[Due to the increasing size of the archives, each topic page now contains only the prior 365 days of content. Access to older stories is now solely through the Monthly Archive pages or the site search function.]
TTI/INRIX study shows US traffic congestion back at pre-recession levels; average travel delay/commuter 2x that in 1982
August 27, 2015
A new report produced by INRIX and the Texas A&M Transportation Institute (TTI) shows that traffic congestion in the US has returned to pre-recession levels. Washington, D.C. tops the list of gridlock-plagued cities, with 82 hours of delay per commuter, followed by Los Angeles (80 hours), San Francisco (78 hours), New York (74 hours), and San Jose (67 hours).
According to the 2015 Urban Mobility Scorecard, travel delays due to traffic congestion caused drivers to waste more than 3 billion gallons of fuel and kept travelers stuck in their cars for nearly 7 billion extra hours—42 hours per rush-hour commuter. The total nationwide price tag: $160 billion, or $960 per commuter. Other top-level findings include:
Ford Car Buying Trends 2015 shows increasing demand for semi-autonomous driving technologies in Europe
August 26, 2015
European drivers are showing an increasing appetite for semi-autonomous driving technologies, according to a new Ford Motor Company study on buying trends in Europe. Ford Car Buying Trends 2015, a study of new car buying habits in 22 countries across Europe, highlights regional trends and national differences.
The study shows significant increases in the number of cars with technologies that help drivers to park, avoid collisions, and maintain set speeds and distances from vehicles ahead. Among the results:
US total VMT hits historic high in first half of year; VMT per capita trending upward, but below 2005 peak
August 23, 2015
US Department of Transportation’s (USDOT) Federal Highway Administration (FHWA) estimates show that US driving topped 1.54 trillion miles in the first half of 2015, beating the previous record of 1.5 trillion miles, set in June 2007. This is more than double the amount driven during the same period in 1981, continuing a trend of America’s driving mileage doubling nearly every generation.
However, on a per capita basis (non-institutional population), VMT, although it has been trending upward for the last year on a 12-month moving average, is still below its peak in June 2005, according to the Federal Reserve Economic Data (FRED) database from the Federal Reserve Bank of St. Louis.
2015 Harris Poll finds 48% of US car owners would consider hybrid for new car, same as in 2013; plug-in consideration up 2 points
August 20, 2015
A new Harris Poll of 2,225 US adults (aged 18 and older) has found that 48% of American car owners (or anticipated owners) say they’d consider a traditional hybrid the next time they’re in the market for a new vehicle—a result identical to 2013 findings. Harris recorded lower consideration levels for plug-in vehicles, whether they be plug-in hybrids (29%, up 2 percentage points) or pure electrics (21%, also up 2 points).
An additional two in ten would consider a diesel (19%, up 3 points), while 35% would consider a smaller or gas powered vehicle to save on operating costs (down 3 points).
Lux suggests how LG Chem might overtake EV battery leader Panasonic
August 18, 2015
Panasonic is currently the runaway leader in the nascent battery market for electric vehicles, but LG Chem has the potential to overtake it in what will be a $30 billion market in 2020, according to a new report—“Watch the Throne: How LG Chem and Others Can Take Panasonic’s EV Battery Crown by 2020”—by Lux Research.
Panasonic’s 39% share of the battery market for plug-in vehicles makes it the leading supplier, but its reliance on a single deal with EV leader Tesla leaves it vulnerable, according to the consultancy. Panasonic lead rival LG Chem has already signed up large automakers including General Motors, Volkswagen, Daimler, and Ford. In the event of a surge in sales of plug-in hybrids (PHEVs) by the German manufacturers, LG Chem would only need to win over Japan’s Nissan to topple Panasonic.
Opinion: Saudi Oil Strategy: Brilliant Or Suicide?
August 13, 2015
by Dalan McEndree for Oilprice.com
In the last quarter of 2014, in the face of possible oversupply, Saudi Arabia abandoned its traditional role as the global oil market’s swing producer and therefore it role as unofficial guarantor of existing ($100+ per barrel) prices.
In October, Saudi sources first prepared the market with statements that the country would be comfortable with oil prices as low as $80 per barrel for “a year or two.” At the November OPEC meeting, the Saudi oil minister, Ali Al-Naimi, publicly announced Saudi Arabia would allow market forces to set prices. He argued that rapidly growing production outside OPEC made the existing status quo unviable, and that lower prices in the short term would increase prices in the longer term through reduced investment and ultimately benefit all OPEC members.
Opinion: The Saudi Oil Price War Is Backfiring
August 12, 2015
by Gaurav Agnihotri of Oilprice.com
Saudi Arabia has long enjoyed the status of being the top crude oil exporter in the world. With record production of 10.564 million barrels per day in June 2015, Saudi Arabia has been one of the major driving forces behind the current oil price slump.
The Saudis have kept their production levels high since last year in order to drive other players (especially US shale drillers) out of business. Equally clear is the fact that this strategy of maintaining the glut and driving out rivals hasn’t worked so far.
Opinion: Global Oil Supply More Fragile Than You Think
August 07, 2015
by Nick Cunningham of Oilprice.com
Many oil companies had trimmed their budgets heading into 2015 to deal with lower oil prices. But the rebound in April and May to $60 per barrel from the mid-$40s suggested that the severe drop was merely temporary. But the collapse of prices in July—owing to the Iran nuclear deal, an ongoing production surplus, and economic and financial concerns in Greece and China—have darkened the mood. Now a prevailing sense that oil prices may stay lower for longer has hit the markets.
Oil futures for delivery in December 2020 are currently trading $8 lower than they were at the beginning of this year even while immediate spot prices are $4 higher today. In other words, oil traders are now feeling much gloomier about oil prices several years out than they were at the beginning of 2015.
Opinion: Could WTI Trade At A Premium To Brent By Next Year?
August 06, 2015
by Nick Cunningham of Oilprice.com
A flood of bearish news has pushed down oil prices to their lowest levels in months, with WTI nearing $45 per barrel and Brent flirting with sub-$50 territory. With a bear market back, there is pessimism throughout the oil markets. Goldman Sachs is even predicting oil stays at $50 through 2020, a profoundly grim view of the state of oil supplies.
On the other hand, the contraction in US shale is underway, so it is just a matter of time before the mismatch between supply and demand balances out.
Volkswagen Group selects LG as FAST partner for high-voltage batteries
August 01, 2015
The Volkswagen Group nominated the first 44 suppliers who will be collaborating with the Group on a new common strategic level under the joint FAST initiative. Among the 44 is LG Electronics for the supply of high-voltage batteries. (Earlier post.)
Volkswagen Group Procurement is responding to the challenges currently facing the automotive industry by working together with its suppliers under the “Future Automotive Supply Tracks” initiative (or FAST for short) and will implement technical innovations even faster. Volkswagen AG said it chose the first tranche of suppliers for “their outstanding performance in their respective field of competence based on a systematic selection process.”
Daimler wraps up eMERGE EV 2-year fleet trial, launches larger eMERGE2 with EVs and PHEVs
July 31, 2015
Daimler reports that the two-year eMERGE real-world trial of 146 smart fortwo electric drive vehicles has been completed. Those taking part in the project were private and business customers in Berlin, Potsdam and North Rhine-Westphalia. The lowest average energy consumption per vehicle over one year was 10.4 kWh/100 km, while the longest single-charge range was 161 kilometers (100 miles). The smart fortwo electric drive is certified with a consumption of 16.3 kWh/100 km and a range of 145 kilometers (90 miles).
eMERGE is being followed directly by eMERGE2, which will see up to 200 cars being used in the model regions of Berlin/Potsdam, Stuttgart, Rhine-Ruhr and Rhine-Main. The vehicle fleet will include the battery electric B 250 e and plug-in hybrids from Mercedes-Benz. The different technology and vehicle segments suggest different use cases than the smart fortwo electric drive.
Saudis Expand Price War Downstream
July 28, 2015
by Gaurav Agnihotri for Oilprice.com
The undisputed king of oil and gas is making some moves that could change the face of the global refining sector. In June 2015, Saudi Arabia pumped a record 10.564 million barrels a day, a record level. As if being the world’s biggest exporter of oil was not enough, the desert kingdom is now looking to conquer the refining sector as it has quickly become the fourth largest refiner in the world.
“Saudis have moved into the product business in a big way,” said Fereidun Fesharaki of FGE Energy. With Saudi Arabia's refined fuel contributing to the global supply glut, what will be its impact on the refining markets especially those in Asia?
Mitsubishi Motors officially announces end of production in US; seeking buyer for plant
July 27, 2015
Mitsubishi Motors Corporation (MMC) officially announced, after several days of press reports, that Mitsubishi Motors North America, Inc., (MMNA) a wholly owned subsidiary of MMC in the United States, is preparing to end production of its sole production model—Outlander Sport—at its Bloomington-Normal, Illinois plant at the end of November 2015. Production of the model will be consolidated in Okazaki plant in Japan, pending a final decision by the MMC Board of Directors on 30 July.
MMNA said it will be making efforts to identify a buyer with the help from United Auto Workers (UAW).
J.D. Power: growing usage of safety technologies in new vehicles contributes to increasing vehicle appeal
July 24, 2015
The safety-related technologies with which manufacturers are increasingly equipping their new vehicles are making those vehicles more appealing to their owners, according to the J.D. Power 2015 US Automotive Performance, Execution and Layout (APEAL) Study.
The APEAL Study, now in its 20th year, examines how gratifying a new vehicle is to own and drive. Owners evaluate their vehicle across 77 attributes, which combine into an overall APEAL Index score that is measured on a 1,000-point scale. The overall APEAL score has increased by 4 points year over year to 798 in 2015. The study finds that some safety features can contribute to a significant boost in APEAL scores. For example, the overall score among owners of vehicles with blind-spot monitoring and warning systems is 38 points higher than among those without them.
ICCT: ongoing cost reductions in full- and mild-hybrid systems could bring them into consumer mainstream by 2025
According to a new technology briefing paper on hybrid system technologies by John German at the International Council on Clean Transportation (ICCT), the costs of full-function hybrid systems are likely to drop to half the cost of their 2010 counterparts before 2025.
Combined with the development of mild-hybrid systems (belt-alternator or 48-volt system)s—which will likely provide one-half to two-thirds the fuel-efficiency benefits of full-function hybrids at less than half the cost—these levels of cost reductions could put both those technologies into the consumer mainstream by 2025, at least from a cost of technology point of view, German suggests.
More Job Losses Coming To US Shale
July 22, 2015
By Gaurav Agnihotri for Oilprice.com
With the recently concluded nuclear deal between Iran and the P5+1 countries, oil prices have already started heading downward on sentiments that Iran’s crude oil supply would further contribute to the already rising global supply glut. The economic crisis in Greece, OPEC’s high production levels and China’s market turmoil have created more pressure on oil prices, making a price rebound look highly unlikely in the near future.
So, with the prices of both Brent and WTI moving towards $50 per barrel, the short to medium-term outlook for oil remains mostly bearish. This is bad news for the U.S. shale sector which is already dealing with rising debt and the ever-increasing risk of default.
Magna to acquire Getrag for approximately €1.75B
July 16, 2015
Magna International Inc. signed an agreement to acquire the Getrag Group of Companies for approximately €1.75 billion (US$1.9 billion). This represents an enterprise value of approximately €2.45 billion (US$2.7 billion) less proportionate net debt and proportionate pension liabilities, which together are estimated to be approximately €700 million (US$762 million) at closing.
Getrag is the world’s largest (by volume) OEM-independent supplier of automotive transmissions, offering a range of transmission systems which include manual, automated-manual, dual-clutch, hybrid and other advanced systems.
Renault-Nissan Alliance posts record €3.8 billion in synergies in 2014, up 32.4% from 2013; role of CMF
July 10, 2015
The Renault-Nissan Alliance posted record synergies of €3.80 billion ($4.25 billion) in 2014, up 32.4% from €2.87 billion the previous year. Purchasing, engineering and manufacturing were the biggest contributors. The launch of the Alliance’s first Common Module Family (CMF) vehicles (earlier post), as well as the recent convergence of four key functions—Engineering; Manufacturing Engineering & Supply Chain Management; Purchasing; and Human Resources—helped drive synergies in all three areas, said Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance.
Synergies are generated from cost reductions, cost avoidance and revenue increases. Only new synergies (not cumulative) are taken into account each year. Accounting for synergies helps Renault and Nissan determine if they are meeting their performance objectives.
Navigant forecasts global annual sales of LDVs of 122.6M by 2035, up 38% from 2015
July 06, 2015
In a new report, Navigant Research forecasts global annual sales of light duty vehicles will reach 122.6 million by 2035, up 38% from a projected 88.8 million this year, representing a compound annual growth rate (CAGR) of 1.6%. Navigant Research expects the number of LDVs in use on roads worldwide to grow by 57.1% from 2015 to 2035 to almost 1.9 billion units.
Navigant expects sales of conventional internal combustion engine (ICE) vehicles will fall significantly over the forecast period, experiencing a CAGR of -6.6%. As a result, the share of vehicles in use that are conventional ICE vehicles will fall from more than 91% in 2015 to under 40% by 2035. Navigant expects ICE vehicles will be replaced by start-stop vehicles (SSVs), which will grow from representing more than 4% of vehicles in use in 2015 to nearly 49% in 2035. Hybrids (HEVs) are expected to account for nearly 3%, while PHEVs (plug-in hybrids), BEVs (battery-electric vehicles), NGVs (natural gas vehicles), PAGVs (propane autogas vehicles), and FCV (fuel cell vehicles) s together are projected to add up to more than 9% of the LDVs in use in 2035.
Lux: graphene severely underperforming commercially against “massive hype”
Market analyst firm Lux Research has maintained a skeptical stance about the commercial prospects of graphene even in the light of the material’s compelling properties. In a 2012 report “Is Graphene the Next Silicon...Or Just the Next Carbon Nanotube?”, Lux examined the interplay between graphene’s compelling performance properties as an advanced material, and the significant hurdles it would inevitably face transitioning from the lab to the marketplace. A research and patent boom along with impressive technical performance is far from a guarantee of commercial success.
Lux is now answering its own question with the assertion that graphene looks much closer to the next carbon nanotube than the next silicon. Reasons the firm gives for this assessment include:
Ford Smart Mobility shifts from research to implementation; company announces new programs, next areas of focus
June 24, 2015
In the opening keynote at Ford’s annual trends conference, 2015 Further With Ford, CEO Mark Fields announced the next phase of the company’s Smart Mobility plan, originally announced in January this year at CES (earlier post). Ford Smart Mobility is the company’s plan to deliver the next level in connectivity, mobility, autonomous vehicles, the customer experience and big data; the initial stage was the creation of 25 mobility experiments across the globe.
Fields said that Ford, which has “learned tons in the past several months” from those initial experiments, is now moving from research to the start of implementation, including new strategic areas of focus, new pilot programs and new mobility product experiments.
Opinion: Expect A Wave Of Consolidation In The Oil Industry
by Leonard Brecken of Oilprice.com
As stated previously, asset monetization by small E&P operators will start in earnest in the second half of this year out of cash flow necessity. Most, if not all, smaller market capitalization companies, public or private, are still free cash flow negative (operating cash flow less capital expenditure) and only a few of the larger ones are now, or will be, based on guidance. The point is, with volumes languishing (and probably poised to decline) tied to a flat oil futures price curve and with economics marginal at $60 per barrel, many E&P operators find themselves running through hedges in 2015 and still in need to finance their already reduced capital spending.
With Wall Street unwilling to lend anymore and prospects of fall credit line redeterminations looming, further reducing liquidity, it is likely small E&P operators will turn to either mature producing asset sales or, more likely, to undeveloped assets which require more capital spending. We are seeing this being factored into stock prices as we speak, as small cap E&P valuations have collapsed to 4-6 times the Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) from 6-8X EV/EBITDA. This not only reflects solvency risk but also the natural course of bringing assets to a price more in line with their underlying sale value.
DOE CEMAC report examines US opportunities in automotive Li-ion batteries
June 23, 2015
With increasing demand for electric and hybrid electric vehicles and with lithium-ion battery (LIB) producers locating in close proximity to automotive manufacturers, the United States has an opportunity in automotive LIBs under certain conditions, according to a new report released by the US Department of Energy’s (DOE) Clean Energy Manufacturing Analysis Center (CEMAC). The current $9-billion global automotive LIB market is expected to reach $14.3 billion by 2020.
As part of its analysis, CEMAC developed a detailed bottom-up cost modeling of regional cell production scenarios based upon total costs that a manufacturer incurs in the high-volume production of LIB cells. Costs captured in the model include all capital, fixed, and variable costs in each country scenario explored. CEMAC then determined a minimum sustainable price (MSP) by analyzing capital expense, COGS, operating expenses, taxes, free cash flows, and required rates of return.
Opinion: Are US Drillers Actually Making A Comeback?
May 20, 2015
by Nick Cunningham of Oilprice.com>
Is US shale about to make a comeback? Oil prices have rebounded strongly since March. The benchmark WTI prices soared by more than 36 percent in two months, and Brent has jumped by more than 25 percent. There is a newfound bullishness in the oil markets—net long positions on Brent crude have hit multi-year highs in recent weeks on a belief that US supply is on its way down.
That was backed up by recent EIA data that predicts an 86,000 barrel-per-day contraction for June. The Eagle Ford (a loss of 47,000 barrels per day) and the Bakken (a loss of 31,000 barrels per day) are expected to lead the way in a downward adjustment.
Smith Electric Vehicles and FDG form JV for commercial EVs in US; new joint EV platform
May 13, 2015
Smith Electric Vehicles executed an agreement to form a joint venture with China-based strategic partner and investor FDG Electric Vehicles, a vertically integrated electric vehicle and lithium-ion battery manufacturer engaged in the R&D, production and distribution of all-electric vehicles. Both parties have also entered into Intellectual Property (IP) and technology licensing agreements with the JV, taking full advantage of the combination of FDG’s electric vehicles designs and Smith’s technologies and distribution network, so as to accelerate the development of the FDG brand name and products in the US market.
FDG will contribute the US-exclusive right to use its self-designed passenger van, minibus, panel van and cab/chassis (a US$30-million consideration) into the JV and also subscribe to the JV’s shares with US$15 million in cash; Smith will inject all of its US-exclusive IP pertaining to electric vehicles and its current client base (a US$40-million consideration). In addition, the JV will enter into an exclusive sourcing agreement for electric vehicles’ SKD (semi-knocked down) kits and electric vehicle battery with FDG, and the exclusive agreement of assembly and production with Smith respectively to entrust Smith to manufacture electric vehicles using FDG SKD kits and batteries.
Toyota and Mazda agree to build long-term partnership; environmental and advanced safety technologies
Toyota Motor Corporation and Mazda Motor Corporation entered an agreement to build a long-term partnership, leveraging the resources of each to complement and to enhance the other’s products and technologies. The two companies are now setting up a joint committee to evaluate how best to utilize each company’s respective strengths.
The committee will encourage “broad and meaningful collaboration” across a range of fields, including environmental and advanced safety technologies. Speculation on a potential agreement prior to the actual announcement had focused on the exchange of Toyota fuel cell and Mazda Skyactiv technologies.
Volkswagen moving MAN and Scania into an integrated commercial vehicles group
May 06, 2015
Volkswagen is moving MAN and Scania into an integrated commercial vehicles group and thus putting in place a structured framework for business with mid-sized and heavy trucks and buses. Truck & Bus GmbH is the new Volkswagen Group holding for the MAN und Scania commercial vehicle brands. Shares in Scania AB held by Volkswagen AG will be transferred to Truck & Bus GmbH. The wholly-owned Volkswagen subsidiary already holds 75.28% of the voting rights in MAN SE.
Truck & Bus GmbH will establish processes specific to the commercial vehicles business, thus leveraging the full synergy potential between the brands. The company will be led by Andreas Renschler, member of the Board of Management of Volkswagen AG. The Supervisory Board, composed on a parity basis, will be chaired by Prof. Dr. Martin Winterkorn, CEO of Volkswagen AG.
EIA AEO2015 projects elimination of net US energy imports in 2020-2030 timeframe; transportation energy consumption drops
April 14, 2015
The Annual Energy Outlook 2015 (AEO2015) released today by the US Energy Information Administration (EIA) projects that US energy imports and exports will come into balance—a first since the 1950s—because of continued oil and natural gas production growth and slow growth in energy demand.
AEO2015 presents updated projections for US energy markets through 2040 based on six cases (Reference, Low and High Economic Growth, Low and High Oil Price, and High Oil and Gas Resource) that reflect updated scenarios for future crude oil prices. US net energy imports decline and ultimately end in most AEO2015 cases, driven by growth in US energy production—led by crude oil and natural gas—increased use of renewables, and only modest growth in demand.
Opinion: How Much Longer Can OPEC Hold Out?
April 10, 2015
by Gaurav Agnihotri for Oilprice.com
OPEC (Organization of the Petroleum Exporting Countries) has been the most talked about international organization among investors, analysts and international political lobbies in the last few months.
When OPEC speaks, the world listens in rapt attention as it accounts for nearly 40% of the world’s total crude output. With its headquarters in Vienna, Austria, one of the mandates of 12-member OPEC is to “ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.” (Source: opec.org).
Daimler & Renault-Nissan Alliance expand cooperation to 1-ton pickup trucks
April 07, 2015
The Renault-Nissan Alliance and Daimler AG are expanding their five-year strategic cooperation (earlier post) into the pickup truck segment. Together, Nissan and Daimler will develop a 1-ton pickup truck for Mercedes-Benz. Mercedes-Benz recently announced its entry into this segment. (Earlier post.)
The Mercedes-Benz pickup will share some of the architecture with the all-new Nissan NP300 but it will be engineered and designed by Daimler to meet the specific needs of its customers. The vehicle will have all of Mercedes Benz’ distinctive characteristics and features.
Roland Berger: China is the frontrunner in e-mobility subsidies; sales of xEVs double in Q1
April 03, 2015
China is currently subsidizing the development of e-mobility, making just under €7.7 billion (US$8.4 billion) available in the period to 2016, and is the global frontrunner in e-mobility subsidies by far, according to the Q1 2015 E-Mobility Index published by consultancy Roland Berger. The report also found that while Japan increased its subsidies slightly to €171 million (US$187 million) through 2016, most of the major automotive nations have seen the public subsidization of e-mobility decline dramatically. The US and Italy offer the least subsidization.
The index, prepared by Roland Berger and fka experts, compares the relative competitive standings of the top seven automotive nations (Germany, France, Italy, the USA, Japan, China and South Korea) in the electromobility segment. The outcome is based on analysis of three indicators: technology, industry and market.
Opinion: Can Argentina Capitalize On Its Vast Shale Reserves?
April 01, 2015
by Alexis Arthur for Oilprice.com
Argentina, once a regional energy leader, is now better known for financial busts and bombastic politicians than hydrocarbons prospects. Still, with a resource potential both vast and untapped, the nation has never been far from energy investors’ minds. The question today is just how much Argentina is willing to change and how this plays into a low oil price environment that is already negatively impacting investment elsewhere.
Argentina’s deliberate efforts to appease some of its international creditors, combined with an overhaul of the nation’s hydrocarbons framework have the potential to lure foreign investors back. The promise of a change of government—and potentially a more market-friendly approach—later this year should add to the country’s appeal.
Wall Street Losing Millions From Bad Energy Loans
March 24, 2015
by Nick Cunningham of Oilprice.com
Oil companies continue to get burned by low oil prices, but the pain is bleeding over into the financial industry. Major banks are suffering huge losses from both directly backing some struggling oil companies, but also from buying high-yield debt that is now going sour.
The Wall Street Journal reported that tens of millions of dollars have gone up in smoke on loans made to the energy industry by Citigroup, Goldman Sachs, and UBS. Loans issued to oil and gas companies have looked increasingly unappetizing, making it difficult for the banks to sell them on the market.
Opinion: Consumers winning with low oil prices, for now
March 13, 2015
by Thomas Miller for Oilprice.com
Lest we be too quick to forget whence we came, America is now 9-months into lower gasoline prices, which started their swoon the week of June 30, 2015 from a lofty national average just under $3.70, tumbling almost every subsequent week before bottoming and bouncing from $2.02 the end of January, according to gasbuddy.com.
It is estimated that for every penny gas goes down, consumers collectively save $1 billion. Therefore, the 2014/2015 drop has accounted for at least $50 billion in your pocket and mine. Well, maybe a little less than that in each of our pockets, but the national average is about $500 bucks per family. The question begs then, has that money shown up in other parts of the economy?
Opinion: Everyone Is Guessing When It Comes To Oil Prices
March 11, 2015
by Nick Cunningham of Oilprice.com
Predicting and diagnosing the trajectory of oil prices has become something of a cottage industry in the past year. But along with all of the excess crude flowing from the oil patch, there is also an abundance of market indicators that while important, tend to produce a lot of noise that makes any accurate estimate nearly impossible.
First there is the oil price itself. The crash began last summer, and accelerated in November. Since then, predictions for oil prices for 2015 have been all over the map— from Citigroup’s $20 per barrel, to T. Boone Pickens’ prediction of a return to $100 per barrel. OPEC’s Secretary-General even said prices could shoot up to $200 in the coming years as a result of overly drastic cutbacks and a failure to invest in new production. With those estimates at the extremes, most analysts think prices will continue to seesaw within a rough band of $40 to $70 for the rest of the year. Still that is quite a large range, highlighting the fact that everyone is merely guessing.
Opinion: Here’s what will send oil prices back up again
March 05, 2015
by Martin Tillier of Oilprice.com
Oil’s rapid decline since August of last year has been dramatic. To listen to some commentators you would also think it is unprecedented and irreversible. Those claiming that oil will continue to fall from here and remain low for evermore, however, are flying in the face of both history and common sense. The question we should be asking ourselves is not if oil prices will recover, but when they will.
From June of 2014 until now, the price of a barrel of West Texas Intermediate (WTI) crude oil has fallen approximately 57 percent. As the chart below shows, there have been drops of a similar percentage five times in the last 30 years. The rate of recovery has been different each time, but recovery has come. In addition, since 1999 the chart shows a consistent pattern of higher lows. In other words, oil is a volatile market, but prices are in a long term upward trend.
Volkswagen Group invested €11.5B (US$12.9B) in R&D in 2014; ongoing focus on electromobility and digitalization of vehicles
March 02, 2015
The Volkswagen Group invested €11.5 billion in research and development last year, more than ever before and more than any other company worldwide. Speaking on the eve of the Geneva International Motor Show, Prof. Dr. Martin Winterkorn, CEO of Volkswagen Aktiengesellschaft, underscored the Group’s increasingly aggressive R&D stance: “Volkswagen is an innovation think tank. We develop technologies that point the way well into the future.”
According to Winterkorn, the company now employs 46,000 researchers and developers as well as more than 10,000 IT experts, all of whom are working on the mobility of the future such as alternative drive concepts or the digitalization of vehicles and factories. He went on to say that the car manufacturer is positioning itself at the forefront of automotive change with its forward-looking “Future Tracks” program. (Earlier post.)
NXP acquiring Freescale for $11.8B; shooting for Nº 1 automotive semiconductor supplier
NXP Semiconductors N.V. and Freescale Semiconductor, Ltd. have entered into a definitive agreement under which NXP will merge with Freescale in an approximately $11.8-billion cash and equity transaction. The resulting combined enterprise would be valued at just over $40 billion (representing enterprise value as of the market close 27 February 2015). The merger creates a high performance mixed signal semiconductor industry leader, with combined revenue of greater than $10 billion.
The merged entity will become the market leader in automotive semiconductor solutions, surpassing Infineon and Renesas, as well as becoming the market leader in general purpose microcontroller (MCU) products, NXP and Freescale said. According to IHS, Infineon Technologies AG took the top spot from Renesas Electronics Corp. in automotive semiconductor sales in 2014 with sales of about $2.8 billion. The previous year Infineon had been on about $2.4 billion in sales and $500 million behind long-time market leader Renesas.
Opinion: Why oil prices must go up
February 19, 2015
by Nick Cunningham for Oilprice.com
It may be difficult to look beyond the current pricing environment for oil, but the depletion of low-cost reserves and the increasing inability to find major new discoveries ensures a future of expensive oil.
While analyzing the short-term trajectory of oil prices is certainly important, it obscures the fact that over the long-term, oil exploration companies may struggle to bring new sources of supply online. Ed Crooks over at the FT persuasively summarizes the predicament. Crooks says that 2014 is shaping up to be the worst year in the last six decades in terms of new oil discoveries (based on preliminary data).
World Bank report highlights massive urban growth in East Asia over last 10 years; just getting started
February 17, 2015
New data and an accompanying report from the World Bank shows that almost 200 million people moved to urban areas in East Asia from 2000-2010—a figure that would be the world’s sixth-largest population for any single country. The Pearl River Delta in China—which includes the cities of Guangzhou, Shenzhen, Foshan and Dongguan—has overtaken Tokyo as the world’s largest urban area in both size and population, with more inhabitants than countries such as Argentina, Australia or Canada.
At the same time, most of East Asia’s population is still non-urban, meaning the region will likely face decades of further urbanization.
New human-robot cooperation in Audi’s final assembly processes
February 16, 2015
At its main plant in Ingolstadt, Audi has for the first time deployed a robot that works “hand-in-hand” with humans—without a safety barrier and ideally adapted to the employees’ working cycles. It is the first human-robot cooperation at the Volkswagen Group to be applied in final assembly. The technology makes work easier for the assembly employees and makes ergonomic improvements, the company said.
Formerly, employees of the A4/A5/Q5 assembly lines at Ingolstadt had to bend over material boxes to take out the coolant expansion tanks. This might seem a simple task, but with frequent repetitions it can lead to back problems. Now, however, the task will be taken over by a specialized KUKA robot, known internally as “PART4you” (Produktions-Assistent reicht Teil). (Volkswagen AG is increasingly working with Germany-based robot manufacturer KUKA; in late 2012, the Group awarded KUKA a contract for 6,000 robots for various plants—KUKA’s largest single blanket order.)
ARCADIS Sustainable Cities Index: US cities held back by transportation, environmental factors
The largest US cities—New York, Los Angeles and Chicago—score best in economic factors but are hindered by poor transportation infrastructure, lack of green spaces and diminishing affordable housing, according to the inaugural Sustainable Cities Index by ARCADIS, a leading global natural and built asset design and consultancy firm.
Well established European cities come top of the overall rankings, with Frankfurt in first place, followed by London, Copenhagen, Amsterdam and Rotterdam. Asian cities show the most divergence, with Seoul, Hong Kong and Singapore in the top ten and Manila, Mumbai, Wuhan and New Delhi forming four of the bottom five cites. No North American city makes it into the top ten. Toronto is the highest ranked at 12th; Boston (15th) and Chicago (19th) are the most sustainable US cities.
Opinion: Crushing the US energy export dream
January 22, 2015
by Arthur E. Berman for Oilprice.com
Exporting crude oil and natural gas from the United States are among the dumbest energy ideas of all time. Exporting gas is dumb. Exporting oil is dumber.
The US imports almost half of the crude oil that we use. We import 7.5 million barrels per day. The chart below shows the EIA prediction that production will slowly fall and imports will rise (AEO 2014) after 2016. This means that the US will never be self-sufficient in oil. Not even close.
Oil price collapse hurting some more than others
January 21, 2015
by Nick Cunningham of Oilprice.com
US oil and gas rig counts dropped to their lowest level in over four years, falling by an additional 74 units for the week ending on January 16. The lower count provides fresh evidence that low oil prices are forcing drillers to pare back operations and slash spending.
While that may soon begin to cut into actual production figures, a new Wood Mackenzie report finds a lot of nuance in the oil patch, painting a complex picture of what to expect in 2015. The report identifies several trends beyond the simple narrative that low prices will force a cutback in drilling.
Thomson Reuters analysis finds automotive new propulsion technology patent activities surge 6-fold in 5 years
January 20, 2015
|Automotive patent filings reduced to one document per DWPI family charted by category and the publication year of the earliest family member. Source: Thomson Innovation & Thomson Reuters Derwent World Patents Index. Click to enlarge.|
An analysis of the global automobile industry’s recent patent activity by the Intellectual Property & Science business of Thomson Reuters has found a massive commitment from carmakers and their suppliers to new propulsion technology. Patent data from 2009 through July 2014 show that activity in propulsion technology grew from fewer than 2,000 patents to nearly 12,000: more than any other technology area in the automotive industry. It was also the only area of patents to reflect a year-over-year growth in the five-year span.
For the report, “The State of Innovation in the Automotive Industry”, Thomson Reuters broke patent activity in the automotive industry into five broad categories: Propulsion; Navigation (which included telematics); Handling (which included autonomous driving); Safety & Security (which included driver assistance systems); and Entertainment.
IBM automotive study sees consumer co-creation, greater personalized driving, but not widespread fully autonomous driving by 2025
January 15, 2015
During the Automotive News World Congress this week, IBM released results of its new Automotive 2025 Global Study, outlining an industry ripe for disruptive changes that are breaking down borders of the automotive ecosystem. The study forecasts that while the automotive industry will offer a greater personalized driving experience by 2025, fully autonomous vehicles or fully automated driving will not be as commonplace as some think.
The IBM Automotive 2025 Global Study is based on interviews with 175 executives from automotive OEMs, suppliers, and other thought leaders in 21 countries, detailing customer expectations, growth strategies, mobility requirements, ecosystem disruption and other topics shaping the direction of the industry. Entitled “Automotive 2025: Industry without borders,” the study was developed by the IBM Institute for Business Value (IBV) as a follow up to “Automotive 2020: Clarity beyond the chaos.”
Scotiabank forecasts 4% growth in global auto market in 2015 to 74M units, led by China
January 09, 2015
|2015 forecast share by region. Data: Scotiabank. Click to enlarge.|
In its latest Global Auto Report, Scotiabank forecasts record global car sales in 2015, with the total market advancing 4% over 2014, reaching more than 74 million units. Global growth will mainly be driven by China, where Scotiabank expects auto demand to grow 7% in 2015 to 19.36 million units, up from an estimated 18.1 million units in 2014. Under the forecast, China will thus represent 26% of global auto sales in 2015.
Despite growing concerns about an economic slowdown in China, demand for new automobiles continues to be driven by rising vehicle ownership in tier 2 and 3 cities, especially for CUVs, which are advancing by 40% per annum, the report noted.
Ford announces Smart Mobility plan; 25 initial projects
January 06, 2015
At CES, Ford CEO Mark Fields announced “Ford Smart Mobility”—a plan to use innovation to take Ford to the next level in connectivity, mobility, autonomous vehicles, the customer experience and big data. The initial step is the creation of 25 mobility experiments across the globe designed to help change the way the world moves.
Smart Mobility builds upon Ford’s Blueprint for Mobility (earlier post). As outlined by Ford Motor Company Executive Chairman Bill Ford in his keynote at the 2012 Mobile World Congress in Barcelona, the Blueprint for Mobility defines the start of Ford’s thinking on what transportation will look like in 2025 and beyond, and the technologies, business models and partnerships needed to get there.
Ford issues 2015 trends report; the emergent role of Generation Z
December 29, 2014
Ford has issued its third annual trends report, a compilation of consumer research and insights from thought leaders around the world, which is intended to provide a look at micro-trends expected to influence products and brands for 2015 and beyond. From the growing influence of young, socially conscious consumers, to a greater acceptance of modern-day rebels and a shifting perspective that de-stigmatizes failure, Ford Motor Company’s trend report suggests 2015 will be marked by a broad desire to enact change for the good.
The Looking Further with Ford 2015 report pays particular attention to the role of Generation Z—roughly defined as those born after 1993. Generation Z, which follows the Millennials, is the first truly global generation, born into an on-demand, technology-driven culture. Expected to account for more than 20% of the world’s population, these digitally savvy, socially conscious consumers, most of whom are still teenagers, are working to help define the trends of both today and tomorrow, Ford says.
Study finds 2008 recession contributed to increase in age of US LDV fleet, slowing of emission reductions
The global economic recession of 2008—which severely depressed light-duty vehicle sales—resulted in an increase in the age of the light-duty vehicle fleet in the US that likely slowed the rate of decrease of fleet average emissions, according to a study by Gary Bishop and Donald Stedman at the University of Denver.
In general, on-road vehicle fleet emission factor increases are correlated with increasing age. Over the last two decades in the US, US owners have been keeping their vehicles longer as vehicle prices and reliability have increased, leading to a “slow and steady” increase in the average age of the registered US fleet from approximately 8.5 years old in 1995 to just over 11 years old in 2012, the authors note in their paper, published in the ACS journal Environmental Science & Technology.
Audi boosting investment over next 5 years by 9% to €24B; 70% to new models and technology
December 27, 2014
From 2015 through 2019, Audi plans to invest €24 billion (US$29 billion)—€2 billion (US$2.4 billion), or 9% more, more than in the previous planning period. 70 percent of the investment will flow into the development of new models and technologies. Audi aims to meet stringent CO2 limits worldwide with a new generation of extremely economical combustion engines and alternative efficiency technologies as well as new features in the areas of connectivity and driver assistance.
Audi also plans to create additional production capacities worldwide in the next five years through large-scale investment. More than half of the planned investment will take place at the German sites in Ingolstadt and Neckarsulm.
Ford CEO: Ford to focus on 5 key areas of innovation: mobility, autonomy, connectivity, customer experience and performance
December 19, 2014
In a pre-Christmas media event, Ford president and CEO Mark Fields said while 2014 was a good year for the company, 2015 has the potential to be a “breakthrough year”. Fields said that Ford’s investments in products, people, plants and technology, combined with industry growth, are not only delivering a year of growth in terms of revenue, pricing power, operating margins and profitability in 2014, but are setting the stage for growth in and beyond 2015.
The global automotive industry is staged to experience $1 trillion of revenue growth over the next five years, Field said: from about $2 trillion today to about $3 trillion by the end of the decade. “That’s a tremendous amount of growth. We want to get our fair share of that growth.” In moving forward on that, Fields said, Ford will focus on five key areas of innovation: mobility, autonomy, connectivity, customer experience and performance.
Oil price tumbles after OPEC releases 2015 forecast
December 11, 2014
by Andy Tully of Oilprice.com
The demand for oil in 2015 will drop to its lowest level since 2002 because of an oversupply of crude and stagnant economies in China and Europe, according to OPEC’s latest forecast. And that’s just one of several sour estimates. OPEC’s monthly report said demand for the cartel’s oil will fall to 28.9 million barrels per day next year, 280,000 barrels lower than its previous forecast and the lowest in 12 years. Add to that a new report from the US government’s Energy Information Administration (EIA), which also cut its 2015 forecast for growth in global oil demand by 240,000 barrels per day, down to 880,000 barrels per day.
For 2014, the EIA expects demand will be about 960,000 barrels per day. And yet on Nov. 27, OPEC refused to lower its production levels below 30 million barrels a day, adding to the oil glut that started with the US boom in high-quality shale oil. As a result, the price of Brent crude has plunged more than 40 percent since June. Futures for US crude also are down dramatically.
ExxonMobil: global GDP up ~140% by 2040, but energy demand ~35% due to efficiency; LDV energy demand to rise only slightly despite doubling parc
December 10, 2014
|As the world population increases by the estimated 30% from 2010 to 2040, ExxonMobil sees global GDP rising by about 140%, but energy demand by only about 35% due to greater efficiency. Click to enlarge.|
Significant growth in the global middle class, expansion of emerging economies and an additional 2 billion people in the world will contribute to a 35% increase in energy demand by 2040, according to ExxonMobil’s latest Outlook for Energy report.
Even as demand increases, the world will continue to become more efficient in its energy use, according to the 2015 Outlook for Energy: A View to 2040. Without efficiency gains across economies worldwide, energy demand from 2010 to 2040 would be headed toward a 140% increase instead of the 35% forecast in the report.
Commentary: Could falling oil prices spark a financial crisis?
December 05, 2014
by Nick Cunningham of Oilprice.com
The oil and gas boom in the United States was made possible by the extensive credit afforded to drillers. Not only has financing come from company shareholders and traditional banks, but hundreds of billions of dollars have also come from junk-bond investors looking for high returns. Junk-bond debt in energy has reached $210 billion, which is about 16 percent of the $1.3 trillion junk-bond market. That is a dramatic rise from just 4 percent that energy debt represented 10 years ago.
As is the nature of the junk-bond market, lots of money flowed to companies with much riskier drilling prospects than, say, the oil majors. Maybe drillers were venturing into an uncertain shale play; maybe they didn’t have a lot of cash on hand or were a small startup. Whatever the case may be, there is a reason that they couldn’t offer “investment grade” bonds. In order to tap the bond market, these companies had to pay a hefty interest rate.
Major power and gas company E.ON splitting in two; focusing on renewables, spinning off conventional power generation
December 01, 2014
Düsseldorf, Germany-base E.ON, one of the world’s largest investor-owned power and gas companies, is adopting a new strategic direction under which is will split itself in two. E.ON itself will focus on renewables, distribution networks, and customer solutions. The existing conventional generation, global energy trading, and exploration and production businesses will be combined in a new, independent company (“New Company”), a majority of which will be spun off to E.ON SE shareholders. In 2015, E.ON will take necessary preparatory steps for the New Company’s public listing.
E.ON SE will have three core businesses: renewables, distribution networks, and customer solutions. About 40,000 employees will be assigned to the distinctly focused company. In its new setup, E.ON will take new approaches to further developing each of its three core businesses. For this purpose E.ON will increase its investments already for the next year by about €0.5 billion (US$0.62 billion) compared to the previously planned 2015 capex of €4.3 billion (US$5.4 billion).
Toyota Motor to consolidate development and production of diesel engines under TICO; manual transmissions under Aisin Seiki; brake systems under Advics
November 29, 2014
Toyota Industries Corporation (TICO) and Toyota Motor Corporation (TMC) will consolidate their joint diesel engine development and production under the control of TICO. The purpose of this decision is to strengthen the competitiveness of both companies by bringing the development and production of diesel engines under one roof and enabling more efficient allocation of resources.
Further, Toyota is consolidating development and Japanese production of manual transmissions under Aisin Seiki subsidiary Aisin AI Co., Ltd. and will accelerate the consolidation of brake system engineering, manufacturing and sales under Advics, which was founded in July 2001 by Aisin Seiki, Denso, Sumitomo Electric, and TMC. (TMC, TICO, Aisin Seiki and Denso are part of the Toyota Group.)
Volkswagen Group to invest $106 billion over next 5 years in Automotive Division
November 21, 2014
The Volkswagen Group will invest a total of €85.6 billion (US$106 billion) in new models, innovative technologies and its global presence in its Automotive Division over the coming five years. Around two-thirds of the total investment amount will flow into increasingly efficient vehicles, drives and more environmentally friendly production.
Investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex) in the Automotive Division will amount to €64.3 billion (US$80 billion), on a level with the planning approved in the previous year for the period from 2014 to 2018. At €41.3 billion (US$51.3 billion)—roughly 64%—the Group will spend most of the total capex in the Automotive Division on modernizing and extending the product range for all its brands. The main focus will be on expanding the SUV range—in particular in the A/A0 class—as well as on modernizing part of the light commercial vehicle portfolio.
Iran negotiations, OPEC meeting loom for oil markets
by Nick Cunningham of Oilprice.com
As November draws to a close, there are two major events that could profoundly change the oil markets. With the clock ticking, the 5 permanent members of the UN Security Council plus Germany (P5 plus 1) are negotiating down to the wire with Iran over its nuclear program. The two sides have made substantial progress, but some difficult issues remain unresolved ahead of the November 24 deadline.
“We’re very keen to try to get to a deal, but not a deal at any price,” UK Foreign Secretary Philip Hammond said on November 17. “There will have to be very significant further movement by the Iranians if we’re going to be able to get to a deal.”
IEA says oil supplies may not keep up with demand
November 15, 2014
by Nick Cunningham of Oilprice.com
Despite what appears to be a saturated oil market in 2014, oil producers around the world will struggle to meet rising demand over the next few decades. In its latest annual World Energy Outlook, the International Energy Agency (IEA) warned that the current period of oil abundance may be fleeting, and in fact, without heroic levels of production increases, oil markets will grow dangerously tight in the coming years.
Global oil demand is expected to increase by 37 percent by 2040, with a dominant proportion of that coming from developing countries—i.e. China and India. In fact, the IEA says that for every barrel of oil the industrialized world expects to eliminate from demand through efficiency or other ways of reducing demand, developing countries will burn through two additional barrels.
With oil prices low, early signs of a pullback in drilling activity
November 14, 2014
by Nick Cunningham of Oilprice.com
With oil prices low and showing no sign of an immediate rebound, the industry is beginning to pull back on spending.
Oil prices have dropped around 30 percent since summer highs, raising fears among producers across the globe. Yet, many oil majors are relatively diversified, with large holdings downstream. For example, ExxonMobil and Chevron have been insulated in the third quarter because of their large holdings in refining. Steep declines in oil prices may hurt their production sectors, but with lower priced oil as an input, big oil’s refining assets become more profitable.
DOE fuel cell market report shows continued growth, with sales surpassing $1.3B worldwide in 2013
November 12, 2014
The US Department of Energy (DOE) released the 2013 edition of its annual Fuel Cell Technologies Market Report, detailing trends in the fuel cell and hydrogen technologies market. More than 35,000 fuel cell systems were shipped in 2013, an increase of more than 26% over 2012 and 400% more than 2008. In 2013, worldwide fuel cell industry sales surpassed $1 billion for the first time, reaching $1.3 billion.
Although early markets such as stationary power and material handling account for the bulk of sales, DOE noted that the fuel cell industry made “tremendous progress” in the light-duty transportation sector in 2013. Achievements include the launch of H2USA (earlier post), a public private partnership focusing on overcoming the barriers to hydrogen infrastructure. The UK launched a similar initiative called UK H2Mobility (earlier post). Hyundai began leasing its first series production fuel cell electric vehicle at select dealerships in Southern California. (Earlier post.)
The driving force behind the US oil boom
November 07, 2014
by James Stafford of Oilprice.com
The shale revolution’s sweet spot is oilfield services, the lower-risk backbone of the American oil and gas boom that pays off regardless of a play’s economics. Behind the stardom of the explorers and producers who have put themselves on the revolutionary shale map and absorb most of the risk are the service providers who make up a highly lucrative market segment.
The US land-based rig count rose 3% over the last quarter, reaching a two-year high of 1,870 active rigs. A major factor in this growth has been an uptick in horizontal drilling in the Permian Basin, Texas’ revived giant, where the rig count was up 21% year-on-year. And while oil prices slumped in October, drilling activity continues to rise, according to Baker Hughes, the third-largest oil services company. Baker Hughes’ rig count is up 3.8% in the fourth quarter of this year, compared to the third quarter.
Opinion: The End Of An Era: Is The US Petrodollar Under Threat?
October 31, 2014
by Andrew Topf of Oilprice.com
Recent trade deals and high-level cooperation between Russia and China have set off alarm bells in the West as policymakers and oil and gas executives watch the balance of power in global energy markets shift to the East.
The reasons for the cozier relationship between the two giant powers are, of course, rooted in the Ukraine crisis and subsequent Western sanctions against Russia, combined with China’s need to secure long-term energy supplies. However, a consequence of closer economic ties between Russia and China could also mean the beginning of the end of dominance for the US dollar, and that could have a profound impact on energy markets.
Ford projects utility vehicles to account for 29% of its global sales by end of decade
October 30, 2014
Ford projects utility vehicles will account for 29% of its global sales by the end of the decade. Ford utility vehicles—ranging from the compact EcoSport to the eight-seat Expedition—accounted for 23% of brand sales globally in 2013, up from 17% a year earlier.
Utility vehicle sales are expanding rapidly in many of the world’s fastest-growing markets according to a Ford analysis of data from IHS Automotive, which forecasts market information and competitive data on the automotive industry. Worldwide demand for utility vehicles is up 88% since 2008, making SUVs the fastest-growing segment. Utilities now account for 19% of the global automotive market, with the segment expanding at more than three times the rate of the vehicle industry overall.