Tuesday, March 5, 2019

How to Save the Planet: The Transportation Sector.

    Global CO2 emissions are soaring. Scientific report after scientific report, book after book, article after article shout the urgency of doing something to stop the rise of atmospheric CO2. As I mentioned in the previous post, almost nothing in the way of actual concrete proposals has been offered by anyone besides a few bloggers and of late a few courageous individuals. The following post is my attempt to enter the fray and offer actual proposals on how we might reduce our CO2 output. Warning: some of the proposals may be disturbing to some viewers and these proposals do not  represent the opinions of Blogspot  or its owners, lackeys, or supporters. These proposals represent my thoughts and opinions and I am well aware they will be controversial and implementation unlikely. Some may prove to be  half-baked and poorly conceived. I will certainly have to retract some of these ideas and replace them with more feasible ones . It will be apparent to everyone that my proposals will reduce economic activity worldwide.I am cognizant that what I am calling for is the wholesale dismantling of the bloated out of control industrial monster we call the Industrial Revolution. My tacit assumption is that the Industrial Revolution is on its last legs and global industrial collapse inevitable. An additional  assumption is that we must dismantle the Revolution in a controlled fashion or have it dismantle us in chaos and fire. The industrial Revolution is at its core a story of growth and progress of the human condition. It is a story made possible by harnessing  millions of years of fossil energy. This fossil energy like our planet is finite, and infinite growth on a finite planet with finite resources is impossible. This story is also an ecological story of humans expanding their niche with tools and machines made possible by this fossil energy. It is the  increasing cost and ultimate scarcity  of this energy that is dooming this revolution. And as we now know the waste products of this Revolution could very well doom the planet and its human and non human inhabitants. A fundamental precept of ecology is the concept of carrying capacity and overshoot. My assumption is that we are there. I think we were there  decades ago. Our choice is to create a new niche reliant on careful use of our remaining fossil energy and utilization of renewable energy. This was the  operational energy  envelope  for most of the  last 200,000 years. We did it once and  can and will do it again. My proposals are directed at the US but it should be obvious that this has to be a globalized strategy.
      My previous post listed the various sectors supplied by the various energy sources. 80% of all energy in the US economy is supplied by fossil energy. In 2017 that amounted to 97.7 quadrillion BTUs or 1.024 Trillion Megajoules. I will try to use consistent units and I have chosen the joule and because the joule is a relatively small unit I will use the mega(million) joule. Fossil energy supplied 80% or 78 quadrillion BTUs or again 810 billion MJ. (I hope i got my math right!).
 The first sector to attack CO2 is the transportation sector which consumed 29% of primary energy. 97% of that energy was liquid fossil energy mostly oil(92%0 and gas(5%) and renewable(2%).
    My easy peasy solution to cutting transportation emissions is a tariff, a tax. There needs to be a tax at the mine opening, the wellhead, the import dock or pipeline. This needs to be assessed at domestic as well as imported oil, gas or coal. For the sake of discussion I will confine this to oil as the US is energy independent in both coal and gas. Taxes will need to be assessed if this situation changes. This is the "carbon" tax. No one is exempt including the military, agriculture, shipping or airlines. No exceptions. no subsidies. In addition there needs to be a tariff on refined fuels. The current federal taxes on gas and diesel  and jet fuel is negligible. It should be a percentage of the fuel cost. Let's shoot for a nice even number: 50% for example. Wholesale gas is around $2/gallon. That brings us to $3/gallon. See what I mean? easy peasy. Since I am now making automobile, truck and train and plane transportation more expensive I would direct the revenue to routing people and goods to more efficient modes. Away from cars and trucks and into trains and buses or other modes of mass transport. My money would go to rail  and port infrastructure and not to concrete highways and bridges and runways. More on concrete later in the show. This 50% tax is pretty minimal but enough to start to force a change in behavior of how people get around and how goods are delivered. It would need to be scaled up over time using a floating target of reducing CO2 from this sector, say 10% per year. If the target doesn't hit 10%, it's raised.I would like to see the tariff raised to 100% at the outset but 50% is probably necessary to give people and companies time to adapt. Eventually I think the tariff should be 200% to 300% of the wholesale cost. 300% tariff is only $6 /gallon which is less than what Europeans pay currently.
I would hit private automobile transportation hard because it is perhaps the greatest waste of energy in our entire system. The gasoline ICE(internal combustion engine) is only about 20% efficient, 25% in the most efficient iterations. But consider that most of that gasoline energy is being used to move 3000 to 6000  hunks of steel with only a 150-200 lb payload, comprising  3 to 5% of the entire weight of the car. This makes the true efficiency  about 1-2 %!!  Moving people to diesel powered trains increases the efficiency massively. Diesel trains are electric trains so I am proposing using electricity to move people around as is done in countries like Switzerland with it's electrified rail system. An explanation is in order. Diesel trains are in fact diesel-electric trains because the diesel engine drives an immense electric motor . The huge diesel engines in trains are among the most efficient ICE ever invented , over 50%. Most electric power plants, particularly coal plants are in the 30%+ range. Notice I am not outlawing cars or trucks. I am giving incentives for people and companies to conserve energy such as carrying more passengers or making long distant shipping of goods more costly which would make closer sources of goods more competitive. Asian sweatshops would now be competing with domestic manufacturing. MAGA! I would tighten the screws on use of the automobile infrastructure. For example bridge tolls could be a tiered structure. One occupant: high toll. 2 occupants, 50% toll. Full car: no toll. No toll for full buses . Hefty tolls for semis. I would add a tariff on new cars and additional tariffs on imported new cars. We have more than enough new cars. The effect of these tariffs would likely clear some of the congestion on the roadways and reduce incentives for private automobile travel.These tariffs on fuel would increase the cost of airline travel which is among the most wasteful and polluting forms of travel. Additional disincentives to air travel could be instituted such as banning private jets at airports whose tax base subsidizes these elite travelers. Since car travel is the worst of the worst in terms of energy inefficiency, there would be no bailouts of car companies as has been the case in past decades in the US. Car and plane travel would certainly decline. That after all is the goal. This would obviously reduce discretionary travel by automobile,fewer long vacations to the National Parks for example, reduced tourism. I live just outside Grand Teton and Yellowstone National Park and while automobile tourism would decline, people would still come just as they did 100 years ago but they would come by rail, just as they did 100 years ago. Ban all cars in the parks and provide buses or trains, just as they do in Disneyland. Think of the savings in road maintenance and animal fatalities. Would these measures doom the automobile and airline industries? Undoubtedly they would shrink in size. They would also emit far less CO2 by virtue of using less steel and plastic and paint. The airline sector might survive or even thrive by virtue of manufacturing light and strong aluminum rail cars, just ground based versions of what they send into the air. cars might eventually become a niche product the way they were 100 years ago before Henry Ford and cheap gasoline. I am of course aware that making automobile transportation more expensive will wreak financial hardships on people in flyover country such as myself in Wyoming. We in Wyoming have the highest per capita energy use of any state. Number 50. A dubious distinction.No worries. It's the best state in the nation and I'm not moving just because driving my 7500 lb Cummins pickup became more expensive. The next post will look at CO2 reductions in the Industrial sector.


Monday, March 4, 2019

Apocalypse Now



    Finally, at long last, main stream media is starting to talk seriously about the danger of climate change. The election of Alexandria Ocasio-Cortez was a noticeable bump impelling the discussion forward with her advocacy of the so called Green New Deal. Gretta Thunberg, the 16 year old Swedish student picketing the Swedish Parliament to do something about climate change has catalyzed similar student movements in Europe and North America. Their advocacy is particularly poignant. It is they, the young, who will reap the whirlwind, not their middle aged parents and the white haired feckless politicians and corporate elites who have done nothing but offering lip service. Many politicians are worse than microcepahalic morons by actively denying the existence of  anthropogenic climate change and worse ridiculing scientific research warning of its negative implications to all life on earth. There is simply no credible evidence that the sudden rise in atmospheric CO2 is  not a direct result of the now long in the tooth Industrial Revolution. The exact role of how rising CO2 levels influence climate are still being researched but there is no doubt whatsoever that atmospheric CO2 plays and important and perhaps dominant role. The warming of the earth correlates with rising CO2 and perhaps the most stunning statistic is how fast atmospheric CO2 is rising. For perhaps the last 800,000 years atmospheric CO2 has ranged between 275 and 295 parts per million based upon ice core samples. A few studies indicate similar numbers going back as long as 15 million years. It has only been in the last 150 years that the numbers have been climbing. More than 85% of the carbon injected into the atmosphere has occurred since the end of WW2. More than 50% has occurred since the Administration of the senior George Bush. The world passed 400 parts per million in 2016 and 2 years on it is now 411,........ 5 ppm per year. This data is contained in a new book by David Wallace-Wells titiled “The Uninhabitable Earth.”
There was a brief dip in world CO2 emissions following the so-called great recession in 2008 but  nonsensical assertions that CO2 emissions have stabilized is not borne out by the data. The US emitted an increase of 1.6% in 2017 and 3.4% in 2018. The increase is greater for industrializing countries. China’s increase was 4.7% last year. India’s 6.3%. I will leave the reader to make up his/her mind on the urgency of the looming climate emergency. At the present time I see no sign of any coordinated action to address the issue. For most of us Americans, it simply hasn’t hit home. Until a critical mass of the population becomes convinced that the problem of global warming is real, nothing is likely to be done. James Schlessinger, the first energy secretary in this country said that Americans have only 2 modes of action: complacency and panic.  My purpose in this post is to try to offer possible strategies to slow or arrest the rise in CO2.  I have noticed to my dismay that even the advocates of action to combat global warming have not laid out in detail what actually might be done beyond opaque statements like “decarbonization” of the economy, or moving  to “renewable” energy sources like wind and solar. The Green New Deal has offered a mishmash of proposals which predate the election of AOC by more than a decade but I have found them vague and many of their recommendations have little to do with lowering CO2 levels. I would like to offer concrete proposals to reduce CO2 and in future posts I will continue the discussion on the consequences of doing so.
In order to lower CO2 emissions we need to know where the CO2 is coming from. What are the sources, the sectors and the percentages. The EIA has some extremely well done graphs and images which I will present.




The left hand column shows the sources of primary energy and the right hand the supplied  sectors. Fossil energy sources supply  80% of our energy.Renewable energy, primarily hydro supplies 11% and Nuke power 9%. The lines from these sources connect with the sectors giving the percentages . If we are going to cut CO2 emissions we will be targeting the right column. Transportation consumes 29% of primary energy, Industry 22%, residential and commercial structures 11% and electrical power generation 38%. If we as a country are serious about cutting CO2 production we will need a target figure. I think we should try to get to emission figures between the end of WW2 and the end of the 20th century. Arbitrarily I would think we could get to numbers emitted per capita in the 1950's, arguably the greatest boom years of the 20th century for the United States. This was the decade of Donald Trump's MAGA period. This was the dacade of the great suburbia build out, the private automobile explosion in transportation, Eisenhower's Interstate Highway System crisscrossing the nation. How much was the world emitting in that decade? Here is the graph:
It appears the world was emitting between 5 billionand 10 billion tons in that decade and we are emitting over 37 billion tons presently. . Is it realistic to think we can cut CO2 emissions from over  37 billion to 10 billion tons annually? There is little doubt that the world will eventually get to 10 billion tons because this tonnage came from a finite supply of fossil energy which is fast depleting. The issue is how should we get there? By apocalypse, by war? by a global warming Armageddon? Or by a global concerted effort to try save our planet from those scenarios by voluntary and cooperative reductions fast enough and powerful enough to avert those very real possibilities which will eventuate if we don't take concerted action. 
       What will cutting emissions of this magnitude involve? Specifically how will the lifestyles of our world's citizens be altered by such reductions of climatic CO2? How fast and how radical do we need to make these reductions ? These are just a few of the questions that will be asked if the world embarks on a fundamental reworking of our energy based economic system.In the next blog post I will try to offer possible options to reduce the world's most dangerous poison Gas:CO2.

Wednesday, February 20, 2019

Coping Strategies at the End of the Automobile Age( including how to choose the right used car)



 I might as well state my bias at the outset of this post on using and living with the automobile at the tail end of the automobile age. I will also describe at some length which vehicles I own or have owned and why I chose them. As ages go, the Automobile Age has had a relatively short lifespan. Not much longer than the lifespan of other living life forms. In the United States the car was born in the early decades of the 20th century. Its rapid adoption corresponded with an explosion of economic growth and industrial expansion across the land. This expansion was fostered by the availability of cheap energy which generated positive feedback loops promoting expanding infrastructures in transportation and housing and Agricultural production. Production of goods and services soared and progress seemed without limits. One of the early decades was even named the “Roaring Twenties.” This growth followed an exponential curve briefly interrupted by a world war but resuming after the war. The United States with an undamaged industrial base and producing most of the world’s energy had a head start resuming economic growth after the war made possible by producing most of the world’s coal and oil energy, the fundamental drivers or industrial growth and expansion. Cheap and abundant oil virtually guaranteed a switch from muscle energy from human and animal sources running simple tools to fossil energy propelling ever larger and complex machines. The great suburban expansion began in the 1950’s helped along by ever longer and smoother roads traveled by ever longer and more powerful cars and truckswhich quickly evolved from simply a tool to get from point to point to a necessity for work and procurement of consumer goods and food. The automobile industry became a prime driver of the economy.  Charles Wilson the CEO of General Motors at the time was quoted as saying that whatever was good for the country was good for General motors and vice versa.” The automobile went from being a tool to a status symbol. Performance and safety improvements were added as well as outrageous stylistic elements like aerodynamic fins and propellers mirroring aircraft design. Indeed in the 1950’s predictions were made that the cars of the future would also fly!  This particular car pictured       was even to be atomic powered!
1955-atomic-flying car.jpg
The absurdity of such predictions was rarely mentioned at the time and automotive engineers concentrated on stylistic and luxury changes to their creations at the expense of mechanical and efficiency improvements. This came to a crashing halt with the oil shocks of the 1970’s when fuel prices soared along with fuel shortages. Social critics at the time started ridiculing American cars as “dinosaurs, boats and Detroit Junk.” My father was one of the first purchasers in our neighborhood of the sturdy German made Volkswagen Beetle which delivered economy and crisp handling. In fact he never looked back and when the Japanese manufacturers began adding quality mechanical improvements and technological innovations like four wheel drive in a small economy car, he was again in the vanguard purchasing the advanced and practical Subaru Station wagon in the 1970’s. The American automotive industry was being eclipsed by foreign producers who emphasized reliability, durability and long life over style and fashion. At a time when the engine life of the typical American engine was 100,000 miles, European and Japanese engines typically lasted more than twice as long. Some like the Mercedes 240 and 300D diesel sedans were lasting more than a half a million miles or longer before overhaul. Eventually some American car companies fought back with quality and durability and efficiency improvements and began to deliver products rivaling their foreign rivals.
     The automobile industry in the latter decades of the 20th century became a globalized entity as country after country developed their own automobiles generating vast increases in production and models. In 2018 it was estimated that there were 1.32 Billion cars, trucks and busses. Virtually all of these vehicles run on petroleum as do all ships and aircraft and most trains. The United States as a single country consumes just under a quarter of all the oil in the world. In 2017, the United States consumed a total of 7.28 billion barrels of petroleum products; an average of about 19.96 million barrels per day. World crude oil + condensate was a bit over 80 million barrels a day in 2017.( Both sources from the EIA).Travel by  private automobile is an enormous waste of oil energy and exceedingly inefficient. The gasoline engine is only about 20-25% efficient and consider that most of the energy is used to transport a 4000 pound mass of steel and overcome friction and air resistance. It  may be carrying a human payload of only 150 lbs dropping the effective efficiency down to about 1% while generating heat and CO2 warming the planet.Moreover, Conventional oil production has peaked and beginning to decline confirming the existence of Peak Oil. For many many decades new discoveries of oil have not met annual consumption. Notice I have not said the world is running out of oil. Indeed the world will never run out of oil but it is certainly running out of Cheap oil. And cheap oil is what has driven our globalized industrial civilization and it is my contention that expensive oil cannot. This is an undeniable fact and it is this reality which will doom the personal automobile transportation model. This fact has not sunk in as a looming reality to most Americans but it will. Most Americans would probably admit that traveling by car as well as by plane is no longer as enjoyable as it once was and traffic jams are a reality in virtually every sizable American city . The roads are full most of the time:                                                                                                                                                                                                                                                                              
                                                                                                                                                                 
On a trip 2 years ago it took me almost 2 hours to get around Seattle returning to Wyoming from a trip to a location just north of Seattle. It was that trip that convinced me that the end of the Automobile Age was nigh, at least in the coastal West.
     Recent production numbers from a variety of countries would seem to confirm my conclusion. Many companies have eliminated jobs, the most recent in the US when GM announced a cut of 15%. Chinese Auto sales fell 17.7% in January and sales have declined 8 months in a row. For all of 2018 it was a fall of 4.1%, the first fall since the early 1990’s. England and Germany have seen cuts in production which appears unrelated to the Brexit issues. A worldwide recession may be in the offing explaining some of these declines but it just may be that we have too many cars and we don’t need any more. It is a certainty that we will continue to use cars but I am calling the end of the Automobile Age. If my judgment call is correct, how should we manage this predicament as individuals? For the rest of this post I will try to offer my opinions and advice on how we can use these rather amazing tools that are nearing the end of their life span. Again these are my personal opinions based upon my experience with vehicles with which I am familiar.
 My advice will be economic as well as practical and frugal. My first piece of advice is NEVER BUY A NEW CAR AGAIN. It has rarely been a good financial decision to buy a new car. People would never buy a new house knowing that as soon as they get the keys to their front door, the house would immediately lose more that 10% of its value, but that is what happens buying a new car. And every year thereafter you will lose another 10% or more. And then there are non deductible interest costs on the loan and expensive maintenance along with the possibility of catastrophic failure of the car itself wiping out your “investment.”  When cars started replacing the horse and buggy, who went out and bought buggy whips? That industry was doomed just like the automobile industry will be doomed along with the airplane industry and all vehicles running on petroleum. So my advice is continue to use cars as tools. Try to choose the best and most reliable tool you can find. Take care of it like you would any good tool and make it last as long as you can. “ Use it up, wear it out. Make it do or do without”, as my depression era mother used to say. Lets now get down to specifics. How can a diligent and thoughtful person manage this process especially if they are not a mechanic?
The best way to start is to find out and listen to someone who is a mechanic, preferably someone who has some gray hair. Repair of most new cars often involves consulting the OBD(on board diagnostic) codes and replacing the part which the  car’s computer says is defective. Many new and younger mechanics trained on new cars are just replacing one black box with another. It is one of my contentions that you need to move to older vehicles having fewer or no black boxes and use that as your starting point. You should also choose and consult a mechanic of that era. Most older mechanics working on newer vehicles have one leg in the older generation of cars as well as the newer generation. That is why your mechanic will have to have gray hair and bad teeth in order to be helpful.
    My next big suggestion is to find the most durable and reliable tool available. This is actually easier than it sounds and many older mechanics can be a big help here. Remember the picture of the Maytag Mechanic? Sitting alone with nothing to do just hoping for a call. You want to find that Maytag quality car. They are out there and they are the cars you want to target. They almost always have had large production runs and this is very important. If millions of one model were made then economies of scale are working in your favor. Parts will be cheaper and more available in not just auto parts stores but in junkyards. Finding which cars have had large production runs is easy. In the united states in sedans that has been the Toyota Camry and Corolla, and the Honda Civic and Accord. If you need 4wd where you live(and most don’t!), that would be the Subaru , particularly models with the 2.2L engine. The larger 2.5L motor was notorious for blowing head gaskets. If you want American cars then GM made millions of Buicks, Oldsmobiles and Pontiacs with excellent durability records in the 80’s and 90’s most with the 3.1 or 3.8 liter engine, If it’s trucks, Gm and Ford and Dodge all made models with excellent durability. They also had models with poor records which should be avoided like the plague. I will cover specific desirable models later on.
    My next suggestion is to look at which older models are still on the road around you  and who is driving them. This will depend upon where you live and what the economy is like. In the Bay area you may see late model  BMWs, Mercedes, Lexus and Teslas. In Oklahoma you will see older Toyotas and Buicks and lots old 80’s and 90’s GM trucks. I had an older mechanic friend who advised me to “Buy what the Mexicans are driving.”
His reasoning was that Mexicans were not usually wealthy and needed reliable cheap transportation that was serviceable. Many Mexicans have experience repairing older cars and they tend to stay away from models with poor reliability and high repair costs.Publications like Consumer reports can be of some help determining average repair costs but this is only somewhat helpful and they only deal with newer models.
    My next suggestion is after you have honed in on a particular car company based on observation and consultation and research, you need to now move on to the next level. Move from Say Toyota Camry 101 to Camry 201. You need to know that ALL cars no matter what make, model, or year, have problems. No car is perfect although some are pretty close. Let me give an example of a car I am particular familiar with: The Toyota Corolla. Some of the early years had mechanical and rust problems but by the late 80’s they became extremely reliable. The 90’s  models were particular noteworthy But at the end of the decade Toyota engineers made changes which were done to improve economy, power and durability but they introduced an unintentional design flaw. It was a simple and stupid mistake. In order for an engine to last it needs oil to lubricate moving surfaces and return to the oil pan and the oil pump. One of the ways the oil gets back to the pump was in drain holes in the side of the pistons and for unknown reasons they reduced the diameter and number of these holes and as a consequence if the engine oil wasn’t changed very frequently these holes would plug up and then the engine would burn the oil in the cylinder instead of returning to the oil pan. These engines were notorious for oil burning as were Camrys and other Toyota models of that era. Toyota even issued a recall for this flaw which helped some owners but came too late for most others.The fix is easy. Remove the pistons, drill in bigger holes and put it back together. I had two of these engines and once fixed the engines are permanently repaired and will deliver amazing economy and long life. I did this repair myself  on my 2001 Corolla some time back over a weekend and  now have 300,000 miles on it. Before the fix it was burning 1 qt of oil every 150 miles and now burns nothing despite the high miles. It also gets 42-50 mpg with a manual transmission, with economy rivaling a Toyota Prius hybrid with none of the complexity.This naturally leads me into a segue on complexity.
    Make simplicity and serviceability a priority. Eschew complexity. For this a mechanic or internet search of the various forums and Youtube videos can be very helpful. Some cars are easy to work on and some are a nightmare. In general larger older cars are easier than smaller newer cars. This is a function of nothing more than “knuckle room.”  Once smaller cars became the rule the engineers were forced to cram the same amount of components into smaller and smaller spaces leaving very little room to swing a wrench, making serviceability problematic. Spaces under the hood also became tighter when cars became smaller and went from rear wheel drive to front wheel drive combining the engine with  2 driveshafts,  expensive constant velocity joints and rubber boots with short lives and a transaxle into spaces that used to be vast and open. If you don’t need the traction superiority of a FWD then an older rear wheel drive offers lower costs and easy access. Access to all the suspension and most engine components is considerably easier. Remember: choose simplicity over complexity. In general the older the car, the less complex. If you go back as far as the 1950’s some of the cars like some early Volvos shared components with Volvo tractors of the era!  Gasoline cars until about the 1980’s used carburetors for fuel delivery. Fuel injection systems under the control of electronic sensors and computers have been the rule for the past 30 years. Diesel engines have always had injection pumps for fuel delivery, incidentally. Injection pumps offered advantages in fuel economy and drivability but disadvantages in reparability besides black box replacement when the sensors or other black boxes failed. Unlike a cranky carburetor, sensors ,injection pumps or computers are  not a reparable items. They are also far more expensive than a simple four  moving parts carb. The other obvious disadvantage of the newer computerized electronics in newer cars is that many require trained expertise and complex diagnostic equipment to fix problems where cars of the 40’s and 50’s could be put back on the road by someone with a vocabulary of 900 words, a butt crack  and a small toolbox. Newer cars tend to go longer between repairs than most older cars but repairs on new models can break the bank. My bias on recommendations is to favor systems with mechanical anatomy and physiology rather than electronic as many mechanical components are field repairable and tend to be cheap and durable. This is not the case for electronics which are sensitive to moisture, vibration and  can be damaged from other defective electronics upstream and downstream. EMP(electromagnetic pulse) waves originating from solar storms   could wipe out most electronics in  unhardened telecommunications and electrical power systems and  to, you guessed it: automobile electronics. In general the newer the car the more electronics system controls. Even simple systems like controlling heat and ventilation which used to be controlled by a lever and a cable are under unnecessarily complex electronic algorithms.
   Another factor to consider when buying a used car is the maintenance history. The ideal car is one with sound design, quality manufacture and a previous owner who followed meticulous maintenance preferably with service records in the glove box. Another issue is the issue of low miles or high miles. Low miles in a context of stop and go city driving or harsh climatic conditions will likely cause more mechanical wear than long haul high mileage conditions. Cars with exceedingly low miles may have been left immobile for long periods which can cause as much or more damage than high miles, the so called “time termite.” You should also keep in mind the appearance and function of all the components you can see when evaluating a used car. You want to buy from someone who fixed anything promptly that went wrong and that includes simple things like handles and hinges and knobs, If they let simple things go unrepaired, that shows a lack of care and attention to more serious problems.
   I would like to return now to how to choose cars based upon model year. I mentioned that all cars have good points and bad points and it is essential to try to find out what they are for a particular model in  which you might be interested. For example let me return to one of my current cars, my 2001 Toyota Corolla with the 1zz-FE engine. I mentioned its greatest flaw, the oil burning. I do know that this flaw continued right up to when they issued the recall for that particular engine. As it happens another engine of theirs, the 2AZFE engine also had oil burning issues and that engine was used in many models well into the second decade of the  21st century. It behooves the buyer to exercise due diligence and do his research. In defense of Toyota engineering I have to say that most other components are exceedingly durable, well designed and long lived, even the electronics. Every single component on my car works flawlessly from hinges to switches to electronic components like cruise control and heating/AC. The gaskets are tight as is the suspension. The seats are comfortable. The manual transmission shifts perfectly. I did replace the clutch which took me only a half day and cost less than $150.This 1ZZFE engine has a timing chain instead of a timing belts and rarely needs replacing. All the major components that wear are easily accessible such as starter, alternator, belts, brakes, and filters. I would advise only buying the manual transmission model. The Automatic of this era performed poorly and delivered abysmal economy. These cars are often available for a song if they have serious oil burning and if all other components are functioning, they are well worth repairing and rebuilding the engine as I indicated. Putting in a low mile used engine is not recommended unless it has had the fix. I would also strongly recommend all Corollas prior to 1998 with the earlier engine design as well as all Camrys up to about 2002 with the 4 cylinder engine. We had a 1997 with an Automatic transmission that was the equal in quality of our 2001 Corolla and it had an excellent engine and transmission which delivered exceptional performance and superb economy as high as 36-38 mpg on trips. Had it not been totaled in an accident, we would still be driving it.. I beg forbearance from the reader for a long discourse on particular car models but only did so to illustrate the care in choosing the best model and achieving familiarity with it is a wise course of action. It is best just like in choosing a mate to find the best model , know its foibles and take care of it and not replace it unless absolutely necessary. It is also possible to learn to do your own basic repairs if you keep it for a long period of time. Replacing your car every few years is economically foolish and damaging to the planet’s diminishing resources and climate
I have another strong recommendation for a durable, easily repairable vehicle of the 1980’s with a well deserved cult following: the mid 1980’s Mercedes diesel sedans. My oldest model is a 1982 240D with a manual 4 spd transmission with roll up windows and all manual controls. It was and probably still is the best taxicab ever built and was a feature of world taxi fleets for a good reason: repairability, durability, and simplicity. This car has 200K miles, burns no oil, delivers economy between 30 and 36 mpg  for a relatively large and heavy sedan. Every single component is accessible. The engine bay is cavernous. The electronics are nonexistent besides lights and a radio. It will run perfectly even if you lose an alternator or a battery. It is possible to push start it if you lose the starter or battery! Heater and defroster controls are controlled by a visible cable arrangement. If it has a disadvantage it is slow. The 4 cylinder engine delivers only about 65 hp . The joke about the 240 D is that it is so slow that you get bugs on the back window! If you can avoid mountain passes, interstate entrance ramps and passing other cars, it is a fine car, I am not aware of any design flaws and the production run on these Mercedes sedans was enormous worldwide and as a consequence parts availability is excellent except almost nothing on these cars wears out. Door handles are heavy chrome steel for example and the seats are original and comfortable. I have another Mercedes diesel, a 1985 5 cylinder turbo diesel with almost 300K miles which  has twice the power of the 240D in the same chassis but at the expense of more complexity such as power windows, cruise  and climate control  and an automatic transmission, all options made for the American car market and all problems I have had to deal with. It is heavier than the 240 D but delivers almost as good economy:28-32 mpg. And also burns no oil and still starts on the first try and runs quietly. Entrance ramps and mountain passes are no problem. I have had both these cars since early in this century and would not part with them. Their engines are solid steel blocks and heads unlike more modern gasoline and diesel engines and as a consequence have identical thermal expansion and do not suffer from head gasket issues as do most other cars of modern vintage. They use timing chains instead of belts  which only rarely need replacement. Many of the Mercedes diesels built after 1985 had a variety of flaws including blown head gaskets. They are best avoided. The 1985 was exceeding expensive for its day and cost about $50,000 new. They can be purchased today in running condition for from under $1000 to about $5000 . If I was forced to choose between the two I would keep the 240 D because of its utter bullet proof simplicity.
My trucks are 2nd generation Dodge diesels which were manufactured between 1994 and 1998. They are famous for the Cummins 12 valve engine which treated properly will last almost indefinitely. Electronics are minimal unlike post 1998 models which had problematic electronic  injection pumps. The transmissions were mediocre and weak but can be made durable when rebuilt to handle the abundant power of the 5.9 Liter inline 6 engine. Despite its considerable weight these diesels deliver excellent economy of up to 22 mpg. They also have a cult following and typically have high resale value.  I am not a fan of older small pickups. Cramming 4 wheel drive components into already tight spaces  makes service and repairs often difficult and expensive. Avoid 4wd vehicles unless it is essential because of higher maintenance cost and reduced economy. The 70’s through the 90’s US made pickups offer decent value and are simple enough for any backyard mechanic to maintain. The 4.9 liter straight  6  Ford engine made from the 70’s until 1995 merits honorable mention because it is a straight 6 design rather than a V design and is long lived and exceedingly easy to service delivering excellent economy especially with the manual transmission.
  It is sometimes possible to purchase these old sedans and trucks that have been restored and most will have had worn out components replaced. It is wise to have a mechanic familiar with the model you have chosen do a pre-sale examination on a lift and do a thorough test drive at all speeds. It is mandatory to do a cold start for the engine and to feel the engine to ensure it is cold. Then check the oil and coolant and other fluid levels such as brake fluid, Transmission and  PS fluid and air filter. The engine should start easily and run smoothly without any unusual noises and  have a smoke free exhaust. Inquire how much oil the engine burns or leaks. Excessive oil burning or leaking needs to be evaluated by your mechanic. Some fixes are relatively inexpensive but most are not. There should be no “blow by” in the breather which usually indicates low compression and worn rings. A compression check and oil analysis can be exceedingly useful. This should not cost more than about $50. If the car passes the mechanic’s checks then it is essential to change all the fluids and filters in the entire car including engine oil, transmission and differentials, brake fluid and PS fluid as well as a coolant flush. Consult the owner’s manual on how often this should be done. The original owner’s manual should be present which usually has some service records and is indicative of better maintenance.  If the car has not had recommended maintenance with these services, that is a potential red flag. All mechanical components ride on a flim of oil and keeping the oil clean is the best way to extend the life and head off wear. I cannot over emphasize this point. Use only the best oil and filters. Synthetic lubricants should be used unless the mechanic recommends against their use and some older cars should only use petroleum based lubricants. A good mechanic can spot problems and provide an estimate of repairs needed to bring the car to acceptable function and will determine what price you can offer. Some of the 4 cylinder cars I have recommended may still be worth buying even with serious issues if the price is right. In those cases it may be just over what a junkyard would offer. In general it is wise to steer clear of any significant rust and avoid cars which were used in areas with salt on the roads or from areas with catastrophic floods. A VIN check would be useful on all vehicles to examine its history.  It is best to buy from a private party and the fewer the previous owners, the better. If the owner is evasive with your inquiry, walk away. Always ask why they are selling the car and their answer should ring true. If they seem in any way dishonest, walk away. I believe most people are honest and in general I think women are more trustworthy than men even if their mechanical abilities are less. There are many advantages owning these older vehicles besides simplicity. Older models may be exempt from emission testing. Insurance will be minimal and repairs will in most cases be far less  and can be provided by you or an independent shop. Dealer services tend to be far above what an independent mechanic might charge. If the car is totaled by an accident or catastrophic engine or transmission failure,  your losses will be far more bearable. Finally I would concentrate on car models which deliver excellent economy. Smaller 4 cylinder engines are preferable to larger 6 and 8 cylinder versions and are easier to do maintenance and service. In conclusion I would recommend doing meticulous research before deciding which model to purchase.  Avoid  the uncommon low production run vehicles and manufacturers out of business or soon to be. The internet car forums and YouTube videos are a great help avoiding notorious lemons and pinpointing desirable models. Face it. Travel by private automobile will likely be increasingly inconvenient and expensive going forward as finite oil stocks deplete as the  the Autombile Age draws to a close.

Wednesday, January 30, 2019

Is Frack about to crack?


Is the Frack about to Crack?
Some very puzzling and contradictory data has been spilling out of my trusty Dell  Precision 390 desktop of late. In November or  December there was a report from the Oil industry rag Oilprice.com on a slowdown in fracksville. Then the WSJ put out a similar story within the last month. Ditto on a blog from the respected INDEPENDENT oil analyst Art Berman. But what does he know? as a Houston oil man said some time back. “Art hates fracking.” The report that really caught my eye was Tyler Durden’s Zerohedge site on 1/20/19 which carried a report from the Big honcho of Continental Resources, Harold Hamm who said that frack volumes could fall 50% this year. He did qualify it as a “Wild guess.” What was more revealing is that the Frack Ponzi which relies on issuing bonds and stock mostly to the hedge fund and private equity crowd was only able to peddle 3 issues in October and NONE SINCE! That is big news and there was signs that the debt already issued was beginning  to smell like 3 day old fish on Wall Street.I mean who would want it? Most have the frackers have been  free cash flow negative forever. That is they are losing money. Free cash flow is operating cash flow minus capital expenditures. Not all companies mind you, just most depending upon what quarter you take a look at. Art Berman said 1/3  of companies were FCF negative in the third quarter at a time when crude prices were pretty high for the year. Continental was one of the winners as well as a few bigger  diversified companies like Conoco Phillips. Some years back Art put out a similar graph of all the companies and at that time I recall that less than 5 were solidly in the red at a time o
f low prices. Above is Tyler’s graph of debt issuance:Below is Berman recent graph of free cash flow for companies engaged in fracking activities in the Permian formation:


And then here is the just issued report from the EIA and Rystad Consultants on the coming boom in Fracksville:
Last week saw some of the most optimistic forecasts for the future of US shale oil production ever published. Rystad Energy announced that the US is on track to produce some 24 million b/d of oil, more than Russia and Saudi Arabia combined by 2025 – assuming that oil prices stay above $58 a barrel. The growth in US liquids production will be driven by major shale basins such as the Permian, Rystad’s report said.
The EIA also joined the optimism last week.  In its Annual Energy Outlook 2019, the administration forecast that US crude oil production will keep setting annual records until 2027 and will remain higher than 14 million b/d through 2040, thanks to continuously growing shale production.   “Near the end of the projection period (2050), the United States returns to being a net importer of petroleum and other liquids as a result of increasing domestic gasoline consumption and falling domestic crude oil production in those years,” according to the EIA.
This was courtesy of Tom Whipple over at Peak Oil Review.  Those numbers are mind blowing forecasts.completely at variance to what I mentioned at the beginning  of this post. The EIA and IEA have been wrong on forescasts for decades usually dialing back numbers with subsequent Energy Outlooks. For eample  The Monterey Shale in California was for some years predicted by the EIA and USGS as the next big gold mine but in 2014 they had to revise the stimates of extractible oil downward by 96%!!!  Art Berman is especially critical of the IEA in Paris. He once noted that the IEA staff is virtually devoid of geologists and consists of statisticians and economists and their idea of making a prediction is to extrapolate  a line from some arbitrary starting point. The head of the IEA, Faith Birol, is a Turkish economist. I do not know if the EIA has scientific staff and is also cluttered up with  economists,witch doctors,and viziers like the IEA but it wouldn’t surprise me. I am eagerly awaiting Art’s take on Rystad’s numbers.
     It should be noted that these agencies and think tanks almost always crank out predictions based upon the estimated resource. But as some wag once noted, it’s not the size of the resource that counts  but the size of the straw! I saw no mention in Rystad’s paper how many wells it would take to reach 24 million bbl/day, or how much sand and water or more importantly how much MONEY  would be needed to hit these numbers.  The inability of  these companies to attract capital in the last 3 months might throw a wet blanket over these predictions.  I assume if the oil price could get to 3 figures and stay there, fracking might become viable but every time in the past 40 years when oil hit a high point, there was a recession. So we have the new truism: high oil prices kill economies. Low oil prices kill companies. There are a few things we do know. Conventional oil wells make money in spades and always have before they eventually deplete. Saudi Arabia has about 1350 wells and as of 2015 the US had  1,666,715!!!
So let’s do the math. Both countries produce about 11 million barrels a day. Divide that by the number of wells and Saudi Arabia extracts an average of 8148 BBL/Day per well and the US 6.59! We know that Frack wells deplete drastically in a year or two and there are a lot of stripper wells in the US but there are stripper wells in Saudi Arabia too.
I have a hunch(just a wild guess) that if these frack companies continue to have difficulty attracting finance they will either go under as many have already or be sucked up by the big fish with deep pockets.(Do fish have pockets?) But the pockets of the big three oil companies may not be as deep as we assume. They have sunk a lot of dry holes looking for oil in the past 15 or 20 tears and piled on a lot of debt:
These aren’t up to date numbers but they show a disturbing trend up to 2017. Little oil companies can go bankrupt but so can big ones if they guess wrong. And to wrap this post up I will state that based upon my own personal research, I do not know if this fracking boom can last . There is no way to be sure.
       There are other places in the world where formations similar to the Permian in W. Texas exist. Namely the Vaca Muerta in Argentina’s high desert and potentially the world’s largest, the Bazhenov in Siberia.  Again, it’s not the size of the resource but the size of the straw and whether the extraction process is cash flow negative or positive. I haven’t previously mentioned this but besides matters of cash flow there is the matter of energy flow or EROEI(energy return on energy invested). Unless these companies can get a decent return in money or energy, what is the point? Germany in WW2 was making aircraft and tank fuel from coal using the Fischer-Tropsch process . It took 2 units of non oil energy to get one unit of fuel energy for  Tiger Tanks and the  ME109.They lost the war because they ran out of oil. I know virtually nothing about these frack formations but water and infrastructure is bound to be a problem in both areas and if global warming continues as is expected, Siberia will lose its permafrost and turn into one big mosquito infested mudhole int the summer.                                                                                                                                        I should briefly recapitulate  some other known facts about  fravking. The depletion rates almost vertical. Here is a graph from the Baaken field in SD taken from Shaleprofile.com. The company is Oasis. Notice that at 24 months the rate has declined 90%.:
         The other important fact to note that these thin light sweet frack grades are great for making gasoline but their  refining yields of the medium distillates like diesel are well below the heavy grades  and this is starting to show up in the spreads, the bid prices with the heavier grades starting to trade at a premium to the frack grades.No surprise that diesel pump prices nation wide are are over 60 cents gallon above gasoline  as reported by Oilprice.com. In our town the spread is far less however.                                                                                                         My final statement in this post is one I have repeated ad nauseam and that is that the world is past its peak in Cheap  Conventional Oil and it is cheap oil that has driven growth in the  world economy. Richard Miller who oversaw prospecting for BP wrote in the Guardian:”We are like a cage of lab rats that have eaten all the corn flakes and discovered that you can eat the cardboard packets too!