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How Quickly We Forget

Retail gasoline prices in the U.S. peaked back in July at $4.17 a gallon. (Source: EIA). At the end of 2008, gasoline had fallen to $1.67. We typically use about 140 billion gallons of gasoline each year, so that $2.50 drop amounts to an annualized difference of $350 billion in the pockets of consumers – and into the U.S. economy instead of the economies of Saudi Arabia and Venezuela. Add in the drop in diesel, home heating oil, and jet fuel and you are looking at half a trillion dollars. And while I am strongly in favor of raising gasoline taxes to reduce our fossil fuel consumption (and demand has been sharply down as a result of high prices), the economy can certainly use this sort of stimulus right now.

But in the long run it is very important how people use that money. And we seem to be reverting to bad habits. How quickly we forget $4 gasoline:

Big is back: As pump prices plunge, SUV sales surge

NEWPORT NEWS – It looks like the Highlander is in and the Prius is out — for now at least.

Trucks and sport utility vehicles will outsell cars for the first time since February, according to a December report by Edmunds.com, which tracks industry statistics.

“Despite all the public discussion of fuel efficiency, SUVs and trucks are the industry’s biggest sellers right now as a remarkable number of buyers seem to be compelled by three factors: great deals, low gas prices and winter weather,” said Michelle Krebs of AutoObserver.com, a division of Edmunds.com, in a prepared statement.

And the punch line:

The surge in SUV and truck sales suggests that the issue of fuel efficiency has faded in the minds of many consumers.

Toyota has already slowed production of the industry’s flagship hybrid vehicle, the Prius, due to lack of interest and a growing inventory of the once best-selling model, Edmunds.com reported.

All this might mean a setback for fuel-efficient models that were heralded as a remedy for the country’s addiction to oil.

If people are going to flock back to gas guzzlers instead of using their extra pocket money to pay down their debt, then I would rather gas prices go ahead and recover. Based on the trends in vehicle sales, I am sure I will see that wish fulfilled before too long.

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January 4, 2009 - Posted by | fuel efficiency, gas prices, Prius

56 Comments

  1. Remember what I wrote in my peak-oil summation:

    “Most importantly we have no way of knowing how human response to “the end of cheap oil” will change over time. We know for instance that car-buying patterns change with gas prices. When gas prices rise, more people buy hybrids. When gas prices fall more people buy guzzlers. That’s messy, and that’s human, but it’s a response. I’d be more worried, and more inclined to the pessimistic view if we didn’t see the hybrid boom in times of high gas prices.”

    We aren’t incredibly bright, but at least we aren’t completely stupid.

    We are enjoying “human” progress, with its typical steps forward and steps back.

    Comment by Anonymous | January 4, 2009

  2. Remember what I wrote in my peak-oil summation:”Most importantly we have no way of knowing how human response to “the end of cheap oil” will change over time. We know for instance that car-buying patterns change with gas prices. When gas prices rise, more people buy hybrids. When gas prices fall more people buy guzzlers. That’s messy, and that’s human, but it’s a response. I’d be more worried, and more inclined to the pessimistic view if we didn’t see the hybrid boom in times of high gas prices.”We aren’t incredibly bright, but at least we aren’t completely stupid.We are enjoying “human” progress, with its typical steps forward and steps back.

    Comment by Anonymous | January 4, 2009

  3. My first UV was an ’74 2wd IH Travelall I got just before graduating and it replaced a ’66 Chevy station wagon. For the record, a Travelall will hold 16 sailors. The Travelall was replaced with an ’84 2wd ¾ ton GMC Suburban which got double the millage pulling a trailer of the IH. During this period, moved 16 times, remodeled several houses, and hauled lots of firewood.

    Finding a UV was never hard when hauling the neighborhood to some even. Big and ugly stood out back then. And what is with the ski rack and other ilk? If it will not fit inside a UV you do not need it Putting nicer seats and AC in a truck frame is not a bad idea as long as you understood it was not a sports car.

    Then SUV became popular. The best I can tell SUV are neither a sports car or a UV. I know very few who know how to drive a 4wd in the snow including 100% of California natives.

    In any case, I have never had any trouble finding a cheap Toyota that gets good millage. They are a lot more fun to drive on mountain road than an SUV until ground clearance becomes an issue. I am still trying to figure out the Pious. A Pious is a fuel efficient car for drivers who do not know how to get good fuel economy. A Pious cost about $6k more than a Corolla. Adding heavy batteries to a car is counter productive to good millage.

    Comment by Kit P | January 4, 2009

  4. My first UV was an ’74 2wd IH Travelall I got just before graduating and it replaced a ’66 Chevy station wagon. For the record, a Travelall will hold 16 sailors. The Travelall was replaced with an ’84 2wd ¾ ton GMC Suburban which got double the millage pulling a trailer of the IH. During this period, moved 16 times, remodeled several houses, and hauled lots of firewood. Finding a UV was never hard when hauling the neighborhood to some even. Big and ugly stood out back then. And what is with the ski rack and other ilk? If it will not fit inside a UV you do not need it Putting nicer seats and AC in a truck frame is not a bad idea as long as you understood it was not a sports car.Then SUV became popular. The best I can tell SUV are neither a sports car or a UV. I know very few who know how to drive a 4wd in the snow including 100% of California natives. In any case, I have never had any trouble finding a cheap Toyota that gets good millage. They are a lot more fun to drive on mountain road than an SUV until ground clearance becomes an issue. I am still trying to figure out the Pious. A Pious is a fuel efficient car for drivers who do not know how to get good fuel economy. A Pious cost about $6k more than a Corolla. Adding heavy batteries to a car is counter productive to good millage.

    Comment by Kit P | January 4, 2009

  5. The optimum solution is fairly obvious but politically difficult. Significantly raise gas taxes and cut FICA taxes in a revenue neutral fashion to offset the increased gas taxes over a period of about 2 years. Result: Americans can “choose” a tax decrease if they want to by driving less, driving more conservatively or buying a more fuel efficient car.

    It creates the stimulus that we need and creates incentives to go green at the same time. Problem is it greatly helps urban and suburban America but hurts rural America.

    Comment by Anonymous | January 4, 2009

  6. The optimum solution is fairly obvious but politically difficult. Significantly raise gas taxes and cut FICA taxes in a revenue neutral fashion to offset the increased gas taxes over a period of about 2 years. Result: Americans can “choose” a tax decrease if they want to by driving less, driving more conservatively or buying a more fuel efficient car.It creates the stimulus that we need and creates incentives to go green at the same time. Problem is it greatly helps urban and suburban America but hurts rural America.

    Comment by Anonymous | January 4, 2009

  7. Kit, go ahead and show me any car that racks up a consistent 46-48 MPG in CITY driving.

    People have selective memories, and like to compare the Pious to the best land distance road trip they ever had in their lives, down hill, with the wind behind them.

    I have been getting 46-48 mpg for the last 30,000 miles. Period.

    – odograph

    Comment by Anonymous | January 4, 2009

  8. Kit, go ahead and show me any car that racks up a consistent 46-48 MPG in CITY driving.People have selective memories, and like to compare the Pious to the best land distance road trip they ever had in their lives, down hill, with the wind behind them.I have been getting 46-48 mpg for the last 30,000 miles. Period.- odograph

    Comment by Anonymous | January 4, 2009

  9. RR: from your lips to God’s, or D.C.’s ears, when it comes to federal gasoline taxes.
    At $4 a gallon, a federal gasoline tax would raise more than $600 billion, and I agree with an earlier poster here is should be offset by lower Social Security Taxes, or no federal income tax on people making less than, say $100,000.
    I would even be open to the abolition of the federa corporate income tax, which has become just about useless as a revenue source. Corporations can offshore “profits” to the nation with the lowest taxes.
    Another reason to raise the federal gas tax is that now our roadways are subsidized by general tax revenues. It makes sense that our roads pay for themselves, either through tolls or gas taxes. For some reason, Dems favor gas taxes, and Repubs favor tolls.
    I favor gas taxes as tolls are a nuisance, and difficult to collect on non-highways.
    We have a tremendous opportunity ahead in the US if we use our deficit spending to build projects of lasting value, such as very efficient power plants, mass transit, or even better-insulated homes that save energy every year going forward. A fleet of very high mpg cars woul also be a gift to future generations.
    The worst thing is to deficit spend and leave nothing but debt to future generations, as has happened for the last eight years. We borrrowed, and spent the money on consumer gew-gaws, war and overinflated housing.
    I wonder if proposing such a tax is all that difficult. If Obama explains the reasons, maybe it would fly. Everybody knows we cannot go on importing several hundred billion dollars of oil every year. We are bankrupting future generations.

    Kit P: I grew up in Southern California in the 1950-60s, and drove using chains and rear-wheel drive many, many times to San Gabriel ski areas such as Kratka Ridge. Bring your rock-buster skis. I can fishtail better than anybody. Four-wheel drive is for sissies.

    Comment by benny "MOAG" cole | January 4, 2009

  10. RR: from your lips to God’s, or D.C.’s ears, when it comes to federal gasoline taxes.At $4 a gallon, a federal gasoline tax would raise more than $600 billion, and I agree with an earlier poster here is should be offset by lower Social Security Taxes, or no federal income tax on people making less than, say $100,000. I would even be open to the abolition of the federa corporate income tax, which has become just about useless as a revenue source. Corporations can offshore “profits” to the nation with the lowest taxes.Another reason to raise the federal gas tax is that now our roadways are subsidized by general tax revenues. It makes sense that our roads pay for themselves, either through tolls or gas taxes. For some reason, Dems favor gas taxes, and Repubs favor tolls.I favor gas taxes as tolls are a nuisance, and difficult to collect on non-highways. We have a tremendous opportunity ahead in the US if we use our deficit spending to build projects of lasting value, such as very efficient power plants, mass transit, or even better-insulated homes that save energy every year going forward. A fleet of very high mpg cars woul also be a gift to future generations.The worst thing is to deficit spend and leave nothing but debt to future generations, as has happened for the last eight years. We borrrowed, and spent the money on consumer gew-gaws, war and overinflated housing. I wonder if proposing such a tax is all that difficult. If Obama explains the reasons, maybe it would fly. Everybody knows we cannot go on importing several hundred billion dollars of oil every year. We are bankrupting future generations. Kit P: I grew up in Southern California in the 1950-60s, and drove using chains and rear-wheel drive many, many times to San Gabriel ski areas such as Kratka Ridge. Bring your rock-buster skis. I can fishtail better than anybody. Four-wheel drive is for sissies.

    Comment by benny "MOAG" cole | January 4, 2009

  11. Ye Gods! The Archdruid has a book now? And it’s in Robert’s sidebar?

    Bad news for him eh, with the price collapse …

    I really wonder if these would-be Nostradamii of the Catabalic are ever going to come to terms with the folly of prediction, the basic nature of uncertainty.

    (Actually I think THEY won’t, but a few of their followers may snap out of it.)

    – odograph

    Comment by Anonymous | January 4, 2009

  12. Ye Gods! The Archdruid has a book now? And it’s in Robert’s sidebar?Bad news for him eh, with the price collapse …I really wonder if these would-be Nostradamii of the Catabalic are ever going to come to terms with the folly of prediction, the basic nature of uncertainty.(Actually I think THEY won’t, but a few of their followers may snap out of it.)- odograph

    Comment by Anonymous | January 4, 2009

  13. Geo metro and VW TDI.

    “People have selective memories…”

    Odo, can you provide independent trials of different POV with professional drivers for me to base buying a car that matches my driving needs?

    No, neither could the Toyota dealer.

    There are all kinds of kinds of factors to base a POV purchase. Mileage and reliability are high on my list. There have always been those that have been OCD about mileage but it does not making a better than the clown that buys it for sex appeal.

    My favorite clown is the guy drove is hybrid to a renewable energy conference of giving presentation on the road trips he took to see how good of mileage he could get.

    I happen to be one of those all of the above guys. For those who are worried about part of US $$s going overseas, I find it strange that they worry about consumers but ignore production. Biofuels and offshore production seem a lot more promising than BEVs.

    Comment by Kit P | January 4, 2009

  14. Geo metro and VW TDI. “People have selective memories…” Odo, can you provide independent trials of different POV with professional drivers for me to base buying a car that matches my driving needs?No, neither could the Toyota dealer. There are all kinds of kinds of factors to base a POV purchase. Mileage and reliability are high on my list. There have always been those that have been OCD about mileage but it does not making a better than the clown that buys it for sex appeal. My favorite clown is the guy drove is hybrid to a renewable energy conference of giving presentation on the road trips he took to see how good of mileage he could get. I happen to be one of those all of the above guys. For those who are worried about part of US $$s going overseas, I find it strange that they worry about consumers but ignore production. Biofuels and offshore production seem a lot more promising than BEVs.

    Comment by Kit P | January 4, 2009

  15. Actually Kit, but we have a pretty good database:

    EPA Shared MPG data

    You can examine the claims and the claimed “city” percentage. No one hit 46-48 in pure city driving.

    Naturally the models/years with the highest numbers of reports are the most trusted.

    – odograph

    Comment by Anonymous | January 4, 2009

  16. Actually Kit, but we have a pretty good database:EPA Shared MPG dataYou can examine the claims and the claimed “city” percentage. No one hit 46-48 in pure city driving.Naturally the models/years with the highest numbers of reports are the most trusted.- odograph

    Comment by Anonymous | January 4, 2009

  17. Odograph: good news on horizon. Dan Neil, pretty good LA Times auto critic, reported getting better than 50 mpg with a Ford Fusion hybrid he tested.
    We could transition the US fleet to such cars in 10-20 years, and of course, some of them could be GM Volt PHEVs, which get unlimited mpg when used in commuting.
    Such a transition would pay us back a few hundred billion dollars a year, depending on oil prices.

    Comment by benny "MOAG" cole | January 4, 2009

  18. Odograph: good news on horizon. Dan Neil, pretty good LA Times auto critic, reported getting better than 50 mpg with a Ford Fusion hybrid he tested. We could transition the US fleet to such cars in 10-20 years, and of course, some of them could be GM Volt PHEVs, which get unlimited mpg when used in commuting.Such a transition would pay us back a few hundred billion dollars a year, depending on oil prices.

    Comment by benny "MOAG" cole | January 4, 2009

  19. Hey old guy, ya you Benny!

    My fist house out of the navy was 7 miles down dirt roads in the PA mountains. Bought a diesel 4wd Chevy LUV. About 6 years later, we have moved to California and are ½ hour from the closest Tahoe ski areas. No more rental “rock-buster skis' for me. The Chevy is a lot worse for wear and CHP turns me back from taking the kids skiing because my Sears traction 'A' tires do not have a M&S (macho & stupid = mud and snow) stamped on the sides.

    For those who are uncertain about the existence of God, I am driving the Suburban home from work at 4am in about an inch of snow when I find the CHP officer in the ditch in CHP 4wd Chevy Blazer clueless about CO hazards. I offered him a ride to the 7-11 up at the highway but he said 2wd would not make it up the hill. I gave him a lesson driving in the snow with good tires.

    Comment by Kit P | January 4, 2009

  20. Hey old guy, ya you Benny!My fist house out of the navy was 7 miles down dirt roads in the PA mountains. Bought a diesel 4wd Chevy LUV. About 6 years later, we have moved to California and are ½ hour from the closest Tahoe ski areas. No more rental “rock-buster skis' for me. The Chevy is a lot worse for wear and CHP turns me back from taking the kids skiing because my Sears traction 'A' tires do not have a M&S (macho & stupid = mud and snow) stamped on the sides. For those who are uncertain about the existence of God, I am driving the Suburban home from work at 4am in about an inch of snow when I find the CHP officer in the ditch in CHP 4wd Chevy Blazer clueless about CO hazards. I offered him a ride to the 7-11 up at the highway but he said 2wd would not make it up the hill. I gave him a lesson driving in the snow with good tires.

    Comment by Kit P | January 4, 2009

  21. My experience from speaking on residential energy consumption in my small community (<50,000 people),is that people are not terribly interested in long term issues of energy prices. This was even true at $4 a gallon last summer, although it was starting to get their attention.

    Just when conservation was increasing and sales of bigger vehicles were falling, the bottom dropped out. It's as though we just can't reach some critical "intellectual mass" to sustain our resolve in the face of LOWER prices.

    Perhaps this is where some "tough love" taxation would help even if it is political suicide. Anybody up to taking the reins?

    Are any politicians talking about actual legislation that looks like a revenue neutral fuel tax?

    Comment by SamG | January 4, 2009

  22. My experience from speaking on residential energy consumption in my small community (<50,000 people),is that people are not terribly interested in long term issues of energy prices. This was even true at $4 a gallon last summer, although it was starting to get their attention.Just when conservation was increasing and sales of bigger vehicles were falling, the bottom dropped out. It's as though we just can't reach some critical "intellectual mass" to sustain our resolve in the face of LOWER prices.Perhaps this is where some "tough love" taxation would help even if it is political suicide. Anybody up to taking the reins?Are any politicians talking about actual legislation that looks like a revenue neutral fuel tax?

    Comment by SamG | January 4, 2009

  23. Why would you consider a diesel, with current price differentials between gasoline and diesel. For example, the Jetta Sportwagon gets about 10 mpg difference, but the price difference between gasoline and diesel would have to be around $.50/gal to be break-even…

    Comment by Anonymous | January 4, 2009

  24. Why would you consider a diesel, with current price differentials between gasoline and diesel. For example, the Jetta Sportwagon gets about 10 mpg difference, but the price difference between gasoline and diesel would have to be around $.50/gal to be break-even…

    Comment by Anonymous | January 4, 2009

  25. Love the blog, Robert, but you of all people should know not to generalize that all that saved gasoline money would otherwise be flowing to the Saudis and Hugo Chavez! They combine for 20% or so of our crude supply, right? And those imports are unrefined…. Just being nit-picky; keep up the great work!

    Comment by Stephen | January 5, 2009

  26. Love the blog, Robert, but you of all people should know not to generalize that all that saved gasoline money would otherwise be flowing to the Saudis and Hugo Chavez! They combine for 20% or so of our crude supply, right? And those imports are unrefined…. Just being nit-picky; keep up the great work!

    Comment by Stephen | January 5, 2009

  27. Benny MOAG wrote: …good news on horizon. Dan Neil, pretty good LA Times auto critic, reported getting better than 50 mpg with a Ford Fusion hybrid he tested.
    We could transition the US fleet to such cars in 10-20 years, and of course, some of them could be GM Volt PHEVs, which get unlimited mpg when used in commuting.

    Ugh. A fleet of 50 mpg cars will not get us where we need to go as a nation. Skip straight to full electric, or, better yet, simply use the car ya got less. Hybrids seem more like a dead end than a shortcut.

    Robert
    http://www.industrializedcyclist.com

    Comment by 57 | January 5, 2009

  28. Benny MOAG wrote: …good news on horizon. Dan Neil, pretty good LA Times auto critic, reported getting better than 50 mpg with a Ford Fusion hybrid he tested.We could transition the US fleet to such cars in 10-20 years, and of course, some of them could be GM Volt PHEVs, which get unlimited mpg when used in commuting.Ugh. A fleet of 50 mpg cars will not get us where we need to go as a nation. Skip straight to full electric, or, better yet, simply use the car ya got less. Hybrids seem more like a dead end than a shortcut.Roberthttp://www.industrializedcyclist.com

    Comment by 57 | January 5, 2009

  29. Robert-
    The enemy of a lot better is the perfect.
    Sheesh, if we could get a fleet of 50 mpg cars in place in 20 years, I would leap for joy. And yes, by all means, plenty of PHEVs, which go mostly on batteries. Yes, more bicycles. Mass transit.
    In town living.
    The quickest way there is a $4 a gallon gas tax. Nothing else will work as well.

    Comment by benny "MOAG" cole | January 5, 2009

  30. Robert-The enemy of a lot better is the perfect.Sheesh, if we could get a fleet of 50 mpg cars in place in 20 years, I would leap for joy. And yes, by all means, plenty of PHEVs, which go mostly on batteries. Yes, more bicycles. Mass transit. In town living. The quickest way there is a $4 a gallon gas tax. Nothing else will work as well.

    Comment by benny "MOAG" cole | January 5, 2009

  31. By the way, maybe there is hope for solar power plants. This article from LA Times suggests 7.5 cents is do-able.

    http://www.latimes.com/business/la-fi-thinsolar5-2009jan05,0,2265033.story

    Comment by benny MOAG cole | January 5, 2009

  32. By the way, maybe there is hope for solar power plants. This article from LA Times suggests 7.5 cents is do-able. http://www.latimes.com/business/la-fi-thinsolar5-2009jan05,0,2265033.story

    Comment by benny MOAG cole | January 5, 2009

  33. Why would you consider a diesel, with current price differentials between gasoline and diesel. For example, the Jetta Sportwagon gets about 10 mpg difference, but the price difference between gasoline and diesel would have to be around $.50/gal to be break-even…
    Here in SoCal that’s about the difference between the cheapest available RUG and Diesel. Oddly, the cheapest RUG and diesel are not available from the same stations. Oh well, time to research the prices then.

    There are, of course, several ways to set up your Diesel to drive on used cooking oil, as über-optimist Benny mentioned when stating his 2008 New Year’s resolutions. If you do what I do, i.e. the most expensive option running cost-wise (but the cheapest ito original investment), you end up paying ~$0.75/gal less than RUG, right now. It will get better in future, I’m betting.

    There are numerous other issues, of course, including but not limited to the durability of diesel engines, the lack of choice (especially in SoCal as Odo mentioned before), your tolerance to being seen in an older model vehicle (generally better for the conversions), etc.

    Comment by Optimist | January 5, 2009

  34. Why would you consider a diesel, with current price differentials between gasoline and diesel. For example, the Jetta Sportwagon gets about 10 mpg difference, but the price difference between gasoline and diesel would have to be around $.50/gal to be break-even…Here in SoCal that’s about the difference between the cheapest available RUG and Diesel. Oddly, the cheapest RUG and diesel are not available from the same stations. Oh well, time to research the prices then.There are, of course, several ways to set up your Diesel to drive on used cooking oil, as über-optimist Benny mentioned when stating his 2008 New Year’s resolutions. If you do what I do, i.e. the most expensive option running cost-wise (but the cheapest ito original investment), you end up paying ~$0.75/gal less than RUG, right now. It will get better in future, I’m betting.There are numerous other issues, of course, including but not limited to the durability of diesel engines, the lack of choice (especially in SoCal as Odo mentioned before), your tolerance to being seen in an older model vehicle (generally better for the conversions), etc.

    Comment by Optimist | January 5, 2009

  35. Optimist-
    I also resolved to lose weight in 2008. As they say, fat chance.

    Comment by benny MOAG cole | January 5, 2009

  36. Optimist-I also resolved to lose weight in 2008. As they say, fat chance.

    Comment by benny MOAG cole | January 5, 2009

  37. If you had bothered to read the whole article, you would have seen that trucks and SUVs are being heavily discounted. If you can save $2,500-$5,000 on the truck you “need,” you can “afford” higher gas prices in the future. Shockingly, lots of Americans just like riding around in a big truck (I don’t own a car myself). I don’t think that’s a sin, nor should it be a crime.

    Comment by Alan Vanneman | January 5, 2009

  38. If you had bothered to read the whole article, you would have seen that trucks and SUVs are being heavily discounted. If you can save $2,500-$5,000 on the truck you “need,” you can “afford” higher gas prices in the future. Shockingly, lots of Americans just like riding around in a big truck (I don’t own a car myself). I don’t think that’s a sin, nor should it be a crime.

    Comment by Alan Vanneman | January 5, 2009

  39. Benny Cole writes:
    By the way, maybe there is hope for solar power plants. This article from LA Times suggests 7.5 cents is do-able.

    http://www.latimes.com/business/la-fi-thinsolar5-2009jan05,0,2265033.story

    and the article says:
    The trouble is that no one involved in the deal is willing to confirm Bachman’s conclusions, not wanting to reveal valuable know-how….
    “Our contract is the least expensive solar power ever delivered in the world at scale,” said Michael Allman, chief executive of Sempra Generation.

    So if no one ever lets third-parties know what the contracted price is, how can they possibly know if theirs is the least expensive or not?

    I don’t know about the energy business, but in manufacturing 100% markup is not uncommon, so if it costs them 7.5 cents/kWh to make, are they selling it for 15 cents/kWh?

    While 9 cents/kWh is the benchmark for new power plants in California, where new nukes and new coal are banned, and possibly new anything more polluting than combined-cycle natural gas may be banned, 9 cents/kWh is a lot more than the current average wholesale rate for electricity in the US. But progress is welcome.

    Comment by Clee | January 6, 2009

  40. Benny Cole writes:By the way, maybe there is hope for solar power plants. This article from LA Times suggests 7.5 cents is do-able. http://www.latimes.com/business/la-fi-thinsolar5-2009jan05,0,2265033.story and the article says:The trouble is that no one involved in the deal is willing to confirm Bachman’s conclusions, not wanting to reveal valuable know-how….”Our contract is the least expensive solar power ever delivered in the world at scale,” said Michael Allman, chief executive of Sempra Generation.So if no one ever lets third-parties know what the contracted price is, how can they possibly know if theirs is the least expensive or not? I don’t know about the energy business, but in manufacturing 100% markup is not uncommon, so if it costs them 7.5 cents/kWh to make, are they selling it for 15 cents/kWh? While 9 cents/kWh is the benchmark for new power plants in California, where new nukes and new coal are banned, and possibly new anything more polluting than combined-cycle natural gas may be banned, 9 cents/kWh is a lot more than the current average wholesale rate for electricity in the US. But progress is welcome.

    Comment by Clee | January 6, 2009

  41. Robert,

    Can we really count on 140 BB gpy? What is the real usage?

    “We typically use about 140 billion gallons of gasoline each year, “

    Comment by Anonymous | January 6, 2009

  42. Robert, Can we really count on 140 BB gpy? What is the real usage?”We typically use about 140 billion gallons of gasoline each year, “

    Comment by Anonymous | January 6, 2009

  43. “I don't know about the energy business, ..”

    No really Clee! In general, the cost of making electricity and distributing electricity is pasted on to the consumer.

    IOU are allowed a small profit of about 12% by the PUC. My IOU is well managed and generate electricity at a low cost with concern for the environment and customers. My state is reasonably regulated also keeping the cost low.

    Clee's IOU (my previous utility) is inept and lives in a state know for driving the costs up.

    IPP also generate electricity and IOU often sell excess capacity.

    States with RPS specify that some must come from solar. So Duke Energy is going to build $1b in solar with the PUC allowing the costs to be passed to the customer. In California, a IPP producer of of a parent California IOU builds a 10 MWe in another state and then contracts it back to another IOU. The PUC allows the contract and further markup.

    Each step along the way requires a whole team of attorneys and tax accountants.

    One of the reasons economy of scale and CF is important is it reduces the per unit cost of attorney fees. So no Clee, 10 MWe is not progress. It is green washing.

    It would be interesting for Clee to dig deeper and compare the benefits of TEC's Springerville PV for its customers to what he is getting from PG&E.

    Comment by Kit P | January 6, 2009

  44. “I don't know about the energy business, ..”No really Clee! In general, the cost of making electricity and distributing electricity is pasted on to the consumer.IOU are allowed a small profit of about 12% by the PUC. My IOU is well managed and generate electricity at a low cost with concern for the environment and customers. My state is reasonably regulated also keeping the cost low. Clee's IOU (my previous utility) is inept and lives in a state know for driving the costs up. IPP also generate electricity and IOU often sell excess capacity.States with RPS specify that some must come from solar. So Duke Energy is going to build $1b in solar with the PUC allowing the costs to be passed to the customer. In California, a IPP producer of of a parent California IOU builds a 10 MWe in another state and then contracts it back to another IOU. The PUC allows the contract and further markup.Each step along the way requires a whole team of attorneys and tax accountants. One of the reasons economy of scale and CF is important is it reduces the per unit cost of attorney fees. So no Clee, 10 MWe is not progress. It is green washing. It would be interesting for Clee to dig deeper and compare the benefits of TEC's Springerville PV for its customers to what he is getting from PG&E.

    Comment by Kit P | January 6, 2009

  45. benny — You may be right that HEVs are a waypoint along the way to energy independence however I’m more inclined to think of them as a dead-end alley that keeps us from getting there.

    It’s entirely conceivable that, 20 years from now, a nation with a high-mileage fleet could be even more oil-dependent and in a much bigger predicament over it than it was 20 years earlier with the guzzler SUVs.

    Robert

    Comment by 57 | January 6, 2009

  46. benny — You may be right that HEVs are a waypoint along the way to energy independence however I’m more inclined to think of them as a dead-end alley that keeps us from getting there.It’s entirely conceivable that, 20 years from now, a nation with a high-mileage fleet could be even more oil-dependent and in a much bigger predicament over it than it was 20 years earlier with the guzzler SUVs.Robert

    Comment by 57 | January 6, 2009

  47. If you had bothered to read the whole article, you would have seen that trucks and SUVs are being heavily discounted. If you can save $2,500-$5,000 on the truck you “need,” you can “afford” higher gas prices in the future.

    I did read the entire article, Alan. The problem is that people aren’t paying cash for these vehicles. They find that with these lower gas prices, they can suddenly afford them. So, they go into debt, gasoline demand increases as these vehicles sell, and we are right back in the same predicament: $4 gasoline and people’s budgets stretched to the limit.

    Cheers, RR

    Comment by Robert Rapier | January 6, 2009

  48. If you had bothered to read the whole article, you would have seen that trucks and SUVs are being heavily discounted. If you can save $2,500-$5,000 on the truck you “need,” you can “afford” higher gas prices in the future.I did read the entire article, Alan. The problem is that people aren’t paying cash for these vehicles. They find that with these lower gas prices, they can suddenly afford them. So, they go into debt, gasoline demand increases as these vehicles sell, and we are right back in the same predicament: $4 gasoline and people’s budgets stretched to the limit. Cheers, RR

    Comment by Robert Rapier | January 6, 2009

  49. Can we really count on 140 BB gpy? What is the real usage?

    It has probably fallen off to the 125-130 billion gpy range, but is likely to start picking back up if prices stay low. It was already above 140 (I think it was 144), but will probably be a while before it recovers back to that level.

    Cheers, RR

    Comment by Robert Rapier | January 6, 2009

  50. Can we really count on 140 BB gpy? What is the real usage?It has probably fallen off to the 125-130 billion gpy range, but is likely to start picking back up if prices stay low. It was already above 140 (I think it was 144), but will probably be a while before it recovers back to that level.Cheers, RR

    Comment by Robert Rapier | January 6, 2009

  51. Shockingly, lots of Americans just like riding around in a big truck (I don’t own a car myself). I don’t think that’s a sin, nor should it be a crime.

    If I decide, of my free will, to stab my neighbor with a knife, it’s a crime: in this case murder.

    If I decide, of my free will, to gas an entire town to death, it’s a crime: in this case genocide.

    If I decide, of my free will, to knowingly drive a vehicle whose emissions are known to cause planetocide, then why isn’t this a crime?

    I openly acknowledge and accept that any industrialized product will produce emissions — it’s the law of thermodynamics after all. But, the law doesn’t state that we should knowingly support deliberately inefficient vehicles. No part of the law says that we cannot at least make an effort to optimize our society’s infrastructure to minimize externalities.

    The biggest problem economics is facing today is how to include all externalities into a pricing structure, so that people do start to pay attention to them, preferably without overt taxation.

    Comment by Samuel A. Falvo II | January 6, 2009

  52. Shockingly, lots of Americans just like riding around in a big truck (I don’t own a car myself). I don’t think that’s a sin, nor should it be a crime.If I decide, of my free will, to stab my neighbor with a knife, it’s a crime: in this case murder.If I decide, of my free will, to gas an entire town to death, it’s a crime: in this case genocide.If I decide, of my free will, to knowingly drive a vehicle whose emissions are known to cause planetocide, then why isn’t this a crime?I openly acknowledge and accept that any industrialized product will produce emissions — it’s the law of thermodynamics after all. But, the law doesn’t state that we should knowingly support deliberately inefficient vehicles. No part of the law says that we cannot at least make an effort to optimize our society’s infrastructure to minimize externalities.The biggest problem economics is facing today is how to include all externalities into a pricing structure, so that people do start to pay attention to them, preferably without overt taxation.

    Comment by Samuel A. Falvo II | January 6, 2009

  53. “If I decide, of my free will, to knowingly drive a vehicle whose emissions are known to cause planetocide, then why isn’t this a crime?”

    The only crime being committed here is your crime of ignorance. And if your ignorance is willful, then the penalty should be very high indeed.

    Look, any reasonably well informed person knows that the climate of the earth has been highly variable for at least hundreds of millions of years, without any anthropogenic involvement; that there is no correlation between atmospheric CO2 and global temperature, over recent history or over the longer geological record; and that global temperatures have been going down for the last decade.

    You don’t have a scientific leg to stand on with your petty self-centered religion of climate alarmism. Planetocide indeed!

    Comment by Kinuachdrach | January 7, 2009

  54. “If I decide, of my free will, to knowingly drive a vehicle whose emissions are known to cause planetocide, then why isn’t this a crime?”The only crime being committed here is your crime of ignorance. And if your ignorance is willful, then the penalty should be very high indeed.Look, any reasonably well informed person knows that the climate of the earth has been highly variable for at least hundreds of millions of years, without any anthropogenic involvement; that there is no correlation between atmospheric CO2 and global temperature, over recent history or over the longer geological record; and that global temperatures have been going down for the last decade. You don’t have a scientific leg to stand on with your petty self-centered religion of climate alarmism. Planetocide indeed!

    Comment by Kinuachdrach | January 7, 2009

  55. Kit P writes:
    It would be interesting for Clee to dig deeper and compare the benefits of TEC's Springerville PV for its customers to what he is getting from PG&E.

    No, it would not be interesting at all for me to see what state’s utility is better than another. I’m more interested in whether First Solar really sold Sempra Generation a turnkey PV power plant for $3.17/watt, and if so, what that included.
    http://www.pv-tech.org/news/_a/has_first_solar_achieved_grid_parity_report_claims_the_numbers_add_up/
    I expect it does not include the land. I expect it includes modules, inverters, wiring and the article says it includes frames and installation too. All the stuff inbetween, like site preparation, permits… what’s included and what’s not? But information is not forthcoming. $3.17/watt installed looks like progress.

    Comment by Clee | January 7, 2009

  56. Kit P writes:It would be interesting for Clee to dig deeper and compare the benefits of TEC's Springerville PV for its customers to what he is getting from PG&E.No, it would not be interesting at all for me to see what state’s utility is better than another. I’m more interested in whether First Solar really sold Sempra Generation a turnkey PV power plant for $3.17/watt, and if so, what that included. http://www.pv-tech.org/news/_a/has_first_solar_achieved_grid_parity_report_claims_the_numbers_add_up/I expect it does not include the land. I expect it includes modules, inverters, wiring and the article says it includes frames and installation too. All the stuff inbetween, like site preparation, permits… what’s included and what’s not? But information is not forthcoming. $3.17/watt installed looks like progress.

    Comment by Clee | January 7, 2009


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