in

Dollar Stretcher Community

This Blog

Syndication

The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

They're Hiding Something

Sometimes I can be contentious. At least that's what my wife says. I prefer to think that I stand up for what I believe is true. Even if someone else needs some evidence to be convinced.

Prime example this weekend. It was an argument that I've heard often. It says that the oil and auto companies are buying up inventions that would make travel much cheaper. You know the 200 mpg car. Or the car that runs on water.

I don't find their arguments of a conspiracy very compelling. Even if they know someone who was related to someone who knew the person who sold their patent to a major oil or auto company. Mostly because it doesn't make sense to me. 

For instance, suppose that I had invented a device that would make it possible for the average car go to 200 miles on a gallon of gas. First I would patent the device so that  no one could steal my idea. Then I'd either begin production of the device or sell it to a car maker. Let's suppose that I sold it to GM. Do you really think that they wouldn't produce the device? Think of how many cars and trucks they could sell if they were getting 10 times the mileage of other car companies. Their sales would sky rocket. So would their profit.

My friend says that the oil companies would buy it up to protect the oil still left in the ground. But the facts don't support that. The Economist magazine pointed out that the true players in oil are the nationalized oil companies. 

Yet Big Oil is pretty small next to the industry's true giants: the national oil companies (NOCs) owned or controlled by the governments of oil-rich countries, which manage over 90% of the world's oil, depending on how you count. Of the 20 biggest oil firms, in terms of reserves of oil and gas, 16 are NOCs. Saudi Aramco, the biggest, has more than ten times the reserves that Exxon does.

You can read the rest of the article here.

I suppose that you could argue that I'd sell the secret patent to the Arabs, but I'm pretty sure that there are laws about selling technology overseas.  But, even if I could and did sell to the Arabs, do you really think that I could keep it a secret? When Paris Hilton can't go to the grocery store without the whole world knowing how short her shorts were, do you really think that all the investigative reporters would overlook a multi-multi-million dollar deal of this type? Especially one that could save consumers thousands of dollars?

Guess I'm not big on conspiracies. But I do believe in good old fashioned engineering and invention. We saw it with fuel injection. First tried (and failed) in the 1950's, it became standard 20 years ago. Much more efficient than carbureators. Computer controls were another step in improving internal cumbusion engines. We have both power and mileage that would have been impossible a generation ago.

Improvements came gradually. I suspect that will also be true now. Sure, there will be some breakthroughs. But much of the solution to the energy crisis will come a little bit at a time. One year Toyota will come up with something good. The next year GM will have something even better. The year after that ExxonMobil will introduce something that takes advantage of whatever Toyota and GM introduced.

Maybe I'm missing something. I'm often reminded that I'm not perfect (unfortunately true). If you have some compelling argument or (better still) some proof that big companies are buying up inventions so they can't be used, I'd love to hear it. Shoot, at this point I'm sure that the whole world would like to hear it!

Keep on Stretching those Dollars!

Gary 

Comments

 

Pat said:

I keep saying I'm not into conspiracies but then I keep thinking... "hybrid" vehicles have been around forever and it's only lately since "green" is so popular that they've started to come to the forefront. I remember reading about them in Popular Mechanics (my brother's!) probably 40 years or more ago.  

I've seen too much corruption and deception in high places to throw out this conspiracy theory altogether.

July 30, 2008 4:59 PM
 

Gary said:

Electrics have been around since the earliest days of the automobile. The most successful was the Detroit Electric which produced cars well into the 1920's. What hurt them then was the lack of a battery that could go 200+ miles on one charge and be recharged many, many times before being replaced. The Detroit Electrics were primarily 'city' cars.

Battery technology has really moved forward in the last 20 years. I'm not sure, but much of it fueled by all the handheld rechargable devices and laptop computers (which use small, rechargable batteries). I suspect that's why hybrids are finally becoming practical.

But, even now, hybrids have a limited market. I haven't done thorough research, but my understanding is that you can expect to replace the batteries more than once during the life of the car. And, it's expensive ($3,000?). You'd have to save a lot of gas (even at $4 per gallon) to pay for a set of batteries ($3,000 / $4 = 750 gallons x 20 mpg = 15,000 miles). Based on this calculation (and all 3 figures are just estimates, I don't hold them to be accurate), you'd need to drive 15,000 BEFORE you'd break even with a hybrid.

And, that doesn't include the hybrid's higher initial cost, the missing cargo capacity (given over to batteries) and the extra complexity (more possible repairs after the warranty period). So there are other answers besides conspiracies to explain why hybrids might not have been ready for the market 10 years ago.

July 31, 2008 8:19 AM
 

Gary said:

A number of people suggested that I watch "Who Killed the Electric Car" <whokilledtheelectriccar.com/> so I did. At least I watched 8 of 11 parts that I found on YouTube.

Here's what I found. The producers have a specific viewpoint. There's nothing wrong with that. But, it does affect how they perceive certain facts. For instance, it was clear that they would prefer that we get away from using oil (domestic or foreign), that they didn't trust automakers (domestic or foreign) and that they believe that it's up to the government to force us to do things that are good for us. Those are all viewpoints that I don't personally share.

Not that I would prefer that we use oil, but I don't particularly dislike it either. Nor do I have any particular love for automakers. They're big companies and can be counted upon to do what's in their own best interest (at least they're predictable). The same thing is true of government. It can be counted on to do what's in it's own best interest (try to hold and gain more power). Sorry, I'm not among those who believe that the government is only here to help. I've seen far too many greedy and power hungry politicians at all levels and from all political persuasions to believe they're only goal is to serve me.

What I didn't find in the documentary was any proof that the electric car could be sold in sufficient quantities by the car companies at a profit.

It had some inherent faults. First, by the documentary's own admission the car would only go 70 to 80 miles per charge or 120 miles per day (two quotes from the movie). That's a problem for most people. Even though they state that the average car only goes 26 miles per day, the problem isn't the average day. It's the one or two times a month (or year) that you need to go further. For instance my own commute is about 5 miles each way. So most days I drive between 10 and 20 miles. But twice this year I needed to cross the state.  My car was perfectly capable of making the trip. If I were driving an EV1, I couldn't have taken it. I would have needed to rent a car or take our minivan. That would have left my wife with only a small EV1. Is that a big problem? Maybe not, but why would I want to face it at all? I could buy a fully functional car for the same (or less) than an EV1, why face any potential inconvenience? And, my guess is that's what the consumers said.

The film said that the payments were between $250 and $500 per month. Since it was a prototype program it's unclear whether GM was making any money at that level. I recall seeing one back in the 90's at a conference. If I remember correctly I was told that it would cost about $30k back then. Quite a bit more than a typical car it's size.

The movie made a big deal about the waiting lists. And pooh poohed GM's claim that when they contacted people they weren't all that interested. Any salesperson will tell you that's not unusual. You start with a 1000 prospects, to get 100 potential buyers and end up selling 10 units. Nothing sinister there. Just the same facts that any seller faces.

Much was made of GM crushing the cars at the end of the program. The movie made it sound as if they were trying to make sure that no one knew how good the cars were. Had they been more familiar with automakers they would have known that was not at all unusual. I'm an old car buff. Back in the 1940's, 50's and 60's the big automakers often produced what they called 'concept cars'. Usually just one or two were made of any particular model. They traveled the country demonstrating what might be coming to dealers in the future. These cars were the pride of the company. Yet, almost all of them were ordered destroyed by the auto companies. Why? I really don't know. Probably because they didn't want to take any risks (liability or otherwise). On a side note, fortunately for car lovers some of them were only partially dismantled and have been found and lovingly recreated. Many are owned by a collector named Joe Bortz who displays them at car shows around the country. But, back to the EV1, it's not at all unusual that GM would want to have them crushed. It would have been a fairly standard practice. The only difference is that this time there were activists trying to play spy vs spy with the companies hired to haul and crush the cars.

Back to consumer acceptance. The movie clearly showed that 80 or so people loved the EV1's. But that doesn't make a marketable (ie. profitable) car. First, they were mostly activists with a specific viewpoint. Definitely not a cross-section of the American public. Second, many were Hollywood types (as claimed by the film). When you're a Hollywood star you're much more likely to be able to afford a car solely for LOCAL transportation. Most of us cannot.

Remember the Edsel? It's been widely derided as the worst auto failure ever. They were produced for 2 1/2 years by Ford. Their total production and sales? 118,287 units.

So what? The test of 100 EV1's was a drop in the bucket to the automakers. For success they need something that they can sell 10's of thousands each year.

Some of you will say that the automakers put pressure on California regulators to drop regulations that would have required zero emissions. That shouldn't be a surprise to anyone. Of course they're going to going to go against laws that will say what they can offer for sale to the public. So would I if I were in their shoes.

Others will say that the regulators were bought off. That, too, shouldn't be surprising. Politicians are regularly bought off. I would expect that both the oil companies and the automakers would be willing to put some money on the table in this case. But, so too would the electric companies and environmental lobby. So is one side bad and the other good? I'll leave that for you to decide.

Ultimately what I saw was a car that wasn't ready for prime time. And that's why it wasn't successful. But that's subjective and cannot either be proved or disproved beyond a shadow of a doubt. Others will have a different view that cannot be proved or disproved.

What I do know is that today's gas/electric hybrids are quickly gaining acceptance. I believe it's because they don't have the range limitations that the EV1's did. And, for many buyers that makes all the difference.

One last thing. The film makers imply that there was some sinister group (oil companies, automakers and regulators) who wanted to hide the success of the EV1. Just the fact that those who liked the car could get a documentary made and it's available where anyone can find it seems to prove that it's not possible to hide things like that today. If that's really what happened it would appear that they failed to keep it quiet.

August 6, 2008 3:39 PM
 

re-tired said:

Another thing to point out about hybrids:  Fire departments must have special flame retardants for hybrid vehicles in case of a fire.  My understanding 3 years ago was that a hybrid that caught on fire coudn't be salvage easily at all!  The vehicle was a complete write-off unless it was a very small fire and extinguished very quickly.

August 8, 2008 12:25 AM
Powered by Community Server (Commercial Edition), by Telligent Systems