Saturday, September 26, 2015

Imported oil geo-politics: SparkEV, the car that will save the world

Not all oil is the same. One crucial aspect is that imported oil can come from ISIS, Russia, Venezuela, and, heaven forbid, "blame" Canada. While overall imported oil is about 30% in 2014, it was as high as 60% in 2006. But as an individual, we use particular type of oil for our vehicles. Since refineries can't use any oil (ie, light sweet vs tar sand), they use about 60% from imported sources. What this means is that you're directly paying ISIS and "Terence and Philip eh? eh?" Canadians with up to 60% of what you pay at the pump. Yes, the ISIS bullet that killed Syrian kids probably came from your pocket if you pumped gas.

Oil wars are not for oil

Often I hear undeclared subsidy for oil are US wars in middle east. That's nonsense. Oil is secondary pretext for war (primary being democracy, human rights, what have you). Far more plausible underlying reason for war is duping the public into fear and to collect more taxes. If some entity is demonized and we are at war with them, people are more likely to cough up the dough. Follow the money for wars and see who benefits: oil companies or war department?

About 20% of US budget is for war department (let's call it what it is instead of "defense" department). A budget monster of $650,000,000,000.00 (or much more?) isn't likely to go down without a fight. There's only so much BS they can give during peace time to keep up their budget.

One way to keep funding during peace time is to demonize another country that we are at peace with at the moment. Now that the cold war is over, we need another. How often do you read about evil China and their military build up? While we spend $650 Billion, China spends $120 Billion, less than 1/4 of what we spend. And why would China go to war with US when US is their largest economic partner? Do they want to commit suicide? If they go to war with US and win, presumably to take over US, then what? Are they going to "manage" US as well as they're doing now with China having 1/8th the per capita GDP of US? This is complete nonsense, but many seem to believe it.

If boogeyman fear isn't enough, a far more effective way to keep/boost war funding is to have some convenient wars here and there to remind the population that boogeyman is still out there and real. Of course, the pretext has to be something like human rights and other nonsense. Occasionally, they slip up, like George H.W. Bush said about the first gulf war being about oil. But if oil did not matter, we'd still have wars, whether it's North Korea or Cuba (before 2015) or Congo or where-ever else we deem convenient to keep the war funding increased. As such, war for oil is false pretext, and oil means nothing when it comes to wars.

But hypothetically, let's assume war was for oil. Shouldn't US benefit from those wars? Why import when we can simply take over the oil fields? Some argue that is happening and all the profits are going to oil companies. As public company, they have to release their books, and you're free to examine them. Then some say those books are cooked. So then the question for them would be, "what would convince you that the wars are not due to oil?" Typically they say, NOTHING could convince them that war's not for oil! Yes, this is straw-man argument, but I haven't heard any good argument for the reason for war is oil while actual beneficiaries are war department cronies.

Most recent war is "war on terror", not oil. When does this war end? When all terrorists are killed? Well, no. This war will go on FOREVER! Pretext for war against terrorist is complete nonsense, just like war for oil is nonsense. The real reason for war is to keep the public in fear so they can collect more taxes.

In a related note, if you think more taxes will help schools and roads, think again. Schools and roads take tiniest of tiny chunk of the tax money compared to war department. Far better idea is to fight to reduce taxes while changing the budget for more productive use. While I dislike subsidies, EV subsidy to get off importing oil is worthwhile endeavor. Economic war on importing oil via subsidy is something I don't mind fighting; nobody dies in this war. In fact, it will save lives via reduced pollution in populated areas as electric generators tend to be in less populated areas.

If war isn't for oil, then why do we care about oil? I might as well drive a Ferrarri that gets 8 MPG, right? No, we care, at least a little, because what's done with the money we pay at the pump. 9/11 was the result of using oil; if we did not give so much money to Saudis for oil, bin Laden probably wouldn't have so much money to fund terrorists, let alone buy a camel for himself. If not for oil, they'd have to do something more productive; with vast Saudi desert, could they be the leader in solar technology today? It's hard to say.

9/11 is just the recent past, but what of the future? As we pour more money into cleptocracies and crazies (ie, Venezuela), we're just inviting more nut jobs. Will one of them take the oil money that you gave at gas station and buy asmall nuclear bomb or plutonium dust and explode it in middle of Manhattan? If we continue to fund wackos, that will happen, not if but when. It doesn't guarantee that won't happen if we don't use oil. However, it is far more likely when they have the money but without much else to do other than digging holes in the ground for oil.

I only touched on this topic. As you look around the world, you will see that oil exporting countries generally lack intelligence (Norway is a rare exception with Qatar trying but failing). They don't produce much other than oil. Who could blame them? Money is pouring in from all corners of the world just by digging holes in the ground. Why should they risk technological development and risk making less money?

That, of course, doesn't mean their population fare well. One only has to look to Venezuela, one of the most oil-rich nation in the world and how poor the people are; as with other oil rich nut jobs they blame other countries for their ills. And finally, one can't forget Canada, a morally corrupt country that gave us "Terence and Philip" along with their tar sands.

Peak oil and scarcity

A very important fact to remember is that fossil fuel, including oil, should be considered virtually unlimited resource in free market economics. While this may seem obvious to econ (homo-economicus), this fact is lost on many, so I'll try to explain it.

Oil is the result of millions of years of dead organic material. Earth had organic matter for roughly a billion years while humans have been using it for about 100 years. Yes, not all of that billion years' worth is available as fossil fuel. But as simple estimation, it's hard to say that we've used many, many orders of magnitude of production in such short time. Indeed, we haven't used much in grand scheme of things, and we're not likely to run out any time soon.

Oil is only scarce due to its price. The so-called "peak oil" is only with respect to technology and cost of exploration, not necessarily due to physical scarcity. If oil cost $1000/gallon, and people must use as much as they do now, companies will find lots of oil, even in so-called no-oil countries like Japan and Korea. If oil is free, not much oil will be found; there's no reason to do so, but there will be constant shortages due to everyone clamoring for freebie oil. In the real world, if oil cost goes up to $1000/gallon, people will simply not use oil. Instead, companies will invent alternatives. Heck, even at $3/gal for gasoline, people like me are driving EV primarily as cost cutting measure.

Fossil fuel Politics

Politics play a huge role in oil pricing, which is another way of saying how much oil is available, so one must discuss politics when discussing availability of oil. Gas is sold with heavy taxes, but producing oil is done with subsidy. This keeps oil exploration and production cheap while artificially keeping the price high at the pump. Overall effect on price compared to free market without subsidy and taxes, according to wikipedia, is probably not much. Since overall effect on price would be about the same without subsidy and tax, they are promoting oil exploration without increasing pump prices. But think about it. Government is subsidizing BP, Exxon, etc. while taxing you and me. While the effect on price to you and me may be benign, there's something distasteful about taking money from individuals to give to multinational corporations. This is a rare moment when I'm not a homo-economicus.

Now let's assume there's no subsidy for production, but the tax for consumption (you and me) is kept. Prices will go up due to lower production, although it's hard to tell if other nations will boost production and to what degree. But more importantly, this will result in less oil exploration in US and more imported oil. Worse, higher prices may lead to less demand, but that extra money will go to foreign sources. Do you feel comfortable giving more money to ISIS and Putin when you pump gas? As distasteful as subsidy is, I prefer subsidy over more imported oil.

Now let's assume there's subsidy for production and no tax for consumption. In CA, tax alone could lower the gas price by almost $1/gal. People will simply use more. Eventually, the price will stabilize, but it will again increase imported oil to meet the demand at least for short term, if not forever. Once again, more money to ISIS and Putin. As much as I hate taxes, it might be worse without it in case of oil.

But what if both subsidy and tax are cut? Will it really result in roughly similar pump prices? It's hard to say, but as wikipedia states, "probably". Trying to cut through the tangled mess of regulation is "probably" impossible, but it's probable that there will be less domestic oil. Yes, they can sell for higher prices, but it'll probably cost less to simply import oil than to explore for more domestic sources. Again, more money to ISIS and Putin.

As an extreme measure, the government can put price control (like in socialist countries) on selling oil. This actually happened during oil crisis in 1970's. As with most (all?) price controls, results were shortages and long line. Combine long lines / shortages with tariff on imported oil and higher taxes for oil production could reduce oil use. There's only so many times one would wait 2 hours to get gas before saying "fuck you. I'm getting a SparkEV which is ready to go in 20 minutes". But there are inevitably unforeseen consequences to price control and shortages: "fuck you. I'm going to steal gas from you." (ie, black market).

You can also try increasing the subsidy and/or increasing the tax. But they inevitably could (COULD!) result in more imported oil. One measure could be tariffs on imported oil, but that could spark a whole new can of worms as demonstrated by 1930's great world-wide depression. (Nazi Germany had almost 0% unemployment during this time, but that means little in terms of quality of life) So no matter what we do in terms of subsidy and tax, it's bad? Damned if we do, damned if don't? What do we do?

Answer to world peace

One possible solution would be to use less oil while keeping both the subsidy and tax the same. According to, while 30% of oil is from imported source (60% in 2006), refineries use roughly 60% of oil from imported source. In other words, gas and diesel at the pump are made with 60% from imported oil, and paying at the pump is the same as directly giving lots of money to ISIS. This is due to inability to refine light-sweet-crude and thick tar at the same time, and they must optimize for one or the other. This doesn't mean driving 60% more efficient car (ie, 70 MPG) will eliminate imported oil as the cut in demand will also impact domestic producers. But it will reduce the amount of imported oil. Whether the refineries will remain at 60%, go up or down is impossible to say. What matters is the amount of money paid to foreign producers is reduced. Hugo Chavez would be turning over in his grave if US could do this.

Of course, cutting oil is easier said than done. How? EV, of course! Unlike gas/diesel, US electricity production is from domestic sources (US electric grid is energy independent). Even with dirty coal, natural gas, nuclear, EV is far more benign to the world geopolitics than oil. A side benefit to this is that 10% to 60% of electricity comes from renewables sources such as solar and wind. While I don't think pollution benefits of renewables are major selling point, not importing oil and technology behind them that add to collective human intelligence is certainly more desirable than digging holes in the ground.

SparkEV, the car that saved the world

We narrowed it down to EV as the solution. But not just any EV will do. One can pay $135,000 and drive Tesla P90D, but not many have that much money laying around. Far better is to have something low cost that's affordable by the masses and desired by them by better performing than comparable cars. Even Nissan leaf fails in this regard due to higher price and poorer performance than comparably priced gas cars. I'm afraid upcoming Chevy Bolt and Tesla Model 3 will suffer similar deficiencies.

There's only one at this time, and that is SparkEV. It's cheaper, quicker, and more economical to operate than any comparably priced car, gas, diesel, or EV. With fast charging, it's a practical car that can be driven hundreds of miles in a day if needed. GM should crank out millions of SparkEV like VW did with their 60+ years production run with their beetle while continually cutting costs using economy of scale.

If GM wants to be patriotic American company, the best thing they can do is build and market more SparkEV and make it easier for people to drive it (ie, DCFC in all their dealers, but not free). If GM wants to be known as a company that saved the world, they should sell SparkEV throughout the world that are energy independent in electricity. Imagine what history would say if everyone drove SparkEV: SparkEV, the car that saved the world.

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