Category Energy Security

Advances in technology such as seismic imaging with Dawson Geophysical and horizontal drilling with Schlumberger have dramatically changed the economics of oil and gas extraction. The change in oil economics is so profound that the cost structure of hydrocarbon fuels will reverberate through the global energy market and impact pricing of renewables energies and investment decisions. So profound are these changes that the US has surpassed Saudi Arabia and emerged as the world’s largest oil producer.

With the price of oil falling as a result of large production gains in US oil production. The price of oil is may fall below $40 per barrel according to an article in Barron’s The Case for $35 a barrel Oil suggesting further oil price declines are possible.

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With the oppressive heat and appalling humidity along the Eastern Seaboard, one considers the possibility of climate change and the impact of that greenhouse gases may have on our environment. Without developing statistical regression models to gleam any semblance of understating of carbon dioxide’s impact on climate change, let’s just look at some charts that illustrate the changes of CO2 levels though history.

While industry experts and scientist debate whether elevated CO2 levels have an impact on climate change, the scientific data taken from ice core samples strongly suggests CO2 levels have remained in a range of 180-to-299 parts per million (PPM) for the last four-hounded thousand years. Scientists have developed models to suggest that rising CO2 levels contributes to global warning which are subsequently followed by dramatic climate changes that lead to periods of rapid cooling – the ice ages.

Scientific theories suggest that rising global temperatures melts the Polar ice which allows substantial amounts of fresh water to enter the oceans. The fresh water disrupts the ocean currents that are responsible for establishing a nation’s climate. As oceans warm near the equator, the warmer water travels towards each of the Polar areas. The cooler water near the Polar areas sinks and travels towards the equator. These ocean currents allows for stable climates. The issue is that fresh water is less dense because it is not salty like seawater. Therefore, the fresh water does not sink like the cold salinated seawater thereby disrupting the normal flow of the ocean currents.

Figure 1 CO2 Ice Core Data – illustrates the level of CO2 over the last four-hounded thousand years. The Vostok Ice Core CO2 data was compiled by Laboratoire de Glaciologie et de Geophysique de l’Environnement.
Ice Core Data

Figure 1 CO2 Levels – Vostok Ice Core CO2
Source: Laboratoire de Glaciologie et de Geophysique de l’Environnement

If this Ice Core CO2 data is correct, then the current data on atmospheric CO2 levels is quite profound. CO2 data is complied by the National Oceanic and Atmospheric Administration NOAA at the Mauna Loa Observatory in Hawaii. The latest trend indicates CO2 levels for June 2010 are at a mean of 392 ppm versus 339 in June 1980 and 317 in 1960. Clearly these CO2 levels are elevated. The question is what is the impact on our environment.

Aside from the catastrophe in the Gulf of Mexico and the dire need to find an alternative to our dependence on oil, should we not accelerate our efforts to find an alternative energy solution and as a way to mitigate the impact of CO2 on our environment? Maybe investment into alternative energy could help solve multiple problems.

Figure 2 Mauna Loa CO2 Readings
Source: Source data published by the National Oceanic and Atmospheric Administration (NOAA)

The bottom line is that we need to consider the possibility that elevated CO2 levels in our atmosphere could potentially have a detrimental impact on our climate. In any event, limiting our dependence on fossil fuels, the main contributor to CO2, should be paramount. Let us not forget oil is supply-constrained – there are no readily available substitutes aside from electric vehicles, and without a strategy to embrace renewable energy, supply disruptions will have a painful impact on our economy, national security, and environment.

After reviewing oil data from the Energy Information Administration (EIA), Global Petroleum Consumption , it may be helpful to put energy consumption into perspective. Most of us are quite familiar with alternative energy such as solar and wind, but the reality is, even if solar and wind could supply all of electric energy needs, the majority of our energy needs is still predicated on access to oil.

While industry experts and scientist debate whether more drilling will ameliorate the energy challenge we face, let’s look at a couple of data points. Figure 1 US Oil Field Oil Production and Drilling Rigs – illustrates that higher drilling activity as measured by Baker Hughes Rig Count data does not necessarily correlate to more oil production as measured by US Oil Field Production by the EIA. Higher drilling activity does not produce more oil.

Figure 1 US Oil Field Production and Drilling Rigs
Source: Energy Information Administration and Baker Hughes research

Despite the large investment in drilling rigs that more than doubled from 1,475 in 1974 to over 3,100 in 1982, US oil production remained relatively flat. Moreover, even the most recent drilling expansion activity that again more than doubled from 1,032 rigs in 2003 to over 2,300 rigs in 2009, resulted in relatively flat oil production, suggesting that on the margin unit oil production per drilling rig was declining. Perhaps even more disturbing is that the most recent drilling activity in the US was accomplished through extensive use of technology. Seismic imaging technology is being used to better locate oil deposits and horizontal drilling technologies are employed to more efficiently extract the oil, yet oil production still lags historic levels. While on the margin, newly announced offshore drilling could add to domestic oil production, extraction costs of oil will continue to rise adding to further oil price increases.

However, what is most profound is our dependence on oil for most of our energy needs similar to how wood was used for fuel construction material during the 1300’s and 1600’s. If we translate energy consumption into equivalent measuring units such as kilowatt-hours, we can compare and rank energy consumption. Although electricity is captured through consumption of several fuels most notably coal, a comparison of energy usage between oil and electric provides an interesting perspective.

Figure 2 Energy Perspective – provides a simple comparison of the consumption of oil and electricity measured in gigawatt-hours (one million kilowatt hours). A barrel of oil is equivalent to approximately 5.79 million BTUs or 1,699 KWH and the US consumed approximately 19.5 million barrels per day equating to 12 million gigawatt-hours a year. The US uses 4 million gigawatt-hours of electric energy annually. The critical point is that even if solar and wind supplied all of our electric energy needs, it would still only comprise 30% of our total energy needs. Therefore, without an energy strategy that facilitates migration towards a substitute for oil, particularly for transportation, we are missing the boat.

Figure 2 Energy Perspective
Source: Energy Information Administration and Green Econometrics research

It’s not all doom and gloom. Technologies are advancing, economies of scale are driving costs lower, and the economics for new approaches to transportation are improving. From hybrids and electric vehicles benefiting from advances lithium-ion batteries to hydrogen fuel cell vehicles getting 600 miles on a tank of fuel. These advanced technologies could mitigate our addiction to oil, however, without formulating an energy strategy directing investments towards optimizing the economics, energy efficiency, environment, and technology, we may miss the opportunity.

The bottom line is that oil is supply-constrained as there are no readily available substitutes, and therefore, without a means to rapidly expand production; supply disruptions could have a pernicious and painful impact on our economy, national security, and welfare.

Despite the global economic recession, preliminary data suggest oil demand remains rather resilient. According to the latest reported information from the Energy Information Administration (EIA), Global Petroleum Consumption is down one percent y/y in 2008 while China and India show increases of 4% and 5%, respectively. However, current data through September 2009, show oil demand fell quite precipitously in the US. Through September 2009, oil consumption is down over two million barrels per day form the 2007 annual average (an 11% decline). Most of the change in oil consumption is cyclical and with an economic recovery expected, oil demand should rebound and perhaps drive prices higher.

Figure 1 US Average Annual Oil Consumption

Historically, the US has seen this type of demand erosion before. From 1979 to 1983, oil demand in the US declined 28% with annualized rate of a 10% decline per year. Over this same period, oil prices actual rose despite the fall in demand. Oil prices by barrel (42 US gallons) rose from $3.60 in 1972 to $25.10 in 1979. Oil prices are up significantly in 2009. In January 2009, oil was traded at $33.07 a barrel and in January 2010, oil is trading at 2010 Oil prices $78.00 per barrel.

On a global basis, oil demand has only contracted by one percent in 2008, the latest data from the IEA. Despite the fall out in US oil demand, global markets driven from demand from China and India, has kept the global demand for oil relatively stable.

Figure 2 Global Oil Demand

The growing demand for oil from China and India increased their respective share of the global oil markets from 3% and 1%, respectively in 1980 to over 9% and 3% in 2008. At the same time, the US share of global oil consumption has declined from 27% in 1980 to under 23% in 2008. See Figure 3 China and India Oil Demand.

Figure 3 China and India Oil Demand

The bottom line is that as financial growth emerges across the globe, oil demand should increase commensurately and with oil process already at elevated levels, further prices increases are expected. – demand for oil will increase and so will oil prices.

Rising inventory levels of photovoltaic (PV) panels and new production capacity coming online is driving solar PV prices lower and thereby, bringing solar energy closer to grid price parity. With the release of the latest earnings of solar energy companies, Wall Street’s keen attention to revenue guidance, inventory levels and pricing are paramount in diagnosing the health of the solar energy industry. Expectations call consolidation of the solar industry with some key players gaining market share and for others it becomes more challenging. However, despite the turbulence in the industry, consumers will benefit in the near-term as solar PV prices fall and government incentive fuel growth in solar PV deployment.

To get a better perspective on the solar PV industry, let’s examine inventory levels for some of the leading solar PV suppliers. The following chart, Figure 1, compares inventory levels in relationship to sales volume. While inventory levels have increased, the level of inventories to sales is not egregious

Figure 1 Sales and Inventory levels

While it is important to control inventory levels in relationship to sales, revenue growth is predicated upon price, performance, and return on investment for prospective customers. Thin-film PV has emerged as the low-cost solar solution even with its lower efficiency levels in comparison to mono-and poly-crystalline PV panels. Thin-film still offers a lower cost/watt than crystalline PV, see Solar Shootout in the San Joaquin Valley , but prices for crystalline PV are falling as a result of rising production capacity and inventory levels.

Figure 2 Market Value

In Figure 2 Green Econometrics is comparing the market value of some of the leading PV suppliers as measured by their respective stock prices. In the valuation of solar PV suppliers, the stock market appears to be betting heavily on thin-film PV, as First Solar (FSLR), the leading thin-film PV supplier, enjoys a market value that accounts for over half the value of the entire solar industry. FSLR is positioned as the low-cost supplier in the solar industry with its announcement of $1 per Watt reducing its production cost for solar modules to 98 cents per watt, thereby braking the $1 per watt price barrier. However, new panel suppliers, mainly from China are pushing prices lower for poly-and mono-crystalline panels suppliers. ReneSolar (SOL) is seeing average selling prices for wafers at $0.93 per watt and bring PV panels prices to under $2.00 per watt.

There appears to be a lot riding on the success of thin-film PV and as prices fall for crystalline PV, the closer we get to grid parity. In the following chart, Figure 3, price for crystalline PV have declined quite dramatically in the last 30 years. According to the Energy Information Administration, in 1956 solar PV panels were $300 per watt, and in 1980, the average cost per solar modules was $27/watt and has fallen precipitously to approximately $2/watt in October 2009. As the installed cost of solar PV falls closer to $4/watt, pricing per kilowatt-hour (KWH) (depending on your climate and geography), equates to approximately $0.16/KWH that would be inline with utility rates after rates caps are removed.

Figure 3 Solar PV Prices

The bottom line is that despite the lower PV panel costs; we are still not at parity with hydrocarbon fuels such as coal and oil. Carbon based taxes or renewable energy incentives as well as more investment into alternative energy should improve the economics of solar and wind and bring us to grid parity.

The fall in oil consumption was most dramatic following the escalating price of crude oil to $145.16 per barrel on July 14, 2008 then at any other point over the last several years. Price elasticity, a key concept in Economics 101, which measures the impact of price change to changes in unit volume sold, is helpful in determining which products have readily available substitutes or which, like oil are inelastic with no real substitutes.

As illustrated by Benjamin Graham and David Dodd in their book Security Analysis, 1940 edition, during the 1930’s the economy had a dramatic impact on spending and consumption particularly on discretionary items such as travel. In one illustration, the change in demand was most pronounced in railroad revenues where tickets purchased for railroad travel, declined 51% from 1929 to 1993 as measured by gross receipts for the railroad industry. Over this same period, spending on the consumer staples (inelastic demand), such as electricity encountered a decline of only 9%.

While almost everyone would agree that the current economic climate is one of the most challenging since the 1930’s, a quick review of oil consumption over the last several years illustrates that demand has not significantly contracted, suggesting driving habits only changed when prices escalated to over $100 per barrel. Oil consumption dropped only 4.9% from January 2008 through January 2009.

Figure 1 Oil Consumption

As seen from Figure 1, the sharp drop in oil consumption in September 2008 of 8.3% appears as an aberration when measured over the whole year. The fact there are no real substitutes for oil in the transportation industry illustrates two important points: 1) structural changes to driving patterns are required to see appreciable changes to oil consumption and 2) how vulnerable we are as a nation with no readily available substitutes for oil in the transportation systems.

Figure 2 Oil Demand in China and India

With China and India undergoing significant structural changes as they rapidly migrate towards motor vehicles for transportation suggests the demand for oil should continue to grow relatively unabated. Until the price of oil climbs back over $100 per barrel, we will not see the structural changes necessary to develop alternatives to oil in the transportation market.

The bottom line: energy and in particular, oil has not experienced a dramatic drop in demand during 2008 suggesting driving patterns were influenced more by the price of oil then the struggling economy. We must begin to shift emphasis to alternative energies such as solar as well as hybrids and electric vehicles.

To understand current energy prices it may serve us to examine historical energy prices. Our theme is energy economics and specifically that energy prices follow the laws of supply and demand to set pricing.

There are some interesting perspectives on historical energy prices from several books including Security Analysis, 1940 edition by Benjamin Graham and David Dodd, The Great Wave, by David Hackett Fischer; and The Industrial Revolution in World History, by Peter Stearns. These books provide extensive data on pricing, industry revenues, and the framework that energy and technology serve in the economics of the industrial world.

Figure 1 Historical Energy Prices

With the risk of oversimplification, our first figure shows there have been four distinct energy prices waves that have rippled through history. The scarcity of wood that was used for building homes, heating, and tools became increasing scarce as deforestation spread through Europe in the 1300s and followed again in the 1600’s. Coal prices rose rapidly with the War of 1812 and the Napoleonic Wars. Oil prices peaked in 1982 and to an all time high of $145.16 on July 14, 2008.

Figure 2 Medieval Wood Prices

During the Medieval period in world history wood prices increased nearly threefold according to David Fischer in the The Great Wave. Wood prices rose with scarcity and peaked in 1320 as impact of the Bubonic Plague began to kill a quarter of Europe’s’ population. Twenty years from its peak in 1320, wood prices declined by 48% as the Bubonic Plague reduces the population and in turn, lowering the demand for wood.

Figure 3 Wood Prices

Figure 3. Illustrates the rapid rise in the demand for wood as the growing world populations benefited advances in science and agriculture from the Renaissance period. Wood is used for just about everything and prices climb as more land is used for agriculture leading to deforestation exacerbating the wood shortage. As demand for wood increases, prices subsequently follow. By the end of the 1600’s, coal begins to substitute for wood as an energy alternative.

With advances in technology came improvements in coal mining and transportation that allowed coal to substitute for wood as an energy source. With the invention such as Thomas Newcomen’s steam, powered pump in 1712 that facilitated coal mining and James Watt’s steam engine in 1765 that lead to advances in transportation including railroads and machinery, coal grew in importance as an energy source. These advances in technology enabled greater supplies of coal to enter the market which lead to declines in energy prices.

Figure 4 Coal Prices

We can gleam from Figure 4 that coal prices peaked in 1810-to-1815 coinciding with the War of 1812 and the Napoleonic Wars. The technological advances in mining and transportations fostered the development of an infrastructure to support the coal industry. The price of coal rose as wars ragging in Europe and the US, increased the demand for materials and supplies such as coal. However, as the wars came to an end, the abundant supplies of coal allowed prices to fall keeping energy prices low.

Oil entered the picture with the drilling of the first oil well in northwestern Pennsylvania in 1859 and the Internal Combustion Engine in 1860 that facilitated the development of the oil industry.

As oil emerged to become the dominant fuel of the 20th Century, it’s only recently that we face supply shortages. To better understand the dynamics of energy pricing in the face of changing demand, a review of spending on railroads and electricity may serve as a surrogate for discretionary and consumer stable spending patterns.

Figure 5 Industry Segment Revenues

Figure 5 illustrates changes in the aggregate revenues of railroads in comparison to electric utilizes during the Great Depression. Copious notes taken by Graham and Dodd for their book Security Analysis help to demonstrate the economic laws of supply and demand.

The change in demand was most pronounced in railroad revenues. Expenditures on railroads, the more discretionary of the two industries, declined 51% from 1929 to 1993 as measured by gross receipts for the railroad industry. Over this same period, spending on the consumer stable, electricity only encountered a decline of 9%. In economic terms, railroads demonstrate greater demand elasticity meaning there is greater change in demand at prices change or this period, disposable income. While there is some discretionary portion of our spending associated with oil, a large portion of spending on oil is out of necessity. Therefore, even during times of great economic distress, the propensity for energy consumption is not eradicated entirely.

The bottom line: Energy pricing will continue to be dictated by supply and demand. Hydrocarbon fuels such as oil are finite in nature and therefore, without definitive strategies to cultivate alternative energy resources we will remain hostage to the vagaries in energy prices..

Access to energy was instrumental fueling the Industrial Revolution. Over the last 200 years, industrial nations have migrated from wood to coal and now to oil as a source of energy. During the 1700’s, wood was used for just about everything from fuel to constructing houses and building wagons and even tools. As demand for wood increased, the cost of wood rose as deforestation led to the scarcity. The scarcity of wood resulted in deteriorating economics.

It was the availability and access to coal that enabled the growth of Industrial Revolution by providing accessible energy. The Industrial Revolution was predicated upon the availability of Labor, Technology, Capital, and Energy. Scarcity of any of these inputs could undermine economic growth, as was the case with capital during the Great Depression of the 1930’s and the Energy Shock of the 1970’s.

Oil, driven by rapid growth in automobile usage in the U.S, has replaced coal as the main energy fuel. According to the Energy Information Administration (EIA), the 70% of oil consumption in the U.S. is for transportation .

Figure 1 US Oil Imports

Figure 1 illustrates US historical oil imports, as measured by the Energy Information Administration in U.S. Crude Oil Field Production (Thousand Barrels per Day) that dates back to 1970. The EIA provides oil import data dating back to 1910. To estimate the amount of money the US spends on oil imports every year, we can use the data from the State of Alaska Department of Revenue, which provides historical data on the price of oil an derive an average yearly figure.

Figure 2 US Oil Import Spending

Figure 2. appears quite staggering given the amount of money we send to oil producing countries. The US is spending hundreds of billions to import oil. According to the EIA, the US imported an average of 10,031,000 barrels per day equating to $263 billion in imported oil during 2007 when the State of Alaska measured the yearly average spot price for a barrel of oil at $72.

According to Solarbuzz, Germany leads the world in solar photovoltaic (PV) installations with 47% of the market while China increased its market share of PV production from 20% to 35%. The US accounts for 8% of the world solar PV installations. Solarbuzz indicates the global solar PV industry was $17 billion in 2007 and the average cost of solar electricity is $0.2141 per KWH. If a portion of our $260 billion sent to oil producing countries were to be invested into solar energy, perhaps the US would not lag the world in alternative energy.

The bottom line is that the money spent on importing oil has a deleterious impact on our economy and continues our dependence on hydrocarbon fuels producing carbon and other harmful byproducts that negatively impact our climate and health of our children. The longer we are dependent on oil, the longer our economy and environment suffer. Use your vote for alternative energy and not drill baby drill.

Using the latest data from the Energy Information Administration (EIA) , oil production remains significantly below historical levels achieved in ‘70’s and ‘80’s. The peak production in 1970 has not been replicated despite significant expansion of drilling activity during the 1980’s.

Oil Drilling and Production

Figure 1 Oil Drilling and Production

Figure 1 illustrates US historical oil production, as measured by the Energy Information Administration in U.S. Crude Oil Field Production (Thousand Barrels per Day) that dates back to 1920 juxtaposed against U.S. rig count, as measured by Bakers Hughes. The chart suggests that during the first energy shock to hit the US and the world, drilling activity expanded dramatically. By 1981, weekly North American oil rig count reached a high of 4,530 oil rigs in 1981.

U.S. Crude Oil Field Production reached a peak of 9.6 million barrels per day in 1970. In 1981, the height of US oil drilling, oil production was 8.57 million barrels per day. By 2002, U.S. Crude Oil Field Production was 5.74 million barrels per day. Over the last six years oil production declined 10.7% while over this same period, drilling activity as measured by Baker Hughes’ North American Rigs Running weekly rig count, increased 125%.

The decline in U.S. oil production is quite disturbing. During the last decade, a host of new technologies were introduced to help facilitate oil production. Companies such as Dawson Geophysical Co. (DWSN) that enhanced the market for energy exploration by providing seismic data acquisition services. Dawson Geophysical acquires and processes data using 2-D and 3-D seismic imaging technology to assess the potential of hydrocarbon sources below the earth’s surface.

Companies such as W-H Energy Services Inc. that was recently acquired by Smith International, Inc (SII) , offer an array of drilling services such as horizontal and directional drilling for onshore and offshore oil drilling, and 3-demensional rotary steering drilling systems. Smith Int’l is growing revenues at over 19% annually and Dawson’s revenues are growing 53%. With these oil drilling and energy exploration technologies growing at double rates, and drilling activity expanding at 14%, why is oil production falling?

With the rancor of “drill baby drill’ heard as call to solve the energy crisis, energy technologies such as solar and wind energy solutions deserve greater emphasis. Oil will eventually run out. There is a finite amount of oil in the ground. The Tar Sands will not solve the problem. According to Alberta Energy, sand oil production was 966,000 barrels per day (bbl/d) in 2005 and is expected to reach 3 million bbl/d by 2020. Tar sands would only contribute 3.5% towards our current oil consumption of 84.5 million barrels per day.

The bottom line is that our dependence on oil leaves our economy vulnerable. Energy is the catalyst that enables economic development. The longer we are dependent on importing oil from countries hostile to civilized existence, the more tenuous grows the environment. We need to conserve existing energy use and invest into energy technologies that foster the development of alternative energies, thereby, limiting our dependence on oil period.

Energy storage enables the electric generated though solar photovoltaic devices or wind turbines to be used when it’s dark, cloudy, or calm. As Nathan Lewis, Professor of Chemistry, Division of Chemistry and Chemical Engineering Lewis Group at California Institute of Technology, framed it, energy storage is integral in facilitating the development of alternative energy programs.

While hydrogen fuel cells offer future promise to our energy storage needs, battery technologies could provide some immediate results. As with all technologies there are tradeoffs.

There are several competing approaches to battery development. Among these approaches include the lead acid, nickel metal hydride, and lithium-ion cells.
Lead acid: batteries are the oldest approach and are typically found under the hood of your car or truck. Nickel metal hydride batteries have been around for more than 25 years and are used in hybrid electric vehicles such as the Toyota Prius. Lithium-ion cells have been on the market since 1991 and are used extensively in cellular phones, laptop computers, and digital cameras.

There are several issues in dealing with batteries such as environmental, economic, power, safety, and useful life. Lithium-ion cells possess many advantages, but incidences such as laptop computers erupting into flames, leaves many concerns for applicability in motor vehicles. Despite the setbacks, lithium-ion technology could provide solutions to the electric vehicle.

Why is this battery technology important? Solving the energy needs of the motor vehicle has profound implications in solving our energy needs. Nearly 70% of our oil consumption is direct towards transportation essentially motor vehicles. Without a dedicated strategy to address the transportation market and specifically the automobile, our progress towards energy independence is an illusion.

There are several issues with the nickel metal hydride batteries currently used in hybrid electric vehicles. Nickel metal hydride batteries are heavy, bulky, require large storage space in the vehicle, and don’t offer great acceleration. Lithium-ion offer power, size, and weight advantages over nickel metal hydride batteries, and numerous companies are working to improve performance and ameliorate the negative connotations associated with flaming laptops.

One of the basic concepts in dealing with batteries is the measure of battery energy versus battery power. The amount of battery energy refers to endurance, how long will the battery last and is often measured in ampere-hours or watt-hours per kilogram of battery weight. The amount of power refers to the energy draw and is akin to delivering acceleration in an electric vehicle.

The following figure illustrates the measurement of battery power and energy. Lithium-ion batteries are differentiated in their ability to bridge the power and energy tradeoff.

Figure 1 Battery Power vs Energy

For home renewable energy projects such as solar or wind energy deployment, it is often recommended that a deep-cycle battery be used. Deep cycle batteries are able to draw down 70%-80% of their full power, offering longer energy life than a typical lead acid battery. In addition, newer materials such as Gel batteries and absorbed glass mat (AGM) that are sealed, maintenance free, and can’t spill, and therefore, are less hazardous. For a tutorial on home use batteries visit
BatteryStuff.com

An interesting perspective on battery design is presented Energy vs. Power by Jim McDowall. For a primer on how batteries work visit presented Battery Power The premise is that there are tradeoffs between designing a battery for high power versus high energy.

Research conducted at Stanford University suggest the battery life of lithium-ion batteries could be extended through the use of Nano-technology. The bottom line: energy storage is paramount to sustaining the development of alternative energies and battery technologies play a critical role in energy storage and further expanding the role of alternative energies.

Rising energy prices and our diminishing supply of oil threaten our national security. Without access to energy our economy and national defense are vulnerable to collapse. As a solution to our energy needs, we hear political rhetoric to expand oil drilling, but our energy strategy requires a long term solution that means embracing alternative/renewable energy technologies such as solar and wind. It only takes a quick review of oil production statistics to realize how formidable the challenge is that we face.

According to the Energy Information Administration (EIA) in 2007, the US consumed 20.6 million barrels of oil per day (bpd) but we were only able to produce 8.5 million bpd, leaving a deficit of approximately 12.2 million bpd. This means the US needs to import 60% of its oil and at a cost of $130 per barrel, the US will spend approximately $600 billion a year on imported oil.

Oil prices have increased dramatically with an increase of 420% since 2001. The combined impact of rising prices and diminishing oil production leaves the US in a precarious position. Yet, drilling for more oil may not rectify this tenuous situation.

As an example, back in the 1980’s, drilling activity in Alaska helped to ameliorate the oil crisis of the 1970’s. Today, oil production in Alaska has declined significantly. From its peak in 1988, oil production in Alaska has decline 64%. In Figure 1, oil production in Alaska in contrasted to the price of oil per barrel from 1980 to June 2008.

Figure 1 Alaska Oil Production

When we measure the supply and demand for oil, we find in the US, it is really a supply problem. According to the EIA , US demand for oil is growing at an annual rate of one percent over the last ten years, but oil production is down 20% since 1987.

Figure 2 US Oil Production

The energy problem however, is global. The demand for oil in the US may slow, yet supply constraints driven by growing consumption in developing countries could exacerbate this already bleak picture. On a per capita basis, the US consumes approximately 25 barrels of oil per person annually or a little over 600 gallons a year. That figure greatly exceeds other countries and particularly those in developing nations such as China.

In China, oil consumption per person is only 2 barrels or 84 gallons a year. However, oil consumption in China on a per capita basis has increased 88% from 1996 to 2006 according to data from the EIA. Despite China’s one percent population growth, at its current oil consumption growth rate, China is expected to double its current oil consumption by 2015 to over 14 million bpd and exceed the US in oil consumption by 2020. China’s current oil appetite suggests that in 14 years China will require an additional 14.6 million barrels per day. Even if oil producing countries are able to produce the additional oil, those countries that are unable to meet their own needs such as the US and China, will continue to be held hostage to oil producing states.

Figure 3 China Oil Consumption per Capita

The bottom line: the energy model based on hydrocarbon fuels is broken. Neither drilling for more oil will not satisfy our energy needs nor will corn-based ethanol. We need to rapidly embrace electric vehicles using solar, wind, and fuel cell technologies to provide alternative energy solutions. It time to put energy as the most critical component of our national security. Energy should be front and center for the US election. It’s time to invest into clean and renewable energy solutions.

As energy and food prices set new world records, what can we do at home to avert the crisis? Food prices are rising because corn is diverted from food production to producing ethanol for use as fuel in motor vehicles and is exacerbated by the recent flooding in the Mid West. Oil prices continue to escalate as demand for oil in developing countries increases and supply constraints, rising production costs, and limited refining capacity constrain the supply of oil. These factors continue to weigh against homeowners that will face escalating fuel bills to heat or cool their homes. There are some viable alternative energy solutions including wind and solar as well as home insulation that should offset the rising cost of energy. As far as food for fuel, we need to break our dependence on hydrocarbons which continues to impact our climate and weather and transfer our wealth to oil producing nations

Corn Prices have increased 264% since 2005. The rising price of corn used for ethanol is causing farmers to plant more corn and less production of other grains such as wheat or soy. Lower supply of grains is driving up food prices. Rising food prices is most debilitating to the poor, especially those in developing countries.

Figure 1 Corn Prices

Growing demand for oil and questions over Peak Oil suggesting even with oil prices rising to such an elevated level, production is rather anemic. According to the Energy Information Administration (EIA) , while oil prices increased 344% since 2001, oil production from OPEC is up only 1.2% over this same period.

Figure 2 Oil Prices

According to the EIA The demand for oil in China is growing at an 8.1% CAGR over the last five years. With demand for oil growing significantly in developing countries and despite production developments in Saudi Arabia and the 5-to-8 billion deepwater Tupi oil discovery in over Brazil The Tupi announcement in January 2008 is the world’s biggest oil find since a 12-billion-barrel field discovered in 2000 in Kazakhstan according the International Herald Tribune. These new oil discoveries are often in inhospitable areas or deep ocean environments, which makes extraction costly and difficult.

Figure 3 Rig Count and OPEC Oil Production

What can we do? . Forget drilling for more oil, electric vehicles and investment into alternative energy is the only way to avert this crisis. OPEC area drilling activity is up 48% since 1998 and yet, despite dramatically higher oil prices, up 5 fold since 1998, OPEC oil production increased only 11% over 1998.

Homeowners could begin to deploy energy saving and alternative energy systems. Wind and solar energy could help reduce some of the pain. As consumer embrace hybrids, electric, and fuel cell vehicles, wind and solar should begin to offer a stronger value proposition. Energy saving tips such as compact fluorescent bulbs, on-demand hot water heaters, and thicker home insulation products should help reduce heating and cooling costs.

According to the American Wind Energy Association AWEA a turbine owner should have at least a 10 mph average wind speed and be paying at least 10 cents per Kilowatt-hour (KWH) for electricity. There are electric utility and tax credits available in some areas. There are also questions regarding zoning restrictions, and whether to connect to batteries for energy storage, or directly to your electric utility. Consult the Wind Energy Resource Atlas of the United States Wind Resource Maps to get a better understanding of wind speeds in your area.

Cost wind systems will vary depending on model and installation costs will vary by your location. The Whisper 500 from Southwest Windpower offers electric production of 538 KWK/month at 12 mph (5.4 m/s). The system weighs 155 lb (70 kg) and has blade span of 15 feet (4.5 m) and must be mounted on a tower in cement. At 538 KWH per month, that is enough energy to cover the needs a modest house with conservative electric usage. Small wind systems can range from under $1,000 to over $20,000 with a payback period of approximately five years depending on wind resources and utility rates.

Solar photovoltaic (PV) panels cost an average of $4.80 per watt according to Solarbuzz which is about $0.24 per KWH over a 20 year life of the PV system. With an average output of approximately 10.6-watts/square foot (114 w/m^2), a five KW PV systems would cover 515 square feet (47.8 sq. meters) costing approximately $36,000 before credits and tax benefits and produce about 490 KWH per month. Of course installations costs are extra, but with PV production ramping and new PV suppliers entering the market we can expect costs to decline. Federal and local tax credits as well as selling unused electric to your local utility offers economic value on the margin.

The economic value is expected to increase as costs decline and electric rates increase and we can expect significantly higher utility rates in the near future. The economics of zero carbon emissions is not even measured as a benefit to the consumer. We are just beginning to see the cost impact of extreme weather and climate change.

Consumers should try to ameliorate the rising cost of energy by investing into solar and wind. There are several companies offering complete installation services. Among these include: Akeena Solar (AKNS) in California and The Solar Center in New Jersey.

The bottom line: energy and food prices are creating a crisis for consumers globally and there are several initiatives that could help minimize the pain. In addition, the erratic weather patterns around the world may be just a prelude to climate changes due to the impact of carbon dioxide on climate, which may cost us much more in the long run. Let’s stop the drain of wealth cause by oil and invest into clean and renewable energy solutions.

The question of Peak Oil, first proposed by Dr. M. King Hubbert can best be illustrated by analyzing the supply and demand for oil. With use of statistics complied by Energy Information Administration (EIA) , the tenuous position our energy needs becomes more apparent. Let’s examine the latest data from the EIA to provide a picture of the global demand and supply of oil.

Oil Demand

Figure 1 Oil Demand U.S. and China

From Figure 1 we can see that while the demand for oil in the U.S. has grown at a rather moderate rate in comparison to China. The demand for oil in the U.S. declined at an average annual rate of 0.4% during the 1980’s. U.S. oil demand has averaged at a 1.5% compounded annual growth rate (CAGR) during the 1990’s and 1.0% in the last five years since 2001.

In China, demand for oil is grew at 2.7% CAGR during the 1980’s and increased to 7.6% in the 1990’s. Since 2001, the demand for oil in China is growing at an 8.1% CAGR over the last five years. The strong demand for oil from China is remains unabated and is driven by growing motor vehicle usage. In nine years, at its current growth rate, China’s oil consumption will exceed the level of oil consumption the U.S. had in 1991 and in twelve years exceed our current level.

Figure 2 Oil Demand in China

Figure 2 illustrates that the demand for oil in China is quite substantial. With the rate of growth in oil consumption in China exceeding 8% it won’t take very long to exacerbate our tenuous current energy position. Perhaps a review of oil production will shed some light on the topic.

Oil Supply

The following graphs provide a review of oil supply from the Middle East, Saudi Arabia, OPEC, Russia and surrounding Eurasia countries including the former Soviet Union.

Figure 3 Oil Production Middle East and Saudi Arabia

While oil production contracted somewhat during the 1980’s, oil production in the Middle East and Saudi Arabia has grown since 1980, but recent oil production appears constrained. Oil production in the Middle East is up 3.1% on a CAGR during the 1990’s, and has remained at that level since 2001. Saudi oil production grew 3.0% during the 1990’s, but has dropped slightly to 2.1% since 2001.

Meanwhile, among the countries of the former Soviet Union, we see oil production gaining strength. In the countries comprising the former Soviet Union (Eurasia), oil production is up 6.7% on a CAGR since 2001.

Figure 4 Oil Production Eurasia, Middle East and Saudi Arabia

Currently OPEC accounts for approximately 37% and Saudi Arabia 11% of the world’s oil production. Saudi Arabia is recognized as having the largest oil reserves in the world and its Ghawar oil field is the single most productive oil field in the world, according to a recent article in the Wall Street Journal . “Saudis Face Hurdle in New Oil Drilling” The Saudis are developing new fields such its Khurais field, but are finding production efforts challenging as they employ deep horizontal drilling and water injection to achieve production. Given what we glean from the EIA production statistics, achieving moderate oil production growth maybe more of a challenge then we think.

Figure 5 Monthly Oil Production

The bottom line is that our dependence on oil leaves us vulnerable not only to supply disruptions but also in trying to protect supply in countries that gravitate towards violence and terrorism. If more global efforts were employed to develop alternative energies, we could limit our dependence on oil, improve global economics by offering affordable energy to the world, and save our environment and climate – a small step for our planet.

Solar energy is gaining considerable attention from Wall Street and countries looking to achieve energy independence. Solar energy represents one of the most significant energy solutions to help eradicate our addiction to oil. Despite the tremendous success offered with solar photovoltaic (PV), more research is required to sustain further deployment and achieve energy independence. Some semiconductor materials used to develop photovoltaic devices are scarce and may limit PV from achieving mass penetration. Let’s review the current solar PV market to better understand the dynamics of this market.

Figure 1 PV Production by Year

Figure 1 demonstrates the rapid market growth of solar PV and Solarbuzz is astute to point out some critical data points: cumulative PV deployment is still less than 1% of global electric usage, PV industry faces capacity constraints, and Germany and Spain account for 47% and 23% of total PV deployment in 2007. With the significant growth in both the production and deployment of solar PV devices, the stock price of some of the leading PV suppliers have appreciated dramatically even despite a recent pull back in the beginning of the year.

Figure 2 PV Production of Leading Suppliers

Despite the turbulence on Wall Street in 2008 with the NASDAQ down 14% year-to-date, and Dow Jones Industrial Average down 7.3% YTD, investor appetite for clean technology stocks remains robust. First Solar (FSLR), a leading supplier of thin film solar PV remains in positive territory and is up nearly ten-fold from its IPO in November 2006. Thin film PV offers a cost advantage over traditional crystalline PV cells. PV devices employ various elements with different band gap properties to achieve improving solar efficiencies. (See our post on semiconductor band gaps: What’s Pushing Solar Energy Efficiency?, October 1st, 2007)

Figure 3 Market Capitalization Solar PV Suppliers

There are several elements used in thin film PV production. Among the elements used include cadmium and tellurium (CdTe), copper, indium, and selenium, (CuInSe), and copper, indium, gallium, and selenium (CIGS). These various elements are used to improve operating efficiencies and lower production costs of PV devices. In general, crystalline PV devices have higher solar efficiencies, but cost more due to their material thickness of 200-to-300 microns. Whereas, thin film PV are usually about 3 microns deep offering significantly lower production costs. However, SunPower (SPWR) the leading polycrystalline silicon PV supplier offers the highest solar efficiency a rating of 22.7% that started shipping in 2007.

Figure 4 FSLR and SPWR Solar PV Production

FSLR and SPWR are the two leading PV players as measured by Wall Street in terms of market valuation. The cost-efficiency tradeoff between these two PV suppliers offers an interesting framework to evaluate the solar PV market.

Figure 5 PV Cost-Efficiency

The stock market appears to be betting on FSLR given its market capitalization of $22 billion and trading at 43 times 2007 revenues of $504 million. FSLR employs CdTe in its solar modules. In several postings on Seeking Alpha starting back in November 2007, Anthony and Garcia de Alba have provided valuable insight into material constraints in the production of PV devices.

Tellurium is a rare metalloid element that is used in producing semiconductor materials because it does not conduct electricity. Tellurium is recovered as a by-product in refining and processing of gold and copper as well as other ores. Tellurium was primarily used to create metal alloys that enable easier machining of end products.

Because of its unique properties, Tellurium and cadmium (CdTe) have been used in thin film PV production since the 1980’s. According to a comprehensive study by Fthenakis and earlier work by Moskowitz “The Life Cycle Impact Analysis of Cadmium in CdTe PV Production”, CdTe is deposited on a thin film substrate using electrodeposition, chemical surface deposition, and vapor transport deposition. FSLR reports in their 10K that they employ a proprietary vapor transport deposition process for CdTe PV production.

A thin film of CdTe is deposited on a substrate at a thickness of 3 microns. According to the Fthenakis and Moskowitz, back in the 1980’s, a 10 megawatt (MW) PV facility employing vapor transport deposition of CdTe uses 3,720 kilograms (kg) of CdTe to achieve a10% efficiency at 3 microns. A one-one bond of CdTe with an atomic weight of Cd at 112.41 and Te at 127.60 suggests Te comprises 53% of the weigh of CdTe. With 3,720 kg of CdTe used at 10MW, the amount of Tellurium used is estimated at 1,978 kg or 197.8 kg/MW.

The electrodeposition CdTe process using a mixture of cadmium sulfate and tellurium dioxide used 880 kg of tellurium dioxide, which amounts to approximately 696.8 kg of Te for 10 MW PV productions. The electrodeposition CdTe process would equate to about 69.7 kg of Te per MW. For a 100 MW PV production approximately 7 tons of Te are consumed.

One would assume the PV production process would improve significantly from the 1980’s and the amount of Te consume would decline with improving efficiencies. This would suggest that FLSR at 200 MW PV capacity in 2007 would consume somewhere between 14 and 38 metric tons of tellurium. This figure is significantly higher than the estimates derived from the FSLR tellurium posts on Seeking Alpha that are closer to10 tons per 100 MW (100 kg/MW).

Figure 6 Te Production

Let’s proceed with the conservative figure of 100 kg/MW (10 tons at 100 MW) to assess the tellurium constraints. Tellurium production is a by-product of gold, copper and other ores. We have found Te production estimates ranging from 132 metric tons (MT) to 300 MT per annum. In a National Renewable Energy Laboratory (NREL) report Assessment of Critical Thin Film Resources in 1999 estimated Te production between 200 and 300 metric tons per year in 1997 and indicated under utilization of capacity for the production of tellurium.

Let’s compare our conservative estimate of 100kg/MW Te usage for FSLR to the optimistic production forecast of 300 MT to evaluate capacity constraints for FSLR. With 300 MT (300,000 kg) global Te production and FSLR using 80% of the Te production, capacity of PV tops out at 2,400 MW (2.4 GW).

The U.S. electric energy usage in 2006 was 4,059.91 billion kilowatt hours (KWH) which translates into 463,460 MW (divide 4060 by 365 days x 24 hours). So without significant investment into research and development for PV FSLR could be constrained at 2,400 MW representing only 0.5% of the U.S. electric usage in 2004. Further more, if FSLR were to be constrained at 2.4 GW annual production, revenues ($2.60 per watt Q4/07) would peak at approximately $6.24 billion, a price-to-sales multiple of 3.4x with its market capitalization of $22 billion.

However, in comparison to leading companies in energy, pharmaceuticals, technology and finance, FSLR’s market capitalization is relatively small. Perhaps with improving production processes, FSLR could reduce the amount of Te per panel and improving mining and metal refinement process could increase Te production to expand the market for CdTe thin film PV devices.

Figure 7 Market Capitalization of Leading Companies

The bottom line is that more research and investment into alternative energies is required to ameliorate the world from being held hostage to oil and hydrocarbon fuels that are directly linked to rising CO2 levels and climate change.

With the infinite wisdom of the White House and U.S. Congress, food prices are now directly tied to the price oil. The price of corn-based ethanol is now determined by the price of gasoline that it substitutes in motor vehicles and that price is established by supply and demand for oil. The price of gasoline at your local gas station or convenience store is based on the price of oil. And now that the price of corn is rising because it is tied directly to oil, the price of other grains and subsequently, prices along the entire food chain are rising.

Corn Prices have increased 166% since 2005. The rising price of corn that is used to produce corn ethanol is causing farmers to direct their limited resources to grow more corn, which means other grains such as wheat or soy become scarce and their prices rise. The growing scarcity of grains for food products is raising price across the food chain. Developing a renewable energy solutions based on diverting food as a substitute for expensive gasoline forces food supplies to become scare and expensive.

It is the supply and demand for gasoline and diesel fuels that establishes the price at the pump. When corn ethanol is substituted for gasoline, prices tend to gravitate towards a mean price that continues to rise to keep pace with the escalating price of crude oil now over $110 per barrel. Corn prices are inextricably linked to oil prices and in turn; corn prices impact other grain prices that means it cost more to feed your family or to feed livestock and forces those prices higher.

The rise in corn prices is illustrated in Figure 1.

Figure 1 Corn Prices

Irrespective of the timing of Peak Oil, a long-term energy strategy is required. The days of cheap oil are over. Remember how oil production in Alaska helped ease the U.S demand for foreign oil a couple of decades ago. Oil production in Alaska declined by nearly 75 percent from its peak in 1987 according a Washington Post article back in 2005. In November 2007, the Petroleum News indicated production in Alaska is expected to decline further in the future. The U.S. depends on oil production in the Gulf of Mexico for about 25% of our supply, according to the Department of Energy which is why the impact from Hurricane Katrina was so devastating.

Diminishing supply and rising demand suggests oil prices should continue to remain elevated. The rising motor vehicle usage in China (China Motor Vehicle Registration)
and India continues to influence the demand for oil.

Figure 2 Vehicle Registrations in China

Figure 2 and Figure 3 illustrate the rising use of motor vehicles in developing countries. This trends should continue and in turn, increase the demand for oil.

Figure 3 Automobile Sales in India

Maybe we should look to some leading countries in the development of alternative energy strategies. Perhaps we can learn from Norway’s HyNor Project. Solar photovoltaic projects being lead by Germany
and Spain.

So the next time you fill your tank or when you’re at your local food store and find that your wages don’t quite cover your food bill, ask your local Congressional representative for better planning on alternative energy strategies and solutions. Investment and research into solar, wind, electric vehicles, and hydrogen energy could provide real solutions by addressing energy needs, climate concerns, the environment, and food prices.

Oil continues to trade above $100 per barrel with the NYMEX CRUDE FUTURE closing at $101.84 on the last day of February 2008 and the US House of Representative passes legislation to raise $18 billion in new taxes for Big Oil to foster development of alternative energies. While President Bush plans to veto the legislation and Republicans claim the legislation unfairly impacts the oil industry, let’s look at the numbers. The legislation calls $18 billion tax over the next ten years so the impact amounts to $1.8 per year. The oil demand is approximately 20.6 million barrels per day according the to latest data from the Energy Information Administration. With oil at $100 per barrel the US will spend about $2 billion a day on oil and that equates to over $750 billion a year. In comparison to the total amount of oil we use, the tax is about 2/10th of one percent.

Figure 1 US Oil Supply and Demand

Well maybe that’s not a fare comparison. The bill, H.R. 6, the CLEAN Energy Act. would roll back two tax breaks for the five largest U.S. oil companies and offer tax credits for energy efficient homes and gas-electric hybrid vehicles.
According to the CNN article, the money to be collected over the 10-year period would provide tax breaks for solar, wind and other alternative energies and for energy conservation. The legislation was approved 236-182, and is expected to cost the five largest oil companies an average of $1.8 billion a year over that period, according to an analysis by the House Ways and Means Committee. So in other words this bill just repeals tax breaks given to Big Oil to become more competitive in the global market.

Figure 2 Oil Prices and World Rig Count

So what is the $1.8 in tax impact on Big Oil? Let’s just look at the impact this would have if just Exxon Mobil Corp (XOM) had to endure the tax only. Exxon Mobil generated $404 billion revenues in 2007, which means if Exxon had to face this tax only, it would be less than ½ of 1% of revenues. Considering that some states impose a 6% sales tax on consumers, a tax impact of 0.2% on the largest oil companies seems rather innocuous.

If the world has to depend upon OPEC oil production, questions do arise over the expansion of oil production and OPEC’s willingness to supply oil despite oil over $100 per barrel. As figure 3 illustrates production among OPEC nations is faltering. Could this be a prelude to Peak Oil?

Figure 3 OPEC Oil Production

The bottom line is that without incentives and further research on alternative energies, the world continues to be held hostage to oil and hydrocarbon fuels which are directly linked to rising CO2 levels and climate change.

World oil demand continues to rise despite efforts to limit demand. Renewable energies such as solar and wind have the potential to limit our dependence on hydrocarbon fuels, but one issue remains prominent – storing energy. While the sun provides radiation for solar and generates wind, when its cloudy or dark we are unable to produce solar energy. One must provide a means to store that energy for when it is needed. Fuel cells enable energy conversion and fill a reliable role in alternative energy strategies.

A chart compiled by Wasserstoff-Energie-Systeme GmbH (h-tec) provides an easy to understand depiction of how fuel cells integrate with solar and wind energy solutions. Fuel cells provide the enabling technology that allows hydrogen to serve as the storage and transport agent. The solar energy that is produced during the daylight hours is used in an electrolyzer to produce hydrogen that in turn, is then used to operate the fuel cell producing electricity at night when it is needed. This process is called the solar-hydrogen energy cycle. Figure 1 illustrates the importance of energy storage in adopting alternative energies.

Figure 1 Solar-Hydrogen Energy Cycle

Demand for oil and hydrocarbon fuels continues to grow despite effort to conserve. Total Petroleum Consumption shows increasing oil demand from China and India while demand in the U.S. grows at a slower pace. With improving efficiencies and lower production costs, fuel cells could provide a solution to our appetite for oil in motor vehicles. Figure 2 describes how fuel cells and electrolyzers (fuels running in reverse) work.

Figure 2 Fuel Cells

Fuel cells are devices that convert chemical to electrical energy – in essence; it’s an electrochemical energy conversion device. In the chemical process of a fuel cell, hydrogen and oxygen are combined into water, and in the process, the chemical conversion produces electricity. In the electrolyzer, an electrical current is passed through water (electrolysis) and is the reverse of the electricity-generating process occurring in a fuel cell.

Hydrogen fuel cells offer tremendous opportunity for storing and transporting energy enabling broad applications for home, business, motor vehicle and large-scale energy projects. The follow provides a review of current technologies applicable to hydrogen fuel cells. Factors to consider in using hydrogen fuel cells include operating efficiency, operating temperature range, and material used for the electrolyte (the catalyst that separates hydrogen) and fuel oxidant (that transfers the oxygen atoms).

Figure 3 Hydrogen Fuel Cell Technologies

One of the most practical fuel cell technologies for motor vehicle use include Proton Exchange Membrane (PEM) because it operates at normal ambient temperatures and offers high electrical efficiency. There are several useful web sites that illustrate the benefits of hydrogen fuel cells. h-tec and the National Renewable Energy Laboratory provide some very useful information on hydrogen fuel cells.

We are also seeing progress on fuel cell vehicles that could ultimately ameliorate are demand for oil, if not eliminate it entirely, all with no carbon dioxide or other harmful emissions. We see most major automakers developing hydrogen powered fuel cell vehicles. GM is making progress introducing several models using GM’s Fuel Cell Technology.
Honda’s experimental hydrogen refueling station in Torrance, CA uses solar to produce hydrogen for their hydrogen fuel cell vehicle Honda’s FCX .

The bottom line is that the availability of cheap oil is on the decline and without further research on alternative energies we may find the global economy in a very tenuous position. Further research into solar and hydrogen fuel cells could significantly reduce our dependence on oil.