For most of us, we’re being asked just what the source of power will be for the devices we use.  In the home, we’re likely using electricity, natural gas, heating oil, propane and other choices.  For travel, we are offered gasoline, diesel, jet and electricity and others soon.  Without a lot of thought, we’re choosing our expense destiny, and the fuel market share when we buy a product.  At the beginning of this blog site, we covered the fundamental question, “Is it Energy or Fuel?”  That question’s answer gets us on solid footing to think, but the analysis of the choices has changed in the past six months and will change indefinitely.  So to get the most for the dollar and the most satisfying result lets look at the U.S. history of energy and fuel market choices and how we might be getting them in the years ahead.

Taken together energy and fuel arrives to us in four main forms.  Electricity by grid, liquids like gasoline pumped or delivered, gases as in natural gas piped under pressure and solids like wood and coal.  In the past 100 years, the shift has gone from nearly 100% solids to now solids below 10% of total joules used.  By about 1950, solids had lost ½ of the market to the others.  Today liquids are about half, gases about a third, and electricity nearly a fifth.  What is noticeable is that since 1950 the big gainer has been electricity.  The second noticeable thing is liquids and gases peaked back between 1970 and 1980.  Solids lost 40% more by 1970 and have slowly slipped since. Electricity has boomed for 50 years.

The answer is in the hard economic facts of efficiency.  OPEC and the Axis of Oil group, by using boycotts and cartel fixing methods of influencing the market have in fact been the architects of their doom.  The price run-ups focused financial and technological efforts into alternative sources of power earlier than would have occurred normally.  Electricity offers a wider set of choices a more efficient transition of fuels into electrical potential; it can be delivered with a long lasting infrastructure and can be used efficiently.  The choice was easy.  OPEC saved the coal industry from disaster. Nevertheless, the fuel and energy market shift rate will continue to increase.

The fuels and power resources for electrical power generation are changing rapidly.  Coal, nuclear and natural gas are the big fuel sources now, but their future is cloudy and getting darker by the day.  Wind and windmills are nearing the point where the installed costs should get below that of coal.  The uranium fuel industry has more problems than any sensible investor can assess with certainty as seen by the effort to get the taxpayer to guarantee the equity money in building new plants.  Along with wind are some in-hand technologies, such as thorium-fueled reactors, ocean wave and geothermal that with very high yield potential from comparably small research investments can make the jump into commercial electricity generation.  They need the research money not for potential, but for economies of scale, locating and site and environment engineering issues.

Even more interesting is the oncoming prospect that one of the Bussard, Rostoker or Lerner fusion techniques gets past breakeven and begin the research and development into to commercial application.  There are new ideas in low wind speed electrical generation. The spoilers in the press and elitists in science failed to kill condensed matter nuclear fusion (aka “Cold Fusion”) that while still in the wilderness is alive, well, and threatening the naysayer’s reputations and the competing technologies price projections.

Its safe to say that the risk to the U.S. economy from an electrical power generation standpoint is near none, although the inevitable local glitches large and small will plague poorly managed or politically charged areas.

The gas source is blessed with both the energy and chemical use customers.  While gas for electrical power use has a role at high demand, and enjoys a low cost installation advantage, the electricity at the end user’s meter is quite expensive.  For home heating gas has become costly, especially in Western Europe, which serves as instruction for the rest of the world.  While convenient, comparatively clean and with an infrastructure in place, gas has a long-term role, but in the temperate areas where heat pumps can compete, they do compete vigorously and research in more efficient electrical heating in colder areas could move a large share of consumer gas use to electrical use.

As prices climb, two sources may come to competition.  The first likely to react would be coal, where gasification is already a technology that is in use and would need economies of scale to become competitive.  In addition, a break in electrical generation power or fuel sources may drive coal to seek alternative markets and coal gasification could get more competitive that anyone might be thinking in today’s market.  Alternative sources are also in research. Although liquid fuels get more attention in some processes, there is usually a gas step, which may prove economically compelling to researchers and developers.  Gas has a clouded future, but the cloudiness isn’t so dark.

Liquid fuels should soon be under intense pressure.  The advantages of electrical power for light and personal vehicle transport in lieu or in part of petroleum fuels will get ever more compelling.  There is in the U.S. about a third of oil use going to chemical and other non-transport customers. The two thirds for transport in is play.

Hybrid technology is maturing nicely in competitiveness. The lone barrier is the storage costs in batteries or capacitors.  There are generator sets, motor controllers and electric motors available today in limited quantities.  Electrified bicycles outsell cars in China even now.  The signs are worldwide and quite encouraging for the emissions and global warming set.

For American consumers the automobile manufacturers are only asleep at the wheel.  The money in Silicon Valley already has the bit in its teeth and sees the opportunity.  Some bright marketer will see the advantage in being first with a light duty pickup or SUV with 500 horsepower (or maybe double that, who knows?) at the wheels with 100% of the torque from startup, with a dramatic improvement in fuel efficiency.  What might be needed is the innovation in business models.  A business might buy 25,000 Ford SuperDuty pickups less engines, transmissions and drive axles and sell them with hybrid power sets installed.  Its already a can do, if Ford, GM, or Chrysler would play ball.

Solid fuels have two hard, but in part false, pressures working against them. The first being the CO2 emissions and the second capital required for economical transition to products that can compete.  While the coal fired electrical generating market may stay stable or more likely shrink gradually, the liquid fuel potential will have a struggle if the transportation liquid fuel market has a price decline.  The threshold for coal to gas or on to synthetic gasoline or diesel is a higher floor than petroleum would be in a declining market.

Wood on the other hand will always have a market both in esthetics and in cost saving for those interested in the work and ambiance of wood heat or fires.  The emission issue will haunt the wood business, and the efficiency of wood varies widely across the various species of tress worldwide.  Wood is a marginal participant in fuel production now and unless a breakthrough is made for converting wood products to a gas or liquid fuel, it will remain so.  Its possible that some tree species can be commercially grown for alcohol fuel production, but the conversion will need to be more efficient than now or as projected in the future.

That leaves us with a continuing trend of electrical potential at the meter as the leading and likely inevitable growing supplier in energy and as a substitute for fuel.  Studies, research and commentary abound that overnight electrical generating capacity is adequate now to substitute the U.S. need for gasoline should overnight charging of electric or hybrid personal transportation vehicles replace the U.S. fleet.

That leaves the liquid portion in a quandary.  Nevertheless, petroleum and the alternative fuels and chemicals are the masterpieces of joules per volume as fuel and the base for an incredible array of products with only the inventor’s and innovator’s spark of genius to become even more.  Natural gas, propane, methane and synthetics will be more vulnerable to technology in price structure.  While chemical and other specialized uses will remain as important markets, simply burning gases should last only for some decades to come.  Solid fuels can only struggle and meet the esoteric customer demands.  Coal will soldier on for decades to come, but factually, the future is a phase out, eventually, entirely.

For a fuel or energy market’s quick, big transition, only two products for sale to consumers need development.  The first is space-heating devices that are more efficient than resistance elements.  I have kept an eye out and haven’t seen anything of note, but a 90% plus efficient air heating device would go far to moving from natural gas to electrical power. With cold climate heating occurring in the off peak electrical generating months, it’s a large opportunity.

The second is underway.  The series hybrid and/or electric vehicle is coming.  Perhaps the automotive industry will have to return to the days when the body manufacturers were “coach builders” and the power and transmission manufacturer were other firms.  In heavy trucks that practice remains to this day, so it’s not a new business model.  In the Internet age, one might go online and choose a “body by” and a power unit, electrical stored range and output torque to the drive wheels based on your desires.  That would make a power set a market of its own.  If the Society of Automotive Engineers gets its act together in time, consumers may find that a new body is all that a “new car” would need as the power set life spans are going to be very long indeed.  An awful lot of people already know what its like to have 100% torque operating a hybrid drive.

The future will be in electricity, how its generated, transported, stored and used will be the major stories of the future.  While the transition will take decades, just keep in mind that 100 years ago solid fuels enjoyed near complete market dominance.  By 1950 half of the market escaped and by 2000 ninety percent was gone.  If history offers another lesson perhaps its that “technological progress” marches at an ever faster pace.  I would consume and invest on the premise that in 25 years the electrical market share will be ninety percent.

Market shares material sourced from Science 225: 890-897, Cleveland, Costanza, Hall, Kaufman.


3 Comments so far

  1. M. Simon on December 29, 2007 2:05 AM

    Nice round up.

    BTW resistance heating is 100% efficient at the point of load (not counting wire losses although they deliver heat too as long as they are in the unit being heated.)

    The only way to get above 100% is a heat pump. If the heat pump collection coils are buried below the frost line (ground sourced heat pump) you can get above 100% during the whole heating season even in cold climates.

  2. Not Ready for Some Football? Lets Learn Something Instead! on January 1, 2008 6:41 AM

    […] paper by Professor Cleveland “On Energy Transitions Past and Future.”  I looked at this in a market share way a few days back and have been saving this link for today as it s a sound, thought provoking […]

  3. Blog Host on November 28, 2010 12:47 AM

    You are the man! Nice article Good luck dude. See you again tomorrow

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