August 31, 2005
Leading gas price analyst weigh in - $4 gas soon and maybe for awhile
The lead alalyst for OPIS, the definitive wholesale/retail price source for fuel prices says today: Pricing experts says $4 a gallon gas on the horizon - Aug. 31, 2005. Mostly due to Katrina as I had been predicting. While it spikes to $4, it stays around $3.50 for 4-6 months! At those levels you will be able to see the impact on GDP. We are in for a bumpy ride. Here is more:
In a research note, Behravesh laid out a worst-case scenario that puts average prices for regular unleaded gasoline at about $3.50 a gallon for the next four to six months.
"The impact on consumer spending in such a scenario would be very dramatic, cutting the growth rate by as much as 3 percent and pushing real GDP growth in the fourth quarter closer to zero," he wrote.
From Bits to Barrels
Mark Anderson, founder of Strategic News Service, asked me to write a few paragraphs about my transition from bits to barrels and the opportunity I see here. A few paragraphs turned into alot, so here it is....
Publisher's Note: Martin Tobias is the quintessential entrepreneur. I've now known Martin for a decade or more, and I am continually impressed by the energy, focus, intelligence and sincerity he brings to each new venture. Martin's contribution this week is particularly interesting for three reasons. First, he has spent the last couple of years at the well-known Seattle firm Ignition Partners. As you'll discover, he had to go through a personal transition to get from bits to barrels, from venture investing in software and wireless to an operating role in an industrial firm. This change was radical and so inspiring that I asked him to spend a few paragraphs describing it himself. Second, Martin's efforts will directly promote increased climate sustainability on a local, regional and perhaps even national scale. And, finally, as world events such as Hurricane Katrina continue to drive oil toward the SNS $100/bbl figure, finding alternatives to this fuel is both timely and provides direct assists to our economy and security. It might even create Martin's next fortune.
I gave a speech at a Digital Divide conference in Seattle a few years ago in which I suggested that cleaning up diesel emissions was the single most simple and dramatic thing we could do to reduce air pollution. At a time when it is becoming painfully clear that small airborne particulates, such as those in typical diesel transport emissions, are causing real deaths among the very old and very young in our cities, the importance of solving this problem grows. And while firms like Detroit Diesel continue to work on the engine side of the equation, firms like Martin's Seattle Biodiesel will be cooperatively hastening this process, taking it out of the amateur fast-food-chain days, and bringing it into the days of global mass production, and a reduced dependency on fossil fuel.
As Martin notes, there may be nothing else today which is more important. - mra.
FROM BITS TO BARRELS
By Martin Tobias
Having been a longtime subscriber to SNS and participant in FiRe, I should really blame this mess all on Mark. Yes, now that I think about it, that makes all the sense in the world. It is ALL MARK'S FAULT. Without the brain damage (and I mean that in the most complimentary way) of SNS and FiRe, I doubt this tech geek would have ever become CEO of a biodiesel company. I would have been happy living in the world of bits without much of a larger world view. Someone else with good intentions was worrying about the barrels, right? But I am getting ahead of myself.
In the Beginning...
There was a fairly typical tech-geek trajectory. In high school, programming Timex/Sinclairs in the drugstore to loop profanity on the screen, using a cassette deck as "mass storage" for my TRS-80, breaking a toe dropping my Kaypro "luggable," president of the Science club... you get the picture.
In college, Marketing/Computer Science double major, COBOL/FORTRAN programming using a card reader, winning a NEC TV for selling the most dot-matrix printers, selling the first Leading Edge PCs to the university, copying research papers off Compuserve, being the first student to take an essay test on a computer (the Zenith Lunchbox portable with 5.25 floppy and fold-down keyboard), an HP 12C always in my shirt pocket, thinking the IBM AT was the "ultimate PC."
Accenture came knocking right after graduation and pressed me into five years of programming IBM S/38s and AS/400s, until Microsoft saved me from the suits. After six years of serious hard work around the world on various missions, I opted for more pain and started my own software company in 1997. Loudeye Technologies (LOUD) went from napkin to 450 people and IPO in less than three years. (Ah, the good old days.) After a much-needed break, I wanted to get back to helping start companies (the fun part), and I have been doing so as a VC with Ignition Partners ever since.
So there I sat, just over a year ago, listening to yet another wide-eyed software entrepreneur tell me how he was going to be "the Google of XXXX," or was it "the Microsoft of XXXX" - no, it was the "Cisco of XXXX" - oh, I forget. Suddenly, David Byrne's "Burning Down the House" came into my head:
Watch out you might get what you're after
Cool babies strange but not a stranger
Then "Once in a Lifetime":
And you may find yourself living in a shotgun shack
And you may find yourself in another part of the world
And you may find yourself behind the wheel of a large automobile
And you may find yourself in a beautiful house, with a beautiful wife
And you may ask yourself - well...how did I get here?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right? ...am I wrong?
And you may tell yourself
My god!...what have I done?
Well... how did I get here? Where does that information superhighway go? After a lifetime of solving software- and computer-related problems and looking over that horizon for what was next in that field, I was suddenly left wanting. A strong desire to build something REAL took hold of me. When the PC was in its infancy, there were many very tall mountains to climb, and climbing them made a big difference in the world. While there still is a lot of work to do, the path seems fairly well laid out, and there are plenty of very smart people on that path.
So where does the world need help? What is the #1 issue that will define this nation, and in fact much of the world, over the next 10 years? Energy.
There I sat, a lifelong Republican tech-geek software venture capitalist, wondering how I could make a dent in the nation's energy picture. The next day I started canceling meetings and rescheduling my life around figuring out what new energy technologies were going to make a difference in the near term (as in: in my lifetime). It became immediately clear that looking at barrels and BTUs from a bit-and-byte perspective could possibly lead to new solutions.
The Big Energy Picture
Today we use fuels of all types for primarily three forms of work/energy: (1) to generate electricity (natural gas, coal, hydro, nuclear); (2) to provide direct heat (natural gas, wood, oil); and (3) for transportation (oil). Electricity has replaced a long list of mechanical activities (manual typewriters, screwdrivers, adding machines, watches, etc.) and continues to increase its share of the total, primarily due to the exponential growth of new electronic items in our daily lives.
We have multiple fuel sources to generate electricity and provide direct heat. Scaling up production in those areas is largely within our control (as a nation, we know the way, although we may not have the will). For transportation, there is only oil (well, okay, 99% oil, 1% electric buses/trains, bicycles, skateboards and rollerblades). Therein lies a problem, and quite possibly, an opportunity.
I may be an outsider on energy issues, but here are some assertions this outsider will make:
1. We don't have an "energy crisis," we have a "petroleum crisis."
2. Americans are fundamentally convenience-oriented and do not have the appetite for wholesale transportation platform change.
3. Non-petroleum-based fuels that work in today's engines (no platform change) offer the fastest route to petroleum independence.
Petroleum has a monopoly on transportation. A small handful of global oligopolies control the production, distribution, and consumption infrastructure and technologies. The DOJ should take notice. The U.S. is by far (4x China, but they are growing faster) the world's largest oil consumer, at over 20 million barrels per day - nearly $500B per year at today's prices (http://www.eia.doe.gov/emeu/cabs/topworldtables3_4.htmlWe import more than 12 million of those barrels. After a brief flirtation with small cars and alternative fuels in the early '80s, Americans went back to the well with a vengeance in their SUVs. We are punch-drunk at the bar, with a heroin needle in both arms, yelling "Drinks for everyone!"
This is an industry built on technology (combustion engines and mechanical drivetrains) well over a century old. Transportation is an incredibly inefficient use of energy. Less than 2% of the energy that starts out as crude oil ends up propelling me to work in the morning. Cars, trucks, and airplanes combined (http://www.ecobridge.org/content/g_cse.htmare the #1 cause of global warming, contributing 36.5% of the carbon in our air (yes, more than power plants [36%], but just barely). World oil discoveries have been dropping every decade since the '50s.
Worldwide demand is today roughly equal to supply, at just over 84 million barrels per day (http://money.cnn.com/2005/08/30/markets/oil.reut/index.htm?cnn=yesA recent oil shockwave scenario (http://www.secureenergy.org/shockwave_overview.phpshowed that as little as a 4% reduction in oil production (terrorist, boycott, civil unrest, weather, whatever) would increase prices over 170%.
Supply/demand is so tight that any disruption at all can cause a price spike. Down in the Southeast Gulf states, where over 25% of American crude comes from and over 40% of our refining capacity resides, Hurricane Katrina has just inflicted over $26B in property damage (early estimates) and put a significant amount of our production/refining capacity offline or under repair. What will be the energy costs to the economy from that disaster? While some in Europe are making a concerted effort to address oil consumption, Americans sit idly by in our SUVs while the sucking sounds from China and India are only getting louder.
In the last decade, less than 1% of the more than $500 billion spent on venture capital went to alternative energy companies, and most of that went into long-term bets on the "hydrogen economy." Very little of what has been funded will show any tangible benefit to our energy picture in the next three to five years. Existing players have ZERO incentive to innovate; they are making too much money! Here is an industry ripe for change.
Yet it ain't going to be easy. Here is the bit-head way to parse the transportation industry: There are three major platforms in transportation, each built around a unique protocol (incompatible with the others): Gasoline, Diesel and Jet Fuel [kerosene]. The standard for each platform is open and defined by international bodies (ASTM, E.U., etc.). Each platform has been optimized for a specific set of applications:
Gasoline: passenger transport and light trucks
Diesel: heavy equipment and machinery, distributed electricity generation, heavy trucks, boats, some passenger cars, and railroads
Jet fuel: flying airplanes.
Each platform is supported by a large, integrated network of very mature refineries, pipelines, terminals, trucking companies, and retail locations. A huge ecosystem of companies (GM, Ford, Chrysler, GE, Cummins, etc.) support each platform with a wide variety of hardware and software offerings as well as a world wide network of sales, service, and support for their products. The platforms are worldwide, employ tens of millions of people all along the value chain, have been adopted by nearly every person on the planet, and enjoy significant government support in every country at all levels. Makes you want to jump right into the fray, doesn't it?
So Why Biodiesel?
The vast majority (http://www.energy.ca.gov/gasoline/whats_in_barrel_oil.htmlof each crude barrel of oil consumed in the U.S. is refined into gasoline (140B gallons/year), diesel fuel (50B GPY), or jet fuel (40B GPY). To reduce our transportation grid's near-total reliance on distillate products from crude oil, you can attack the problem from either production (substitute fuels, use existing vehicles and distribution system - a backward-compatible version upgrade) or consumption (substitute vehicles, fuel, AND distribution system - the platform upgrade). Natural-gas buses are an example of the latter. Implementation requires a whole new fleet of vehicles, a new fueling infrastructure, scaling up production of natural gas, etc.
Despite years of evangelism and vehicle research, natural gas is still not a practical option for anyone except a few scattered (okay - Los Angeles), very centralized fleets with centralized fueling. It is like getting someone to switch operating systems or hardware platforms. Lots of pain awaits. What about all your favorite old applications? A drive to the beach house for the weekend? Oops, can't - no natural gas stations out there. A quick jaunt to the mountains with a carload of friends for some snowboarding? Oops, can't - the natural-gas car doesn't have enough room or power.
Fuel cells for transportation are an even uglier platform upgrade. You need new vehicles of all types, new wholesale and retail distribution systems for the hydrogen, service and support infrastructure, and, oh yeah, an energy-efficient way to reform massive amounts of hydrogen from a cheap, renewable source. So why are Big Oil, Detroit, and Pres. Bush selling us that song? Good old-fashioned Fear, Uncertainty, and Doubt about change to the current platform. "Be happy with what you have today and place all your faith in a future upgrade." I have seen this movie before: "Everything will be fixed in Longhorn [the next MS operating system], so don't bother me to fix anything in the current version." No, I don't believe anyone selling a platform upgrade is serious about solving our dependence on oil anytime soon.
What it is going to take is a version upgrade. An upgrade of either the fuel or the vehicle would allow you to leverage the existing infrastructure investment. Since gasoline is the largest liquid-fuel market, you would expect the first traction for upgrades to come in that market segment. The Prius is a vehicle version upgrade for the gasoline platform: some new technology in basically the same form factor that is plug-compatible with existing infrastructure while providing unique new benefits (lower emissions and higher fuel economy). This is just the first baby step in the siliconization of the automobile. If you want details on how "the electric power train is overwhelmingly superior to the mechanical - five orders of magnitude better on every key metric," read The Bottomless Well by Huber and Mills.
Ethanol (made from plant starch) is a plug-compatible fuel version upgrade that is replacing an older flawed technology (MTBEs) as a gasoline additive of up to 10% (3B gallons were mixed into the US fuel supply last year). A higher blend of ethanol (85%E, 15% gas), when combined with an automobile version upgrade (flex fuel vehicle - basically a computer timing upgrade), will yield even greater reduction in petroleum usage and more environmental benefits.
Alas, I have never been much of a hardware engineer, so no upgrading the vehicle for me. The ethanol industry is fairly mature and is mainly a capital deployment business today. While there is the promise of some technology change on the horizon (cellulosic production from the whole plant instead of just the starches: http://www.eia.doe.gov/oiaf/analysispaper/biomass.htmlthe first commercial plant has yet to be built, and it will still take more R&D and 10 years to make a difference. The market also has a natural cap on it, in that no more than a 10% ethanol blend is backward-compatible with all existing gasoline engines (the 85% blend requires a new car with the new computer program). What about jet fuel? Humm, redesign a jet to be more fuel-efficient (already a top design criterion), or convince airlines to take a chance on a new, untested fuel? Looks like another LONG road.
That leaves the diesel platform. Most of the early advances in the gasoline platform do not transfer. Ethanol can't be mixed with diesel effectively. Hybrids are okay for light commuting, but have been a total failure in heavy-duty applications. The city of Seattle tried some hybrid diesel buses and found that dragging the extra weight of the electric engine and battery packs up and down the hills resulted in WORSE total fuel consumption than straight diesel. The much-trumpeted Lexus Rx 400h just turned in 10% worse mileage over a 5,200 km road trip test against the Mercedes ML 320 CDI - all diesel: http://www.b100fuel.com/archives/2005/08/mercedes_ml_320.html.
While America turned away from diesels for consumers (as I did after an underpowered, dirty 1980 VW Rabbit diesel experience), relegating it to heavy industry, Europe embraced clean diesel technology, and today diesels power more than 50% of the consumer vehicles (in addition to the heavy industry). Europe also developed an alternative fuel in the form of biodiesel: http://www.biodiesel.org.
Biodiesel is a one-for-one replacement for petroleum diesel that can be made from a variety of vegetable oils, animal fats, and waste grease. Biodiesel is backward-compatible, with 100% of the existing fleet (minor fuel hose replacement in much older vehicles) and fueling infrastructure. It is biodegradable and nontoxic. It can be blended in any ratio with petroleum diesel or used in its "neat," 100% pure form (as I have been doing in two cars for over a year). 100% biodiesel is renewable, carbon-neutral (the plants consume the equivalent amount of carbon that comes out the tailpipe), with lower emissions of all types across the board (although the scientists are still debating NOx).
In Europe, they make almost a billion gallons of biodiesel a year out of rapeseed. In America, soybean farmers have been driving the development of biodiesel, largely because they have an extra 1B gallons of soybean oil a year. The National Biodiesel Board has done the hard work of getting the fuel certified as an "alternative fuel" under federal guidelines and is carrying the torch for more government support of the industry. Last year, America made about 30 million gallons of the stuff (less than 0.0005% of our diesel consumption). Coincidentally, Seattle consumed over 10% of that and has the highest per-capita biodiesel consumption in the nation. The analysts project the market growing at over 100% a year for the foreseeable future.
The basic chemistry for making biodiesel is pretty simple. Vegetable oil is a triglyceride molecule that looks kind of like a three-legged stool. A glycerin molecule is the seat, and three ester (fatty acid) molecules are attached at the legs. The chemical name for biodiesel is methylester [alcohol] (you can also make ethylester, but I digress).
Those of you who didn't sleep through chemistry class (as I did) have already figured out that what you have to do is detach the glycerin molecule from the esters and re-attach a methanol molecule to each ester leg, and voila! You have biodiesel. I have done it using salad oil in a blender (makes great margaritas afterward!). The glycerin and biodiesel separate like oil and water (different specific gravities), and after a little more cleaning, your biodiesel is ready to use. If you are going to sell it commercially, it must pass a battery of tests defined by the American Society for Testing and Materials (www.astm.org
So if there is a more environmentally friendly, renewable, ready alternative to diesel that is easy to produce, what is the problem? You could just as easily ask why everyone isn't running Windows XP or the latest version of Office. Even backward-compatible version upgrades have issues. There are bugs in the new code that need patches. There may be field-compatibility issues with the many various configurations in the field. In biodiesel's case, there are more issues. While soy is the largest crop in the world, soy is a fairly inefficient oilseed crop, at less than 14% oil. If one were to grow a crop primarily to produce vegetable oil to make biodiesel, one would not choose soy.
The first American refineries have been built by the same Austrians and Germans that are building the European refineries. They use first-generation technology that is highly engineered and very expensive per pound (think IBM mainframe). Good old American ingenuity and PC-style economics have yet to take hold. Even with recent crude oil spikes, it still costs more to make a gallon of biodiesel than it does to make a gallon of dinosaur diesel. Only government subsidies get the prices close to parity (in some locales, even less than diesel).
So I say to myself, "If someone could make a series of inventions (in crops, process technology, etc.) that lead to being able to make a gallon of biodiesel cheaper than a gallon of dinosaur diesel (with crude at, say, $45/barrel), well, that someone would have cracked a nut that really needs cracking." This may be one of those rare cases in which one can do something good for the world and put a little jingle in the pocket, too.
So here I am, Chairman and CEO of Seattle Biodiesel, charging up the hill again. Last time I made it over the top, but the weight of the arrows in my back caused a bloody and painful trip back down. This time I am better prepared and plan to take it a bit slower and with laser focus. This mountain is worth taking. I invite you to join the climb. Mark, thanks for encouraging me to take the first step.
August 30, 2005
some fun with oil numbers
Check out the latest crude oil supply/demand numbers. Supply 84.12 MBpd/ Demand 84.38 MBpd. Yes you read this right demand is AHEAD of supply by 260 million odd barrels.
Here is some other math. US produces roughly 12 MB per day of crude. 35% of that out of the Gulf. 92% of the oil platforms in the Gulf were shut down and remain shut down by Katrina. That is over 3.8 MB per day out of production. It will be a week or so until we know how many of those platforms will get back into production, although the big oil guys were preaching calm today (see below).
Oil companies on Tuesday rushed teams to the Gulf of Mexico to assess the damage the hurricane may have caused to their rigs, platforms and refineries.
Royal Dutch Shell said an aerial inspection of its Mars platform showed some damage to its upper deck.
BP said initial indications showed that the hurricane caused little damage to its operations, including its massive $1 billion Thunder Horse platform.
Kerr McGee (up $1.67 to $87.16, Research) resumed oil and natural gas production in the western gulf after its facilities survived the brunt of the storm, a company official said.
Apache (up $0.97 to $70.70, Research) said it hoped to resume operations at some platforms by the end of the day if pipelines were not damaged.
The Louisiana Offshore Oil Port said initial damage reports were encouraging and hoped to begin crude shipments on Thursday.
Marathon Oil (up $1.87 to $61.96, Research) said early assessments showed no damage to some offshore operations and the 245,000 bpd Garyville, La., refinery.
OPEC's biggest crude oil producer, Saudi Arabia, pledged an extra 1.5 million bpd of oil to the market if needed, while the United States announced it would dip into its strategic reserves if necessary.
GM and Toyota in Smackdown on future drivetrains
GM says Diesel, Toyota says (surprise) Hybrids. RED HERRING | Diesels May Challenge Hybrids In the middle of the article you find that they actually agree. The Toyota guy says that over 8,500 lbs, diesel will rule. That means most SUVS which make up the majority of the market and GM's line today and in the future. What I think is the killer in the light duty is a diesel hybrid. Diesel has 12% more energy than gasoline and diesel engines get 30% better mileage. Why not have them be the powertrian to a hybrid?
August 29, 2005
Energy Venture Fair VI Boston
Is November 2/3 a the Hilton Boston Back Bay: Energy Venture Fair VI. I will be presenting Seattle BioFuels there along with 80 other energy related venture backed companies. If you are interested in energy venture, this looks like the event to be at.
chemical process modeling software WOW
At Seattle Biodiesel, one of the challenges we have is trying to figure out what will happen to the quality of the end product when you change one variable in the production process. Good old trial and error is one way to find out, but it can be very painful. Now with: Stat-Ease, Inc., Design of Experiments (DOE) specialists. I can model my process and the effects of changing variables. What more could a software guy turned biodiesel manufacturer want?
August 28, 2005
There has been lots of discussion lately and even some publicity of the idea of making diesel from Coal. This is the process the Germans used during the war basically because they couldn't get crude. Those engines were much more forgiving (would burn straight veg oil actually) than today's highly tuned diesels. Anyway, here are some pointers"
The current DOE stance on FT Diesel (does NOT qualify for EPAct credits).
One company (Rentech)'s response to the DOE.
Current list of qualifying EPAct fuels.
National Biodiesel Board's opposition to FTD.
All current FT diesel documents at DOE.
Looks like Biodiesel will remain the only plug compatible diesel fuel alternative for some time.
August 25, 2005
Need a pool table?
Just posted my trusty pool table on Craigs List: Modern Pool Table with red felt, Air hockey and Ping pong top... Have had alot of fun on that. Paid over $2,200 for it, but it doesn't fit in the new house. Have fun!
August 24, 2005
Review of Northwest Energy Technology Collaborative conference
Went to this conference yesterday in Portland. Put on by the Northwest Energy Technology Collaborative, good bunch of guys headed by Jeff Morris. The morning was split into a business track with fairly mature companies and an academic track talking about stuff in the lab. I went to the lab geek session since I had seen most of the more mature companies. The afternoon was dedicated to venture stage companies which I will review in detail in a moment. From the academic track, unfortunately there was nothing ready for commercialization within the next two years, so I won't bother to geek out on that stuff. Just a few comments on the later stage companies:
1. ADI Thermal Power out of Woodenville, WA is creating a sterling engine that they hope will achieve 50% effeciency. They are currently at 40% on their Alpha unit and hope to get it to 45% by field Beta in January. Currently running only on Hydrogen and Propane, no liquid fuels. Interesting, but far behind STM power.
2. Carmanah Technologies, Inc. Solar powered LED lighting products. Great combination of highly efficient LEDs and today's solar collection technologies. They have things like outdoor lights, flashers, etc. that you want to put somewhere and have self powered. I like the use of LEDs. I don't see anything proprietary.
3. Novus Power Corp. These guys have invented a new design for an electric motor that uses 1/4 the electricity to produce same amount of torque at any size. Very cool technology. Very smart guys. I am no mechanical engineer, so I couldn't make a technical analysis as to how good their invention is at all. The real issue is how do you sell a new engine design into a market that hasn't had a fundamental technology change in 100 years. You have to get OEM design wins into existing products. Products with warranties and lots of historical experience with other designs. The energy savings along are probably not enough to get you wins. You have to figure out which niches just CAN'T LIVE WITHOUT your power savings. I have no idea those are. I hope they do.
4. Prometheus Energy Company. They have a small scale production facility to extract LNG from landfills, stranded gas wells, anaerobic digesters and coal mines. The key to their business is putting the LNG manufacturing closer to the consumption (basically LA) and save transportation and reforming (from CNG) costs. The numbers work. Unfortunately the market is small and the sales time is VERY long.
Now on to the fun stuff. The Venture Companies.
1. Microstaq. I LOVE this one. They basically have a silicon flow control valve that is about 1/20 the size of the mechanical flow control valve it replaces. A picture says a 1000 words and I wish I had the one from their presentation with the old valve and the new one next to each other. My friends at Yaletown are in the deal and my old friend Russ Aldrich just became interim CEO. This is part of the overall solid-state-ization of the automobile. Look under your hood. There are hundreds if not thousands of analogue old mechanical things in there. Most everything outside the core engine itself could be made solid state and out of silicone with enough thought. There are already large locomotives and dump trucks with solid state drive trains. Their first target market is to replace the mechanical flow control valve in an air condition pump with an electronically controlled one, a $750M market. You get 4mpg better, save weight and have finer grain control. The issue is the long sales cycle. But fortunatley these guys came out of the auto parts industry and have the right contacts. I like it.
2. Columbia Energy partners. This was more a project finance, Real estate limited partnership pitch than a venture pitch. They are basically small scale (<10MW) wind developers taking advantage of the standardized interconnect contracts and requirements for utilities to buy power from these facilities. They basically need $1.5M in equity up front to put in a 5MW deal. These equity investors are really treated like loans and get a projected 12% IRR over a 20 year life. Basically they should be marketing this in $50K chunks to doctors and lawyers not to VCs. There is no invention here.
3. Sieber Energy Inc. Yet another wave energy company. But this one has an interesting technology twist. They basically put bobbers on plungers out in the ocean. As these go up and down they create compressed air, just like when you pump a bicycle pump. This compressed air is delivered by a LONG hose to the shore. There you can run anything pneumatic from an electricity generator to a nail gun. Their technology works in prototype lab scale at the university and they want to commercialize it. Too much of a wild ass swing for me, but intellectualy interesting. Will take ALOT of capital to commercialize.
4. Novinium. These guys have figured out a way to increase the lifespan of medium voltage electricity grid cables. The WW industry spends about $350M a year replacing cables they say. Inject their gunk into your cables and get another 40 years (good as new) they say. Their goo is second generation goo. The first generation was developed by the same team and is now sold by the leader in the field with about $60M in revenues. Looks like an interesting niche technology with a long sales cycle to me. Not great for venture sized returns.
Comments always welcome.
Mercedes MS 320 CDI beats Lexus Rx400Hybrid
I have been saying all along that the hybrid numbers are funny. They are based on flat track driving. Not real world driving. When you add hills, the mileage goes WAY down because you are dragging around an extra motor and battery pack. This recent cross country test: Green Car Congress: Diesel Bests Hybrid in Cross-Country Fuel Consumption Test shows that a diesel SUV was 10% better mileage than the hybrid. Further proof of my assumption that in heavier vehicles the diesel, especially biodiesel, will be MUCH better than a hybrid. Go Mercedes!
August 23, 2005
Microsoft gets patent on iPod menu interface
In the "oops" column for Steve Jobs has GOT to be not getting a patent on the iPod interface. My bet is that it will go down as one of the biggest gaffs in technology history. Here is what the "official" microsoft line is as of today:
"We have a longstanding practice of licensing things to Apple and licensing Apple's patents to use in our products. Our approach is to recognize that, frankly, we're both mutually dependent on the good ideas of one another." - David Kaefer, business development director, Microsoft's intellectual property and licensing group, on MS getting a patent to an iPod menu interface.
Seattle leading the way in climate change
I noted earlier that Seattle Mayor Greg Nickels has been leading the way trying to get individual municipalities to meet or exceed the Kyoto protocols. I just found the exact text of the agreement: Seattle Mayor Nickels - US Mayors Climate Protection Agreement. Very interesting that it is framed in an economic development language. Basically, hey guys this is good for our long-term economic survival. That is great. Now 141 countries have ratified Kyoto and at least 10 cities (more signing on as we speak apparently). This is great local support for something the feds have been failing at.
August 21, 2005
Book Revies: Fuels and chemicals from oilseeds: Technology and policy options (AAAS selected symposium)
Ever get a hankering for a prequel? You know it is all the rage in the movie business. Well you can get that in the book world too. Just read old books. This one is from the 1982 AAAS symposium. During the first oil crisis. A bit of back to the future. All these professors talking about the potential of crops to provide our fuels. Most of the problems they laid out have since been solved (mostly by computers and improvements in crop yield). The descriptions of basic chemistry were good though. Definitely academic as it is basically a collection of professor papers. Not for the feight of heart, but for the biodiesel geek, it doesnt' get any better!
I give it a 1 of 5 on the Tobias scale (only because no-one but me will probably ever like this book).
Review: Ann Coulter Treason: Liberal Treachery from the Cold War to the War on Terrorism
Then there is the whole idea of Alger Hiss and the Democrats claiming there were on Communist anywhere. Well it turns out that Hiss WAS a communist and WAS an agent of the Soviet Union. There were MANY of them and only a few were in fact found. It would be like Bush promoting a member of Al Queda. Hey, this is America, you can be in Al Queda, but if you are, you probably should NOT be working in the White House.
Rather than rehash the whole set of arguments and enjoyable quotes, just read the book. Even if you are a leftie. You need to read and make the decision for yourself. Are you just going to take for granted what the "gospel" is about the right? Why not find for yourself the other side of the story. Ann delivers it in a very entertaining and powerful way.
You go girl. I give it a 4 of 5 on the Tobias Scale.
Review: Harry Potter and the Half-Blood Prince
Ok, I am a Harry Potter fan Harry Potter and the Half-Blood Prince (Book 6). I didn't mean to be, but the first one got me hooked. I bought it in the airport and had to tell my traveling friends that I was reading it for my daughter. You know, to see if it was appropriate for her. "How old?" "Uh, three". busted. So I have read them all. And this for the new one, I did the right thing and ordered it through my local bookstore paying full retail. (Death to you who bought it at Costco!)
So I am a Potter fan. Unfortunately this one just dosen't deliver. It takes WAY too long to get going. Nothing happens till the very end. At least in the other books there is more than one conflict scene. It seems like all backstory and build up. Like 400 pages of it! Then the climax is what we all expected any way. You need to read it to complete the series, but this is my least favorite. Also probably the least accessible if you haven't read any of the others. If you are a fan, read it because you have to. If you are not yet, dont' start here, go back to the beginning.
I rate it a 2 of 5 on the Tobias scale.
August 18, 2005
Another business group formed to reduce our dependence on oil
When the business people start saying we need to do it and it is just not the hippies, there is really something going on. Securing America's Future Energy Go to the site and watch the videos of the scenario simulation. Remember, just a couple million barrels a day out of the world oil production and we have well over $100/barrel oil and well over $4 gas. The way things are going, we may bet there even without major production disruptions.
August 17, 2005
California diesel/biodiesel hits price inversion, others to soon follow
What happens when the price of a substitute product becomes cheaper than the incumbant? You got it, massive product switching. Since Biodiesel is a direct replacement for diesel (and tied to the commodity price of Soy instead of crude oil) you would expect big behavior switch when it becomes cheaper than diesel. This has already happpened in Hawaii where Biodiesel is consistently about $.40 a gallon cheaper than diesel (due to the fact that biodiesel is made on the island and #2 Diesel is imported). Now it has happened in California. The average price of #2 Diesel in Bakersfield is $3.17 and about $2.80 for 100% biodiesel. The price of #2 Diesel is up over $1.00 in a year, the price of Biodiesel only up about $.50.
Here in Washington, we are still waiting for cross over, but we are getting there quickly. The average price of #2 Diesel in Seattle is $2.85 a gallon up from $2.13 a year ago. 100% biodiesel is $3.10 up from $2.78 a year ago. Washington is going to take longer to go up in #2 diesel price because we have refineries quite close and don't have the special blend requirements of California.
Back to the original question. What causes a tipping point in a commodity market? What about when the replacement commodity becomes cheaper?
August 16, 2005
I am doing 43 things.
Judy's book in the news
On of our investments, Judy's Book in the local search category has a nice article in the NYT today. An IPod for Your Thoughts: A Web Site Offers Incentives to Reviewers - New York Times. The category is a very rich one if you can crack it. Here in Seattle there are at least four others trying. I see one getlocal.com every morning as I get coffee (they have their cards there). But my bet is on Andy and the people at Judy's book. They are professional software developers who have built a large community before. This iPod promotion is just one tool to attract reviewers and I expect more.
August 15, 2005
OPEC establishing an "R&D" facility to combat "alternative fuels"
Humm, finally OPEC figures it should do some research to improve it's product. I can't wait to see what they come up with (lol) World Tribune.com -- OPEC sees threat from 'alternative energy'
August 10, 2005
buy my wheels
Put new wheels on the Beetle. 18's, black with fast tires. Buy my OEM wheels off e-bay. eBay Motors: OEM VW Beetle 16" wheels and tires also Jetta, Golf, TT (item 7991302457 end time Aug-10-05 20:48:24 PDT)
August 5, 2005
A (potential) politician that gets it
My friend Andrew Rasiej is running for a little known office in NYC on the platform of free wireless connectivity and cell phones that work for all. Interesting huh? So much so that the New York Times picked it up: Calling All Luddites - New York Times. He is using the next generation political tools from what Dean used.
While I don't agree with everything Andrew says (he is a die-hard D), I do agree with his idea that basic connectivity should be very cheap or free. And in fact in places like NYC it it is a national security issue. I contributed to his campaign. If you agree, so should you.
PhoneGnome a re-branded Sipura 2000?
Joi Ito pointed me to the new PhoneGnome - It's now easy to make FREE phone calls!. Immeidately I said "hey that looks like a Sipura 2000! I bet it is. I wonder how they are going to do now that Cisco bought Sipura for $68M in April (duh the founder did Cisco's last SIP adapter). Sipura was the first acquisition in the Linksys division. Look for their products with the Linksys badge on them soon. Say byebye to the Vonage/AT&T VOIP deals and hello to Linksys only deals!
Biodiesel geek reading
Picked up two books at the Seattle Library today. Handy how they put all the books on a similar subject together. Found stuff I would never have otherwise found. Bedtime reading this weekend will be: Fuels and chemicals from oilseeds: Technology and policy options (AAAS selected symposium) and The Petroleum Industry: A Nontechnical Guide
Major media not covering foiled terror plots
Debkafile has done a good job on reporting ALL terrorist threats and activities. Recently, they have pointed out foiled attacks in Jordan DEBKAfile - that would have been "Zarqawi's crowing venture". Why do you think the major media only covers the "successful" killing of Americans and Iraqi's? There are hundreds of attempted plots that have been foiled. This is the positive side of our war on terror, yet it never gets covered. We are winning, no-one should believe otherwise. In Iraq, we are fighting a disenfranchised minority (mostly foreign) bent on regaining dominance over the population. It is not a popular uprising. They kill 10x the number of Iraqis for each American. And we should just leave them to it?
August 2, 2005
Newsweek story on Biofuels a week early
This will be published next week: The Next Petroleum - Newsweek: International Editions - MSNBC.com. Basically you can aready buy Ethanol for half the cost of unleaded in Brazil. They are selling it for $25 per barrel and making money and exporting it. So much so that Americans have a tarrif on it to protect domestic ethanol producers. Biodiesel is just getting started, but VW is committed to it because "you don't have to reinvent the car". Exactly.
August 1, 2005
King Fahd is (officially) dead
Even though some outlets were calling him dead as long ago as May 27, apparently the royal family decided to make it official today. There has been lots of
good coverage of the details and good background on the issues surrounding the rot in the royal family. I am completely stunned (even though I shouldn't be) by the main stream media's lack of analysis on this. Basically CNN and all the networks just reported the press release details (Fahd dead, Abdullah named king) and looked in the rear view mirror on how it affected the oil markets. The guy who has thought very deeply about is is Robert Baer and his concerns are not addressed anywhere in the media coverage. Abdullah is a reformer who has done some changes around the edges but now that he is king, will he press ahead full steam to reform the royal family's prince system and corruption? If so, there will be bumps and lots of fighting as their old lavish way of life goes away. And what about Abdul Aziz, Fahd's slow but tenatious Wahhabi pandering son who gave $100M to the Taliban? We are in for a rough ride. And remember, Abdullah is only two years younger that Fahd, he is 80! Who is next?
At a time when any slight disruption in our oil supply would cause shock waves, to blithely accept the Saudi's assurances of "no change in policy" is stupid. Even with no change, the supply/demand equation has not fundamentally changed. The political risk has actually increased and the motivation for terrorists to strike at a time of "weakness" is heightened. I am betting on $70 oil within two months.