Pain at Pump Equals Pain in Assets
Commodity prices eased back a bit today from the heady highs of $111 per barrel of oil, but something tells me they’ll climb on up and beyond before long. And while the oil and gas industry may be reveling in M&A deal values bolstered by the rising tide of commodity prices, energy consumers may be ready to row to shore—pain at the pump at $3.20 per gallon regular unleaded may finally be reaching a psychological breaking point for gasoline pumpers.
And that will ultimately affect petroleum’s market share. Here’s what I mean:
When the caucophony of cursing reaches a crescendo at retail gas stations, consumers having to make sacrifices for the precious golden fuel will seek more affordable alternatives. And it won’t be ethanol, at 20% the burning efficiency of gasoline means you have to fill up five times as often. Won’t happen.
And it won’t be fuel cells, at least not in the short term, as the delivery and storage of hydrogen is with risk and highly volatile.
It’ll be plug-in hybrids. With new technology lithium ion batteries holding more power than ever, the new breed of cars can get 100 miles to the gallon with an overnight charge—just sippin’ at the petro as it zips along. The combustion engine will serve the diminished role of recharging our batteries.
And when we can pull into a “recharging” station on the highway, plug in and recharge in five minutes, we won’t even need the petro to power our vehicles. We’ll fuel our chariots from the grid. And when we wake up and smell the plutonium like our savoir faire friends in France did 30 years back, we’ll be driving on nuclear when it all shakes out.
Frankly, I think consumers would buy one 200-mile-per-charge all-electric car today for commuting only if they could do so affordably. Plug in at night and skip the pump altogether.
It’s not that far away if pain at the pump outpaces wages, peak oil nothwithstanding. How far out can you hedge?
ZAP Launches Sale of Plug-In Hybrid Electric Car, Tests Show up to 120 Miles per Gallon
Chrysler touting all-electric cars
BMW to Use Daimler’s Lithium-Ion Battery Technology
Steve Toon, Editor, A&D Watch, Contributing Editor, Oil and Gas Investor, stoon@hartenergy.com
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