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Fedex Ceo: Let's End Our Need For Oil

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By Frederick W. Smith, CEO, FedEx

http://money.cnn.com/2011/02/01/technology/frederick_smith_energy.fortune/index.htm

FORTUNE -- Every day more than 285,000 FedEx team members deliver some 7 million packages to 220 countries. Every 24 hours our aircraft fly 500,000 miles, and our couriers travel 2.5 million miles. We accomplish this with 670 aircraft and 70,000 motorized vehicles worldwide -- nearly every single one of which is fueled by oil, the lifeblood of today's mobile, global economy. We are all dependent upon it, and that dependence comes at a significant cost...

My comments: Batteries are increasing on all fronts at a rapid pace. It may take until 2030 to have outright electric vehicles being the mainstream new car choice. But already we see a plug-in hybrid the Chevy Volt make it to market. For the driving habit of the average American it is said, 80% of travel would be powered by electricity with the Chevy Volt.

A fleet operator where the Van does the same route every day and that route is always under 100 miles, can probably already go electric.

For a nation in the long run I think the combination of nuclear power and electric cars can bring a level of energy security and abundance. Where instead of trying to sell something to a Sheik so he will sell us a barrel of oil, we simply produce all the electricity our market demands. No need to depend on selling things to foreigners.

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Electric vehicles can't compete like for like with petrol / diesel vehicles

put aside emissions as a source of environmental damage and climate change, that's still coming from power stations anyway - more so if there are more electric vehicles to charge

running an electric vehicle is only cheap due to its low / exempt tax status. In the UK, if there was no VED, no fuel duty and the same reduced rate VAT on road fuel as domestic electricity, a petrol or diesel car would be so cheap to run that electric cars would never get a look in

even if and when we need to switch to more expensive to extract oil, it would still be cheaper to burn oil as petrol / diesel than run an electric car

hydrogen on the other hand... that could be interesting

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For Britain the issue also isn't as pressing because we produce around 1.5 million barrels a day of oil, and consume maybe 1.7 million barrels a day. That is a mere 200,000 barrels a day we have to net import.. cost per year at 80$ a barrel oil = 5.8 billion US dollars. Not the end of the world.

For the USA its a more pressing issue when they are importing 11-12 million barrels a day. That costs over 300 billion a year to import. And that is money that could be flowing around America if it went to electric producers. And in addition it costs an undetermined amount in order to intervene elsewhere in the world to ensure supply.

I agree with you overall though that right now electric cars just aren't price competitive with oil cars. The gap is narrowing though, and the Volt also changes the question by being a plug-in hybrid.

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For Britain the issue also isn't as pressing because we produce around 1.5 million barrels a day of oil, and consume maybe 1.7 million barrels a day. That is a mere 200,000 barrels a day we have to net import.. cost per year at 80$ a barrel oil = 5.8 billion US dollars. Not the end of the world.

For the USA its a more pressing issue when they are importing 11-12 million barrels a day. That costs over 300 billion a year to import. And that is money that could be flowing around America if it went to electric producers. And in addition it costs an undetermined amount in order to intervene elsewhere in the world to ensure supply.

I agree with you overall though that right now electric cars just aren't price competitive with oil cars. The gap is narrowing though, and the Volt also changes the question by being a plug-in hybrid.

just where does the energy come from to power all these vehicles?

and electric jets.......hmm.

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Electric vehicles can't compete like for like with petrol / diesel vehicles

put aside emissions as a source of environmental damage and climate change, that's still coming from power stations anyway - more so if there are more electric vehicles to charge

running an electric vehicle is only cheap due to its low / exempt tax status. In the UK, if there was no VED, no fuel duty and the same reduced rate VAT on road fuel as domestic electricity, a petrol or diesel car would be so cheap to run that electric cars would never get a look in

even if and when we need to switch to more expensive to extract oil, it would still be cheaper to burn oil as petrol / diesel than run an electric car

hydrogen on the other hand... that could be interesting

It depends strongly on electric source and price. If you are talking about off-peak nuclear, then both emissions and price would be very low for the electric car. Hydrogen by itself is unlikely ever to be a common fuel, due to the extreme problems of energy density, transport and storage; the only good thing about the stuff is that it's easy to make.

My particular favorite on that subject is Methanol, on the basis that it is fairly easy to make but acts as a like-for -like petrol replacement, more or less.

As far as switching to harder-to-get oil, what do you think we are doing in the deepwater Gulf of Mexico, Alberta tar sands, offshore Alaska, ultra-deep offshore Brazil, exploring the Falklands..?

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It depends strongly on electric source and price. If you are talking about off-peak nuclear, then both emissions and price would be very low for the electric car. Hydrogen by itself is unlikely ever to be a common fuel, due to the extreme problems of energy density, transport and storage; the only good thing about the stuff is that it's easy to make.

My particular favorite on that subject is Methanol, on the basis that it is fairly easy to make but acts as a like-for -like petrol replacement, more or less.

As far as switching to harder-to-get oil, what do you think we are doing in the deepwater Gulf of Mexico, Alberta tar sands, offshore Alaska, ultra-deep offshore Brazil, exploring the Falklands..?

I hear that nuclear is only cheap because the disposal and decommissioning costs are not included.

And private contractors arent bothered...they "conveniently" run out of cash come the decommission time and go bust, leaving a nuclear pile for disposal by....guess who?

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For Britain the issue also isn't as pressing because we produce around 1.5 million barrels a day of oil, and consume maybe 1.7 million barrels a day. That is a mere 200,000 barrels a day we have to net import.. cost per year at 80$ a barrel oil = 5.8 billion US dollars. Not the end of the world.

From what I have read the amount of oil we are getting from the North Sea has already peaked and we are importing more each year :blink:

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From what I have read the amount of oil we are getting from the North Sea has already peaked and we are importing more each year :blink:

North sea oil peaked in 1999-2000, at about 2.8million barrels per day, if my memory serves; Gas peaked circa 2005 (again, IIRC). So we have gone from a million-plus bpd exporter to an importer in under 10 years!

Strangely, this has not attracted much attention in the press. Nor has the fact that by dint of exploiting the resource as fast as humanly possible (or if you worked on Piper Alpha, faster).

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I hear that nuclear is only cheap because the disposal and decommissioning costs are not included. And private contractors arent bothered...they "conveniently" run out of cash come the decommission time and go bust, leaving a nuclear pile for disposal by....guess who?

The trick is to add a very small levy to the power produced (as in the US) which is then invested in a decomissioning/disposal fund. It's pretty simple to do and given life extensions you generally end up with more than you need.

I could also ramble on about how various forms of breeder reactor essentially remove waste disposal from the question, and on the irony of environmentalists strongly opposing recycling when it comes to nuclear fuel..

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North sea oil peaked in 1999-2000, at about 2.8million barrels per day, if my memory serves; Gas peaked circa 2005 (again, IIRC). So we have gone from a million-plus bpd exporter to an importer in under 10 years!

Thanks for the back up.

When you look at the state the UK is in - national and personal debt levels, GDP, net energy importer, industry long gone, decent jobs (& even crap call centre ones) being exported, too many graduates, no natural resources etc etc we are left with the only thriving industry being the casino banking industry in London!

Once the World readjusts (the next crash) and London is either regulated (don't hold your breath) or the big banks move East to blow up bubbles in emerging markets what has UK PLC going for it for the next 5-20 years?

These kinds of questions are what consume me when thinking about where I want my young children growing up in the coming years and Australia seems to be my best answer so far. However the Oz economy seems to be overly dependent on exporting to China (will they crash?) and exporting all their natural resources only seems to be accelerating climate changes with Australia ironically being the first Country to experience the effects first hand!

Edited by GeordieAndy

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The trick is to add a very small levy to the power produced (as in the US) which is then invested in a decomissioning/disposal fund. It's pretty simple to do and given life extensions you generally end up with more than you need.

I could also ramble on about how various forms of breeder reactor essentially remove waste disposal from the question, and on the irony of environmentalists strongly opposing recycling when it comes to nuclear fuel..

nice idea, but this looks like a tax, and like many other "funds", they are not pools of cash, they are merely an accounting allocation of income...the actual payment will come out of later taxation.

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From what I have read the amount of oil we are getting from the North Sea has already peaked and we are importing more each year :blink:

Production is down to 1.1-1.2 million bpd. Thats fluffed up a bit by the addition of Natural Gas Liquids but the trajectory is still a steep downward path. Production fell 25% between 2008 and 2010.

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North sea oil peaked in 1999-2000, at about 2.8million barrels per day, if my memory serves; Gas peaked circa 2005 (again, IIRC). So we have gone from a million-plus bpd exporter to an importer in under 10 years!

Strangely, this has not attracted much attention in the press. Nor has the fact that by dint of exploiting the resource as fast as humanly possible (or if you worked on Piper Alpha, faster).

Yup - British Energy Policy at its finest. Sell the oil at $20 barrel and buy it back 2 decades later at $100 a barrel :blink:

Look at Hollands management of it's gas resources for a different approach.

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I hear that nuclear is only cheap because the disposal and decommissioning costs are not included.

And private contractors arent bothered...they "conveniently" run out of cash come the decommission time and go bust, leaving a nuclear pile for disposal by....guess who?

To be fair most of the costs you see associated with decommissioning are associated with crash course nuclear weapons production from the 1950's and 60's. Those costs do#nt have to be repeated with the new generation of nucs.

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By Frederick W. Smith, CEO, FedEx

http://money.cnn.com/2011/02/01/technology/frederick_smith_energy.fortune/index.htm

My comments: Batteries are increasing on all fronts at a rapid pace. It may take until 2030 to have outright electric vehicles being the mainstream new car choice. But already we see a plug-in hybrid the Chevy Volt make it to market. For the driving habit of the average American it is said, 80% of travel would be powered by electricity with the Chevy Volt.

A fleet operator where the Van does the same route every day and that route is always under 100 miles, can probably already go electric.

For a nation in the long run I think the combination of nuclear power and electric cars can bring a level of energy security and abundance. Where instead of trying to sell something to a Sheik so he will sell us a barrel of oil, we simply produce all the electricity our market demands. No need to depend on selling things to foreigners.

Where do you think the energy comes from to fuel a battery? If you think it's nuclear, think again, at least if you think that nuclear will replace oil. If every major nation went over to Uranium fishion reactors, the world would hit peak uranium in less than 20 years.

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Where do you think the energy comes from to fuel a battery? If you think it's nuclear, think again, at least if you think that nuclear will replace oil. If every major nation went over to Uranium fishion reactors, the world would hit peak uranium in less than 20 years.

But as we move over to renewables like wind, solar, tidal etc., then electric vehicles will become 'green'. Doubters will say things like "do you know how many wind turbines it would take to produce the equivalent of one nuclear power station?" and "what happens when the wind stops blowing?" But perhaps we should call all our large conventional power stations 'steam power stations', because that's what they are. Oil, coal, gas and uranium are just means of boiling water to create steam to drive the turbine-generators. Known world reserves of oil, gas and uranium at current usage rates is measured in mere decades, with coal lasting a bit longer.

So we have no option but to move to renewables. And we shouldn't be leaving that until the last minute - the quicker we move to renewables the longer the world's remaining finite resources will last.

A lot of van fleets could replace a proportion of their vehicles with battery electric ones, retaining diesel ones for longer journeys.

I think the crucial factor about the future of mainstream electric vehicles is whether or not the initial purchase costs can be brought down. If you're able to buy, say, a battery electric Ford Transit, for not much more than the cost of a diesel one, then I reckon they'll sell - especially in large conurbations.

Although I'm optimisitic about the future of electric and hybrid vehicles, I'm not sure the Nissan Leaf is heading in the right direction, since it seems to be aimed right into a market sector where long range IS important - the family hatchback Focus / Golf / Astra category. Still, it could benefit from being the only electric car in that category, I suppose.

Edited by Hyperduck Quack Quack

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just where does the energy come from to power all these vehicles?

and electric jets.......hmm.

It depends on how mainstream the electric vehicles are. You can't switch off power stations at night when very little of the electricity that they produce is actually required and the rest gets wasted anyway. There's currently no way to accumulate the excess power in the grid during the off-peak hours to use it during the afternoon peak (in the US they use massive tanks and pump water into those overnight and drain it through the turbines during the day thus making some sort of an AC battery - not at all efficient but better than nothing).

There's very little environmental impact (other than from manufacturing batteries) from the electric vehicles that charge from mains overnight; just make existing power that would have been produced and wasted anyway used a bit more efficiently. However, if the electric vehicles become mainstream, it is probable that the energy consumption at night will far exceed anything we could potentially produce.

Therefore the most efficient outcome is the mixture of electric, hydrogen and petrol vehicles existing in parallel until the invention some sort of an ultimate energy source. It is a bit like an existing balance between perol and diesel cars: we can't all run only petrol or only diesel engines as diesel (the same as kerosine for jets) is an inevitable consequence of producing petrol.

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just where does the energy come from to power all these vehicles?

and electric jets.......hmm.

75% of France's power comes from nuclear. In Britain 19% comes from nuclear and the rest is mainly gas and coal.

Planes probably won't go off oil for a long time. It ill take batteries a long time to get the energy density to be viable for flying planes.

Edited by aa3

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Where do you think the energy comes from to fuel a battery? If you think it's nuclear, think again, at least if you think that nuclear will replace oil. If every major nation went over to Uranium fishion reactors, the world would hit peak uranium in less than 20 years.

I have *never* seen 'peak uranium' convincingly demonstrated. There tends to be a lot of 'if we don't discover any more at all and we use highly pessimistic estimates for existing mines and we assume the worst possible fuel cycles then we hit peak soon'.

Peak [conventional] oil is a different matter because of the nature of the resource; most oil is in big fields and we have explored the planet quite intensively.

The problem is it's very easy for people to get carried away with 'Peak XXX' theories, because it's very easy to get the conclusion you want by manipulating the assumptions. And some people (*cough* cells *cough*) can make the same error the other way.

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Planes probably won't go off oil for a long time.
I agree, although aviation might be one possible use for hydrogen as a fuel.

Since hydrogen uses more energy in its production than you get back from burning it, I can only seeing it being adopted for use in applications where there's no viable alternative - and aviation might be one such application. I don't think hydrogen will ever become a major fuel for road transport, though, as there are better alternatives.

Edited by Hyperduck Quack Quack

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It depends strongly on electric source and price.

No it doesn't, because all of the extra cost in an electric car is in building the thing in the first place and the tax subsidies are there to artificially reduce the cost price to the consumer.

This is not going to change however you generate the leccy.

tim

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I have *never* seen 'peak uranium' convincingly demonstrated. There tends to be a lot of 'if we don't discover any more at all and we use highly pessimistic estimates for existing mines and we assume the worst possible fuel cycles then we hit peak soon'.

Peak [conventional] oil is a different matter because of the nature of the resource; most oil is in big fields and we have explored the planet quite intensively.

According to a TV prog this week there are (IIRC) 120 years of oil in the Canadian oil sands.

Though it wasn't clear if that was using the current (relatively tiny) amounts of extraction or when it's the only source left.

tim

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According to a TV prog this week there are (IIRC) 120 years of oil in the Canadian oil sands.

Though it wasn't clear if that was using the current (relatively tiny) amounts of extraction or when it's the only source left.

There might be oil there but is there the water and cash (capital investment) to enable it to be extracted? Obviously this quick question is ignoring the larger environmental effects (water contamination etc) and if it is even economical in terms of the energy required to extract the oil compared to the price you can get for it.

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  • 284 Brexit, House prices and Summer 2020

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