Issue # 251 Oil Futures
Written by Robert Smith   
Thursday, 07 May 2009
Apart from being the year the Olympic and Paralympic winter games come to Canada, 2010 looks like being the year the electric car comes of age. Both Honda and Toyota will introduce replacements for their existing hybrid cars, and they’ll be joined by the new Chevy Volt. So what?

Here’s what: this next generation of hybrid vehicles is intended to perform daily commuting duties without ever visiting a gas station. Yes, they’ll have a gasoline engine to top up their batteries if the journey goes over the estimated 60- to-100 km range, but if operated within a typical commuting envelope, they’ll run entirely on a daily overnight charge from a domestic power outlet.

Conceived and developed on the crest of a wave of environmental concern and high gas prices, plug-in hybrids could just be the killer app that the auto industry has been looking for. If they’re not, it likely spells the end for General Motors, such is their reliance on the Volt to spark the brand’s revival. Given the animosity many people feel toward the gas companies and the almost obscene profits they’ve made over the last couple of years, the flood to buy plug-in hybrids could turn into a tsunami.

Don’t get me wrong, here. I’m not planning to trade in my trusty Triumph ST for a Prius:  for one thing, it still gets better gas mileage. But I do have serious concerns as to what this trend might mean for the already marginalized motorcyclist.

Let’s say that 10 per cent of cars on the roads get traded in for plug-in hybrids. That could mean a drop of close to 10 per cent in gas sales. If you owned a chain of 10 gas stations and saw your revenues drop by 10 per cent, how would you respond to the lost income? That would depend on how significant your fixed costs were, but the chances are you’d close at least one of your outlets.

What if you’re an oil refining or distribution company? How keen are you going to be on spending money to increase refining or production capacity if there’s a general trend toward plug-in cars? Given that our economic system is built on the basis of ever-increasing growth, what happens when demand for a commodity like gasoline starts to decline? Typically, the availability of that commodity diminishes, and its price increases because fixed costs have to be spread over smaller revenues. That translates to higher prices and greater distances between gas stations.

When I was growing up in England (here he goes again …), our suburban semi-detached was heated by coal. Attached to the side of the house were three concrete bunkers about the size of a large chest freezer that would periodically get filled from hundredweight sacks (about 50 kg) toted from the back of a big flatbed truck by men wearing black leather skull caps and a permanent layer of coal dust. The sacks were emptied into the three coal bunkers, and provided our heating—a coal fire in one room—and hot water, via a back-boiler behind the coal fire.

In the 1950s, the famous London smogs blanketed the city every winter, causing respiratory distress to many and resulting each year in more than a few fatalities.

In the worst year, over a four-day period from Dec. 5-9, more than 4,000 people died from respiratory problems resulting directly from the smog. The chief culprit: particulates, sulphur and nitrogen oxides, mostly from the burning of coal. Coal was gradually phased out as a domestic fuel, replaced, in our own case, by cleaner-burning coke. And when central heating became more widespread in Britain in the 1960s, natural gas and electricity became the preferred domestic fuels; coal and coke distribution withered and eventually disappeared.

So will petroleum distribution go the same way? In the short- to medium-term, not likely. But some gas stations are likely to close, fewer new ones will open, and those most likely to disappear are the ones with already marginal income—rural outlets.

So we come to the question I usually ask at this stage: what does this have to do with motorcycles? Well, quite a lot, of course. The advent of a practical motorcycle with a plug-in hybrid powertrain lies somewhere between unlikely and improbable, mostly because motorcycles have less size over which to distribute the extra mass. Batteries are bulky and heavy, and even if the engine was of smaller capacity (as most plug-in hybrid engines will be), it won’t be physically that much lighter.

Add the sophisticated electronics, regenerative braking, electric motors and other necessaria, and your R6 ends up with the curb weight of a Gold Wing, and a price to match. That may be okay for Wingers, or even city-only scooters perhaps, but the hybrid sport- or dual-purpose bike ain’t happening.

The fuel range of a modern mid-size motorcycle can be less than 200 km, while a typical non-hybrid car will do 500 or more; so bikes need to fill up more often. And no gas company is going to open an extra outlet to serve just motorcycles, so expect gas stations to become fewer and farther between in future. And if you’re thinking of buying a new motorcycle, you might just want to check whether a long-range tank is available.  
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