Peak Oil

There is a blessing to the reality of $4.50/gallon gasoline and $5.00/gallon diesel. These prices are producing the first measurable changes in consumer behavior. More people using rapid transit; in fact, many rapid transit agencies are bumping up against capacity. Hybrid cars are now selling at a premium. Used hybrids are almost impossible to find and they sell immediately when they come on the market. There is a growing disenchantment with the large SUVs and trucks that America loved so much when gas was $2.00/gallon. There is a lot of anger, which is better than depression, its counterpart, when people lose something dear to them. People want a solution. Let's drill for the offshore oil, the north slope oil anything that slakes our thirst for cheap fuel.

That is the solution, actually: cheap fuel. It doesn't really matter what fuel is used to get us around. We just want to move freely, in our own vehicles, and with as much interior space, steel, aluminum, composite, or carbon fiber wrapped around us as we desire. We are not happy with the idea of having to buy a new vehicle to achieve that goal, but when we elect to buy a new car or truck or SUV, then we'll consider something new and revolutionary if it gives us cheap fuel and doesn't cost an arm and a leg.

What is new and revolutionary and is definitely coming soon to rescue us from our addiction to imported petroleum is the plug-in hybrid. Every major car manufacturer has announced that in 2010, a year that will live in history, they will have a plug-in hybrid or an EV on the market in reasonable volume. If driven by demand, the manufactures will increase the supply. They have to do it, or die.

Now, when we begin driving cars that travel their first 40 miles on the power stored in a LION battery, and if we are able to plug in our cars at night and use the huge excess capacity of electrical power that exists at night to replace most of the gasoline we use, there will be a sea change in demand for oil. Everyone will be happy except the folks who make their living producing and selling oil and its refined products. As the demand for oil declines, the price of gasoline will decline, or at least it will not rise weekly. India and China will also benefit from this trend. With declining demand, there will be enough oil for everyone in the world, removing a major cause of world tension. Maybe, just maybe, the U.S. will no longer find the Near East such a compelling place to control.

By the way, I may have invested a year too early in the Chinese LION battery manufacturer called China BAK (symbol: CBAK), but I still remain heavily invested in the company and I am convinced that it will be a major player in this revolution, since China has the third largest known deposits of lithium salts in the world (Chili and Bolivia are first and second) and CBAK is the largest producer of LION batteries in China and will soon announce a formal agreement to supply LION batteries for HP's laptop and other portable computer-like devices. It already makes the LION batteries for Lenovo (formerly IBM). And when the automobile revolution begins, it won't be long before such cars and trucks are manufactured in China, both by multinationals and Chinese manufacturers. CBAK is already negotiating with several unnamed companies to supply the LION batteries for such cars. They have 1.9 million sq.ft. of manufacturing space in a facility constructed last year and a separate research facility in China with more than 100 Ph.D.s and engineers working there to develop better LION batteries, particularly high powered LION batteries for use in vehicles, and another research group in Canada. They will be ready for the revolution when it comes in 2010 and beyond.