Dot Product

Well, as predicted Katrina’s devastation on the Gulf petrochemical complex has sent aftershocks through the domestic gasoline market. CNN has a story indicating that $4/gallon should be expected in the near term. I’d say ‘put down that doom-saying crackpipe’, but since domestic refineries were already running at peak capacity, and roughly 10% of the country’s gas comes from refineries in that region, I’d say it’s certainly a real possibility. The President’s willingness to tap the strategic reserve won’t help unless those refineries are brought back online.

My hope is that this helps people re-think how transportation is organized and sold in the US, but I think only sustained high prices are really going to make that happen. With sustained higher prices, electric vehicles would become economically viable, and there would be increased pressure for auto makers to squeeze even more efficiency out of hybrids. There are a number of people who say even todays hybrid vehicles can do better.

Whatever the form, we’re going to have to do alot better than 10% - 20% better efficiency, because demand worldwide for energy is going to continue to skyrocket as China and India seek to reach prosperity parity with the US & Europe (which is their right… ). That’s roughly half the planet folks… so lets just use round numbers and say a 50% improvement in efficiency is called for, JUST TO TREAD WATER.

Innovators, get cracking!