The Oil Dilemma

UPDATE: Read the story below, then have a look at Autoweek’s review of the GMC Graphyte – a GM two-mode hybrid SUV prototype. It sums up the dilemma and the current proposed solution in one nice, neat article, with pictures.

UPDATE 2: As if on cue, here’s another story on future vehicle and propulsion delivery, one that also happens to mention the 9-5 Biopower (now accounting for 66% of 9-5 orders in Sweden)

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The Original Post:

You have a finite supply of oil, and a finite ability to refine it. You have growing demand from not only existing markets, but also from rapidly expanding new markets. What to do?

You can:

a) stick your head in the sand and pretend nothing’s happening (just remember that with you head in the sand, your backside is exposed and unguarded)
b) try and stretch the current resources further, or
c) find alternative fuels and uses for them.

Thankfully the people with a real stake in the industry seem to be doing little, if any, of (a). There seems to be a lot more of (b) going on and the progressive types in the industry are exploring more and more of (c).

GM’s corporate blog, Fastlane, has a story today about the joint venture with DaimChrys to develop a two-mode hybrid system. It’s their version of point (b).

GM and DaimlerChrysler Corporation have signed a non-binding “memorandum of understanding” and intend to enter into a definitive agreement in early 2005.

Both companies have been working independently on their own hybrid propulsion systems for their range of passenger vehicles.

GM previously announced its first application of a full hybrid would be launched in late 2007 in two of GM’s most popular full-size SUVs, the Chevrolet Tahoe and GMC Yukon. Combining the hybrid development efforts of DaimlerChrysler and GM will position both companies for leadership in this technology.

This is good news as there needs to be more efficient use of the resources we have available to us on this planet. The infrastructure for the extraction and refining of oil is already in place and the end product needs to be used as efficiently as possible as the demand for it, and consequently the price, is only headed one way: UP.

The last week or two has seen summer holiday demand in North America added to consistently increasing demand from China and India. As I write, the price of crude has gone through the US$60 per barrel mark. Many experts are saying that it’s not the supply of raw materials that’s the problem, it’s the ability to refine the raw product in the various grades of fuel needed around the world.

So, again – what to do? There’s an opportunity to invest right now – either in refining or in the development of newer, perhaps more sustainable technologies.

So what about (c)? Finding alternative fuels and efficient applications for them.

Well, Saab has already got a fully working and accepted alternative in the 9-5 Biopower, which runs on E85, a mix of 85% Ethanol and 15% gasoline. If you’re new to the technology and the 9-5 currently selling like hotcakes in Sweden, then you can read all about it here. It really is worth the 10 minutes of your time.

There’s some out there that consider an alternative like E85 as a waste of resources. I’d say they do so at their own peril. I’m no engineer, but if there’s an investment to be made and your alternatives are expanding an existing market that will one day swallow itself up, or expanding a renewable greenfields market, I have a fair idea of which makes more sense in the long run.

The problem? The long run is 20 years and onwards. The people in charge of allocating the resources think more in terms of 5-10 year business cycles and CEO contracts, or 4-year election terms. These are the oil companies and the governments that regulate them and they are the gatekeepers.

The motto of all free-market economies is to give the customer what they want and if you can, give them plenty of it. There are resource extractors, resource manufacturers, and end-resource consumers. GM are the resource manufacturers and we are the end-resource consumers. GM’s job is to give us what we want, and plenty of it. And what we want is power, and plenty of it. And the most efficient wat to deliver it given the current infrastructure in play is via a gasoline engine.

Until more and more alternatives like E85 or diesel have the distributorship network in place, expect companies like GM to keep fiddling the same tune. It’s their job.

What we need is more renewable fuel-resource production and infrastructure and with it, growing consumer demand. I’m sure that once those two are in place, the manufacturers like GM and technology leaders, like Saab, will have something to offer.

The 9-5 Biopower already offers increased power and torque from a mostly-renewable fuel source, and it’s emissions neutral. That’s what’s been achieved up to 2005.

Imagine what they could do by 2025.

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8 Comments

  1. AP,

    I, for one, aren’t familiar with the context of your comment. Who’s Ben, Mr McGuire, and what’s the nature of the comment. Sorry, but it’s unfamiliar, at least to me here in Australia.

  2. “Plastics”

    That’s a line from the movie “The Graduate” which starred Dustin Hoffman and Anne Bancroft. Mike Nichols directed. Great movie. Released in 1967, or so, if I recall correctly. Lots of Simon and Garfunkel on the soundtrack. I don’t know if the song “Mrs. Robinson” was written for the movie, or before the movie, but the whole thing fits together quite nicely.

  3. Greg,

    Thanks for the heads up. Haven’t seen it – a little before my time. Will get to it and many others once the kids-that-dominate-the-TV-and-DVD-player move on. One day.

    But I’m still unsure as to relevance to this post.

    AP? Anyone?

  4. Well, I was 3 years old when it was released so it counts as a little before my time, too. You should see it, the ending is interesting – dramatic but still true to the characters.

    For what it’s worth, I think AP is saying that you are like McGuire – telling us what the future will be.

  5. autoprophet-why you don’t like diesel? or biodiesel? are you beholden to big auto?

    FUEL ENERGY YIELD NET ENERGY(loss)

    Gasoline 0.805 (19.5%)

    Diesel 0.843 (15.7%)

    Ethanol 1.34 34%

    Biodiesel 3.2 220%

    I’m from Illinois and as much as I’d like to see

    more ethanol made and sold, biodiesel is the

    shit especially as it goes with the “new” ULSD

    like PB&J. Hydrogen, its problems and its infrastructure is decades away…I’ll give you

    hybrids…the autostop on me mums Civic is a great feature here in the land of the five-minute

    traffic light. Only problem…engine stays running with AC which begs why not electric compressor? dzlsabe

  6. The GM opel astra diesel/electric hybrid looks a very attractive proposition.Any idea when this unit is coming on the market.David

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