By admin | March 9, 2010
Submitted by R-Squared Energy Blog
Spring is approaching, and gasoline prices are once again climbing. But you may not know that this ritual of climbing prices happens almost every year about this time. If you check the history of gasoline prices at the Energy Information Administration’s (EIA) website you can see that gasoline prices almost always rise between January and May.
The primary reason this happens is due to a seasonal switch in gasoline blends. There are two key (although not the only) specifications that refiners must meet for gasoline. The gasoline must have the proper octane, and it must have the proper Reid vapor pressure (RVP). While the octane specification of a particular grade is constant throughout the year, the RVP specification changes with the seasons. (See Refining 101: Winter Gasoline for a more detailed explanation of gasoline blends).
The RVP is based on a test that measures vapor pressure of the gasoline blend at 100 degrees F. Normal atmospheric pressure varies, but is usually around 14.7 lbs per square inch (psi). Atmospheric pressure is caused by the weight of the air over our heads. If a liquid has a vapor pressure of greater than atmospheric pressure, that liquid boils. For example, when you heat a pan of water the vapor pressure increases until it reaches atmospheric pressure. At that point the water begins to boil.
In the summer, when temperatures can exceed 100 degrees F in many locations, it is important that the RVP of gasoline is well below 14.7 psi. Otherwise, it can pressure up your gas tanks and gas cans, and it can boil in open containers. Gas that is vaporized ends up in the atmosphere, and contributes to air pollution. Therefore, the Environmental Protection Agency (EPA) has declared that summer gasoline blends may not exceed 7.8 psi in some locations, and 9.0 psi in others. The particulars vary, but key considerations are the altitude and motor vehicle density of a specific location.
The EPA publishes a schedule for the RVP transition:
Guide on Federal and State Summer RVP Standards for Conventional Gasoline Only
The schedule varies somewhat from region to region, but in general is as follows. After allowing vapor pressures as high as 15 psi in the winter, the limit drops starting on May 1st:
May: 9.0 psi
June – Sept. 15: 7/7.8 psi
More congested areas and hotter areas will tend to have a limit of 7.0 psi, while cooler climates generally opt for 7.8 psi. Some cooler climates maintain a 9.0 psi limit throughout the summer. One of the disadvantages of having different requirements for different areas is that summer gasoline is less fungible. This can cause price imbalances in different areas, and sometimes prevents product from flowing from one area into another to ease the shortage.
Refiners will start to pull down their inventory of winter gasoline well in advance of the May 1st deadline. On that date, all gasoline in the system has to meet the stricter requirements, and this “summer blend” is costlier to produce because it contains less butane.
Butane, which has an RVP of 52 psi, can be blended into gasoline in higher proportions in the winter because the vapor pressure allowance is higher. There are two advantages in doing this. First, butane is a cheaper blending component than most of the other ingredients. That makes fall and winter gasoline cheaper to produce.
But butane also adds to the total gasoline pool, so that means that gasoline supplies increase in the winter as more butane is added to the mix. Not only that, but this takes place after summer driving season, when demand typically falls off. These factors normally combine each year to reduce gasoline prices in the fall (even in non-election years). The RVP is stepped back down to summer levels starting in the spring, and this usually causes prices to increase.
One misconception some have is that they can save money by buying cheap gasoline in the winter and storing it for the summer. Remember that winter gasoline will pressure up as the weather heats up, and the contained butane will start to vaporize out of the mix. You will end up with less gasoline than you paid for, and that would also contribute to the air pollution problem that summer gasoline was designed to avoid.
If, on the other hand, you were to buy summer gasoline and try to store it until winter, you might find yourself having problems getting the fuel to ignite, due to the lower vapor pressure. This would be like putting a little bit of diesel in your gasoline – not very good for your car.
So how high might gasoline prices climb this spring? The EIA’s gasoline inventory database can provide some guidance. In the spring of 2007 gasoline prices spiked above $3.00 a gallon for the first time. But that year gasoline inventories also dropped sharply. Rapidly falling gasoline inventories are a good predictor of sharply higher gasoline prices. In the fall of 2005, Hurricane Katrica also caused a sharp drop in gasoline stocks, leading to an atypical fall price increase.
So far in 2010, gasoline inventories have been at very healthy levels. While some inventory draw down can be expected during the transition to summer gasoline, it is a pretty safe bet that the current high level of gasoline stocks will prevent a rapid escalation of prices this spring. I would expect no more than a mild price increase between now and summer, and at the current inventory levels it would not be surprising to see prices start to decline from present levels.
However if oil prices escalate, that could trump high gasoline inventory levels. This is why gasoline is presently about $1 more than it was last year at this time; oil prices were $30-$40 lower than they are now. But that’s a topic for a future essay.
By admin | March 9, 2010
Submitted by Aguanomics Blog
This exchange among Central Valley farmers got my attention:
But the idea of outside regulation doesn’t sit well with growers. Farmers see groundwater as their last resort in a drought, and they are reluctant to relinquish any right to pump it.
“Overdraft is here. So who are you going to try and regulate?” asked Westside farmer and commissioner John Howe.
Howe was responding to a statement by Kings County Counsel Peter Moock that the overdraft situation is probably “going to get worse.”
“An end has to come to that [overdraft] at some point,” Moock said.
Remember that these guys claim that more surface water will reduce overdraft. I doubt that will happen, as long as they are unwilling to put any restrictions on overdraft (robbing from their future).
On a related note, I see that
Westlands has quit ACWA. It seems that Westlands has decided that its interests are not the same as a majority — there’s no “I” in team. That’s quite a signal. Are politicians listening?
By admin | March 9, 2010
Submitted by Aguanomics Blog
Someone forwarded this to me; it’s quoted verbatim below, with some formatting. It’s a good example of how water and money are related. Note that the water may not be used to generate additional jobs.
From: Mark M. Borba
Sent: Friday, March 05, 2010 10:32 AM
To: ‘Thomas W. Birmingham, Esq. (tbirmingham@westlandswater.org)’;'zzCardoza, Dennis’; ‘jimcostamc@mail.house.gov’
Cc: ‘Sarah Woolf’; ‘Jean Sagouspe (E-mail)’; ‘John Harris’; ‘davidewood@harrisranch.com’; ‘don.devine@harrisranch.com’; ‘DonP@wvfinc.net’; ‘jflores@donaghysales.com’; ‘John Diener (redrock_ranch@yahoo.com)’; ‘Stuart Woolf’; ‘Jason Peltier’
Subject: THANK YOU! WWD allocation announcement impacts
Jim, Dennis & Tom:
Thought I’d share my rough calculation of the impact of the (30% + 8-10%) = 38-40% allocation announcement now anticipated (thanks to all of your tireless efforts) from the Bureau on March 15th:
It was a $140,000,000 phone call!…..adding an average of $312/ac to the “margins” of every grower’s budget in the District:
- (Increase by 35%) = 420,000 AF X $300/af (ie. $465-vs-$165; Supplemental -vs- O&M)
- (Total 40%) = 480,000 AF X $30/af (ie. Est.reduced O&M/af)
- $140,000,000 over 450,000 acres = $311/acre
How growers elect to “spend” that is anybody’s guess:
- Plant more acres (Cotton?)
- Substitute for Supplemental water (no acreage change; lower input costs; shift to capital spending?)
- Substitute for Well Water (no acreage change; lower input costs; add margin to financing package?)
- “blend” all water costs; farm more acres (NOTE: +35% = 0.8925 AF/acre)
Any grower talking to a lender about 2010 financing not only shows this increase in margin, but can now “show me the water”, which has become the bankers lament…and a prerequisite to getting crop financing.
Thanks to Cong. Costa and Cardoza for not only pushing for this accelerated announcement in the increased water supply, but for insisting that the allocations (both the 30% and the addn’l 8-10%) be delivered at “Contract Rates”.
This is HUGE…combined = $140,000,000!
By admin | March 9, 2010
Submitted by Aguanomics Blog
Gary Libecap, a well-known water economist at UC Santa Barbara writes with this:
I have been asked to write up a summary/short survey of recent water research for the NBER Reporter. I want to use this opportunity to advertise what is being done in the area to the broader NBER community that generally will not be up on this. Since you are active in the field, I want to be sure to include as much of what is out there as possible. Can you send me cites as well as any downloads of working papers that might be more difficult to access?
If you have papers on water (economics, politics and other social science angles), then please email the link or paper to Gary.
By admin | March 9, 2010
Submitted by Aguanomics Blog
Peter Gleick announced a new Pacific Institute book with that title. I left this comment:
Why not publish a book called “Farm animal success stories”?
Perhaps because farm animals are grown and sold in markets, with prices and incentives.
Water will be used efficiently when and where there are financial incentives. These guys are surely successful and efficient, but I’d bet they only went there because of money, subsidy or propaganda.
Bottom Line: We don’t need stories and case studies, we need incentives.
ps/For those who think I only bash Peter, check
this post on landscaping, which I like. I left this comment: “Good post. Here’s a simple rule: Don’t add water to your garden. What lives is what you should have there.”
pps/His post advocating prosecution of businesses that dodge water efficiency regulations does nothing to serve consumers and a lot to serve overweening regulations. Right, that’s enough of Peter Gleick for now…
By admin | March 9, 2010
Submitted by Aguanomics Blog
These posts are still relevant (to me :), so please read/comment:
Anti-Capitalists — where I take apart Food and Water Watch.
DiHydrogenMonoxide — ban this nasty chemical.
As Reservoirs Fall, Prices Should Rise — but they aren’t in Las Vegas
California and Australia — from what I’ve recently seen, I was about right.
Engineers Doing It Right — professionals criticizing professionals when they fail.
A Drought of Good Ideas in the media and politicians’ mouths. Even worse, both classes make
weather driven policy — if it’s raining, there’s no drought.
By admin | March 5, 2010
Submitted by R-Squared Energy Blog
I usually scan the energy headlines each morning, but had somehow missed the stories on the recently introduced bills to electrify the U.S. Postal Service fleet:
U.S. Postal Service to test a repurposed electric vehicle fleet
Rep. Gerald E. Connolly (D-Va.) introduced a bill Friday that would pay for 109,500 electric vehicles, though the cost of that program isn’t known yet. “This, to me, would be a very productive thing and . . . likely to produce jobs and revitalize an industry,” Connolly said.
In December, Rep. José E. Serrano (D-N.Y.) announced an “e-Drive” bill that would give $2 billion to the Energy Department and Postal Service to convert 20,000 mail trucks into electric vehicles.
I have always liked the idea of electric cars. I have written a number of essays around that theme, primarily because electric vehicles could in theory be adequate replacements for internal combustion engines as supplies of fossil fuels deplete. Imagine that our electric grid eventually moves more toward renewable energy, and electric vehicles could be a much greener solution than the majority of the vehicles we have on the road today.
But note that I use words like “theory” and “imagine” to describe this idealistic future. I firmly believe that we need to have a look at the data from time to time to make sure that our idealism isn’t in direct contrast to reality. Unfortunately, in this case it might be.
Study: Electric cars not as green as you think
The environmental benefits of electric cars are being questioned in Germany by a surprising actor: the green movement. But those risks don’t apply in the U.S., the American electric-car lobby asserts.
Today, the German plants that deliver marginal electricity are fueled by coal. That is the main problem, according to the study. The research adds that to produce the same amount of energy, coal emits more carbon dioxide than even gasoline.
“The irony is that you don’t need a lot more electricity for electric cars,” Raddatz, said. “But the problem is that if they cause these peaks, we would have to have power plants that would be ready to start (as) the massive charging starts.”
An electric car with a lithium ion battery powered by electricity from an old coal power plant could emit more than 200g of carbon dioxide per km, compared with current average gasoline car of 160g of carbon dioxide per km in Europe, according to the study. The European Union goal for 2020 is 95g of carbon dioxide per km.
I have been thinking about this a lot, as I have recently seen some electric car/combustion engine comparisons in a report that is about to come out. I won’t divulge much about the report, but when it comes out I will link to it. But I will provide a quote from the soon-to-be-released report:
New Zealand energy consultant Steve Goldthorpe estimates that if the entire New Zealand vehicle fleet were replaced with electric cars, the amount of electricity New Zealand needed to generate to power this fleet would be increased by about 60%. Only a small percentage of this electricity could be produced sustainably; the balance would probably have to be generated by burning coal.
I think this is where idealism clashes with reality. As I pointed out in The Nuclear Comeback, over the previous 10 years electricity demand increased by an average of 66 million megawatt hours per year. That is without adding electric cars to the mix. The growth rate for renewable energy over the past 5 years or so has only been about 10 million megawatt hours (although last year saw an impressive 20 million). Still, this is a far cry from just keeping up with normal demand growth.
So the idealistic side of me sees renewable electricity continuing to grow, and powering a fleet of green electric cars. The side of me that looks at the data says that in reality, a rapid ramp-up of electric cars will have to be driven by non-renewables because renewable energy growth won’t be able to keep up. I wouldn’t personally have a problem with a nuclear-driven electric fleet, but I don’t think that’s the vision many have for future electric vehicles.
I am not factoring in the possibility that conservation of electricity can help close that gap. On that I remain hopeful, but our history is one of ever increasing consumption.
By admin | March 5, 2010
Submitted by R-Squared Energy Blog
The following is a guest post written by Dan Harding. Dan has written numerous articles on the solar industry, and is a regular contributing author to CalFinder.
———————————-
Will Solar Prices Fall into Grid Parity?
By Dan Harding
The Holy Grail…in solar-speak, it translates roughly to Grid Parity. It is a goal either mythical or predestined, depending on which side of the solar power movement the speaker resides. A recent surge in supply and technology, coupled with increased government subsidies, are tipping the scales toward destiny, although by no means is the path to grid parity set in stone. The rapid fall in prices for solar panels and other system components in an oversupplied and flooded market could continue home solar power on its way to that mythical Grail but, all mythos and wishful thinking aside, what are the odds?
Good, says Swami Venkataraman, Director of Corporate and Government Ratings at Standard & Poor’s, in a recent assessment of the U.S. solar market for Renewable Energy World. As of February, 2009, installed costs for residential and commercial photovoltaic (PV) systems had fallen to $7.60 per watt from $10.50 per watt just two years earlier. Prices continued to fall throughout 2009 and, while expected to stabilize somewhat as the national economy rebounds, they should remain on that downward slope in 2010 and beyond.
So when will solar cross that line? It could be soon, very soon in regions of the country with either abundant sunlight (southwest) or relatively high electricity costs (northeast). Yet some valuable help is still needed at the legislative level which, if provided, could propel solar power to grid parity in the short-term in the aforementioned regions.
Three factors, says Venkataraman, can help make PV cheaper than, say, a combined-cycle gas turbine plant. One or all of the following could ensure solar power a level playing field in the long term:
- Rising gas prices
- Renewable portfolio standards that make renewable energy credits (RECs) more valuable
- The passage of carbon legislation that would force gas power producers to buy carbon credits, thus forcing an increase in price for natural gas.
Including incentives, solar power is already close to grid parity in many areas. The Northeast holds the handy combination of some of the most lucrative solar incentives (per watt installed) in the country, as well as the highest electricity prices. Therefore, solar has far less distance to make up to reach at least natural gas, and gives solar power the best and fastest chance to reach grid parity in the nation. In California, where incentives have been declining for several years now, the primary advantage is in abundant sunlight (same goes for Arizona, New Mexico, west Texas, etc.), as well as a powerful RPS and a general eagerness from the public to adopt clean energy.
But as those two examples illustrate, grid parity will almost certainly NOT come to the United States as a whole all at once. Federal incentives were expanded in 2009, including the removal of the $2,000 cap on residential systems and the admittance of utilities into the Investment Tax Credit, but continue to vary widely between states. The feds provide a baseline subsidy, but what truly makes solar affordable for most homeowners and businesses are the added incentives offered by their state. So, in terms of reaching grid parity, we can expect the Southeast — despite its healthy share of sunshine — to be the slowest to reach the Holy Grail. This is due primarily to a lack of incentives, low electricity costs and a deep connection to fossil-fueled electricity.
Without incentives, there is still a real chance for PV, especially commercial PV, to reach grid parity in the relative short-term. Current capital costs for commercial PV are about $5.50 to $6.60 per watt depending on the size of the installation, according to Standard & Poor’s. Incentive levels in many northeastern states are upwards of $4.00 per watt, which means that, given incentives, the levelized cost of electricity (LCOE) of commercial PV systems was already below standard commercial rates. Furthermore, if falling panel prices enable systems to reach or fall below $5.00 per watt, then solar PV could reach parity even without subsidies.
Residential grid parity is more distant but still closest in the Northeast. Outside of the Southwest and Northeast, where solar irradiance and/or electricity costs make the solar-grid-parity question more complicated and uncertain, help will have to come from other renewables. Most notable among these are geothermal (Northwest) and wind power (Midwest). It is important when discussing grid parity for solar power not to forget its intermittency and the fact that some backup power system will be needed. Even if our solar infrastructure were so advanced as to provide all our power needs during peak load times, we would still need alternative sources to pick up the slack on cloudy days and at night.
Of course, straight-laced economics aside, we must also consider the inherent value of solar power beyond mere dollar signs. The point of renewable energy is to switch from pollutive, peaking sources of energy to clean, renewable ones. Solar power emits no greenhouse gases, no carbon dioxide and, when distributed, can provide power at or near the point of use without turning our cities into smog factories. That alone is reason enough to subsidize solar, wind, geothermal and other renewable resources until they reach the Holy Grail that is their destiny.
By admin | March 5, 2010
Submitted by Aguanomics Blog
The Nature Conservancy is spending $140,000 [pdf] to find good ideas on how to manage water (including markets and prices) in Arizona’s Verde Valley. Deadlines at 5 and 17 March. Great!
By admin | March 5, 2010
Submitted by Aguanomics Blog
Loved this post. Here’s an excerpt:
This sense of a “water crisis” is really about the political realisation in many parts of the world that we cannot continue to live as if water availability were not a restraint on our activities. It is a bit like coming to terms with the fact that Santa Claus does not exist. For years, politicians and engineers have worked to create the illusion that abundant water is part of nature’s bounty, wherever in the world it is required. It was easier to maintain the pretence of plentiful water in the past. In the US, for example, large dams and water transfer projects could be financed through federal government borrowing, paid off through taxation over the decades, and hardly noticed by the general populace. In the Middle East, governments turned to thermal desalination plants, but generally avoided passing on the cost to the customer. In India, the illusion of cheap and plentiful water was created by the provision of free electricity to pump groundwater.
By admin | March 5, 2010
Submitted by Aguanomics Blog
Imagine H2O is invites you [$$] to “Meet the Winners of Imagine H2O’s Prize for Best Water Startup, and World Leaders in Water Innovation”… next week in SF. Here are the ten finalists.
By admin | March 5, 2010
Submitted by Aguanomics Blog
Hattips to DL, TS and DW
By admin | March 5, 2010
Submitted by Aguanomics Blog
Jaakko Ojala asks:
Could You explain the following claims made traditionally by Christians… using economic analysis:
- Heaven is a free gift.
- Heaven is not earned or deserved.
- Man is a sinner.
- Man cannot save himself.
- God is merciful - therefore doesn’t want to punish man.
- God is just - therefore must punish sin.
- Christ is both God and man.
- Christ died on the cross and rose from the dead to pay the penalty for the sin of man and to purchase a place in heaven for man which He offers as a free gift.
- The free gift is received by faith.
- Faith is trusting in Jesus Christ alone for eternal life.
Jaakko is doing this for doctoral research. I already said this:
Christianity is just another religion, and religions are good for social order and personal happiness.
Heaven is a free gift, but you have to die to get it. Seems that it’s not free. (Economists say there’s no free lunch.)
Feel free to leave your own comments here.
By admin | March 5, 2010
Submitted by Aguanomics Blog
I met a nice family of church-going Christians in the campgrounds the other day. The father, mother and four kids were on vacation from his work at Boeing.
He works on aircraft maintenance for the C-17, a cargo plane that the Australian (and US) airforces use in Afghanistan.
I’ve long thought about the role of the individual in supporting causes that may conflict with that individual’s moral stance. In this case, I was interested to know if the guy felt a conflict between his Christian beliefs (thou shalt not kill) and his job (supporting an army in war).
Unfortunately, I did not discuss this topic with him, but perhaps we can here.
So, does an individual have a responsibility for the actions of his employer (as a cog in the machine) or is s/he excused (”I just work here”)?
I have a lot to say on this topic, but I want to hear what you all have to say.
(As most of you may know, I have issues with working for the government or as a professor where my time may be wasted on regulations and “useless” research, respectively. That said, I am a postdoc at UC Berkeley who’s considering running for Congress, so I am tipping back and forth.)
Right — so what’s your opinion? Your personal experience?
By admin | March 5, 2010
Submitted by Aguanomics Blog
Hey! There’s a new poll (know your neighbor) to the right —>
| My national government serves (choose 1+)… |
| the People |
 12 votes |
| special interests/businesses |
 58 votes |
| its own people (bureaucrats and politicians) |
 28 votes |
| the ruling party |
 5 votes |
| the majority race/religion |
 4 votes |
These results indicate that government (in many places?) has lost the confidence of citizens. That’s not a good thing, as it leads to a deterioration in the provision of social goods; see this morning’s post.
Bottom Line: We are willing to give up things for the common good as long as we feel that our sacrifices are evenly shared and benefit the majority.
By admin | March 5, 2010
Submitted by Aguanomics Blog
JD found that the comment period on federal guidelines is extended to April 5, 2010.
Go for it!
By admin | March 5, 2010
Submitted by Aguanomics Blog
Kaveh Madani, a post-doc at UC Riverside’s Water Science and Policy Center and the founder of Water SISWEB, created this neat calendar of water-related web sites [PDF] that’s based on the water year.
Aguanomics is in November 2009, when it started to rain. You can thank me later 
Take down that Pirelli crap and put this in its place, with pride!
By admin | March 5, 2010
Submitted by Aguanomics Blog
Economists spend a lot of time discussing the conflict between actions that serve an individual and actions that serve the community. (The Invisible Hand refers to actions that directly serve the individual and indirectly serve society.)
Take water use, for example. People who use more than their “fair share” serve themselves while leaving less for everyone else. If others respond by increasing their use, then shortages grow worse. If they respond by attacking the “wasteful” individual, then conflict can erupt that’s even more costly.
One solution — my preferred solution — is to allow people to use as much as they want but charge them for the privilege. As prices rise, everyone will use less, and shortage will not result. That’s what happened when gas prices rose — everyone faced the choice of using less or paying more, and everyone was happy with their action. Some people may have been upset at others who continued to drive SUVs around, but they know that those drivers were paying a lot to be wasteful, which was (often) an acceptable punishment for such “anti-social” behavior.
That case with water could be the same, if we raised prices, but there are many barriers — cultural and political — to doing so. Without prices, there are fewer options on the table. Most places ask people to use less; some of them regulate use. Both of these schemes will fail if people set themselves above the community. (For example, regulating lawn sprinklers is useless if people water at night, take long showers, or water their back yards.) That’s been the case in most parts of the US, where individual rights are often stronger than the sense of community. (There are some exceptions, and they often surface when a critical mass of citizens, media and leaders come together, agreeing to do something.)
In other places (Australia, as I am learning), people are willing to use less, because they have a stronger sense of community, and doing the right thing. That force appears to have been the primary driver behind Brisbane’s drop in per capita use to 140 lcd, and Melbourne’s current use of 174 lcd (46 gcd).
I am sure that readers can give their own examples of conservation successes and failures that can be attributed to a strong or weak sense of community, respectively.
Ironically, it is hard to built “community” in an area (gated communities, anyone?), but a community, once built, lowers the cost of almost every activity in life — education, safety, traffic, resource use, and so on.
Bottom Line: There are many ways to motivate people; choose the right one for the job.
By admin | March 2, 2010
Submitted by R-Squared Energy Blog
I just became aware that BiofuelsDigest wrote a story on my recent blog on Range Fuels, and got some comments back from Range Fuels’ CEO David Aldous:
Battle of the Falling Timbers
Aldous said pretty much what I would expect the CEO of Range Fuels to say. He defended his company, and complained that the funding includes money for future phases. That may be, but it is true that Range recently went back to the DOE for more money. If they are already funded for future phases, then why not show us what you can do before asking for more money now?
The truth is that the early public statements from those involved with Range - prior to them getting taxpayer funding - don’t remotely reconcile with what they are now prepared to deliver. The costs have escalated, the capacity has been ramped down, and production went from “cellulosic ethanol” to “cellulosic biofuels” to “mixed alcohols” to “methanol.” Those are the facts, and I think Aldous is trying to put the best possible spin on a bad situation that he inherited.
In fact, left unsaid in my original blog is that things have obviously gone horribly wrong from the days of Range’s early claims. Reading between the lines, I think the capacity downgrades are an indication that the gasifier didn’t scale up as expected. Gasifiers are tricky, and one that works fine at one scale and with one feedstock may not work at all at a different scale. I also think Range found out that producing ethanol from syngas is much more difficult than they expected, and they couldn’t get a catalyst to do what they had hoped.
One interesting comment from Aldous was that their methanol would be a qualifying fuel because they will put it into biodiesel. Imagine that. Biodiesel is already struggling to compete, and now we are going to pay a subsidy on the methanol that is used to produce biodiesel, and then we will probably end up reinstituting the subsidy on the finished biodiesel.
That is going to be some expensive biodiesel (from a taxpayer perspective). Methanol presently trades at about $1.10 a gallon, so if we subsidize that as a cellulosic biofuel we would presumable pay a subsidy of $1.01 per gallon on top of the market price. In a nutshell, the real cost of that methanol going into biodiesel would be double what it should be.
There was a comment left following the story that allows me to finally tell a funny story that happened at the Pacific Rim Summit last November (here are my slides from my presentation). Alan Propp wrote the following:
Dear Editor,
My comment is this: you describe Mr. Rapier at the outset of your article with these terms, “Noted and widely respected energy writer…” I have met Mr. Rapier, and my description of him would have been, “Controversial, highly opinionated and frequently misinformed energy writer…”
His lack of knowledge or understanding of the Range Fuels project is indicative of his blog and other writings.
Sincerely,
Alan Propp, Ph.D., P.E.
Merrick & Company
That comment is priceless on several levels. First, while Propp is smearing me he conveniently doesn’t mention that his company is the engineering firm for the Range Fuels plant. His company has made a lot of money on all the hype, and his fingerprints are all over the project. Think he might have an axe to grind?
But here is the really priceless part. At the Pacific Rim Summit, I was having a bite with a colleague at an evening conference event. Joining us was David Bransby, a professor from Auburn (and advisor to Range Fuels) who gave a presentation that I really enjoyed. His wife was also present, as well as some members of the Hawaii Science and Technology Council. We were having some interesting discussions around logistics, energy density, and the problems of scaling up biomass-based solutions.
Up walks Alan Propp, Ph.D., and he immediately began to berate me. Shortly thereafter, one person got up and left the table (telling me later that Propp’s behavior was the reason he left the table), and two more later asked “What was that guy’s problem?”
We were talking about the difficulties with scaling up biobutanol (which I have blogged on here) and Propp said “You are wrong. They now have a new process which can get butanol titers above 10%.” I looked at him with a puzzled look, and said “That’s impossible. Butanol phases out of water at 7.7% concentration. You can’t have a 10% solution.”
Propp was undeterred. He said that a certain company had given a presentation that day, and if I had attended it “I might have learned a thing or two.” (I would have attended but had a conflict). I was really puzzled, and couldn’t figure out what he was talking about. I decided I would investigate later, but I knew one thing: He was wrong about butanol titers above 10%. That’s like saying “Our water freezes at 40 degrees.”
The conversation turned to energy balances, and Propp’s position was “Energy balances don’t matter.” We were discussing a municipal solid waste project for converting trash into fuel. I said that if the energy inputs into the project were higher than your outputs, then in most cases you don’t do the project (unless you are using non-fungible fuel like coal as an input to produce a liquid fuel output). Propp said (paraphrasing) “If the biomass is free, then usage of those BTUs is what matters.”
I knew that we were looking at this problem in two very different ways. I was looking at it from the long-term viability of an energy project. Propp was locked into the idea that because the BTUs are free, then any usage of them is an improvement over the status quo. I couldn’t get it through his head that if the usage involved consuming more BTUs than you could extract from the free biomass, you don’t do the project. So we had a very fundamental disagreement. For an energy project, I won’t consume more than 1 BTU of fungible fuel to produce 1 BTU of fuel unless there are some really special circumstances (e.g., if the project is really a waste disposal project and energy would have been consumed regardless).
The evening went on like that. Propp was extremely arrogant and condescending. Had I known then of his involvement in some of these biofuel projects, I would have had a better grasp on why he behaved as he did. But then I went back to my hotel and looked up the company he had been talking about. It turns out that the good Dr. Propp was actually confused and had been talking about iso-butanol, a fundamentally different compound than normal butanol (which is almost always shortened to just “butanol”).
From a bio-perspective, it is true that i-butanol is less toxic to microbes than n-butanol, but the phasing concentration for i-butanol is also higher. What is needed to crack open the economics of producing butanol biologically (which used to be the case before the much cheaper petro-route came along) would be to get butanol concentrations above the phasing level, so it could be skimmed off instead of having to distill it all. From that perspective, the lower toxicity of i-butanol is offset by the higher phasing concentration.
Further, in the chemical industry the chemical properties of n-butanol are generally preferred over i-butanol. Therefore, butanol production is shifted to the greatest possible extent to n-butanol, and i-butanol almost always trades at a discount to n-butanol. There is still a market for i-butanol, but it is unclear if i-butanol would be an attractive renewable fuel. The published test results I have seen were all of n-butanol.
So I chuckled at the thought that Alan Propp, Ph.D., didn’t know the difference between i-butanol and n-butanol, yet berated me for not knowing about new technology that produced “butanol titers above 10%.” I sent him a note later that night and said “I think you meant iso-butanol.” He responded back “Yes, that’s correct.” (In fairness to Merrick, Propp did have a colleague with him - Steven Wagner, VP from Merrick - who I found to be much more reasonable and more interested in simply have a conversation about technology).
The next day, I saw Propp and his demeanor had changed entirely. Gone was the arrogance from the night before. (I presumed he was feeling pretty sheepish). He had promised to show up for my presentation later that day and put some tough questions to me, and I said “By all means, show up and give me your best.” He was a no-show.
So it is with an extreme sense of irony that I read Propp’s comment above. It is a classic case of projection. Of course the sort of pseudo-knowledge displayed by Propp that night is a big reason that Range is in the position it is in. They failed to distinguish between cellulosic ethanol and biomass gasification, and therefore made certain representations that many of us knew were incorrect.
Second, they didn’t understand the chemistry of alcohol production well enough to know that the production of pure ethanol via this route is problematic, and that a mixed alcohol is what they would produce. As reality began to settle in, we have seen the statements from Range evolve a very long way from the initial claims of what they would do.
So despite comments from Aldous and Propp, the verdict on Range is the same. What they are proposing to deliver is a far cry from the technology (and cost) that they initially went out and hyped. The public statements are there for anyone to read, and don’t need any particular interpretation from me to see that things have not gone according to plan.
By admin | March 2, 2010
Submitted by R-Squared Energy Blog
I wasn’t going to write anything on the Bloom Box, but people keep writing to ask what I think. My initial reactions were “What a lot of hype” and “I have seen this all before.” I also wondered why it is that people keep falling for these kinds of stories.
But fuel cells aren’t my specialty, and as such I won’t weigh in on the relative technical merits of this design over another. I know that fuel cells have been very expensive for many years, and the initial projections I have seen over the Bloom Box are that they will be very expensive.
Lots of people with expertise in fuel cells have weighed in on the matter, though. If you want a more technical assessment, see the National Geographic story:
Bloom Box Launch Is “Big Hype”–Invention Nothing New?
The Bloom Box—an as yet unbuilt in-home “power plant” designed to be about the size of a mini-fridge—could provide cheap, environmentally friendly electricity to U.S. households within ten years, according to Bloom Energy. Or not.
But fuel cell experts say that, based on the information the company made public today, the Bloom Box technology is not revolutionary, nor is it the cheapest or most efficient fuel cell system available.
“It’s a big hype. I’m actually pretty pissed off about it, to be quite honest,” said Nigel Sammes, a ceramic engineer and fuel cell expert at the Colorado School of Mines. “It really is nothing new. Go to any [solid oxide fuel cell] Web site and you’ll see the same stuff.”
Those were my initial feelings as well, and here is why I say we have seen this before. The year was about 2001, and I was younger and a bit more subject to being influenced by massive hype. There was a company called Plug Power (still in existence today; stock symbol PLUG, but they are flirting with getting themselves delisted) and they came out with pretty much the same story.
In fact, if you go back into Google’s news archives on Plug Power, you can see a histogram that shows the news stories on Plug Power spiking in 2000, remaining fairly strong until about 2005, and then falling to lower levels in the past few years.
The buzzwords used to describe Plug Power were the same as those used to describe the Bloom Box. The technology was called revolutionary and a real game-changer. There was a prediction made that most people would have Plug Power’s fuel cells in their homes by 2010 and we would all be locally producing and using our electricity in a refrigerator-sized box.
What happened? Plug Power’s stock soared to $2 billion on the hype at a time when investors would bid up companies that had no earnings but incredibly high growth projections. It just so happens that hype can lead to those growth projections (a hard lesson for me that permanently changed my investing style), and what happened was that reality eventually caught up with the hype.
Plug Power, like Range Fuels from my previous essay, could not deliver on the hype. They couldn’t deliver cheap fuel cells, and so they didn’t get the market penetration many had (unreasonably) expected. Their valuation came crashing back down to earth. Today Plug Power is worth about $70 million, or about 96.5% less than it was when I was following the story.
Bloom Energy looks like both Plug Power and Range Fuels to me. It is a company that is attempting to produce energy cheaper than all those who came before using known technology - and using hype to attract investors. And if Bloom Energy fails to deliver, they will learn just like Range Fuels that hype is a two-edged sword.
By admin | March 2, 2010
Submitted by Aguanomics Blog
The US government subsidizes nuclear power. Get ready for stupid results.
The US government is increasingly incompetent because bureaucrats are tangled in their own org chart, get appointed for political reasons or hired and promoted for the wrong reasons, and lack accountability
Westlands is “a coyote with its leg in a steel-jawed trap,” says Jason Peltier (of Westlands), and this desperate, non-fuzzy beast is attacking on all fronts, using its political tool, Diane Feinstein.
“The Delta Vision Blue Ribbon Task Force… was planted with key individuals likely to support building a peripheral canal and that their input as stakeholders in the process has been ignored.”
Meanwhile, the Marines covered up the cancer-causing chemicals that were in the water of soldiers and their families, with help from some crooked contractors.
By admin | March 2, 2010
Submitted by Aguanomics Blog
This article discusses the issue. My favorite line is:
“Very few of these sales are voluntary,” said Don Mills, chairman of the Kings County Water Commission. “The economics are forcing the farmers to sell the water.”
I’m at a loss for words with that statement.
The bill text is here. Essentially, it would prevent DWR from approving agricultural to municipal transfers of State Water Project Water for periods lasting more than 10 years. Perhaps Mr. Arambula is unfamiliar with the Monterey Agreement, which specifically allowed these types of transfers? Lots of work went into that agreement, so to propose eliminating one of the Agreement’s provisions shows a lack of historical understanding.
As for the 10 year transfer limit - When I lived briefly in Washington DC, I rode the Metro to work. Metro sold two unlimited weekly passes and I bought the Short-trip pass which covered all rides in off peak hours and up to $2.65 of a ride for peak hour rides. My peak hour ride to work cost more than $2.65, however, so to avoid paying more, I would take the yellow line north to the city (I lived in Alexandria) and get off a couple stops later, sprint to the fare gate, exit (that trip cost less than $2.65), re-enter to start a “new” $2.65 trip and sprint back to the subway before the doors closed, if I were lucky, to continue into DC. So much for their policy that the pass was only good for $2.65…
If the government says no to transfers longer than 10 years, we will see transfer proposals for 10 years with an expectation to renew. And users will get around it in other ways too.
Bottom Line: California’s water market does not need pointless hurdles like this.
By admin | March 2, 2010
Submitted by Aguanomics Blog
Russ Roberts explains, and I agree, with two caveats:
- For more on the pain involved in creative destruction, consider the case in Malaysia, where capital did well but labor did not. This pain is important in societies dominated by agriculture, where free trade may hurt the majority.
- Russ missed a VERY important point — much of our current prosperity and lifestyle is based on MINING natural resources (I use that word in its dynamic sense, which includes over-exploitation of “renewable” resources.) I know that we would be doing pretty well without mining, but our pace and level of consumption is NOT sustainable.
Bottom Line: Accurate accounting means that you count everyone and everything that’s relevant. Miss something and you may think that a loss is a profit.
By admin | March 2, 2010
Submitted by Aguanomics Blog
Go here and click on the “submit comment” on the left sidebar.
Deadline is March 5.
Here’s my comment.
Here’s an interesting commentary from a former Corps engineer:
Revising the Principles and Guidelines: What all Water Organizations Should Know
Mr. Fred Caver, former Deputy Director of Civil Works for the Army Corps of Engineers prior to his retirement in 2005, explained the significance of the proposed Principles and Guidelines revisions and why water related organizations should be informed. Mr. Caver now runs a small water resources consulting firm, Caver and Associates, Inc., and serves as the Chairman of the National Waterways Conference, an organization dedicated to creating a greater understanding of the widespread public benefits of our nation’s water resources infrastructure and to effecting common sense policies and programs which recognize the public value of water resources and their contribution to public safety, a competitive economy, national security, environmental quality and energy conservation. A transcript of the February 24, 2010, interview conducted by Kris Polly of Water Strategies, LLC, is below.
By admin | March 2, 2010
Submitted by Aguanomics Blog
As many of you know, I am not keen on command and control regulations of water use. I advocate higher prices to give people an incentive to use less. (I will cover the role of customs, norms and self-control in the next few days.)
A central problem with my proposal — some water for free, pay for more — is that it’s based on a per capita allocation of water. Since most water utilities do not know how many people live at a given meter, it’s hard to establish per capita allocations and pricing.
I was talking to some Australians who mentioned that their water bills show their use and gave a calculation of per capita consumption as if they had 2, 3 or 4 people in the household.
This calculation helps people understand how well they are doing at pursuing a target of 155 liters/capita/day (41 gallons/c/d). They are currently at 174 lcd.
Now it’s clear that any water district can use this method to help their customers help themselves,* but it can be leveraged for use in a per capita allocation/billing system, if you add a little twist.
So here’s how it works:
- Ask people to declare the number of people at their address (meter).
- Allocate some cheap water for each individual, and then charge more for use above that use; see this post for more.
- Give them a bill that shows their use per individual, given the number of people they have declared.
- (The twist) Also give them the use, number of people, and use per capita for 10-20 neighbors around them. This latter bit of information will create a common knowledge of how many are using how much, which will put pressure (social pressure) to both reduce overall consumption as well as honestly declare the number of household members. Although some people may complain that it’s invasive, I do not agree. Most water conservation campaigns focus on “doing your part for the community,” and most people do not mind their neighbors knowing how many people live in the house.
Bottom Line: Water conservation takes effort, and we need to be given reasons to exert it — financial and social incentives provide good reasons.
* As opposed to telling people that
they should use 10 or 20 gallons less, which is not only meaningless to the average person, but also wrong in terms of asking water wasters and water misers to use the same amount LESS, from a much-greater number.
