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Discussion Starter · #1 ·
On this holiday weekend I thought I'd put up a thread that talks to why I bought my Fisker and why I think this is paving the way to a Brave New World.

I used to be a hedge fund manager and can say that I had no down year and averaged 20%+ returns each year for 15 years. ****, those were the days... I wouldn't be able to get those types of returns managing more than the $100M I did but in part that is why I left the industry back in 2006. The market was going crazy and investors were walking UP the risk curve without getting commensurate returns. Hedge funds went from managing mostly principal capital to an asset gathering business where the Administration fee of 2% was seen as a growing revenue line. (don't get me started on this... I'm going to stop myself before I start going off on a tangent of how I think the biggest thieves in the market weren't Wall Street execs, but were the Fund of Funds and Credit Rating Agencies)

Anyways, it was around this time that I started to witness the largest arbitrage in human history ... no word of a lie, it's the truth and it continues today. It is the $/energy differential between the world's 2 superfuels, natgas and oil. If you look at natgas prices in the US, you're basically looking at an energy equivalent cost of $20/barrel of oil. So, how can this exist? Well for the longest time, the use of natgas and oil weren't fungible so you couldn't replace one without the other but in a few paragraphs you'll see the link and see that all of this will change in the next decade.

I give a lot of presentations as being the CEO of a company who is working on building the first large scale heavy rare earth separation plant outside of China and i always begin my presentations with the notion that the next era will coined the Era of Efficiency. We've seen productivity grow in leaps and bounds throughout the Industrial Age, the Information and Tech Age, Globalization etc. but as production curves begin to flatten and we see the Law of Diminishing Returns creep in, the next era will be one of Efficiency. While the technology has existed for a while, only in the last 5 years have we seen companies start to produce product that will make this arbitrage between natgas and oil, happen. Our largest use of oil is in gasoline or transportation fuel. For natgas, it was traditionally heating but as Natgas Cogen plants represent the fastest growing segment in the US power grid, Natgas is quickly replacing coal as the base load power gen commodity.

So now you can start to see the link... natgas fired cogen facilities producing electricity used in electric/hybrid cars where an electric motor is 4x more efficient than the ICE. For the US economy, if people were to switch to electric based transportation fueled by natgas fired cogen, this would result in annual savings of over $200B every year. That's not an exaggeration, it's just numbers. It would also end the US reliance on foreign oil... think of the implications. There are 4 industries that will be greatly affected by this trillion dollar arbitrage and rare earths is one of them as they are the enabler elements used in building electric motors that are strong and efficient so that's why I am in that industry but watch for more changes to come and it's all just around the corner. Hybrid car technology will lead the way as most consumers have range anxiety.

We are truly on the cusp of a Brave New World...
 

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I'm curious where you got the information that switching to electric based transportation fueled by natural gas would result in $200B savings per year? I don't doubt the numbers...just wanted to know where you got the information?
 

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ok here are the rough #'s, if you'd like, email me at [email protected] and I will send you a copy of one of my presentations where there is an appendix that goes into the #'s in more detail.

Here are some basic assumptions behind the #'s and I got them while research energy generation and efficiency:
- energy left after generation (in the case of natgas, going from the rig to the powerplant to electricity) for natgas is only 58% versus oil (going from the rig to the refinery and after processing) which is 92% efficient
- energy after charging and transportation losses for electricity is 88% vs oil where you take into account transport (oil tankers etc) is 95%
- btu's per kwh from natgas is 3412 vs a gallon of gasoline which is 115,400
- energy efficiency of electric vehicles is assumed to be .19kwh/m vs a fuel economy for ICE of 24 mpg
- the ratio of miles per btu is around 4.3:1 in favour of natgas generated electricity
- on avg the US consumes about 9M barrels of oil a day for gasoline worth about $328.5B so using the above ratio that would imply about $250B in savings a year
- I rounded down to $200B :)
 

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It's worth adding that distributed natgas-fired generation can run over 80% efficient: you burn the gas in a very small jet engine (a microturbine) to generate electricity, then use the hot exhaust to heat water for domestic hot-water needs and/or to drive dessicant cooling systems for domestic air-conditioning needs.

There's a minimum size on this that makes it impractical for individual homes, but it's great for apartment complexes, offices, hotels, data centers (think Google disk farms), and many industrial uses.

Natural gas is also actually a renewable resource (it's made by various bacteria when they digest garbage and sewage) and it's the best way to package hydrogen gas (if you want to run cars off hydrogen someday): you "un-burn" water (H2O) and carbon dioxide (CO2) to obtain the H and C atoms, then you combine them to make CH4 (methane, natural gas) molecules.
 

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ok here are the rough #'s, if you'd like, email me at [email protected] and I will send you a copy of one of my presentations where there is an appendix that goes into the #'s in more detail.

Here are some basic assumptions behind the #'s and I got them while research energy generation and efficiency:
- energy left after generation (in the case of natgas, going from the rig to the powerplant to electricity) for natgas is only 58% versus oil (going from the rig to the refinery and after processing) which is 92% efficient
- energy after charging and transportation losses for electricity is 88% vs oil where you take into account transport (oil tankers etc) is 95%
- btu's per kwh from natgas is 3412 vs a gallon of gasoline which is 115,400
- energy efficiency of electric vehicles is assumed to be .19kwh/m vs a fuel economy for ICE of 24 mpg
- the ratio of miles per btu is around 4.3:1 in favour of natgas generated electricity
- on avg the US consumes about 9M barrels of oil a day for gasoline worth about $328.5B so using the above ratio that would imply about $250B in savings a year
- I rounded down to $200B :)
I have never been good with math. In fact, I failed calculus (TWICE!) in college. So I'm going to have to trust that you know your stuff. :)

Thanks!
 

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By the way, here's how, right now, to use natural gas (or diesel but you save way more money with CNG) to power medium-duty trucks in a way that can save the USA about $16 billion dollars a year: http://www.truckinginfo.com/news/news-detail.asp?news_id=77031&news_category_id=63 (it works much better for trucks than cars because trucks drive many more miles every day: delivery trucks, garbage pickup trucks, etc., they're all out there doing stop-and-go driving all day long).
http://www.truckinginfo.com/news/news-detail.asp?news_id=77031&news_category_id=63
 
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