I’ve long believed that political solutions to the climate crisis will be limited in their impact primarily because of the very short attention span of most politicians, i.e. until their next election and due to the influence peddlars in DC, most of whom are ex-politicos. If we’re going to solve this huge global problem then the markets will have to be the drivers of change.

One big factor in this is our own pocketbooks- we know from the oil crisis in the seventies that it took average Americans screaming bloody murder over gas prices and shortages to see any big change in energy policies. So what will it take now? Let’s look at where gas prices might need to go to drive change.

Gas at the pump prices are about $.30/gallon higher on average than six months ago. assuming an average MPH of 23 this means it costs us about $.013 more per mile to drive. If you drive an average of 1200 miles per month, this increase cost you $15.60 more per month than you would have paid six months ago. Probably not enough to really anger a lot of people in the US.

If we’re at $3.30/gallon now, at what price point do we start getting concerned and/or angry? $4/gallon gas would take another $36.40 out of our monthly budgets (on top of that 15.60). Is this a price tipping point? How about $5/gallon- another $52./month? That might do it.

Admittedly, this is a simplistic calculation. Let’s look a little further. There are approximately 200 million licensed drivers in the US, driving 240 million registered passenger vehicles. If these 200 million drivers are each shelling out an extra $1200/year for fuel (based on $5/gallon pricing), that’s $240 billion that is not entering the ecomomy- it’s being sucked up by the oil industry. Is a quarter of a trillion dollars in lost purchasing power, annually, enough to wake this country up? I sure hope so because it’s coming. They’re already there in Europe.

Finally some other related stories: The recent riots in Myanmar (aka Burma) were triggered by the government removing subsidies on gas prices. They went from pennies a gallon to dollars a gallon overnight and the country exploded. In Venezuela, nut case dictator Hugo Chavez (I’m a liberal but I don’t buy into this guy for a second- nothing but a petty tyrant), subsidizes gas so the populace only pays $.07/gallon. This is the classic ‘bread and circuses’ tactic used to keep the populace blissfully unaware of reality.

Oil is never, ever going to cost less, no matter what new fields are found. We have to change our entire society to end our dependence, quitting cold turkey so to speak.

Here’s innovative thinking, the kind of thing that heralds radical change in the way we view our transportation systems. Business Week announces that Honda is going to introduce a combination of a fuel cell car with a home hydrogen plant that generates hydrogen from natural gas. Not only will the plant fuel the car, it will power the household utility systems with zero emissions and higher efficiency. And not ten years from now- coming in 2008!

First the car:

” a 20-percent increase in fuel economy – to the approximate equivalent of 68 mpg2 combined fuel economy (about 2-3 times the fuel economy of a gasoline-powered car, and 1.5 times that of a gasoline-electric hybrid vehicle, of comparable size and performance);

• a 30-percent increase in vehicle range – to 270 miles;

• a 25-percent improvement in power-to-weight ratio, in part from an approximate 400-pound reduction in the fuel cell powertrain weight, for superior performance and efficiency despite a substantial increase in overall vehicle size;

• a 45-percent reduction in the size of the fuel cell powertrain – nearly equivalent, in terms of volume, to a modern gas-electric hybrid powertrain;

• an advanced new lithium-ion battery pack that is 40 percent lighter and 50 percent smaller than the current-generation FCX’s ultra-capacitor; and

• a single 5,000-psi hydrogen storage tank with 10 percent additional hydrogen capacity than the previous model.

Full details will be set closer to launch, but current plans call for a three-year lease term with a price of $600 per month, including maintenance and collision insurance.”

And the fuel system:

“ Honda Home Energy Station IV

Of course, while California’s Hydrogen Highway is a leading initiative in developing a hydrogen distribution infrastructure, fuel supply will still be a huge issue for the first generation of FCX owners. To ease this transition for early adopters, Honda decided to build a home-based hydrogen generation and fueling device — which has evolved into an energy-saving power station for the whole home.

Running on a home’s existing natural gas supply, the Home Energy Station IV produces and stores hydrogen, while providing heat, hot water and electricity to an average-size home.

The Home Energy Station IV can reduce both cost and carbon dioxide (CO2) emissions for the consumer. Compared to the average U.S. consumer’s home with grid-supplied electricity and a gasoline-powered car, a home using Home Energy Station IV to help produce heat and electricity and also to refuel an FCX Clarity can reduce CO2 emissions by an estimated 30 percent and energy costs by an estimated 50 percent.

“Honda is striving to address the need for a refueling infrastructure for hydrogen fuel cell vehicles,” said Ben Knight, vice president of Honda R&D Americas. “The Home Energy Station represents one promising solution to this issue, while offering the added benefit of heating and powering the home more efficiently.”

The natural gas is reformed to produce hydrogen, which is then run directly through to a fuel cell stack to generate electricity for the home and enough heat to run the hot water supply. When immediate consumption is not needed, the hydrogen is refined, compressed and stored in a large tank for later use, or to fill a hydrogen car like the FCX Clarity.

Storage in the Home Energy Station IV is a maximum of 132 liters, which it fills at a rate of 2 normal cubic meters per hour.”

Zowie.

If this is for real, it’s a breakthrough. A Penn State research team has developed a way to extract hydrogen using common bacteria that is highly efficient, clean and low cost. They claim it returns 288% more energy than the process consumes.

This would be very big news as hydrogen extraction methods in use today are not energy efficient and typically require the use of petro products, rendering hydrogen’s use in fuel cells inefficient when you look at the big picture, costwise. Because hydrogen is a completely clean fuel, an efficient production process could dramatically change things. I suspect GM will be all over this for their fuel cell car project.

They also claim the process could be used for fertilizer production, another process that currently relies heavily on using petroleum products.

Nice to have something positive to write about!

Image courtesy of the National Science Foundation.

And I’m wondering what price will initiate real change. The recent protests in Burma against the military oppressive government weren’t triggered by human rights abuses, they were the result of the government removing their artificially low gas prices (under 10 cents a gallon). Overnight it became virtually impossible to afford to drive. This triggered an entire country to rise and confront their government on a wide range of issues.

Recent earnings reports from the big oil companies had their results down sharply from the year before (when they recorded the highest profits in history for any kind of company). Ask yourself why? My answer?

They have been intentionally keeping gas prices at the pump from rising as oil prices have risen because they know the social implications of a sharp rise. One economist estimates that a $10 rise in oil should increase retail gas prices by 2.2 cents a gallon. Oil has risen almost $50/gallon without a related rise in gas prices over the past year. However, on the heels of these earnings reports and the extremely unstable political situation in the Middle East (Kurds and Turks fighting, Musharraf showing his true thug nature, Israel and Hamas fighting, sword-rattling between us and Iran…) we’re finally seeing prices rise. High test today was $3.47! Now these are New York state prices that include high taxes but…

So oil is nearing $100/barrel which puts the true cost, adjusted for inflation, higher than at our worst point during the Arab oil crisis of the seventies. I’m old enough to remember gas lines, rationing and an uptake in public transportation. I imagine that these things won’t happen until we hit $5 because we’re slightly more efficient mileage-wise than we were then. But only slightly, thanks to the insane lobbying to keep gas-guzzling behemoths legal by the US auto industry.

We could easily be driving 100 MPG vehicles today. If we were, we wouldn’t be at war in the Middle East, we’d be in a position to tell the Saudis to stop this fundamentalist craziness, we’d be an example in fighting climate change for the rest of the world and we’d be creating a better world for our grandchildren.

So bring on the $5/gallon gas if that’s what it takes to wake us up.

BTW, GM posted a $39 billion dollar loss today. This would never have happened if they had any real strategic long-term planning instead of the afore-mentioned lobbying and reliance on old technology instead of innovation.