Friday, June 7, 2013

Volvo to make a "DME" truck

DME powered trucks!  Or Diamethyl Ether as it's formal chemical name is. First I've heard of it.

Here is a YouTube providing the answer to the question "What is DME?"





NOTE: This post is more of a place holder for me to follow up and read more.

Sunday, May 26, 2013

CNG Compressor Set up in Indy

I had a trip this week to the Carrier/Bryant furnace factory in Indianapolis, Indiana.  The factory did not allow pictures (so all of our loss as all big factories are cool in general to walk through).

In route we took a short road trip to check out a very successful OEM re-fitter for compressed natural gas vehicles. We stopped by Green Alternative Systems (or G.A.S. as for the shortened logo name on their cards) to check out a conversion factory up lcose.  The other special reason for the visit was their inventory VPG MK-1 CNG vans (or cross overs, or whatever you'd call them).  Juaning Higgins pictured in the test drive below.



VPG has the MK-1 made by AM General at a former Hummer plant in Indiana. VPG is a start up auto manufacturer making a niche vehicle for transporting those in wheel chairs.  We saw these all over Chicago as cabs while we were there to. According to the Cabby driving one we talked to the City of Chicago has an ADA compliant requirement for taxi fleets in the city.  Also the lower cost of CNG as well as an incentive that CNG taxis go to the front of the line at O'Hare Airport make these popular among the drivers who can get them.  In fact the cabby we talked to said that if we were doing something with CNG he wanted to invest (which goes more to the point that there is a boom coming on this subject as speculators are already circling).

The MK-1 is designed specifically with special needs transportation.  Wide on the inside we couldn't help but notice it would make a really sweet service van.  No doubt these vehicles will possibly have a huge cross over potential especially with this factory CNG opportunity.  The sticker price on these high demand limited run vehicles is around $50,000.  From what we can figure that price tag is probably competitive in the ADA transportation business. No doubt retrofits after the factory are probably extremely expensive and a short run vehicle like this cannot be inexpensive.

LUBRICANT NERD ALERTWhen we drove the vehicle I had one thing I noticed.  The RPM on the dash lived above 3000.  So my experience of training as a driver I was instructed to keep the shifting below 3000 preferably at 2000. It just struck me that given the lean natural gas fuel the engine needs to run at a higher rate to get the same power. Something I will be looking at going forward as I get more familiar with CNG will be checking out oil samples out of these CNG engines.  No doubt there is more wear not less though the CNG sales men like to tell us we can extend oil drains due to the reduced emissions going into the oil I am not convinced.  No doubt higher RPMs is more heat, more wear, and therefore probably a special lubrication specification if you want to see them exceed 200,000 miles in their life.


What's cooler than a new car company start up?  The compressor they use to fill them and the Ford vehicles up with.  That was probably the highlight of the trip for me. Luckily they let me take pictures of the unit they rely on. Originally G.A.S. had a BRC Fuelmaker but this unit couldn't keep up with production. Hence they had a new rig assembled and installed.  

( NOTE: I am a layperson. A nerd layperson.  But still a layperson).
Below is what looks like to me to be the compressor and a flywheel no doubt attached to an electric motor below in the cabinet. I was not able to get a good look at the motor driving the compressor.


This is the path that natural gas at 10psi (according to our tour guide) moves its way into the compressor (in Oregon I have always been advised that the service side of a compressor would be under 5psi). Notice the water drain at the bottom left.  Pretty simple parts but no doubt thinking about cleaning up the gas off of the pipeline is an important part of these compressor lives.  No doubt moisture being a constant wear issue.

If the cabinet was not a dead give away about this being a fabricated one-off system the gauges will remove all doubt.  Notice the plastic carve out labels. I haven't seen this on a new installation in years. The whole system seems to be completely analog too. The gauges being the first give away on that.


Here is a picture of the fueling station.  I have seen in Oregon where they run ten or twenty feet of high pressure (3800 psi) stainless steel lines from the compressor to the fueling dispenser.   It never made sense to me. In Indy they obviously like simple and compact better.  There are two wands on the fueling location for two different sizes of refueling port that goes on the vehicle.  This was news to me as I had never heard that before.  A real important tid bit if you build your compressor set up and then find you've got a VHS vs Betamax design problem when you go to fuel.

Inside the compressor compartment there are three filter canisters.  Now of course these also might be pressure canisters for the three stages of refueling.  But I am not an engineer.  The guy on site couldn't answer what they were specifically.



A cool trip and very interesting to see what other markets are doing in the field. This trip to Indiana and Illinois just made me want to find my way to Pennsylvania where I hear the real gold rush for CNG is at.  From what I hear anecdotally they literally have people with expired wells on their property from a century ago and they are tapping these resources with a compressor and pumping natural gas for free out of the ground. I'd be real curious to take a tour of old petroleum country and see it for myself for sure.

Sunday, April 28, 2013

Natural Gas - The on-road fuel gold rush is coming!

Geez I haven't blogged in nearly a year. Been busy. But one thing that is looking very apparent. There is about to be a big gold rush for natural gas fleet fueling solutions.

I keep getting questions asked about it by my forward looking fuel customers. Throw the cost per BTU difference compared to diesel and all the issues many fleets are having with the newer clean diesel particulate trapped engines and the market is willing to experiment in new technologies.  Even those that have spark plugs (Natural Gas is a spark ignited tech just like gasoline so these engines do not require particulate traps).

Here is an article from the NY Times that spurred my interest in blogging again.


Sunday, July 8, 2012

Peter Diamandis is going where I want to go!

Haven't posted in a while.  Of course these days no one reads this blog as either do I.

Regardless felt compelled to post this up as it really had an impact on me.

Peter Diamandis is interviewed in Wired magazine.  This man has become my hero!  Just the tone and approach.  He is the first person to voice my opinion in a mainstream way about the future in a long time.  I ran out and bought his book Abundance and it too had an impact on me.  Motivating stuff to see others who are optimistic about the potential for the future.

NOTE:  Photo from Wired Magazine article.  Photo taken by Nigal Perry

Best quote ever in a Wired interview below:

" I was like, fuck that. We’re going to give this world-famous expert in gravity the opportunity to experience zero gravity!" - Peter Diamandis


In context below:

Greenwald: How does experiencing weightlessness drive space exploration?
Diamandis: Two forces have opened most frontiers: tourism and resources. People go for the experience or for the gold, spices, and tobacco. I had tried to get on NASA’s zero-g plane and couldn’t. I thought there must be a market for this, so in May 1993 I partnered with NASA engineer Ray Cronise and Byron Lichtenberg, a friend who had flown two Space Shuttle missions, and we raised $500,000. We walked into Federal Aviation Administration’s office and pitched the idea. They said the regulations wouldn’t allow an airplane to do parabolic flight and with passengers whose seat belts were unstrapped. I said that’s bullshit. I proceeded on an 11-year effort to get permission from the Federal Aviation Administration. We finally became operational in October 2004, and today we’ve flown 300 flights for 12,000 customers, most famously Stephen Hawking.


Greenwald: You unstrapped Stephen Hawking’s seat belt in zero gravity?
Diamandis: He told me, “One of my dreams is to fly into space.” I said I couldn’t fly him into space, but I could fly him into zero gravity. On the spot he said yes. The next day I put out a press release announcing our intention to fly Stephen Hawking. I got two calls that day. One was from our aircraft partner, who said, “Are you crazy? We’re going to kill the guy!” The other was from the FAA saying, “You’re only licensed to fly able-bodied people.” I was like, fuck that. We’re going to give this world-famous expert in gravity the opportunity to experience zero gravity! It took six months to line up the approvals.

Friday, April 27, 2012


From 2004 at the dawn of the biodiesel industry a Wired magazine article.  Funny to look back.  Posted to test out the new blogger format.





Biodiesel Boom Well-Timed

John Gartner Email 06.01.04
Biodiesel fueling stations are sprouting like weeds across America, where production of the alternative fuel rose 66 percent in 2003. Experts say the rapid growth of the renewable fuel will stretch the country's tenuous petroleum supply while helping people breathe a little easier.
Damon Toal-Rossi of Iowa City, Iowa, jumped on the biodiesel bandwagon after a friend outlined the benefits of using a fuel made from soy or vegetable oil. The software programmer liked the idea of a cleaner-burning fuel that reduces dependence on foreign oil so much that he traded in his gasoline-powered pickup truck for a diesel-powered Volkswagen Golf.
After a few months of driving 10 miles to a biodiesel fueling station, Toal-Rossi went online to find arecipe and began making his own fuel. Because Toal-Rossi gets the primary ingredient -- used cooking oil -- from a nearby restaurant for free, he spends just 41 cents per gallon to make his 12-liter batches of biodiesel.
"I feel good about reducing my environmental impact, and besides, it's a great fuel for my car," said Toal-Rossi, noting that he now gets 44 miles per gallon, a big improvement over his 14-mpg pickup.
Biodiesel enthusiasts like Toal-Rossi may soon find their oil-alternative fuel easier to acquire. According to the National Biodiesel Board, the number of consumer biodiesel fueling stations rose nearly 50 percent last year to 200. So far this year, 25 new stations have opened, including 10 in Colorado and five in New Hampshire.
Ron Heck, president of the American Soybean Association, said biodiesel can be blended with regular diesel in any ratio, or can be used as a fuel by itself. "It has almost the same amount of (energy) as petroleum diesel," Heck said. Using biodiesel will clean an engine's fuel injectors and cut down on the number of required oil changes, according to Heck. "I buy it because it's better fuel."
The reintroduction of diesel vehicles into the U.S. market is expected to increase the demand for biodiesel, according to the National Biodiesel Board's Jenna Higgins. After abandoning the U.S. market for almost 20 years, Mercedes-Benz and DaimlerChrysler are delivering new diesel vehicles in 2004, and Volkswagen has expanded its lineup of diesel-engine vehicles.
Higgins said most diesel vehicles do not have to be modified to burn biodiesel, and auto manufacturers support fueling their vehicles with biodiesel, which burns cleaner than standard fuel.
Passenger vehicles, private vehicle fleets and farmers used 25 million gallons of biodiesel in 2003, up from 15 million gallons the previous year, and new federal Environmental Protection Agencyemission rules could further increase demand, according to Higgins.
Starting in 2006, the EPA will require that diesel producers reduce nitrogen oxide emissions and remove up to 99 percent of the sulfur content in the fuel used by passenger cars and trucks. In May 2004, the EPA announced that these same rules would apply to diesel for off-road vehicles starting in 2007.
While the EPA estimates that cleaning up the diesel will prevent 4,300 premature deaths per year, removing the sulfur also reduces the fuel's lubricity. Diesel producers need to regain that slipperiness to prevent engine clogging, and biodiesel is a likely additive, according to Galen Suppes, an associate professor of chemical engineering at the University of Missouri-Columbia.
"Biodiesel is cost-competitive" with the chemical alternatives, said Suppes, adding that a 2 percent biodiesel mix restores lubricity. "Technology-wise, (biodiesel) is a good solution." But Suppes said diesel refiners sometimes prefer to produce solutions internally rather than rely on external suppliers. "It's difficult to predict what the refiners will do."
The biodiesel board's Higgins said the market for the alternative fuel could climb to more than half a billion gallons per year if diesel refiners add just 2 percent biodiesel to their products. This could provide the economy of scale that would lower the price of the renewable fuel for everyone, Higgins said.
"Could we meet that demand instantly? No," said Higgins. She estimated that the 21 existing biodiesel production plants in the United States could produce up to 80 million gallons a year, and another 20 plants could quickly go online. Higgins said 90 percent of today's biodiesel comes from soy oil, and 10 percent from recycled cooking oil. Other feedstocks, such as animal carcasses, could be used to fill any gap, according to Higgins.
Biodiesel currently costs between 20 cents and 30 cents more per gallon than standard diesel, Higgins said, but pending legislation may help to make it more economical. In May, the Senate passed a bill that would give a 1 cent tax credit for each percent of biodiesel blended with petroleum diesel.
Higgins said that if gasoline prices continue to climb and the tax credit becomes law, biodiesel could become cost-competitive with petroleum. "Anything that lessens our demand on foreign oil helps," Higgins said.

Saturday, April 9, 2011

Ethanol Efficiency - A great post by Advanced Biofuels USA

A great blog post (see the original post HERE) by Advanced Biofuels USA by Robert Kozak (NOTE: This is a nonprofit organization I am unfamiliar with other than this post). The article discusses a graph produced by the NRDC showing the CO2 intensification of various energy sources..


The big things I really wanted to pull out of this post.  I haven't seen this said better:


This trendline also got me thinking about how long it took the petroleum industry to reach its current efficiency that allows it to produce a gallon of gasoline for about 26 lbs CO2. As it turns out, the answer is at least sixty years -1910-1970.
Production and quality improvements have been slow in the petroleum industry. While the first oil well was drilled in Pennsylvania in 1859, demand for gasoline did not really exist until 1900 when cars with internal combustion engines began to be produced. It really took off after 1908 when the Ford Model T began production.  However, neither performance (octane rating) nor conversion efficiency were quick to follow.
For instance, the catalytic cracking of crude oil into gasoline, which doubled existing yields of gasoline, was not developed until the 1930s. Octane ratings, a measure of gasoline’s ability to withstand pressure to produce more power (current regular gasoline has a rating of 87 and ethanol 105+), were about 40 until Allied aircraft needed high octane fuels to fight German and Japanese planes in WWII. This octane development work was largely financed by the US government. The current hydrocracking technology which again increased gasoline yields, did not come on-line until the 1960s, while the current rate of oil to gasoline conversion was reached after the 1973-4 oil shock.

Saturday, April 2, 2011

Why did Oil Prices Go Back Up?

Above is a graph showing crude market prices over the last few years.  More on the spike from this most recent February below.

I've been meaning to get this post up for over a month.  Oil prices rose back to 2008 levels suddenly in February.  The price increases coincided with civil protests in the Middle East.  First starting in Egypt the protests expanded to Libya, Iran, Saudi Arabia and Syria.  This unrest ultimately leading to the stepping down of Egypt's long time dictator and an open revolution inside Libya which continues to this day.

Of course the unrest is the defacto explanation for oil prices as the news covers the rising pump prices.  In my own small oil business I haven't had one call to my office by customers asking "why is diesel a dollar more than a few months ago" which is odd.  Usually get a consistent stream of calls as oil prices hit certain dollar marks.  As we past $3 and moved onto $4 a gallon for finished products I didn't hear a peep from my customers.  It seems as if the American consensus is that petroleum is just higher than $3 a gallon and $4 is acceptable.

Here is what I don't get though in this rational script of why prices are high.  For two weeks Egypt's protests grabbed headlines and the markets didn't move but a little bit per barrel.  It wasn't until President's Day, a day the US Markets were closed, that a true price spike occurred. This spike was isolated to just commodity futures trading (not Supply and Demand forces).


There was no watershed event in the Middle East (other than the lack of Egypt's upheaval spreading beyond its Euro-aware neighbor Libya).  The grand scheme of world oil production Libya shutting off its spigot would not normally cause a move like this as a permanent realignment of pricing.  But on a day the US Markets happened to be closed a ran occurred in smaller trading markets with an expected result caused the following day in the US.  I can't help but actually see this as a speculative run attempting to push the price of oil up. 


This strikes me as literally a bold and obvious move to manipulate markets like something out of the Age of America's Robber Baron past.  Player's with market power exercised it in a coordinated way not as an expression of market efficiency but taking advantage to leverage their own market power to pull profits off the top.  Our current oil prices are not solely set by a currently adequate and for the most part unchanged Supply and Demand but because of trading volumes in a futures market.


I also want to share with you my perspective on President's Day.  I remember it because I was at my desk and the Editor of OPIS (the Oil Price Information Service) sent out an email that immediately grabbed my attention.  See below:

Below is the email I received.  I wanted to post it for a single reason.  To document the day prices went back up without a real market explanation.  See OPISnet.com's Editor's email below:

---------------------------- Original Message ----------------------------
Subject: Oil Futures Soar in Electronic Trading; Marketers See Hefty
Tuesday Price Increases
From:    "Oil Price Information Service" >
Date:    Mon, February 21, 2011 11:10 am
To:      "Mark Fitz" >
--------------------------------------------------------------------------


This breaking news story is brought to you by Oil Price
Information Service...

   The peace and calm for marketers who are today observing
Presidents' Day has been interrupted by a paroxysm in global
prices for crude and refined products, which almost certainly
will add 5cts/gal or more to wholesale prices tomorrow.
   The New York open outcry markets are closed, but some hefty
volumes have changed hands in electronic trading and sent
overseas crude prices as high as they've been since September
2008,[NOTE: bold emphasis is mine] and pushed gasoline and diesel prices up 5- 7cts/gal in the
process.
   Brent crude, which has been the driving force behind NYMEX
RBOB and heating oil futures price gains in 2011, traded for over
$105/bbl this morning, spurred by violence that appeared to
escalate into chaos in Libya. Libya produces some 1.7 million b/d
of crude. There are also concerns that violence in the Persian
Gulf may be ratcheted higher as unrest in the region shows no
completion date.
   April Brent crude was trading at $104.73/bbl, up $2.21/bbl at
presstime.
Even higher numbers were seen in electronic WTI action, where the
expiring March contract moved up $4/bbl to $90.19/bbl and the
April contract (which will soon represent the prompt month)
rallied some $4.38/bbl to $94.08/bbl. This latter rally has the
interest of technical analysts, who believe it may signal a much
larger pop.
   March RBOB futures were up 5.87cts/gal at $2.61/gal and April
(the low RVP month) moved up 5.87cts /al to $2.749/gal.
   March heating oil was up 6.46cts/gal at $2.7775/gal and April
barrels were 6.52cts/gal higher at $2.7912/gal.
   Most U.S. oil companies are closed today, so OPIS has not yet
seen a host of intraday moves. Terminals are quite busy, however,
as jobbers race to get ahead of price increases that might add
$400-$500 per load when spot markets reopen for business
tomorrow.
 
President's Day 2011 was the day the oil market returned to 2008 prices.
People far smarter and better qualified than me have theories of why. 
Their theories just don't make sense in my gut.

Now the US Energy Information Administration has this to say about crude prices and Libya:

Crude Oil and Liquid Fuels Overview.  EIA expects continued tightening of world oil markets 
over the next two years, particularly in light of the recent events in North Africa and the Middle East, the world's largest oil producing region.  The current situation in Libya increases oil market uncertainty because, according to various reports, much of the country's 1.8-million bbl/d total liquids production has been shut in and it is unclear how long this situation will continue.  The market remains concerned that the unrest in the region could continue to spread.

 
Libya and the Middle East unrest definitely has something to do with prices. But they don't have anything to do with a jump like we've seen. A sustain jump indicative not of risk in the future but of a realignment of Supply and Demand needs.  Especially a jump that occurs primarily around a single big day of trading when the US market is closed and no really big information has changed the market's perspective. Lets look at prices during that short time frame.



Notice the price spike in this shorter time frame.  That was President's day.  Or in this chart the day missing between Friday before and the Tuesday after President's day (as our markets were closed).  Supply and Demand did not change.  Only the volume of people in the market for futures. 

My only real thought that derives from this is a need for diversification and true substitutes for petroleum derived liquid fuels. 

NOTE: For those who disagree and believe that markets are rationally pricing the risk of a Libyan oil being sucked out of the market here is a list of production numbers showing where Libya is in the grand scheme of things (this being non-academic and provided by a 3 min google search).  The new production that has come on line since 2007 I would believe should have offset a good chunk of this.  I don't see supply interruptions in my market either leading me to believe there is still plenty of crude available for refining and available tank space for storing refined product (unlike 2006-2008 in my market where there were consistent outages by my suppliers).  And again, just my passing thoughts without even close to enough research to really justify a strong argument.  This is just my gut thinking.

Thursday, November 18, 2010

Congrats to Oregon's Puralytics!

Beaverton, OR based start up water scrubbing innovator Puralytics is the Winner of the 2010 Clean Tech Open!!!  Or as offhanded mentioned in a Portland Business Journal article the Academy Awards of Cleantech.

Glad to see a local company win the Clean Tech Open.  Exciting.  As a washout in the qualifiers a few years ago its nice to see a local start up take it home.

Thursday, November 11, 2010

Sunday, November 7, 2010

Kholsa Ventures: Food vs. Fuel White Paper

This is from an old post (Dec 1st, 2008) that popped up in my iGoogle news from the Energy Blog I thought it was worth posting.

A Food vs. Fuel White Paper commissioned by Khosla Ventures the big money championing Range Fuels and the future of ethanol as an investment.  Though the biofuels boom has cooled substantially with the recession that started a few months before this paper was published its a good subject matter to keep in mind.

With this white paper in particular there is one other great reason to read it.  It lays out a very good description of the Petroleum industries benefits (i.e. subsidy) provided by the US Federal Government's pro oil development policies.  If you are an undergrad student doing a research project where you want to lay this out there a great recipe for doing so exists in this white paper.

Its been a few years since I glanced at Khosla's web site.  After browsing it awhile there is a lot of interesting subject matter to read.  In particular I liked an interview link shown of an OPB interview with Vinod Khosla (the V.C. whose namesake the venture group is named for).  A great quote I've pulled out of context about the importance of investing in new technology:

"This has got to be what Nassim [Taleb] calls the black swan phenomena. We have to radically change our assumptions. We are very much like turkeys and as Nassim says in his book, Black Swan, "for a thousand days, a turkey's worldview model is it gets fat every day these humans come out and feed it. Somehow [...] before thanksgiving, it's model changes." We have to follow that model. We have to radically change, and that can happen for the negative or the positive.


We have to shift from extrapolating past assumptions, ignore what economists and econometrics tells us about how much oil we need and when we'll run out and what consumptions will be. Because they are based on the false assumptions. Once those assumption change and technology will drive that change, the world will be different."

 So reading between the lines.  Convert to Ethanol or get your head chopped off!

Just kidding, I couldn't help but point out the logic.  I agree with Khosla quite a bit.  Not as boldly as his investment state but still I agree with much of his premise.

Tuesday, June 15, 2010

Just another story about a homeless man and his Lamborghini.

So you ever have a friend who has a bad year?  Their women walks out leaving them with a house and life they don't want.  Well this guy did the only thing reasonable.  He sold it all, bought a Lamborghini and traveled the United States for years.  If only he solved crimes while doing this he'd have a TV series spun off about it.

Wired Magazine covers it on their website.  You've got to read it.

Monday, June 14, 2010

Fisker Auto's $88,000 Plug-In Hybrid and my own random thoughts.

NOTE: The following post goes all over the place without a specific logic to it other than my coffee induced curiosity and the ability of Google to serve up info.

I noticed in the SIJ website this morning an update about the massive fund raising success of Fisker Auto in its pathway to market for a plug-in electric hybrid vehicle.  The price tag hit me though at $88,000.  Then I thought back to a few books I read about the invention of the auto industry and the early cost of utility vehicles such as the Curved Dash Olds and Model T.    

So I ran it through an inflation calculator (don't ask why I just did).  In 1908 the year the Model T came out that would have been $3,584.  Not comparably cheap even by early adopter status.


The Curved Dash Olds first sold for $650 in 1901.  According to Tom's Inflation Calculator a 1913 Olds selling for $650 would adjust to a $18,895 price tag.  Being the low end no frills electric vehicles with no options or safety go for way below this the industry ain't doing to bad.

The Model T first sold for $825 in 1908 and ultimately after decades of engineering excellence by the Ford Motor Company sold at it's lowest as $260 by 1924.  To adjust that get's fun for one reason.  In 1908 the 2010 value of a Model T was $20,253 which is what a reasonably equipped sedan goes for today.  By 1924 you could buy a more reliable and improved Model T for $3,257!  

Anyone else see a trend similar to computing power and gasoline power train?  That drop in true cost of a vehicle really blew me away.  Now lets hope that EV's take a similar pathway in innovation on a far accelerated timeline.


Side note.

The 1901 Curved Dash Olds was the first mass produced cheaper automobile.  The pioneering horseless carriage. Its original success beyond hobbyists was its ability to speed up the day for a travelling professional who would not have to worry about a horse.  For doctors and lawyers traveling within 30 miles of their home this hugely improved their productivity more than paying for itself as an investment.

I don't have proof of it handy.  But while reading one of the better histories of the auto industry they related the cost of a vehicle to the median income in the US at the time.  That would place a curved dash at the time it was introduced to being the equivalent of $70,000 today.

It wasn't till 1908 that Henry Ford introduced the Model T and began to focus on ever improved and lower cost vehicles (and of course we saw how cheap he got).  

The history of the early auto industry was of visionary engineers and entrepreneur wanting to mass produce cheap vehicles and the bankers, investors, and managers around the industry who demand high end high margin pleasure vehicles (because why would anyone want a vehicle for utility purposes?). In fact the amazing early history of Chevrolet and the founder of GM Billy Durant is one of lower mass markets versus higher end markets.  Billy Durant literally swindled his company back from a group of bankers by setting up Chevrolet and trading its stock on the open market for GM stock till he had 51% of the shares back.  

 Special note of personal perspective.  The Oldsmobile ushered in the modern auto industry of the world at the dawn of the 20th century.  It also exited business as an auto brand at the dawn of the 21st century.  There is a bookend story to be had here if I ever put it together.

Tuesday, June 8, 2010

Oregon's BETC Reform

In energy circles Oregon has been well known in the last ten years for it's generous Business Energy Tax Credit (BETC) which offers up to 50% off the capital cost of a project back as an income tax deduction.  Better yet if you are a low cash flow start up you can "Pass-Through" this BETC for 35% of face value cash up front.  So if you build a $1,000,000 project in theory Oregon will give you a $500,000 income tax break over five years and you can sell this tax break to an investor for $350,000 cash.

Its no doubt one of the greatest deals for project development out there.  Throw into that mix a huge clean energy consumer base and utility connection to wheel power to the California market and you've got a strong comparative advantage in Oregon.  I know I've done several project that would not have happened without the BETC which have directly created jobs at my family's business.  I've also used the BETC as a down payment with a bank as part of financing.  Its a great economic development tool but the lack of boundaries on the program has blown up its use.  Solar panel manufacturers, wind farm developers, and a few large projects have exploded the dollar figure this tax credit brings.

So in Oregon the Department of Energy (ODOE) has been under fire for the Business Energy Tax Credit  taking a large cash draw in the economic downturn.  The fact that the alternative energy tax break is primarily being taken by the Wal-Mart, large banks, and other huge corporations hasn't polished its image any either.  Corporate welfare is never a great selling point.  This causing Oregon's Legislature to push a "reform" to bring down the total dollar figure of the BETC.

First a law capping total dollars came down.  Then rules were written to figure out how to stay within the budget.  So the rules are set and now is the time to pay attention as any potential new project I may come across will be playing in this new league.  Through the recession I haven't had much in the way of project opportunity.  Just trying to keep momentum moving forward for what we built pre-2008.  Taking a look there are things I agree with and those I don't.

First I don't see any reference to property tax impact of a capital project (and I didn't in the debate during the reform). The local positive impact of these projects isn't considered at all.  If the state is losing on the income tax side but funneling more in a much more permanent base of property tax revenues I would call that great policy.  Unfortunately the only focus isn't on long term revenues but instead on a single ticket price

I've always thought the controversy of corporations taking BETC's to avoid income tax is over stated.  In fact its safe to say if it wasn't for the BETC many of these companies wouldn't have realized the same amount of income tax (then avoided by a BETC) by creative and legal accounting gimmicks to minimize profits in Oregon.  I am very confident that the BETC funnels what otherwise would have been money leaving Oregon into capital investments that raise local property taxes far in excess of their real cost to Oregon's general fund.

Now back to the actual reform.  One good thing is they moved the one year BETC opportunity up to a $20,000 one year project (meaning I can take a tax credit in one year instead of taking it over five years). Short payback of tax credits is very good for small businesses seeing great years and investing in improving their operation.  In the small business community you never know what the next year holds so five year paybacks are a tough sell for a BETC.   Better yet, one year is very positive for the type of projects I do with refueling infrastructure which can be kept under $20,000 if we work at it.  It's also very good for retrofit projects as well so local smaller scale contractors will benefit from this.

As of right now there is a cap of $300 million  in BETC money established through 2011's state budget.  Of this $300 million $218 million potential projects has already been pre-certified.  So in theory its already spent.  But of course it probably won't be close to spent.  It begs the question, how does this work that projects take years and are unpredictable and therefore when the BETC vests to being taken might effect other budget years?

There is a Q&A page but it hasn't posted any questions and answers.  I definitely have small talk to make next time I run into an ODOE staffer.  Just that much more reason to get to local conferences I guess.

To help they have created a "tiered" approach.  ODOE shows an under $500,000 project costs, $500,000 to $6,000,000 project cost, and of course an upward of $6,000,000 project.  This will be interesting.  It does not mention how they will break out the remaining sum of cash between these projects.  I also am curious what happens if you apply pre-project, don't get a pre-certification, then start building and finish in a specific time frame.  If other's in that tier didn't finish can you take their budget allotment?

Oh well. As with all changes questions and ideas pop up.

Monday, June 7, 2010

Zip-Car for Bicycles

Here is a cool concept that even the 'nu-uh' scrooge in me loves.

I saw it at Fastcompany.com and think its a great pay it's own way service.

B-Cycle is a large scale bicycle sharing program that just took off in Colorado.  This would work really good in the Metro area around Portland.  Especially if they had the check out stations at trail heads.  For over ten years I've been meaning to buy a better bicycle and never get around to investing the real money it takes.  I would jump on this and I know I'm not alone.

Saturday, June 5, 2010

In Search of the Factory Equipped Hyper Miler

Wired Magazine online has a great article about where fuel efficiency will come from. The Federal government is seeking a 34.1 mpg fleetwide CAFE standard for vehicles sold in the US market.  Wired reports that the National Academy of Science asked 12 engineers, scientists and industry certified smart people to examine commercially available technologies and their impact on fuel economy.

This report is titled "Assessment of Technologies for Improving Light Duty Vehicle Fuel Economy"  and is for sale via the link shown.  The website will allow you to skim the document though.  Of course that's not assuming Wikipedia or some other site won't have it posted for free sometime soon (I can't wait to see).

What did they come up with? Fuel efficiency has a high capital cost.

But of course doesn't all new technology?

What else did they conclude? That VW TDI's kick the crap out of hybrids (okay I exaggerate their findings).  They comment that Hybrids cost around $9000 more per vehicle for a 50% fuel savings and Diesel cost around half that for a savings for 35% so therefore more miles and a longer engine life for less money.

Something I can't see mentioned is the energy impact of these technologies before their life on the road.  I would like to start seeing the energy cost of construction of these various technologies.  No luck there yet though.  Guess only the new fuels are held to this standard while the technologies that harness or precede new fuels aren't judged under this category.

Other note.  The Wikipedia post on CAFE standards is worth checking out.