<DrumBeat: September 3, 2008 The Oil Drum DrumBeat: September 4, 2008>

176 comments on Hedge Funds, Hurricanes and Energy Markets

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Robert Rapier on September 3, 2008 - 8:28am Permalink | Subthread | Parent | Comments top

While the numbers add up as in total liquids, they are meaningless because the forms of energy in total liquids are no all the same. Each has a different price, different characteristics and differing utility.

But your glaring, perpetual blind spot is being unable to see that when the various forms can be used in the same service - as is the case with natural gas and ethanol as transportation fuels - then you are comparing apples to apples.

It is a perfectly legitimate question to ask: If I use natural gas to produce a very small energy return in the form of ethanol - why wouldn't I be better off just using the natural gas directly? Why must we create these negative externalities by going through a convoluted conversion process? Why are we indirectly subsidizing the usage of natural gas by subsidizing ethanol?

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majorian on September 3, 2008 - 12:54pm Permalink | Subthread | Parent | Comments top

R^2,
Your objection that natural gas in cars is more efficient than dry milled ethanol in cars has been debunked before.

A gallon of ethanol(including coproduct) takes 45802 Btus of energy
(including fertilizers) which is roughly 46 SCF.
http://www.ethanol-gec.org/netenergy/NEYShapouri.htm

A 127.77 SCF of natural gas is 1 GGE. So 36% of a GGE(45.802/127.77=35.8%).

1.53 gallons of ethanol is equal to 1 GGE or 1 gallon of ethanol is .65 GGE.

So if you put in .36 GGE and get out .65GGE, that is the same as putting in 1 GGE of NG and getting out 1.8 GGE of ethanol, whereas with a CNG car you just use 1 GGE of natural gas.

http://en.wikipedia.org/wiki/GGE

Even forgetting the co-product you get 72052 BTU or 72 SCF or .56%
or .65/.56=1.16GGE.
So you put in 1 GGE of natural gas and get 1.16 GGE which is superior to burning 1GGE of natural gas in a CNG car.

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memmel on September 3, 2008 - 4:49pm Permalink | Subthread | Parent | Comments top

Robert I agree 100% the world has two primary sources of energy that are easily converted to transportation fuels Natural Gas and Light sweet crude. A distant third is biodiesel below that sugar cane ethanol.

The last two are viable and will work in a world where they are used in places that liquid fuel cannot be replaced. This is my viewpoint.

From a completely different direction if you have ample electricity from renewable resources or fission/fusion in my opinion hydrogen + carbon => liquid fuel is also probably viable.

But this and the biofuel approach only mean that we probably can reasonably generate a supply of liquid fuels with a volume like 5% of todays usage. Add in direct Natural gas and you have say 15-20% of todays energy levels available for fuel cell or internal combustion. Air transport would probably be the primary use case representing like 50% of the total liquid fuels usage in a post peak world. Farm machinery would also represent a big share but probably using internally produced fuels.

The point is we probably will have enough liquid fuels for critical use cases even if the EROI is negative as long as liquid fuels are themselves not a primary input.

The above is doable and fairly easy for most people to agree on if we cut our fuel usage by 85% then we can live in a low energy world. Widespread use of electric rail would ensure that ability to transport people and goods would be cut a lot less than the total energy. I'd say that going to electric rail we would lose and this is debatable about 50% of our mobility if you will. But the important routes would continue to have 100% service so its better to view it as different. The way I define mobility is the ability to move basically anywhere in a region. Cars have high mobility and planes coupled with cars gives us tremendous mobility.
Basically today you can be anywhere in the world within 2 days. In a electric train world this would probably extend to more like 4 days so thats why I say you have lost 50% of mobility. The greatest use of mobility is in the suburbs and this is where you would have the greatest losses. But once you remove suburbia then you get pretty much exactly this 85% reduction in usage.

So long range trips may take twice as long and anything like suburbia today would exist only for the upper middle class or higher.

Certainly you could have higher mobility in the future but with constrained energy supplies what people are missing is past the core transport requirements converting energy to mobility is negative for GDP your better off using that energy to create products not driving a SUV to the McMansion.

At its core the problem is that as energy gets expensive the EROEI for Suburbia drops to 1:1 i.e the typical suburbanite cannot produce more than they consume and are not productive. You get this huge divide between the overall productivity of someone living in town using electric transport to do a job vs someone living in the burbs with a SUV driving to work. I'd not be surprised if the suburbanite is not a net drain and has been for some time cheap energy hid this situation since it did not matter. Balance of trade indicates we have consumed more than we have produced for a long time. When the pie is finite and getting smaller you see this EROEI cliff develop rapidly. We can no longer afford to have used house sales people do marginal productive transaction work and use kWh's of electricity and thousands of gallons of gasoline just to facilitate a transaction. The job they do is just not worth it in the energy they consume. Same for suburban houses themselves the additional costs of supporting expensive homes that use a lot of energy and the transport to and from those homes simply is not a net gain from most jobs descriptions.

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DaveMart on September 3, 2008 - 5:16pm Permalink | Subthread | Parent | Comments top

memmel, I don't think that you can make your case through an EROI POV.
From such a viewpoint the EROI of electric vehicles is just fine, and electric bikes, scooters and delivery vans even more so.
If combined with railways they could do the job with relatively small loss of mobility.

It is also a lot cheaper to knock down a few houses and build some shops locally, and distribute more of the offices and industry than it is to abandon vast swathes of excellent housing, as it is to insulate them to an acceptable degree rather than move.

I don't know if we will have the time to make such a transition, particularly with the dire financial position we have, and I take Gail's prognosis in this respect very seriously, but as far as the technology and EROI is concerned there would seem no good reason why a very substantial degree of mobility should not be retained.

The amortised costs of an EV or hybrid with petrol at $4 gal would actually be less than a petrol driven car, and if that could not be afforded an electric scooter still cheaper. Most would put up with the inconvenience of two wheeled transport to work rather than abandon their house and live in a hovel in the city centre.

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memmel on September 3, 2008 - 7:10pm Permalink | Subthread | Parent | Comments top

Dave your missing the real point. We have limits and choices if your job does not cause you to earn enough money to justify the energy usage level implied by suburban living EV or no EV then you will not be able to live in suburbia.

Are we better off building trains or personal EV's and who gets the personal EV's ?

I'm a pretty talented person in my domain and have a broad educational background and I'm in the top 15% income level. I think assuming I manage to keep something close to the same income level I have now I'd barely be able to afford and electric suburban lifestyle. And I'm pretty conservative so I'd have to have a LOT of faith in my future earning power to commit to the debt load that would entail.

Bottom line if you don't have a very secure position earning over 100k your probably not going to be able to join this fantasy land of electric suburbia.

I get the feeling your fairly well off financially so you don't realize how few people will have their own EV. I've never said we probably won't have these sorts of suburban enclaves but they will be for the wealthy.

I just don't see them as important on any time scale or productive for that matter.

Also as with my EROEI argument approach the overall productivity of supporting workers with that lifestyle stinks. Its effectively exactly the same as having your entire economy based on constructing houses and stores does not take long for it to implode.

I could really care less what the wealthiest people in America can or will do its has little relevance in the big picture. Sure a lot of them will hole up in guarded walled estates and drive electric SUV's to the companies they own but so what ?

Btw I'm assuming that post peak my own earning power would drop to 30k a year which is a LOT lower then I make now. And thats doing the same job I do today. Earning that I'm riding a bicycle to the train not driving a EV. And I fear I'm overestimating what I could make but thats very competitive with wages in India and China today so not a bad bet I could make Indian/Chinese wages in the future. My bottom estimate is 15k a year as a professional. I'm assuming that some belated protectionism could help limit the number of people with my skill set.

Can I afford a 200k suburban house and a 30k EV on 30k a year ?

Nope. Even if I'm wrong about my personal future plenty of other people with lesser skill sets will see steep drops in wages as unemployment rises so if I do better than I've outlined I assure I'll realize I'm lucky. And no way in hell would I go into debt even if I did decide I could and wanted to live the Suburban/EV lifestyle I'll pay cash.

Thats just me but I'd love to see how the hell all these middle class people that do incredibly useless jobs are going to maintain their income levels in the future and who can afford them and what they nominally produce. So before we ever get to this concept of EV's and abandoning suburbia lets figure out how all these people are going to make all this money effectively doing nothing.

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DaveMart on September 3, 2008 - 7:32pm Permalink | Subthread | Parent | Comments top

My point was the narrower one that it does not look as though EROI is the reason why personal transport should cease, or the suburbs be totally depopulated.
You seem to be going with the top case of people switching seamlessly to EV cars, which seems unlikely to me anyway, but I can't really see why most of them shouldn't use some sort of electric scooter, or why they should be unable to finance it, and given that they would probably prefer to hang on in their houses.
The situation in the States may be a bit confused by non-recourse mortgages, but when a really large number of people get hit, the alleged price of their house is likely to be inflated away to a realistic level.

The biggest stock of available houses for rent for those who don't hang on would be in the suburbs anyway, so whoever owns them they are more profitable rented than empty.

Sure there will be contraction and some abandonment of suburbia, particularly the most far-flung, but overall, especially if times are hard, it makes sense to continue using the housing you have.

In most areas of the world, the issue does not even arise, as mortgages are non-recourse, so you hang on as long as you possibly can, and for instance in the UK the local authority has an obligation to re-house families, and often do so in regions which are inconveniently far from the city centre, so ownership may change but most of the houses would still be lived in.

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Nick on September 3, 2008 - 7:48pm Permalink | Subthread | Parent | Comments top

The point is, a Prius is cheaper to buy than the average light vehicle, and a plug-in Prius won't be more expensive, so why should the economics of driving from the suburbs change?

Actually, the overall cost per mile will go down substantially from current costs, given the electricity is much cheaper per mile.

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memmel on September 3, 2008 - 8:25pm Permalink | Subthread | Parent | Comments top

Nick this get completely wrapped up in the financial mess we are in throughout the world.

My contention is that most people will be unable to finance long term debts and those that are able will be unwilling. You cannot make assumptions that the future availability of consumer debt will be like it is today.

I won't use Brazil but I will use Mexico as a better example of conservative lending when defaults increase.

Understand that at its heart Housing/New Cars or WT Iron triangle is a ponzi scheme built on expectation of future earnings these expectations rest on assumptions of a cheap oil supply. Once the directions of these vectors change course you start spiraling downwards. In your post your making the assumption that most people can afford to finance a new car. I'm not making this assumption.

In my opinion you have to assume that from now on out we will be in a deep recession to depression that should be your basic economic assumption. Any "solutions" would have to be workable in this context implicitly assuming that a large number of people are willing and able to take on 20k of long term debt much less more is in my opinion a mistake.

For the most part the vast majority of white collar jobs in the US are irrelevant and not needed once discretionary spending collapses walk around your neighborhood and ask people what they do for a living and think about the viability of the hair stylists and insurance analysts positions in the near future.

At best and feel free to show me different as near as I can figure only about 30% of the work force in the US is involved in reasonably needed work 70% is fluff that could be massively cut. Think about EV's under these conditions and at least you can see why I'm saying they will be the toys of the wealthy and are not important. Just look at home and car sales through the last great depression to understand. This is all well known and its also well known how our economy differs from the 1930's.

I'll repeat I make over 100k now I'm hopeful to make 30k a year in 2011 I'm confident I'll earn 15k.
I have zero plans to buy a EV and will only buy a house if I can pay cash. If I do get a good deal on a suburban house I can pay cash for then I'll be riding a 150 cc motor bike or bicycle to work or to the train till I get enough cash to buy a used EV in a few years and I'll consider myself very lucky. And to be honest I probably won't buy th EV but save to send my kids to college.

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Nick on September 3, 2008 - 10:33pm Permalink | Subthread | Parent | Comments top

" most people will be unable to finance long term debts and those that are able will be unwilling"..."from now on out we will be in a deep recession to depression that should be your basic economic assumption"..."once discretionary spending collapses "..."70% is fluff that could be massively cut"

But why do you think this will happen? On what basis? World GDP has grown 40% in the last 5 years on flat oil consumption. US GDP grew about 20%, with flat oil consumption. US oil consumption fell almost 20% from 78-82, while GDP grew a little. Why do you believe oil is magically essential to our economy? Heck, we could reduce consumption by 25% in 6 months just by wartime type requirements for carpooling, and lose no jobs at all.

"expectation of future earnings these expectations rest on assumptions of a cheap oil supply"

ah, no, they don't. We didn't need oil 100 years ago to run an industrial economy, and we won't 50 years from now.

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memmel on September 4, 2008 - 12:15am Permalink | Subthread | Parent | Comments top

Nick I'll let someone else respond to this one or you can educate yourself on our situation.

I'd suggest starting with Mish Shedlock.
http://globaleconomicanalysis.blogspot.com/

He has some really good links off of his page. For a more direct on the street type viewpoint I'd suggest

http://www.thehousingbubbleblog.com/index.html

You really should educate yourself if you want to come up with realistic post peak solutions.
Your certainly free to not do anything but I'm very interested in real solutions post peak.
I fully and 100% endorse Alans electric rail proposals and WT ELP concepts. I agree 100% with Roberts views on ethanol etc.

You should also look at the wedge concepts that have presented here on the TOD and consider trying to execute a wedge under depression like conditions.

http://www.theoildrum.com/story/2006/12/17/1377/0132

If you do read and understand the problem then I suspect you will come to the same conclusion I have the only viable solution is a rapid expansion of electric rail service nothing else will work.
People simply won't have the cash to finance the transition it will have to be done via public works.

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Pitt the Elder on September 4, 2008 - 7:41am Permalink | Subthread | Parent | Comments top

Nick I'll let someone else respond to this one or you can educate yourself on our situation.
...
You really should educate yourself
...
If you do read and understand the problem then I suspect you will come to the same conclusion I have

All you've said here is "if you don't agree with me you must not understand the problem", which is both patronizing and reflective of a very closed mind. You haven't actually provided any information; all you've done is dodge answering his questions.

As a general rule of thumb, if somebody asks a question you can't answer, that probably means you've got a flaw in your own understanding somewhere. If it was a basic question that anyone who understood the situation could answer, then you'd be able to quickly and definitively answer it, rather than having to wave your hands and mutter "you just don't understand..."

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trichter on September 4, 2008 - 11:28am Permalink | Subthread | Parent | Comments top

Check down the page, the general discussion continues there. Memmel was quite forthcoming with the reasoning behind his opinions as he has been in previous threads.

Back to the topic of the value of houses, here's a place in Detroit selling for a buck if anyone's interested:

$1 house

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Nick on September 5, 2008 - 4:07pm Permalink | Subthread | Parent | Comments top

"Memmel was quite forthcoming with the reasoning behind his opinions"

I don't see any evidence for a depression there, either. Do you see any?

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Nick on September 4, 2008 - 7:47pm Permalink | Subthread | Parent | Comments top

Well, I reviewed Mish's blog, but I didn't really see something that supports the idea that we're facing a deep depression. Could you point me to a particular article of his?

I would note that he has a serious conflict of interest in that he's a salesman for commodity investments with a strong "goldbug" emphasis, there's no sign of energy or economics related training or experience (the only background given is photography), and he's building a home in a far suburb of Chicago that fits the profile of the kind of exurban community that you've suggested is going to be a terrible place to live in coming years.

I would echo Pitt's comments on the tone of your comment. I've reviewed all of the other sources you mentioned (Alan Drake, Jeffrey Brown, Robert Hirsch) in great detail, and there's really nothing there to support the notion of a great depression. Oil is simply not a magical elixir for economic growth (though applied energy certainly is), and it's decline is not a disaster.

You might want to look at www.econbrowser.com for authoritative analysis by a PO-aware economist. You could also look at my analysis on my blog ( www.energyfaq.blogspot.com ), especially the section on Robert Hirsch's recent prognostications.

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memmel on September 4, 2008 - 10:50pm Permalink | Subthread | Parent | Comments top

Read my reply to Chris if your solution is not viable in a depression then its not viable and probably not a solution. The only reason I even care is we are not doing electric rail but stupid stuff like EV's and trying to save suburbia.

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Nick on September 5, 2008 - 1:34pm Permalink | Subthread | Parent | Comments top

Well, I still see no evidence for a coming depression.

Sure, SUV and pickup sales have crashed, but isn't that what we would want? Car sales are stable, and manufacturers can't make enough fuel-efficient vehicles to satisfy demand at the moment.

PHEVs and EVs won't cost any more to buy than the average vehicle (a Prius costs rather less) and will have much lower operating costs, so unless we have a major depression PHEV/EVs will naturally replace ICE's.

Re suburbia: unless the housing market picks up, the housing stock we have now is pretty much going to be the housing stock we'll live with. Why is Mish (the blog you referred me to) planning his future in the suburbs?

Have you looked at www.econbrowser.com ?

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ChrisN on September 4, 2008 - 3:38pm Permalink | Subthread | Parent | Comments top

"My contention is that most people will be unable to finance long term debts and those that are able will be unwilling."

Memmel, I see what you're driving at (and yes I've read Mish and the rest) but I still say 'taint necessarily so.

For example were I live there is a small operation with three principals who are wealthy enough to invest their money in hedge funds or what have you (and for all I know, they do). They have started a third-party financing company that's making it possible for any small commercial operation to install solar without being one dollar out of pocket on the deal. It's a no-brainer for the customer, a good deal for the financiers, and they're doing some good sized systems. They just financed a deal worth over $500K for a school district.

The same thing could be done in next-gen vehicles, in doing "green ups" on homes, etc.

With all that hedge fund money at risk and in flight mode right now, such a business model starts to look pretty attractive. There is very little risk in it and if you subscribe to the peak oil/energy thesis, it's a virtually guaranteed gain. It wouldn't surprise me at all to see hundreds of billions in private equity exit the hedge fund world and move into the energy/efficiency world.

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memmel on September 4, 2008 - 10:47pm Permalink | Subthread | Parent | Comments top

Chris this is a completely different sort of way to move money around. Actually its the way the US got rich in the first place the Banker was local and the rich guy was local and they invested locally.

From the super big picture the problem is wealth concentration at the top with no way to reinject the money back into the bottom if you will globaliization and even nationalization warps the cycling of money locally.

What your describing is the right way to do things.

Next time the conversation drifts this way on the drumbeat I'll bring up concepts like what your saying.

I think this thread is buried. I'm by all means not a doomer actually I just think that we have to face the facts that some approaches will work post peak and some won't ELP which is what your describing more from the financial side and Alans electric rail pass with flying colors and work even if the financial system deteriorates.

I'm intrested in solutions which work when a lot of people are flat broke I could care less about people opinion of if we are going are not going to be flat broke or suffer financial crises. The base of our new economy should be something that works well without a lot of money or assumptions. And its not just for us which almost no one recognizes but also for the third world.

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cooma down under on September 3, 2008 - 9:11pm Permalink | Subthread | Parent | Comments top

Every night when the cars are being charged has anyone guessed at the huge extra demand on the power grid ?

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DaveMart on September 3, 2008 - 9:25pm Permalink | Subthread | Parent | Comments top

Yep. Extensive studies have been done.
http://www.pnl.gov/news/release.asp?id=204
PNNL: Newsroom - Mileage from megawatts: Study finds enough electric capacity to �fill up� plug-in vehicles across much of the nation
http://www.chiefengineer.org/content/content_display.cfm/seqnumber_conte...
Grid Will Handle Rechargeable Cars

Some main points to bear in mind:
We won't instantly be producing as many electric cars as ICE cars at present.
Electric cars are far more efficient and use a fraction of the energy of petrol cars - check out the comment that charging one overnight would use a quarter of the energy a plasma screen uses.
Only part of the capacity of the grid is used most of the time, so the Californian system of charging different rates for different times would mean that the grid was not under too much strain.

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cooma down under on September 3, 2008 - 9:35pm Permalink | Subthread | Parent | Comments top

Thanks DaveMart,
Here in Australia there has been a lot of talk on the subject without true facts.

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totoneila on September 3, 2008 - 11:00pm Permalink | Subthread | Parent | Comments top

Hello Davemart,

I wonder if it has occurred to anybody that PHEVs will be essentially useless in an regional emergency? A vehicle with only a thirty mile range won't get you very far from an incoming hurricane, or if a big quake hits Cali, a PHEV won't get you across the desert to Phoenix or Vegas to recharge the batteries. :(

Just another reason we need to expand the RRs. Even if your PHEV can be recharged periodically along your chosen escape route by evacuating extra early, your overall progress will be slow. Then, you won't be able to get back to your house till the grid is essentially fully restored.

My 'Wild & Crazy' idea to help restore a Hurricane failed grid more quickly by proactive unloading of high voltage wiring:

http://www.theoildrum.com/node/4487/402885

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

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DaveMart on September 3, 2008 - 11:19pm Permalink | Subthread | Parent | Comments top

I hadn't thought about it - it's a long time since we have had a hurricane in Bristol!

More seriously, we seem to have two problems with the EV and PHEV alternative - either they are discounted because everyone will be destitute and not able to afford an electric bicycle, or because they may not provide 100% of the performance of an ICC car for a few years.

You are also confounding two technologies, Bob - the GM Volt PHEV will do around 40 miles on electric before needing recharging, but will carry on just fine if you put some petrol (gas!) in, whereas a pure EV will likely do around 80 miles or so before they need recharging, which should be good enough.

In any case, there is a world of difference between a situation where people can't get to work or the shops from their current homes, and so have to abandon their homes, and one where they don't have a perfect emergency escape vehicle - if they are that worried, they could keep an old ICC, 4 wheel drive of course, and some cans of petrol in the garage!

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totoneila on September 3, 2008 - 11:32pm Permalink | Subthread | Parent | Comments top

Hello Davemart,

Oops! Thxs for correcting my wrong info on PHEVs vs pure EVs--so many acronyms and differing tech ideas nowadays, it is easy for me to get them mixed up & confused.

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DaveMart on September 3, 2008 - 8:29pm Permalink | Subthread | Parent | Comments top

Memmel, I see no reason why the fact that we are at some slight variance on this particular issue should preclude me from picking your brain, so perhaps you would use your mathematical talents on my behalf to substantiate that many of the suburbs should be perfectly inhabitable even if people do not continue to run private cars! :-)

Have a look at this:
http://www.taxibus.org.uk/
That does not seem to be working on my computer - here is the Google cache of it:
http://64.233.183.104/search?q=cache:gHPOoJkl0-EJ:www.taxibus.org.uk/+taxibus&hl=en&ct=clnk&cd=3&gl=uk&lr=lang_en|lang_fr&client=firefox-a

Anyway, if this doesn't get through the basic idea is that you give a bell on a mobile, and 3 minutes later a 8-10 seater vehicle picks you up, which has other passengers who are going in the same general direction.
To work to those specs for London you need around 50 taxibuses per square mile.
It should be cheaper than buses as the smaller size gives more flexibility, and so it doesn't spend so much time running around half empty.
Capital costs and fuel costs are also far lower, in spite of the door to door swift service.
So if you used a hub and spoke system, perhaps dropping most who were going a longer distance off at a bus or rail terminal, at what population density does it become unviable?
Would this be sufficient for most American suburbs?

Superficially it would seem that if instead of a 3 minute delay you accepted a 30 minute delay, then you might be able to run it at 100 times less density than London, but I am sure I have dropped some of those pesky decimal places or something somewhere.

This certainly has the potential to be a powerful mobility tool, at least.

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memmel on September 3, 2008 - 8:58pm Permalink | Subthread | Parent | Comments top

Well your leaving out the delay for a train so 30 min commuting from the suburb to a rail coupled with train travel times probably puts you at the 2 hour limit for travel thats pretty constant.

I'd think that bringing back trolley cars is probably going to have a bigger impact. Also believe it or not simply walking a few blocks to a mile or riding a bike a mile helps transportation issues a lot.

Lets look at it a completely different way your main contention is to maintain the value of the suburban housing however its trivial to look at cities such as Detroit or any rustbelt city in the US to see that housing value can readily drop to zero they have no intrinsic worth. You have no a priori reason to assume housing values cannot decline to zero. Next construction of higher density housing and condo's or even English style row houses is well understood and provides a nice density vs lifestyle pattern. The terrace house if you will is a really good solution.

http://en.wikipedia.org/wiki/Terraced_house

Certainly higher density living is possible but these row houses result in very reasonable walkability with balanced density.

We have no intrinsic reason to not move to them also they make great rental or owned homes while your typical suburban home is a poor rental prospect.

So now back to the current housing stock in the US the obvious probable result is that houses resonably close to a main street for trolley or bust access will probably either be converted to apts or replaced with apts or row houses. Also some will be converted to businesses such as walkable grocery stores. As the potential for rentals climbs in parts of the suburbs these will become new small town centers.

Best guess is that at least 20% of the current suburban land/houses will be refocused to this suburban converted to small town. Outside of this I honestly don't know as far as the other homes go I'd guess many will be torn down some will become slums etc. Basically every single scenario you could think of will probably come to play and it will be dependent on the details of the conversion. The amount of suburban housing that goes to your electric suburban scenario is probably small say 10% and only probable in the top suburban neighborhoods say areas with current incomes over 100k as I've said.

So just like with what I said about overall economics being depression like the basic assumption is suburban housing values go to zero unless they can be re-purposed or its high end houses. I suspect a lot will be knocked down and scavenged for the creation of row houses.

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DaveMart on September 3, 2008 - 9:18pm Permalink | Subthread | Parent | Comments top

Surely this does not address the substantial comments I have made?
Both new technology such as Taxibus making a more retail public transport available and the possibility of using relatively cheap electric bikes and scooters should mean that for many they are better off staying put.

Your comments on the devaluation of many suburbs happened in the very different context of an expanding economy and relatively small areas of decline.

It seems to be something of a Strawman to assume electric transport merely means the continuance of present patterns, when what we are probably looking at is a fairly messy process of a lot of inconvenience being traded for some reasonable standard of accomodation.

A trolly bus system costs many times what a taxibus system does to install, so why in a cash strapped environment that should be preferred outside of the main routes I can't understand.

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memmel on September 4, 2008 - 12:42am Permalink | Subthread | Parent | Comments top

Dave their are no strawmans here I already stated that I'll only talk about solutions in the context of economic conditions I expect to occur if you don't agree with that then it makes no sense to talk about solutions.

Your correct about trolleys only on the main routes and I said I expect the only housing that will retain value to be on the main routes or in walkable distance of the main routes. This is effectively your trolley car suburb of the past.

Even with the dire economic conditions I envision public socialistic style programs can and do work and can be used to build out a public rail network and furthermore they can be used to build out apt flats if needed. Look at postwar USSR for and example or postwar Asia. Even with limited energy supplies we can do this.

We end up in the same point we do on all our conversations other means of transport are secondary.

The addition here is that you believe that homes have some sort of intrinsic value yet we have ample historical evidence and even contemporary evidence that without a robust economy and jobs the values of homes goes to zero.

http://www.trulia.com/for_sale/Detroit,MI/price;a_sort/#for_sale/Detroit...

http://www.trulia.com/foreclosure/2002309048--Spencer-St-Detroit-MI-48234

http://www.trulia.com/OH/Cleveland/#for_sale/Cleveland,OH/price;a_sort/2_p/

And example for California.

http://www.trulia.com/CA/Manteca/#for_sale/Manteca,CA/price;a_sort/12_p/

I'm sorry your making basic assumptions of some intrinsic value in suburban real estate thats simply not true.
These are cities in the US that have experience economic contraction today.

So your basic argument that somehow there is something to "save" in Suburbia is false. The fate of suburbia itself has nothing to do directly with oil and everything to do with the economy.

The future economy will be negatively influenced by high oil prices.

The electric rail proposals are the only solutions that are robust agianst economic dislocation.
Every single other solution I've seen makes assumptions about some sort of Business As Usual.
In your case its the assumption that building in places that have no local economy have some sort
of intrinsic significant worth. Why on earth does a house 20 miles from the town center have any intrinsic value ? A whole huge pyramid of assumptions underlie this and they are not robust against stress.

Feel free to look at links like I've posted your assumptions are already failing dramatically.
And we have not even started to have serious problems. I'd actually be surprised to see suburbia even
make it much past peak oil right now much less be worth saving. The way things are going suburbia will be dead before we even get worldwide acceptance of peak oil.

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memmel on September 4, 2008 - 1:18am Permalink | Subthread | Parent | Comments top

Dave you don't have to believe me.
http://globaleconomicanalysis.blogspot.com/2008/09/gm-ford-chrysler-sale...

"The biggest issue is credit," Chrysler President Jim Press said in an interview. "It isn't the gas mileage of the vehicles turning people off, it's getting credit and financing.

So I'll happily wait till these same people snap up your EV's.
Good luck.

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BlueTwilight on September 4, 2008 - 3:31am Permalink | Subthread | Parent | Comments top

Or the problem is obsolete automobile manufactures producing overpriced vehicles loaded with unnecessary options. All the extra junk, such as computer controls, navigation systems, antilock breaks, air bags and crash safety designs, will be discarded if a large portion of the U.S. population can not afford automobiles. Look at Tata's vehicles to see what can be done on the cheap. Last I read, GM's Volt will be loaded with options making it pricey and perhaps dooming it to failure. Ford and GM need to go bankrupt to sweep away those dinosauric corporations clearing the way for new, innovative ones. They had their chance with California's zero emissions mandate but instead of complying, joined a lawsuit.

Memmel, when it comes to buying a used PHEV, the longevity of the expensive batteries will be of prime importance. The seller will try to sell just before the batteries fail dumping the expense of replacement onto the buyer. Without a decade of experience, their longevity will be a huge unknown. In this respect compressed air or hydraulic drive trains have an advantage because they should be durable.

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alistairC on September 4, 2008 - 6:42am Permalink | Subthread | Parent | Comments top

I agree the major car manufacturers will have to go bankrupt before the paradigm shift can happen. In Europe too.

They have been adding technology and gadgets to keep the price and profits up, but faced with a new economic setup where people can perhaps afford a 5000 euro car, but certainly not a 15000 euro car, I suspect they will die rather than give in to what the market actually demands (the US auto makers certainly are!)

An interesting example : Renault bought the Rumanian auto maker, Dacia, and makes cheapish family cars for Eastern Europe there, with a level of equipment equivalent to those of Western europe 20 years ago.
People started parallel-importing them back to France... it's EU after all... so now Renault sells them in France, but rations them. There are long waiting lists. And they are not even especially cheap!

In the electrical era, will a bunch of start-ups fill the void / accelerate the implosion of the big makers?

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DaveMart on September 4, 2008 - 7:24am Permalink | Subthread | Parent | Comments top

Most business models lease the batteries, not sell them.
Costs for the purchase of an EV and leasing the batteries look lower than running an ICE car if you assume petrol at $4/gal.
How much money will be available to buy cars though is the big issue, as we have managed to drive the economy into a wall just as we need to radically alter the technological base.

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BlueTwilight on September 7, 2008 - 3:15am Permalink | Subthread | Parent | Comments top

The last time automobile manufacturers leased electric vehicles, they refused to renew the leases and destroyed the vehicles. I do not want to be in a situation where they refuse to continue the lease on the batteries leaving me with a inoperable vehicle and a shipping bill for the return of the batteries. If I can not own it, I would not buy it.

I think the cost of purchasing an EV and leasing the batteries would assume high annual mileage. I have had the same compact pickup for 20 years and have drove it 50,000 miles for an average of 2,500 mi/yr. The vehicle is absolutely necessary because I must go to town for supplies. It can not be replaced with an electric bike or electric car because they can not transport enough cargo. I need a pair of horses and a wagon :) I have spent a total of under $20,000 on this vehicle, including the purchase price, fuel, maintenance, insurance... and, in short, everything. Unless the batteries are much more durable or inexpensive than I suspect, a PHEV will not achieve this level of economy. My analysis makes me conclude that a compressed air or hydraulic drive train, even though less efficient than a battery, would be superior for my application and anyone trying to minimize costs by driving infrequently. A lease creates a constant cost per unit time, not a cost based on usage.

Said by alistairC:
In the electrical era, will a bunch of start-ups fill the void / accelerate the implosion of the big makers?

I do not think start-ups have a chance until Ford and GM are gone because they protect their turf religiously. I also suspect the U.S. government will bail them out preserving their decay and suppressing the needed innovation. Toyota is on the right track with the Prius and may thrive. Congress must change laws to allow vehicles to be manufactured more economically. Will the right decisions be made in time?

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DaveMart on September 4, 2008 - 7:20am Permalink | Subthread | Parent | Comments top

Since I have already stated many times that I feel that there will be no instant change-over to electric vehicles, but this will initially be mainly in things like delivery vehicles, and most people will use electric scooters, assisted bikes and trikes and so on, I have no idea who you imagine you are rebutting.
Considerable personal mobility seems likely to remain though.

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DaveMart on September 4, 2008 - 7:14am Permalink | Subthread | Parent | Comments top

A range of options are surely possible, although obviously there are deep problems in both finance and technology.
It makes no sense to me to be too deterministic about what the outcome 'will' be.
Some contraction of the suburbs is already taking place, and further contraction will surely take place.
It makes a difference though if the contraction ends up as being 80% or 20%, and it is not realistically possible to fully determine that.
In arguing your case for massive contraction you basically ignore options which might reduce this, by re-writing critiques, and refer to arguments for considerable personal mobility remaining as BAU, when so far as I know no-one is arguing that.
However, you do not substantially address why electric scooters, more clever taxis etc are not possible, at least to some extent, or simply some re-location of offices and other work places.

Where you get the idea that 'my assumptions are failing dramatically' I really don't know, as I hold no deterministic position on how successful outcomes will be, and that is the sort of Strawman I was referring to - I simply have no attempted to make some of the arguments you seek to rebut.

As for 'houses having no intrinsic value', sure they have - they give you somewhere to live, at a far higher standard than some of the slums you suggest, and it is surely reasonable that instead of throwing away all that sunk effort, whatever it's nominal current market value, many will put up with considerable inconvenience to stay there.

How it plays out depends on a lot of decisions which have not yet been taken, and any result is possible, at least in the US, from the suburbs being virtually abandoned to their being substantially intact, although doubtless gradually being re-zoned and infilled.

Your models do not appear to be robust, as they depend heavily on a series of assumptions, and flatly ignore any forces which might mitigate the results you project.

Maybe everyone will make very silly decisions, and maybe no attempts will be made to alter the financial and legal framework to address them , for instance much of the abandonment which occurs in America is due to a peculiarity of the legal system, non-recourse mortgages, and seemingly small differences, say a relaxation of zoning so that work and home can be closer together, can make real differences to the outcome.

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Dryki on September 3, 2008 - 11:32pm Permalink | Subthread | Parent | Comments top

you don't realize how few people will have their own EV

My EV will be an electric bike. But mostly I figure on using pedal power or just not going places as often. Besides, if the roads fall into more and more unmaintained conditions and I start breaking wheels, that will only work so long. Road conditions - not traffic - turns out to be the most difficult aspect of biking at night.

I was at my son's soccer game yesterday and had to listen to other parents talk about how they were hanging on and busy enough that they never ate at home. Some sort of finance/insurance work. Pretty soon the talk changed to how big the police department was. Useless jobs supporting bloated suburban cops - probably most of them stricken to have missed playing at the RNC.

cfm in Gray, ME

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Schrodinger1 on September 3, 2008 - 4:53pm Permalink | Subthread | Parent | Comments top

I think there are two answers to that, infrastructure and vehicle cost. Ethanol can be pushed through the same infrastructure used for gasoline and can be burned in the same vehicles.

For natural gas there is not much fueling infrastructure, although maybe this should be government subsidized. A NG powered Civic costs about $7000 more than the gasoline model. That might come down with higher volumes but a high pressure tank is always going to be more expensive.

I like natural gas as an alternative fuel but I'm not sure wether it should be used for cars replacing gasoline or for trucks replacing diesel.

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davidel on September 3, 2008 - 6:10pm Permalink | Subthread | Parent | Comments top

Your point is well taken. One possible way around it is to use a like quantity of natural gas prsently used to produce ethanol for fleets powered by natural gas.

This way the distribution of the fuel is concentrated to a much smaller number of locations. The specialized maintenance of the vehicles is also concentrated. Another silver bullet for the time being (life of the fleet).

David

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