Blog – Economy
Blog Posts related to the Economy
According to this recent article in The Nation, Americans are switching to renewable energy because its actually cheaper.
As a salesperson at JBL Solar, a Sonoma County California Solar Installer, has been telling me recently, there’s never been a better time to install solar. Why? Prices have dropped dramatically and owners can make a profit on purchased systems even if they pay as little at $80/month for electricity. In California, Solar installation has passed grid parity on the retail level and is heading in the direction of wholesale grid parity.
The Nation’s article notes that, but also reports that the US shale oil and natural gas boom will be short lived. Shale oil and tracked wells have a short lifespan – about 3 years. They cost quite a bit to start up $3 million or more each and aren’t profitable with oil priced at $50-$60 per barrel. Without the funds to pay for new oil wells, the recent boom will go bust soon.
Price Anxiety, rather like range anxiety for electric vehicle drivers, is causing some utilities and energy consumers to invest in wind and solar energy in order not to get caught in the next price increase to $100/barrel oil. In addition, wind and solar energy systems are technologies, not fuels. Technology has a track record of improving over time, while fuels are commodities that fluctuate in price with market supply/demand. Switching to Solar or wind allows energy consumers to lock in prices over time and have the promise of cheaper energy in the future as technology improves.
Here’s the link to the article in The Nation
The California Program for Entrepreneurship (CAPE) at Santa Clara University, now in its sixth year, is able to offer space for up to 45 participants in a new format of 7 weekends to better suit busy schedules.
CAPE is a 6-month FREE program for early-stage entrepreneurs who seek a dynamic and rigorous schedule in which to learn the fundamentals of starting and building a business in California. By providing business education and mentoring, it is the CAPE mission to help entrepreneurs develop and implement business plans that will contribute to the growth and well being of the California economy. The application deadline is Sunday, May 31.
For applicants selected for the 2015 CAPE cohort, Santa Clara University has secured program funding to cover the cost of all: Classes, Workshops, Seminars, and Books/Class Materials.
Candidates will be selected based on application quality, experience, the stage of development and likelihood for success of the business idea, and, of course, the potential contribution to the California economy. All candidates must complete an online application.
Applications will be accepted through May 31, and the program will begin with a virtual assignment in June, 2015. For more information or to apply, please visit CAPE on the CIE website.
Citing numerous empirical studies, analysts at Bloomberg New Energy Finance (BNEF) stipulate that the future of transportation is poised to look a lot different than the current oil-fueled model. Their analysis shows oil consumption peaking in 2004, and since then, it has remained flat for about a decade due to inventories surging through the fracking boom, increased vehicle fuel efficiency mandated by federal regulation, and the dawn of a new, clean form of transport – the electric vehicle.
All of these factors have coalesced to make oil a far less valuable commodity. In the U.S. alone, dramatic improvements in miles per gallon has cut oil demand to the point that automakers were averaging 24.5 MPG in 2001, and by 2014, that number was 31.6 – a 29% improvement in just thirteen years.
In addition to more efficient cars, automakers are steadily electrifying their fleets. Global sales of plug-ins reached 288,500 units last year, according to BNEF research. While that is less than 1% of total sales, it’s more than five times the number in 2011. The surge is due to the continued falling costs of electric batteries. BNEF estimates that the price of lithium-ion batteries that power most electric cars has fallen 60% from 2010, and will keep declining at the same pace.
There is also dwindling interest in continued investment in biofuels – gasoline substitutes made from corn and sugar in the form of ethanol. Currently, biofuels account for 10% of the U.S. fuel supply, and efforts to find an alternative from crops that cannot be eaten have stalled. Plus, lower oil costs make it economically unfeasible to produce fuels in such a manner.
Who knew a concept tire could look this cool, and at the same time, positively impact the environment. Our hats are off to the R&D staff at Goodyear Tire & Rubber Company responsible for this innovative, first-of-its-kind thinking.
The concept product, called BHO3, and revealed at the 2015 Geneva Motor Show, “offers the possibility of charging the batteries of electric cars by transforming the heat generated by the rolling tire into electrical energy.”
According to Green Car Reports, Goodyear says the BHO3 can harness heat created by flexing under normal driving conditions, increasing the efficiency of electric vehicles. This could be a boon for car manufacturers who are searching for ways to extend the range of large, electric batteries, similar to how regenerative braking stretches the length of a battery charge.
The company also announced a new tire called “triple tube,” which automatically adjusts its own air pressure based on road conditions through its three internal tubes. Reinventing the tire so it is more closely integrated with a car’s computer and memory systems seems like a natural progression in automotive engineering.
ChargePoint, an EV infrastructure company with more than 20,000 charging spots in North America, recently compiled a list of the top 10 U.S. cities for electric cars based on the number of vehicles registered and available charging stations. So what city came out on top?
The San Francisco Bay Area claimed the number one spot, which encompasses Oakland and San Jose, as well as the city of San Francisco itself. Los Angeles came in a strong second, leaping four spots from its previous position of sixth. Seattle, San Diego, and Honolulu round out the top five.
With its EV friendly atmosphere, staunch approach to reducing greenhouse gases, and pro plug-in legislation, it’s no shock that three out of the five top spots came from California. The Golden State has a long history of forward thinking behavior and this certainly solidifies its reputation as a trailblazing state.
The complete list: 1) San Francisco, 2) Los Angeles, 3) Seattle, 4) San Diego, 5) Honolulu, 6) Austin, 7) Detroit, 8) Atlanta, 9) Denver, 10) Portland. It appears the West Coast has been the earliest adopters of Electric Vehicles. Let’s hope the rest of the nation, particular the highly populated Northeast Corridor, catches up soon.
Electric Vehicle chargers are forecasted to be everywhere – in public parking garages, off heavily trafficked freeway exits, at dealerships, even companies are installing charge hubs for employees, and let’s not forget the most convenient option of them all, your garage.
So it only makes sense that ChargePoint, an EV infrastructure company with more than 20,000 charging spots in North America, is the latest entrant into the crowded residential charging station market. According to ChargedEVs, the competition is fierce with multinational conglomerates and long-established EVSE companies like ABB, AeroVironment, Bosch, ClipperCreek, Eaton, GE, Schneider Electric, Siemens, and others already fully entrenched in this market segment.
So what caused ChargePoint to jump feet first into this tight margin business – well, it is tremendously popular. The company estimates between 70 and 80 percent of all new plug-in buyers sign up for one of their accounts. Its social media channels are absolute world beaters with its Twitter @ChargePointnet yielding nearly 6,500 followers.
Plus, according to its website, it appears the ChargePoint Home charging units will be among the most tech savvy on the market. There is currently a wait list “for the smartest, smallest and most advanced home electric vehicle charger…ChargePoint Home is wifi enabled and works with the Nest Learning Thermostat™.”
While many manufacturers are focused on the home and well traveled freeway corridors, Sunspeed Enterprises is building out the hard to reach, rural destinations with its SunTrail Route network of charging stations. The very first chain of EV charge hubs being built are on California’s scenic Pacific Coast Highway. To start, 30-40 hubs will stretch from Eureka to the north, to as far south as Malibu in Los Angeles County.
Environmentally conscious California is considering a bill that would dramatically cut the sales tax on new green cars. According to Green Car Reports, the proposed law calls for reducing the sales tax on battery-electric cars, plug-in hybrids, and hydrogen fuel-cell vehicles to 3.06 percent, compared to the current 7.5 percent. If passed, the sales tax reduction would be an absolute shot-in-the-arm for the burgeoning EV industry – and not to mention the consumers that will keep more money in their pockets.
The measure being debated in Sacramento comes as no surprise, as California leads the nation in pro-plug-in legislation. In fact, the legislature tried to pass a similar version of this bill in 2013, but it lost momentum due to concerns over funding. This time the measure stands a better chance of passing thanks to the state’s improved fiscal outlook, and Gov. Jerry Brown’s strident stance on reducing California’s carbon footprint.
The main obstacle – as is the case for any tax break – is finding a way to make up the lost revenue. The Los Angeles Times estimates that $96 million per year would be lost between 2016 and 2020 – the period for tax cuts specified in the bill. The Times calculated that number by using the total number of plug-in sales in California (60,000) for 2014, and baselining that with the national average transaction price of $34,700. Plug-in sales, particularly in California, are growing year-over-year, so it’s possible that substantial increases in the sales volume would help ameliorate the tax situation.
Notable EV-friendly actions by Gov. Brown of California:
This bodes well for the economy, as a boom in new and used car sales suggests consumers are now finally starting to release the pent-up demand that was built during the lean recovery years following the Great Recession. What is most troubling about the findings is that consumers are stretching their payments over longer loan periods.
According to Edmunds.com, new car loans now average a record 67.2 months, at an average interest rate of about 4.5%. For all of 2014, the average transaction price of a new vehicle was $32,386, Edmunds says. While this isn’t a great cause for alarm, it does seem a little silly for lenders/dealerships to encourage borrowers to buy more expensive cars by offering an extended payment period. Not to mention the added interest that will accrue during the added months of the loan can ultimately turn that $30K car into a $40-45K total purchase.
Much has been written about the $1.1 trillion (and counting) student loan bubble and how that will be the next credit line to “burst,” which can potentially trigger another recession. It has eclipsed credit card debt and auto loans to become the largest category of non-housing-related consumer debt. Hopefully these “stretch” auto payments are just a fad and consumers go back to more traditional repayment plans.
Ever wonder what’s the most popular car in your home state? Well, the folks at IHS Automotive, a market research firm, wondered the exact same thing. Through empirical research, it found the most popular new vehicles registered in each state by individual retail customers for the year 2014.
Yahoo Autos notes “the unexpected geographic outlines, many of which follow old college sports conference boundaries; in Big Ten land, Chevy rules, while Ford has the Big 12 to itself and Toyota dominates the old Southeastern Conference.”
While trucks are immensely popular in the interior, the coasts, tell a different story. Honda and Toyota reign supreme considering most buyers near the Pacific or Atlantic opt for more fuel efficient options. In fact, all of California’s top-five selling vehicles, for 2014, were either Honda or Toyota.
The price of oil has enjoyed a nice rebound as of late, but this week, oil prices fell again as inventories grew higher than what forecasters predicted. The drop in oil, which dipped 3.8% this week, comes on the heels of a U.S. government report which showed American stockpiles hitting 425.6 million barrels last week. That’s a 7.7 million barrel increase from the previous week, more than double the amount projected by analysts.
West Texas Intermediate (WTI) closed under $51, while Brent crude, the international standard, ended the day just above $60. Oil has rallied over the past month, with Brent gaining 35 percent from a mid-January low as traders covered short positions after a 60 percent crash since June. Analysts have been closely monitoring the drop in active rig counts since oil’s precipitous fall that started last year.
Continued drops in the oil rig count could send prices higher, as OPEC continues its strategy of not cutting production in order to preserve marketshare, despite a global oil glut. Currently the number of U.S. rigs drilling for oil are at three-year lows.