Saturday, December 31, 2011

The year is gone







The stock market here in the US as measured by the Standard and Poor’s 500 basically did nothing from beginning to end of year but certainly had some wild swings during the year. The US moved to become a net exporter of refined petroleum products for the first time in 60 years. The price of natural gas in the US dropped by 30% during the year thanks to the shale gas, while the cost of oil was up just over 10% for the year. The economy here in the San Francisco Bay area had some real winners as well as losers. Apple and Google are humming while Solyndra is dead as a door nail. I drove down interstate 880 yesterday and went past the closed Solyndra facility in Fremont. This large imposing billion dollar facility is shut and the lights are off. About a mile north of Solyndra is the Tesla assembly facility that previously was owned jointly by Toyota and GM. There are massive Tesla signs on the walls of this large facility and my bet is in about a year it too will be half empty as the Tesla Model S does not deliver as promised.

My least favorite auto company Fisker just recalled all the 250 cars they have delivered so far. Looks like A 123 who supplied the lithium ion batteries did not clamp coolant lines properly to the battery packs and the battery packs might catch alight if they get too hot. No doubt A 123 was a dog this year as the stock dropped (as predicted by the Green Machine) to $1.61 at year end after starting the year as a ten buck share. I think A 123 will be gone by the end of 2012 and Fisker will also be a history major. Advanced Battery and Ener 1 are goners and delisted from the NASDAQ. Valence Technology will soon be put out of its misery and a discharged lithium ion stock. The question is how much longer can Tesla (TSLA) and Nissan lie about their costs of producing cars with lithium ion batteries. Tesla uses Panasonic batteries and Nissan uses NEC ones. Panasonic got its clock cleaned in 2011 in the TV space and recently admitted to a yearly loss of over $5 billion. Yeah 5 billion big boys! Panasonic cannot continue to pretend to produce lithium ion batteries at low cost and give these to Tesla to sell at an even lower cost. The charade will end in 2012. GM has priced its Volt at its cost and has not subsidized sales of the vehicle hence its puny market share. My expectation is that GM may sell 15 to 20 thousand volts in the US next year and will be happy to sell twenty times as many of their Cruze which is doing really well without any plug from a plug in. GM will also do really well with their E Assist vehicles and the US auto fleet will be greener.

Auto sales in 2011 in the US totaled 12.8 million new vehicles and this was about one million more than in 2010. I do believe we may see 13.5 million vehicle sold in 2012. The great news is that we scrap approximately 14 million vehicles a year so the total fleet continues to shrink and so does our appetite for gasoline. We used 1.9% less gasoline in 2011 than we did in 2010 and we are now using 8,944,000 barrels a day of gasoline on average. My prognostication is that we will use 1% less gasoline in 2012 than we did in 2011 and will continue to drop by this much each year going forward. We of course used more natural gas in 2011 than we did in 2011 and will continue to use more each year going forward. I have often stated that President Obama should declare victory in natural gas and say it was his idea to frack our way forward. Coal is another declining fuel in the US with 17 million less tons consumed in 2011 versus 2010. The US did produce half a percent more coal in 2011, but exported its surplus.

The New Year will be full of surprises and who knows we may actually get some real leadership in Washington come November. What won’t change are the laws of thermodynamics and the laws of motion. As much as the VCs have hyped alternate energy we will likely see them pretend like they did not bring us Solyndra, A 123, Kior, Fisker, Solazyme, Coda, and a dozen other thermodynamically challenged startups. The VCs will find the next bandwagon to hang their hat on and maybe just maybe Vinod Kholsla will end his reign as the king of alternate energy. I think we will also see a lot less of Al Gore. I hope that by December 31, 2012, our Secretary of Energy will be long gone and forgotten. I hope I am proved wrong next year and the Brady Bunch lifestyle is endless for all of mankind and free and abundant energy will flow from heaven and that Bright Source and their partner Bechtel dispatches electricity that is too cheap to measure. But for now I see the entropy on our planet simply increasing as it has done since the dawn of time. Steve Hawking had it right that entropy increase with time because we choose to measure time in the direction entropy increases. I wonder if I spell all my words backwards and if my blogs were written backwards whether this will change the direction of time or will it be yet another futile attempt to refute Josiah Willard Gibbs. Brother Gibbs is perhaps the man I admire most from the 19th Century. Gibbs spent his whole adult life at Yale. Those who refute him and break his second law should spend their adult life in Thermodynamic Jail.

7 comments:

  1. I am happy to see your devotion to Josiah Willard Gibbs who spent his whole life at Yale and was surely its greatest scientist and founder of mathematical analysis many areas of chemistry. I learned about him during my education in physical chemistry and his work has influenced my others. One connection that I was unaware of until reading the Wikipedia article about him is on economics. Here is the reference:
    Gibbs strongly influenced the education of the economist Irving Fisher, who was awarded the first Yale Ph.D. in economics in 1891.[11] One of Gibbs's protegés was Edwin Bidwell Wilson, who in turn passed his Gibbsian knowledge to the American economist Paul Samuelson.[12] In 1947, Samuelson published Foundations of Economic Analysis, based on his Harvard University doctoral dissertation. Samuelson explicitly acknowledged the influence of the classical thermodynamic methods of Gibbs.[13] Samuelson was the sole recipient of the Nobel Prize in Economics in 1970, the second year of the Prize.[14] In 2003, Samuelson described Gibbs as "Yale's great physicist".[12]

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  2. Thanks for this information. Perhaps we need Gibbs to teach both the Secretary of the Treasury as well as the Secretary of Energy. The problem he would have with the modern crowd is none are honest and teaching them ethics would be a prerequisite for any further study.

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