stage of depletion that Texas started declining. It now looks like Saudi Arabia, in 2006, was more depleted than Texas was when it started declining, which suggests that the Saudi decline rate will be sharper than the Texas decline rate, which of course will have a highly detrimental effect on net oil exports.
As gasoline and overall energy prices increase, the decline in the market value of outlying suburban areas will accelerate. I would think that areas dependent on discretionary spending will suffer even more, e.g., in the county where Las Vegas is located, one out of every thirty homes is now in foreclosure proceedings.
From the Texas/Lower 48 article we did on year ago: http://static.flickr.com/55/145186318_27a012448e_o.png
A friend went off to Vegas last week with her boyfriend. I joked about her coming back married, which she insisted would not happen. Well, I got an email this morning that they're moving to Vegas and have found a huge house (five bedrooms but they have no kids) to live in and they're going to get married. Even before "haha, I told you that you'd get married in Vegas" popped in my head, the thought "OMG, I can't think of a worse place to move to now, you're going to get screwed (and I'm not talking about in the Honeymoon Suite)" jumped through my head like a frog on a hot plate.
The attraction of Vegas as a place to live full time for those not directly connected with the gambling industry is just beyond me.
Though I have to wonder, when things start to get bad, will Vegas, being built on discretionary income, fold or will people flock there in even greater numbers out of desperation to win big and for some escapism.
I worked in LV last summer, and when we'd drive past the Strip from a distance, it just looked like a (once and future) ghost-town to me. Packed full of people, construction cranes everywhere. I had talked to an electrician who was working on a new billion-dollar hotel.. all I could see was one of those Hollywood Western Towns, all paper-thin Facades, inches away from blowing over with the next good gust.
Job paid great, and bought me a chunk of PV panels and support Hdw. Looks like I'm not on poker this summer.. darn, I could use a few more panels.
Bob
Escapism takes many forms though. A nature walk through the woods could be viewed as escapism too.
I agree about Vegas though. What do these two do for a living anyways?
She is a client representative for a pet supply company. It involves lots of travel so she might end up keeping the same job despite moving across the country. Vegas likely has nearly as good domestic air connections as Atlanta does.
I don't know what he does for a living but I know he is big into gambling on just about anything. She believes that he is good at it and his winnings exceed his loses. I suspect his winnings only exceed the loses she knows about but who knows, there are some people who are able to get ahead in gambling but they're an extreme minority. I suspect they only are able to do it because they're going up against people who don't know better rather than casinos. The local poker tournament or sports betting is very different that the big guys who have all the numbers hashed out by actuaries and statisticians. If he is moving there thinking of Vegas as the gambler's paradise, they're probably going to be in a heap of trouble quickly.
It is just such a strange thing to do but she also recently bought a large SUV so it's not like trying to explain why this is a bad idea would do any good.
Your debate with RR is probably the #1 TOD classic. I believe that you will be proven right (after the necessary caveats regarding non-geological restrictions on output and shifts in oil field technology producing one-time gains). Peak Oil timing, like market timing, is very hard to do.
I expect to be amazed at how "generic" suburbia will adjust to gas prices. There is simply so much wasted driving out there. I agree that "discretionary dependent" suburbia will be the canary in the coalmine. Nevada may, though, benefit from gov't mega $$$ poured into CSP solar, PV solar, holy-cow solar, and anything-else-we-can-think-of solar projects. Of course the public or politicians may panic in some unpredictable way anyway.
WT;
The typical CERA line about improved recovery techniques seems to me that we've simply engineered better gangplanks on which to perch out on the 'Overshoot' of the curve and marvel at how far down we don't think we are going to fall..
There is an interesting dynamic involved with U.S. exports - as the dollar sinks, they become more attractive. But one of the major categories where U.S. exports are concentrated is aircraft - it is very much open to debate whether aircraft demand will actually be increasing in the next few years.
The 787 is selling INCREDIABLY well ! (and the rival Airbus A350 fairly poorly, in part due to lagging technology).
A main selling point is that the 787 is promised to be 20% more fuel efficient than the 767 it replaces. And Boeing routinely exceeds promises.
And a 737 replacement based on improved 787 technology, is rumored to be waiting only for better engines.
Significantly more fuel efficient a/c will have a large replacement market for decades, even if the total market shrinks some.
After the 787 technology, the last foreseeable boost in fuel economy will be a flying wing. B-2 technology (also made by Boeing).
Best Hopes for Boeing,
Alan
And the A380 seems to be slow in getting going. I cannot help but wonder if Airbus made an incredibly bad bet on that thing...
Airbus A380
Poor strategy, poorly executed.
AB was incrediably jealous of the 747 cash cow at Boeing (high margins w/o competition in the sector). Plus AB is not really a commerical company, but a partially gov't owned and heavily subsidized industry.
So they *HAD* to have "bigger & better", with nationalistic pride and grabbing Boeing profits & prestige major factors.
Boeing argued that the market was going "point to point" rather than "hub & spoke", with shorter travel times and fewer miles flown to get from A to B driving this. The residual hub to hub market could not support enough a/c to justify an all new design. And the structural weight issues with a complete double deck a/c would cut performance.
A major design flaw of thh A380 is that they wanted an a/c that could be expanded easily, so they put on an oversized wing. The current A380-800 wing could be easily adapted to a alrger A380-900 (IMHO a apaper airplane that will never fly). Since wing width is limited to 80 m (decades ago, Boeing, McDonald Douglas and Airbus told airports to prepare for a/c that fit inside an 80 m x 80 m box), this meant a relatively stubby and inefficient wing that weighs more than it has to for the A380-800.
Airbus also assumed that major airports could not add runways (hence needing larger a/c) but could add larger terminals and taxiways, etc. LAX (world's largest origination & Destination airport) refused to spend the ~$1 billion to properly adapt to the A380 and spent much less on a "make do" arrangement that will NOT appeal to most pax.
Boeing has come with an improved 747 design that, with the 777F, has captured 100% of the large a/c freighter market (all A380F sales canceled). This market is substantial and still growing. The 747-8F is also more fuel efficient than the 747-400F (15% from memory). Four VVIP passenger versions have been sold in the Middle East and 20 pax 747-8s to Lufthansa. Boeing may end up selling more 747-8s than Airbus does A380-800s !
Airbus also updated the design software in France but not in Germany for the A380 deisgn. This created a MASSIVE snafu with wiring that has delayed some deliveries by two years (and upset customers !).
Add the euro at $1.36 (it was $0.935 when Bush took office), the proposed A350 that is "a day late and a euro short" of the 787 and I would NOT own EADS stock !
Best Hopes for Boeing,
Alan
Not that I care about either Boeing or Airbus much, but the Airbus strategy of high capacity passenger aircraft remains very defensible - the number of landing slots at most major airports is not going to increase, for example, so being able to fly more passengers within a slot is a way to increase airline revenue.
Another defensible aspect of the strategy was long range travel - the A380 was essentially seen as point to point transport between Singapore and Frankfurt, for example. Again, one flight with essentially the same costs as a smaller capacity aircraft means more airline revenue with a full aircraft.
Defensible is not quite the same as brilliant, and poor execution ruins even brilliant strategies. It was a gamble, one that Airbus is certainly not winning right now.
On the other hand, I don't think the airline industry has that much of a future anyways, as noted below.
the number of landing slots at most major airports is not going to increase
It is easier/cheaper to create slots by increasing the size of the smaller a/c than the largest. Fly three A320 or A321s instead of four A319s between two cities daily for example.
The most slot constrained airport in the world is Narite, Japan. One long runway when the A380 was launched. A rice farmer died and his heirs FINALLY sold out (Japan has no eminent domain) and a short runway was built with a green painted 250 m segment on the other side of another rice farm.
When that rice farmer dies, they hope to build a long runway, conencting the two segments.
Thus no Japanese sales of the A380.
A380 was essentially seen as point to point transport between Singapore and Frankfurt, for example
Both FRA and SIA are major hubs. Of course, hubs are destinations as well. But which is more appealing if one lives in Berlin or Munich and wants to travel to Singapore (or Manila) ? Direct flights on a 787-8 or commuting to FRA , transfering, flying to Singapore on an A380 (and perhaps transfering again for a flight to Manila) ?
Emirates is built on offering the option of taking a 777 from Berlin to Dubai, transfering, and taking a 777 or A380 from Dubai to Manila or Singapore.
There is a market for A380 size a/c, it is just not a very large market (as Boeing quite publically said long before the launch of the A380).
If world oil production drops 20%, I would expect aviation use to drop by 15% or so (home heating and auto commuting consumption would decline more than 20% IMHO). You expect aviation oil use to decline by more than the global average.
It will take at least till 2030 to replace half of the existing fleet with 787 technology a/c IMHO.
Best Hopes for Boeing exports, we will need them !
Alan