Dear Covers:

After the recent discussion here about hybrids, I couldn't help calling the following article to your attention. The American engineer H. Piper filed a patent, in 1905, for a gasoline electric hybrid, similar to those that are now in the market. Now, read on.

************

Timing is often everything in the automotive world. Take American engineer H. Piper for example. In 1905, Piper filed a patent for a gasoline engine-electric motor powertrain—a hybrid. But unlike today, the purpose of Piper's hybrid design wasn't to increase a vehicle's fuel mileage and lower its emissions. According to the patent application, an electric motor would augment a gasoline engine, allowing a vehicle to accelerate from zero to 25 miles an hour in a sizzling 10 seconds—three times faster than contemporary cars.

Unfortunately for Mr. Piper (here comes that "timing is everything"), when the patent was issued three and a half years later, cars had become powerful enough to achieve or exceed the same performance.

Then there's the Ford Motor Company. Ninety-nine years after Piper applied for his patent, the automaker introduces for sale the world's first hybrid sport-utility vehicle, the Escape Hybrid. Talk about good timing: The groundwork for consumer acceptance of hybrids has already been laid by Honda and Toyota; gasoline still hovers around $2.00 a gallon; and the Escape Hybrid is a vehicle that many car buyer's have longed for—a fuel-sipping SUV with near zero emissions.

The full text may be found in the following link.

http://autos.msn.com/advice/article.aspx?contentid=4022560&src=msn&GT1=4553


Charmed :)

Dear Covers:

Now, oil prices have risen to another record high of $54 per barrel.

“It would be imprudent for the public to expect that all this would be resolved anytime soon. We have to adopt a mentality that we have to live with these prices,” said John Vautrain, vice president of Texas-headquartered energy consultants Purvin & Gertz in Singapore.

Read on. May be the 100 year old idea - the hybrid car - needs to be revived.

Charmed

**************

Nigeria strike, reduced Gulf of Mexico output weighs
The Associated Press

Updated: 7:38 a.m. ET Oct. 12, 2004NEW YORK - Crude oil prices breached the $54 mark Tuesday to reach a new all-time high, fueled by continuing worries over supply in Nigeria and reduced output in the hurricane-hobbled Gulf of Mexico.

Traders were also concerned over troubled Russian oil giant Yukos, which has been hit with a fresh tax bill that could derail output amid fears that supplies from Brazil and Iraq might also be disrupted.

Crude for November delivery on the New York Mercantile Exchange reached a new high of $54.14, after settling overnight at $53.64. Brent crude for November broke through the $51 mark for the first time to reach $51.10.

******

Lowdown on high oil prices

To view a slideshow, click here.

• High demand
• Low inventories
• Supply snags
• Pump problems
• Price pressure
• Economic disruption
• Cartel crunch
• The fear factor
• Vulnerable infrastructure
• The bottom line

Source: Forbes.com

******
World oil demand is growing at its fastest pace in 16 years. U.S., European and Japanese economies are finally growing again and China is sucking in oil -- imports are 20 percent higher than a year ago -- to power its manufacturing and to make gas for its booming car market. The world consumed 79 million barrels of oil a day in the second quarter. Forecasts call for that to rise to 82.5 million in the fourth quarter.

Stocks of oil are low by historic standards, removing a cushion between demand and supply. The unusually cold winter in the Northern Hemisphere caught oil companies shorthanded, forcing them to run down stocks. But oil companies are keeping less oil on hand than in the past to lower their cost of business. OPEC has kept its stocks low as a matter of policy.

Unrest has disrupted oil production in the Middle East, Nigeria and Venezuela. New production investment has been low in the Persian Gulf and Caspian Sea. Mature U.S. and North Sea oil fields are producing less and new finds have dropped to 6.8 billion barrels annually in 2001-2003 from 11.4 billion barrels per year in the previous five years. U.S refineries are running at near-full capacity, slowing gas deliveries to consumers. Summer driving will only make things worse.

U.S. gas prices rose more than 50 cents per gallon during the first five months of 2004, but higher crude accounted for only about half of that. Severe winter weather delayed U.S. refiners from making their annual switch to summer products. Even if they try to play catch-up, tankers from the Gulf take six weeks to reach the U.S. so new supplies wouldn't reach consumers until late summer. And because different U.S. regions require different gas formulations, a shortage in one can't be met with shipments from another.

Oil prices have jumped 30 percent this year thanks to the supply-and-demand problems, the weaker U.S. dollar and speculation. A 10 percent drop in the dollar against currencies of other oil-consuming countries means a 7.5 percent rise in the dollar price of oil. OPEC officials also blame hedge fund bets that prices will go higher for up to 20 percent of $40 oil. But even at $42, a barrel of oil is cheaper than it was in 1980, when it cost $81 in today's money. (In 1864, oil hit a giddy $8 per barrel -- $92 in 2004 dollars.)

High oil prices push up inflation through higher energy and transportation costs; they can push up interest rates and trim economic growth too. A $1 gain in crude oil prices adds $280 million per year to U.S. airlines' fuel bills. If price rises are steep enough or last long enough, they can trigger recessions, as happened in 1973-1974, when OPEC tripled oil prices overnight, and in the 1980s, when oil prices stayed above today's prices in real terms for seven years.

OPEC's 11-member states pump 39 percent of the world's oil production and half of oil exports. The 44-year old cartel tries to manage prices by regulating output, though quotas rarely reflect true OPEC output. But while OPEC opted to raise output at its June 3 meeting in Beirut, most members are producing at full capacity already. OPEC also has internal policy divisions between pro-U.S. members such as Saudi Arabia and Kuwait and countries less favorably disposed to the Bush administration such as Iran and Venezuela.

Although the U.S. gets only 10 percent of its oil from the Persian Gulf, the Middle East remains the world's largest oil producing region. Recent violence in Saudi Arabia, including a deadly attack by Islamic militants in Khobar, and a fear that al Qaeda-linked forces are trying to provoke civil war in the kingdom have again raised fears about supply interruptions. Continuing unrest in Iraq will delay the return of its oil to world markets in any significant volume.

The world's oil infrastructure has many points open to terrorist attack, but it would take simultaneous strikes to cause a significant disruption. Oil wells, pipelines and tankers are the least of the worries. Ports are a bigger potential chokepoint because most oil producing nations have only one or two terminals. But with U.S. refineries already at full capacity -- no new ones have been built for years because of environmental concerns and NIMBYism --taking out one would send U.S. fuel prices soaring.

Although oil -- and natural-gas -- prices have risen sharply, they will likely have only mild effects on overall economic activity, making real U.S.gross domestic product only about 0.9 percent lower than it would otherwise be. Not enough to derail the recovery. Businesses also have more experience with energy price shocks; they understand how the shocks affect them and how other segments of the economy will respond. But many of the factors behind the recent surge in prices are likely to persist.


While oil prices are about 80 percent higher than a year ago, they are more than $26 below the peak inflation-adjusted price reached in 1981. Underlying daily jitters is that excess available output is scant, with global production capacity only about 1 percent above the daily supply of 82 million barrels.

“It would be imprudent for the public to expect that all this would be resolved anytime soon. We have to adopt a mentality that we have to live with these prices,” said John Vautrain, vice president of Texas-headquartered energy consultants Purvin & Gertz in Singapore.

In Nigeria, a nationwide strike to protest higher fuel prices began Monday, shutting down most of Lagos, Nigeria’s commercial capital. The country’s output of 2.5 million barrels per day has not been affected yet but traders remained concerned.

Nigeria produces low-sulfur crude — currently in high demand — and analysts said the prospect of losing output there is particularly worrisome.

The four-day strike takes place just after a militia group and the government reached a tentative peace deal.

Previous efforts by the Organization of Petroleum Exporting Countries, which already produces close to 30 million barrels daily, to boost output have involved crude with a high-sulfur content, which is less desirable for refiners.

“People are nervous and starting to focus on winter weather,” said Vautrain.

“OPEC as a whole has seen production capacity dropping by nearly one-quarter in the past two decades,” said Morgan Stanley chief Asia economist Andy Xie in his latest research report. “Until 2 years ago, OPEC was sitting on a comfortable level of spare capacity,” said Xie.

The market is also closely monitoring the slow recovery of production in the Gulf of Mexico, where 17 million barrels of oil production have been lost since Hurricane Ivan whipped through the region mid September.

*******

Monday’s close was the fifth straight day of record settlements on the Nymex for November crude.

Where are oil prices heading?

Dear All:

Here's another nice article on hybrid cars. Gasoline prices are falling again. Will they continue to fall or reach a new equilibrium level? We should be thinking hard about dollars per mile driven and not just miles per gallon or dollars per gallon. That's where the hybrids kick in.

http://autos.msn.com/advice/article.aspx?contentid=4022561&src=Hybrid+VehiclesCategory

The hybrids increase the fuel economy of a vehicle, or the miles per gallon. Even if dollars per gallon is high, the consumer will see high miles per dollar. Nice way to play the same game - of increasing profits with increasing gasoline prices.

Charmed