"Future Energy: How the New Oil Industry Will Change People,
Politics, and Portfolios," is a just-published book that places
plug-in hybrids right in the middle of its projections for how the
energy and transportation industries will change. It provides a fresh
and unusual look at subjects that may have become overly familiar.

Bill Paul, its author is described on the jacket as "a noted
journalist with over 30 years' experience writing and reporting on
energy and the environment and the economic and political impacts of
both. he was a Wall Street Journal staff reporter from 1970 to 1990,
based in Europe and the United States. Paul was also CNBC's special
energy correspondent."

Here are excerpts from the book announcement:

A new book due out at the end of January describes how an energy
technology revolution the equal of the information revolution of the
1990s is about to transform the global energy industry and can free
the United States from its deadly dependence on foreign oil within 5
to 10 years.

Future Energy: How the New Oil Industry Will Change People, Politics,
and Portfolios (John Wiley & Sons) describes how a combination of
high prices, national insecurity and environmental anxiety is causing
the world to move away from a politically and economically vulnerable
single-source (crude oil) transportation system to a multi-source
system which, in addition to providing energy security for every
nation, should benefit the global economy and environment - a win-win-win.

Future Energy features a detailed list of "100 companies to watch,"
including many that make this not your father's oil industry.

The book stresses the need for Washington (hopefully in partnership
with Beijing) to accelerate the first major technological
restructuring of the oil industry in over 100 years through a
Manhattan Project-style program. The book argues that such a program
should more than pay for itself by saving the U.S. billions of
dollars currently spent on insuring that America's imported oil
reaches its destination. (Translation: there's no need to raise
gasoline taxes.)

Among the book's predictions: garbage will be turned into liquid
transportation fuel (think Back to the Future); wireless providers
will provide the communications backbone of a new method of wealth
creation that utilizes energy efficiency to put money in the average
Joe's pocket. Big Oil will still rule the energy world (but in a
brand new way). #



We were impressed at how up-to-date the book is -- the author picked
trends accurately when he submitted the manuscript some months ago. I
may have helped that he got insights from experts we often quote in
CalCars-News: Brad Berman (HybridCars.com), Michael Millikin
(GreenCarCongress.com) and Philip Reed (Edmunds.com). We also can't
help being partial to the book because he highlights CalCars. The
author went a bit overboard in his section where he picked "The
Complete List of 100 Companies to Watch." He told us that though he
knew we were non-profit, we still belonged in the category of
Consumer Information Providers and Hands-on Companies. This will
surely be the only time CalCars appears in a list with Alternative
Energy Store, Google, Home Depot and Lowe's!


Here's less than 25% of Chapter 5, "The Power of Efficiency".

It is important to draw a very clear distinction between the
advantages of plug-in and non-plug-in hybrid vehicles.

Both enable a vehicle to go farther between liquid fill-ups. Both
help reduce the emissions a vehicle generates. But while a
non-plug-in vehicle is still at the mercy of whatever liquid fuel is
being sold at the corner gas station, plug-in capability frees that
vehicle from its involuntary servitude.

Basically, plug-in capability makes it possible for America's
transportation system to tap into virtually all of America's domestic
energy resources by utilizing the full range of energy sources that
are used to make electricity.

Remember what I said in Chapter 1 about how the revolutions in mobile
and stationary energy consumption will increasingly be seen as two
sides of the same coin? Plug-in hybrids are the main reason why.
Plug-in capability is the connector, the bridge between our two
energy universes, the one we inhabit when we are moving and the one
we inhabit when we are standing still.

With plug-in capability, it becomes possible to keep a vehicle fueled by:
* Coal, both indirectly in the form of electricity and directly in
the form of synthetic gasoline.
* Natural gas, again both indirectly and directly.
* Solar power.
* Wind power.
* Geothermal power.
* Nuclear power.
* Garbage power.
* Synthetic gasoline made from tar sands or oil shale.
* Gasoline made the conventional way from crude oil.

Just as diversity through electricity was the key to America's
industrial sector being able to increase productivity without
increasing oil consumption, so too is it one of two keys (the other
being diversity through biofuel) to fueling the growing number of
vehicles expected on global highways without adding to the strain on
global oil supplies and without everyone choking on their own exhaust.

If that doesn't sound like advantage enough, consider this: By
exchanging a single-source (oil) transportation system for a
multisource system that makes greater use of the nation's
domestically obtainable fuel sources, America automatically enhances
its national security, which in turn reduces the financial burden of
having to defend America's sources of imported oil, which in turn
frees up billions of tax dollars for more worthy endeavors.

Now that's a sweet spot.

Certainly, non-plug-in hybrids have their own sweet spot that makes
them a worthy addition to a nation's fleet of cars and trucks. Still,
while one of non-plug-in hybrids' celebrated selling points is their
environmental friendliness, a case can be made that plug-in hybrids
are even friendlier in the sense that the fuel one puts into his car
or truck can be the "green" power one makes himself at home. More
specifically, it can be the electricity one generates by putting
solar panels or solar roofing shingles on top of his house, or by
installing a geothermal heat pump or wind turbine in the backyard.
(Before long, another option may be small wind turbines that go on
top of a house like a weathervane.) Indeed, a case can be made that
plug-in hybrids will accelerate peoples' use of environmentally
friendly green power sources, which at present are catching on thanks
to the revolution in stationary energy.
<snip>
Depending on who you asked, in 2006 plug-in hybrid technology either
was ready to go right now, close to a breakthrough that would make it
ready, or still in need of considerable development.

For supporters like Felix Kramer, the technology was ready to go.
Existing batteries were "good enough," he told me, and "can only get
better." President Bush, in his Earth Day speech and in another
speech to the National Association of Manufacturers, basically said
we are close to a breakthrough. (The president talked about plug-in
vehicles providing 40 miles of all-electric power without looking
like a golf cart.) But there was more than one automotive engineer
who publicly said that plug-in technology was still years away.

There was, however, a common thread here, namely, that plug-in
hybrids are coming.
<snip>
Think about it. In 2006 oil markets resembled a roller-coaster.
Prices surged to nearly $80 a barrel, then plunged to below $60 a
barrel, during a time when there was no oil shortage, just fear of a
possible shortage caused by a natural or manmade disaster. There is
every reason to believe that this unprecedented volatility in prices
will become a permanent feature of global energy markets. As more of
America's critical energy infrastructure-both oil and natural
gas-gets concentrated in the hurricane-exposed Gulf of Mexico, and
with the memory of Hurricane Katrina unlikely to fade anytime soon,
fear of a weather-related energy catastrophe should worsen. With
Osama bin Laden and the legion of terrorists he has spawned
well-known for their patience in planning an attack, fear of another
terrorist attack-this time maybe on U.S. soil-will not abate.

Enter plug-in hybrid vehicles, which, as the president indicated,
have the potential to make it possible for people to not use gasoline
(negaoil).

How many vehicles are we talking about? How many people are likely to
make the switch and for what reasons? What are the most likely
cities, states, and regions of the United States to feel the impact
of plug-in technology? How might this impact oil companies' imbedded
infrastructure? What could be the impact of that prediction made by
the author of the Reason Foundation study on traffic congestion that
over the next 25 years the number of cities where congestion causes
peak-hour traffic trips to be delayed by more than 50 percent will
grow from 4 to 34?

While it isn't known when plug-in hybrids will arrive, it could be
before 2012, even without a Manhattan Project-style program. Will the
United States be prepared? Will there be a sitting government panel
or task force made up of the best minds in energy, transportation,
national security, agriculture, and so on? Will that panel have had
time to analyze the mega policy issues that plug-in capability (and
also biofuel) raise?

Or will there instead be a hodgepodge of competing interests trying
to spin the public and the politicians? In the absence of a clear and
coherent government policy for incorporating plug-ins (and biofuel)
into America's transportation system, there could be more frequent
oil price gyrations as traders face the new uncertainty of trying to
predict how much gasoline Americans are going to consume in their
cars and trucks versus how much electricity and how much cellulose
and grains. This planning must extend to global commodities markets,
for in the new oil industry there will be unprecedented linkage
between agricultural and energy commodities. Perhaps it is time for
the White House to merge the departments of energy, agriculture, and
transportation. (Don't forget about coal as a jet fuel.) It
definitely is time for financial markets to have more reliable energy
and agricultural statistics from China, India, Russia, and so on.

As energy analyst Glenn Wattley put it, this stuff is too complicated
for Adam Smith.

To be sure, plug-ins may arrive in China without all this planning.
When I asked Goldman Sachs vice chairman and China business expert
Bob Hormats if he thought China was keen on plug-in hybrids, he said
he had not seen any sign of it yet, and then added that if the
Chinese government wants to go that way, it will just go ahead and
install external wall outlets in convenient places.

China might want to first think things through, lest it wind up
roiling global energy markets.
<snip>
An extremely upbeat forecast specifically of hybrid technology's
overall potential was offered in a June 2006 research report from
AllianceBernstein L.P., the global investment banking firm. The firm
predicted that the world is "on the cusp of a major transition to
hybrid-power vehicles," basically because of hybrids' fundamental
superiority over gasoline-powered vehicles. The report described
hybrids as a game-changing technology that will significantly reduce
oil demand by making electricity the primary energy source for
transportation. The report went so far as to say the advent of
plug-ins could reshape the foreign policies of the United States,
China, Japan, and other major oil-consuming countries.

Importantly for investors, the report concluded that technology and
utility companies will gain the most from hybrid technology,
oil-related companies will lose the most, and leadership in the auto
industry will depend on leadership in hybrid technology. While the
report concluded that all automakers will produce hybrids, it echoed
others' feelings toward Toyota and Honda, noting that the other car
companies "will have to act fast since Toyota and Honda will soon be
on their third-generation hybrid systems."

The report said that plug-ins will become popular on the heels of
development of batteries that offer significant electric driving
range. It also broke down the investment potential along sector
lines, not surprisingly finding that the sector with the best
combined near-, medium-, and long-term prospects is hybrid battery
manufacturers. Importantly, the report concluded that electric
utilities also have excellent long-term prospects, as do electronic
automotive suppliers and power-semiconductor suppliers.

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Felix Kramer fkramer@...
Founder California Cars Initiative
http://www.calcars.org
http://www.calcars.org/news-archive.html
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