Cheapest Gasoline Ever?

Last week the Energy Information Administration  (EIA) reported that the $2.43 per gallon average US retail price for regular gasoline in 2015 was the lowest since 2009. A quick look at the EIA's handy page for comparing nominal and real fuel prices over time shows that last year's average, when adjusted for inflation, was actually the cheapest since 2004. A recent article suggested that current prices are lower than those in the mid-1960s, in the heyday of the American love affair with driving. I've lost the link, but that factoid checks out, too. However, even this understates the bargain currently on offer at the gas pump.

The price of gasoline is still one of the most visible prices in the US, prominently displayed on gas station signage and roadside billboards across the country. However, it only captures one aspect of how much motorists really pay, just as measuring fuel economy in miles per gallon misses the economic impact of driving. A few years ago I ran across a metric that combines these factors into a simple gauge of driving cost: miles per dollar, or mp$.

The chart below incorporates EIA data on inflation-adjusted fuel cost and data from the National Highway Transportation Safety Agency (NHTSA) on actual fleet corporate average fuel economy (CAFE) performance for each model year of passenger cars--not SUVs or light trucks--to display average mp$ for the last four decades.

Taking last week's average price of $2.03 for unleaded regular and using 36.4 mpg for the 2013 model year (the latest on NHTSA's site), today's fuel cost of driving is cheaper than at any time since 1978--and maybe ever. The 18 miles per dollar I calculated just beats the previous peak of mp$ in the late 1990s, when fuel economy was around 28 mpg and gas prices averaged barely over $1, due to the effects of the Asian Economic Crisis. By comparison, the $0.31 per gallon that motorists paid in 1965 was downright expensive, after adjusting for inflation and factoring in the low-to-mid-teens fuel economy of cars of the day.

Miles per dollar is also handy for comparing driving cost on gasoline to the cost of operating vehicles that use other fuels or electricity. When I first looked at miles per dollar in 2008, electric vehicles were significantly cheaper, per mile driven, than cars running on gasoline or diesel, even hybrid cars like the Prius. That gap still exists, but it has narrowed. At an US average residential electricity price of $0.126/kilowatt-hour last year, a Nissan Leaf or Chevrolet Volt would get around 26 mp$. However, in New England and other parts of the country with significantly higher-than-average electricity prices, the miles of driving that an EV can deliver per dollar of energy used could be less than that for gasoline in some locations.

A few caveats are in order. Based on data from the Transportation Research Institute at the University of Michigan, new-car fuel economy has slipped 0.8 mpg since oil prices started falling in the summer of 2014. And in any case, new cars are typically more efficient than the entire US car fleet, which includes older vehicles and substantial numbers of SUVs and light trucks. The Consumer Price Index is also an imperfect tool for comparing prices over long periods of time, because the Bureau of Labor Statistics periodically changes the components of the "basket" of goods and services that go into calculating the CPI.

None of those issues seems big enough to alter the basic conclusion that the gasoline cost of driving is exceptionally, perhaps historically cheap at the moment. If oil prices stay "lower for longer", as some experts expect,  changing the make-up--and thus the emissions--of the US car fleet is likely to be an uphill battle.

Comparing Driving Costs of EVs and Conventional Cars

• A new Department of Energy website helps consumers compare the energy costs of EVs to non-plug-in cars by converting kilowatt-hours into "eGallons".
• How valid this proxy is depends heavily on assumptions about the cars being compared to EVs.  If hybrids set the bar, then DOE's eGallon prices are significantly understated.

I’ve been looking through a new website developed by the US Department of Energy (DOE) to assist consumers in comparing the energy costs of driving an electric vehicle (EV), relative to posted gasoline prices in their state. I heard about this site at the US Energy Information Administration’s (EIA) annual energy conference in Washington, DC last month. It sounded like a handy tool for both current EV owners and those considering buying one, but I couldn’t help thinking about it in the context of a presentation I saw at the same conference on the cost effectiveness of federal tax credits for EV purchases. A key question in both instances concerns just what kind of car is being replaced by that new EV.

The website uses simple math, together with the EIA’s continuously updated data on gasoline and electricity prices around the country, to come up with a national and state-by-state price for an “eGallon”. This imaginary construct is essentially the quantity of electricity that would take a typical EV as far as a gallon of gasoline would take the average new conventional car. As the text points out, it’s hard for consumers to calculate this for themselves. They see gasoline prices everywhere they drive but must dig through their utility bills to find their electricity price–not always obvious–and then might not know how to compare the two.

The site’s documentation indicates the eGallon calculation is based on the average energy usage of five specific EVs, including the Chevrolet Volt, Nissan Leaf, and Ford Focus EV, along with the 2012 EPA fleet average fuel economy for what EPA defines as small and mid-size cars. The result is side-by-side postings of the US average gasoline and eGallon prices, plus a drop-down menu to replicate that for each state. The site also includes the chart below, comparing these two prices over the last decade.

Two facts become immediately apparent. First, electricity is generally a cheaper fuel for cars than retail gasoline. That’s true for a variety of reasons, including the higher end-use efficiency of electric motors compared to internal combustion engines and the lower cost of most of the fuels used to generate electricity in the US. For example, the natural gas burned in power plants sold for the equivalent of $ 20.40 per barrel last year, while the global benchmark for oil averaged nearly $112/bbl. It also appears to be less volatile, at least at the level of national averages.

However, just as there’s no single gasoline price for the whole country, neither is there a single electricity price. Even the state averages used by the DOE to calculate eGallon prices mask a bewildering variety of regional electricity price tariffs and tiers. So your cost to recharge an EV might not just vary by location, but by time of year, time of day, and the specific rate plan that applies to you.

My main concern about the site derives from something much simper: the big central assumption that EVs compete with the average cars sold in America last year. According to the eGallon site, the average small-to-medium US car in 2012 got 28.2 miles per gallon (mpg) in combined city and highway driving. Using that figure, and with residential US electricity prices averaging 11.6 ¢/kilowatt-hour (kWh) in March 2013, the national eGallon price for March would have been $1.14/gal., compared to $3.71/gal. for unleaded regular gasoline. But what if we assumed that the cars most often compared to a new EV were not average cars, but other efficient cars, as logic and my intuition suggest? If we substituted the fuel economy data for a conventional Ford Focus or Toyota Prius hybrid, the eGallon price would jump to $1.26 or $2.03, respectively.

In some respects this result is fairly obvious. If you were already contemplating buying a hybrid, an EV won’t save you as much as if you were thinking of buying a conventional mid-size sedan. However, this distinction is important enough that the DOE should consider refining its eGallon calculator. EVs are much like wind and solar installations that cost more than conventional alternatives, but are expected to produce over their lifetimes economic or environmental benefits that offset those higher costs. The attractiveness of that big up-front investment is directly proportional to those benefits. I don’t have the data that would clarify the actual comparisons EV buyers are making, but someone must, perhaps including DOE. And it turns out that this isn’t just important for calculations like eGallon, but also for assessing the cost-effectiveness of federal EV policy.

That brings me to the Congressional Budget Office’s analysis of federal EV tax credits last fall. The report merits a posting of its own, but one nugget I gleaned from the presentation at the EIA Conference was that the CBO found that the current federal credit of up to $7,500 per car was still insufficient to make most EVs cost-competitive on a full-life basis with conventional cars. Yet despite this, the effective cost to taxpayers of each gallon of gasoline saved by a Leaf-type EV was well over $6 when compared to conventional cars getting average fuel economy, and over $10 vs. high fuel-economy compact cars. That’s assuming they save any gas at all, because of the way the Corporate Average Fuel Economy rules have been structured. Implied costs for greenhouse gas emissions avoidance were even more startling, at over $400/ton of CO2 in most cases.

The desirability of a tool like “eGallon” is rooted in the convoluted way we talk about transportation fuel economy and energy costs in this country. Miles per gallon is itself a poor metric, compared to something like gallons per 100 miles, or even miles per dollar. That's because it obscures the high value of modest improvements in high-consumption vehicles, while exaggerating the value of shifting from very efficient to ultra-efficient cars. It’s also more useful for policy makers than consumers, who are ultimately concerned about outcomes in dollars per mile or dollars per trip.

Recognizing the impracticality of training 300 million consumers to think about this subject differently, eGallon might prove useful, but only as long as it is grounded in the best information we have about the vehicle choices that potential EV buyers are actually considering. Since current EV incentives apparently provide a poor return to taxpayers, an overly simplistic tool that drives consumers too far in that direction might be worse than not having such a tool at all.

A different version of this posting was previously published on Energy Trends Insider.

Libya's Ripples for Energy Markets

The unrest that began in Tunisia and Egypt has now destabilized a country that exports important quantities of petroleum, and the oil market is reacting in earnest. With Libya in violent turmoil, UK Brent crude traded above $108 per barrel today, and even West Texas Intermediate (WTI), which has been massively discounted due to excessive inventory at its Cushing, OK delivery point, hit $98 in early trading before falling back to the mid-$90s. Unless events in Libya resolve quickly and positively, oil's price moves will shortly translate into higher gasoline prices. As I considered these events over breakfast, it also struck me that GM and Nissan could turn out to be very lucky indeed in launching their electric vehicles now, instead of a year or two ago when gas prices were lower and less volatile.

The media commentary I've seen so far concerning Libya's oil production has missed some key details that explain why a disruption of exports that in theory can be covered by OPEC's ample spare capacity--currently at a multiple of Libya's output--could be disproportionately large. Instead of focusing on Libya having Africa's largest oil reserves--a fact that is important for the long run but essentially irrelevant in the current situation--what matters is production and exports, and especially the location and quality of the latter. Libya produces around 1.7 million bbl/day of crude oil and exports much of that, due to its small domestic market. As oil companies evacuate personnel, that output will drop, and exports from Libya's ports are at risk of disruption by the chaos unfolding there. The majority of those exports stay in the Mediterranean, where they are key inputs for Italian, French and Spanish refiners. Very little of it comes to the US, for which Libyan oil made up less than 1% of our imports in 2009. So any effect on US markets will be indirect, but no less dramatic for that.

On the surface, OPEC is more than capable of making up for the loss of a bit over 1 million bbl/day from the market, if it wished. However, most of the cartel's roughly 5 million bbl/day spare capacity is on the Arabian peninsula--near another focus of instability in Bahrain, which is no longer an oil exporter. Nor is most of OPEC's remaining capacity of a quality comparable to the typically light, sweet crude types that constitute most of Libya's output. These crudes are well-suited for making the diesel favored in Europe, and it would be difficult for many European refiners to switch on short notice to a diet richer in Saudi grades that are higher in sulfur.

Various analysts have noted that US gas prices were already reflecting higher world oil prices, rather than the lagging WTI indicator. With April gasoline futures trading above $2.75/gal. on the NYMEX this morning, that would yield an effective average US retail unleaded regular price of around $3.45/gal, after factoring in excise and sales taxes and typical dealer margin. That's well above the $3.18/gal. average that the Lundberg Survey reported for last week. It would also be the highest average at the pump since October 2008, when prices were unraveling from their $4-plus peak of that summer.

It's too soon to predict an imminent return to those heights, although no one can gauge what will happen next in Libya, where it's not even clear who's in charge at the moment. (It does seem safe to predict that the US will not lead a NATO invasion of Libya, as Fidel Castro has apparently warned.) Still, it is worth thinking about how consumers might react if the current chaos persisted. The last time gas prices rose sharply, we saw significant drops in both US vehicle miles traveled and gasoline consumption. We also observed a noticeable increase in the sales of hybrid cars, which have lagged recently. There were no mass-market electric vehicles available at the time, but it doesn't require a leap of faith to envision a healthy boost in EV sales from their low initial levels, too. That would be good for both GM and Nissan, which have invested enormous sums--and their corporate reputations--bringing their Volt and Leaf models to market. It might not be so positive for sales of clean diesels, despite their high efficiency, if constraints on Libyan oil tighten European diesel supplies and drive up world diesel prices.

Events in North Africa and the Middle East will determine how high oil and gasoline prices rise in the weeks ahead. If Libya's dictator departs as readily as President Mubarak did, things could settle down quickly, unless the unrest spreads to another major oil producer. It's still too early to call this a new oil crisis, but it's not too soon to consider our options if it proved to be one. Although that would be a very unwelcome shock to an economy just regaining some momentum, we have many more options than in 1979, when the Iranian Revolution sent oil prices to levels that it took nearly three decades to exceed, in real terms.

Temperature Extremes and EV Battery Trade-offs

The first production-model Nissan Leaf electric vehicle is scheduled to be delivered to a customer in the San Francisco Bay Area tomorrow. I know if I were on the receiving end, I'd be as excited as a kid on Christmas morning, particularly in a place where having the first Leaf will score its owner many green points. However, if the assessment by MIT's Technology Review of Nissan's choices concerning the temperature control of the Leaf's battery pack is accurate, then it's probably just as well that the first one is going to a location with such a benevolent climate, instead of the Midwest, upstate New York, or the desert Southwest. Batteries are sensitive to external temperature, in terms of both performance and longevity, and Nissan appears to be betting that making the battery simpler to replace is a higher priority than optimizing its condition at all times, as GM has done for the battery pack in the Chevrolet Volt.

It's easy to forget that batteries are fundamentally chemical, rather than just electronic devices. The chemical reactions in a battery absorb or release heat during the charge/discharge cycle, and the capacity of the battery's environment to accommodate those heat flows can affect these reactions. For a battery pack storing and delivering as much energy as required to run a car, these interactions are significant, and early adopters of EVs are already learning that the range of EVs becomes more limited in hot or cold weather. It's not as clear that they understand the degree to which extreme temperatures can degrade battery life. The economics of an EV could look very different if a battery pack only lasted six or seven years, instead of ten.

As the article explains, GM chose a liquid cooling system for the battery pack in its Volt range-extended EV. This system cools or heats all of the battery's cells, as necessary, and sometimes draws power for this purpose even when the vehicle is parked, as I learned when I test-drove one with the Volt's Vehicle Line Director last winter. According to him, GM's design team knew it had to go to extraordinary lengths to ensure the battery would perform reliably and last the expected ten years or 150,000 miles. Nissan appears to have taken a different path to battery management, providing a cooling fan for the battery pack and an optional battery heater--an option reportedly not available on the first Leafs. You don't have to be an expert in heat transfer to guess that air won't move heat around the battery pack's cells as well as liquid can, and that as a result, at least part of the Leaf's battery could potentially be exposed to more heat and cold--and possibly suffer more performance impact from them--than the Volt's.

That trade-off might reflect a different vision for how the battery will be used. Nissan (with its alliance partner Renault) is the main carmaker working with Better Place, Shai Agassi's EV battery recharging-and-exchanging start-up. A battery pack with only electrical connections to the car will be much easier and neater to swap in and out than one with liquid hoses running to a radiator and heater. This situation wouldn't even be a consideration for the Volt, which has an onboard generator to take over when the battery's charge falls too low. But for battery-only EVs, battery-swapping is as close as they can get to replicating the convenience of refueling a gasoline or diesel car in a few minutes. If EVs catch on via a business model like Better Place's, in which consumers routinely exchange their flat batteries for fully-charged ones (and might not even own the battery pack, but instead rent it by the month or the mile) any shortcomings from Nissan's less robust battery-conditioning strategy would fall on someone other than the consumer, as a statistical cost of doing business.

From my perspective this is just one of the uncertainties concerning the operation and consumer acceptance of EVs about which we'll learn more as their numbers climb from the low thousands to the hundreds of thousands and millions. However, I find it interesting that few journalists have picked up on an issue that could have far more impact on the EV ownership experience than the tempest in a teapot that some stirred up when they found out that the Volt's wheels are occasionally driven partly by the engine-generator, rather than entirely electrically. If I were buying one of these cars, I'd be a lot more interested in how far its expensive battery pack will carry me and how long it will last, than in whether the car is truly a range-extended EV or just a plug-in hybrid.

Electric Vehicle Choices Expand

One of my basic assumptions about our energy future is that most automobiles will eventually be electrified. That's based on extensive scenario work done with my former colleagues at Texaco, Inc. in the late 1990s. Nothing I've seen since then has changed my view on that. However, vehicle electrification is not necessarily synonymous with "electric vehicle" (EV) in its common usage to connote a car powered only by electricity stored in batteries. It's a much broader category, covering all three electrification options now slated to be available to consumers by year-end: hybrids, plug-in hybrids, and "pure" EVs. It also encompasses fuel cell vehicles, though these have yet to move beyond the test-market stage. The characteristics of the three current varieties of electrified vehicles differ in important ways that will affect both their impact on our energy consumption and their success as consumer products.

With hybrids already well established and plug-in and EV models intended for the mass market about to go on sale, this is no longer just a theoretical comparison. Shortly, consumers will be assessing these cars against each other, as well as against more conventional choices, including clean diesels and ordinary gasoline-powered cars, which are becoming more energy-efficient all the time, as noted for the new-model Ford Explorer SUV. Only part of that comparison will hinge on how their drivetrains are energized. In order to achieve mass-market success, they must compete on the whole array of product attributes, since for many people cars are much more than simple transportation.

Start with hybrids, which are sometimes referred to as conventional hybrids, or even "non-plug-in hybrids", to distinguish them from other types. According to the June Hybrid Cars Dashboard at hybridcars.com, 26 hybrid models represented 2.3% of the cars sold in the US in the first half of 2010. That's down from about 2.8% last year. The Prius by itself accounted for half those sales, and it's still the archetypal hybrid for comparison purposes. Like other hybrids of this type it gets all its energy from the gasoline that's put in its tank, and it uses this fuel more efficiently than non-hybrid cars by recovering and recycling part of the energy otherwise lost through braking, and by avoiding idling. (The latter feature is pretty much all that some "mild" or stop/start hybrids do.) The EPA rates the 2010 Prius at 51 mpg city/48 mpg highway. The base model Prius has a sticker price of $22,800, and as far as I can tell it is no longer eligible for any federal purchaser tax credits.

The Chevrolet Volt is based on a different hybrid design, as a plug-in hybrid (PHEV) or more accurately a range-extended electric vehicle (REEV). It also represents a different car philosophy, presumably aimed at a different segment of the market than the Prius. This kind of hybrid gets its primary power from an external electricity source, stored in a battery pack that gives it a range of roughly 40 miles without using gasoline. At that point, and before the battery's charge is fully depleted, the car's onboard generator--a four-cylinder gasoline engine--kicks in to recharge the battery, which continues to send power to the electric motor. Actual fuel economy thus depends on how often and how far one drives with the generator running. I believe the EPA is still grappling with an appropriate methodology to represent this fairly. Of course even when driven only on battery power, it still consumes energy, and in most parts of the US that means that some fossil fuel will be burned somewhere to power it, most likely natural gas.

GM just announced the base sticker price for the Volt, and at $41,000 before tax credits this should make it pretty clear that GM had someone other than Prius buyers in mind. Having driven a pre-production Volt this winter, I'd see it competing more with the Lexus HS250 hybrid, which starts at $34,650, and with non-hybrid entry-level luxury cars like the Acura TSX ($29,310 MSRP but more like $32,410 similarly equipped.) If it lives up to its potential, the Volt could significantly broaden the appeal of hybrids in general, while also saving a lot of gasoline for its owners. Whether it will also save them money is much harder to assess, because the calculation hinges on the specifics of where and how the car would be used.

Nissan's new Leaf is a bolder, if technologically less-complex step than the Volt, because it relies entirely on grid power stored in a 24 kWh battery pack, with no back-up other than a cable and plug--or a tow-truck. At $32,780 before tax credits the stakes are also somewhat less daunting for buyers willing to risk a bit of range anxiety and some adjustments in their lifestyles. I'm not the only one who sees the Leaf aimed squarely at the green consumers who have formed the core of Prius buyers. That's important for several reasons. It reduces the substantial product launch risks for Nissan, which already has thousands of prospective buyers on its waiting list. However, if the Leaf cannibalizes existing hybrid sales, rather than dramatically broadening the electrified vehicle market, then its impact on US oil consumption and the economics behind those tax credits will look a lot less valuable to policy makers.

My skepticism about the Leaf goes a lot farther than Nissan's incredible claims concerning its equivalent miles per gallon. In the basic architecture of the Leaf I see many of the same issues that caused the launch of GM's ground-breaking EV-1 electric car to fail. Attitudes towards oil and the environment have changed significantly in the last decade, and the government is pushing recharging infrastructure much harder and with much more financial support than when the EV-1 was launched. The Leaf also benefits from not being the only plug-in vehicle coming to market, though it requires its plug, whereas the Volt merely works better with one. Fundamentally, however, I just don't know if enough Americans are ready for a car that can only go about 100 miles on a good day, and potentially a lot less than that when conditions aren't ideal. That's particularly important when we recognize that at the price points for both the Leaf and Volt their realistic market isn't first-time buyers in their early twenties for whom basic assumptions about range and refueling times might not be so ingrained. Taking advantage of the entire $7,500 federal tax credit would require an adjusted gross income of at least $55,000 for single taxpayers ($74,000 for married couples), based on last year's tax tables--and probably even higher when taking into consideration itemized deductions, dependents, and other factors. In my view, likely buyers for both cars would be solidly middle-to-upper-middle class.

Rather than making expansive predictions based on guesses about how well these new cars will do with real consumers, I will be watching the start of this grand experiment with great interest. If the Leaf catches on as well as Nissan hopes, then the trickle of other EV launches that are expected to follow could turn into a tidal wave of automotive innovation. If the Volt does better than the Leaf, despite its higher price, that could signal that consumers still value the comfort of knowing they can pull into a gas station and refuel in three minutes--rather than several hours--more than they value their independence from oil. And if both do well without eroding the sales of conventional hybrids, then that would bode well for a much more efficient vehicle fleet in the years ahead, relying on a much wider mix of energy sources than today's.

Electric Cars and Natural Gas

Two items in the weekend Wall St. Journal caught my attention. The first concerned the mileage ratings of electric vehicles, with the EPA apparently reconsidering its initial methodology with an eye to making it better reflect reality. The second reported on a meeting of natural gas exporting nations, which seem to be backing away from notions of OPEC-style gas output cuts. While these stories appear entirely unrelated, at least in any cause-and-effect sense, they intersect in interesting ways. That's because natural gas has largely replaced fuel oil as the link between electricity markets and the world of hydrocarbons, while becoming a viable alternative vehicle fuel in its own right. Any shift away from oil-based transportation fuels toward either electric- or natural-gas-powered vehicles could be hindered, if gas prices started to behave like oil prices.

As the article on EV fuel economy reminds us, GM and Nissan made headlines last year with eye-popping mpg estimates for their Volt and Leaf electric vehicles, respectively. However, as I noted at the time, it is simply not realistic to apply a theoretical energy conversion equating the energy in a kilowatt-hour of electricity to the BTUs delivered by a gallon of gasoline without taking into account the means by which it was generated. According to the Journal, Nissan's 367 mpg claim was based on a calculation using 82 kWh/gal. That implies that it takes just 1,414 BTUs to generate each kWh of electricity used by the Leaf. Physics tells us that isn't possible, with 3,412 BTU/kWh as the theoretical minimum and real-world values much higher. Perhaps the earlier methodology reflected assumptions about the fraction of the time the Leaf might be expected to recharge on surplus wind or solar power, for which no fossil fuels are consumed. At this point any such assumptions look premature, at best.

Several years ago, the Pacific Northwest National Laboratory evaluated US power generating capacity to determine the level of EV market penetration that could be accommodated without building more power plants. Their conclusion that 84% of the cars on the road could be electrified without exceeding the capacity of existing power plants surprised a lot of people, and it has been cited many times since--usually without attribution--as evidence that EVs are a practical alternative to imported oil. The aspect of the study's findings that often gets ignored is that the unused capacity available to power EVs came mainly from gas turbines that are used to meet peak power demand and back up the intermittent output of renewables such as wind and solar power, and are thus idle for many hours a day. Yet while wind and solar have both grown substantially since the 2006 PNNL study, their contribution to actual US net generation has still only increased from 0.6% to 1.8% of the total--not enough to alter the conclusion that for the time being any incremental power consumed by EVs will come mainly from natural gas and other fossil fuels.

In that light, realistic fuel economy estimates for EVs must incorporate reasonable estimates of the amount of gas needed to generate each kWh used. Depending on the applicable gas turbine configuration, which would vary by time-of-day and market, that could range from 7,000 to 12,000 BTUs or more. Even if we used a conservative figure of 8,000 BTU/kWh, that means that the amount of natural gas equivalent to one gallon of gasoline (carrying 116,000 BTUs) would generate at most 14.5 kWh of power. If the previous 367 mpg estimate for the Leaf was truly based on an assumption of 82 kWh/gal., then its effective fuel economy might actually be no higher than about 65 mpg. That's still impressive, and it would save a lot of oil, but does it represent enough of an improvement over a Prius-type hybrid--or compared to the Chevrolet Volt, which the Journal cites as getting 50 mpg on its range-extending generator after the initial battery charge has been depleted--to justify the lifestyle constraints of a 100-mile range and recharging times measured in hours? More fundamentally, is this even the best use of the natural gas involved, compared with backing out coal-fired power generation and its high CO2 emissions, or using the gas directly as a vehicle fuel, particularly for trucks and delivery vehicles, as proposed by Mr. Pickens?

While the answer to the latter question is neither trivial nor obvious, all of these options hinge on natural gas being both plentiful and cheap, especially relative to crude oil. You've heard a lot about the impact of the shale gas revolution on gas supply and pricing in North America. Because the US now needs less imported gas to meet demand, and because domestic gas looks plentiful for decades to come, commodity gas on the Gulf Coast now trades for just 1/20th the price of crude oil. That means that the natural gas energy equivalent of a barrel of oil is selling for just $23.50. Even at the roughly $6/MCF indicated for December 2010 gas futures, that's still just $35/bbl. However, the more we rely on gas to generate electricity--to meet incremental demand, including from EVs, and to back out higher-emitting sources like coal--and the more gas we put directly into vehicles, the likelier it is that we'll need to import LNG to balance supply and demand. If the international gas market were controlled by an OPEC-like cartel that was able to constrain output to put pressure on prices, then eventually this would translate into higher gas prices here--closer to crude oil's--and that would make both natural gas vehicles and EVs running on gas-generated power less competitive with fuel-efficient gasoline and diesel cars. So for both EVs and NGVs, it's good news that the gas producers meeting in Algeria seem unlikely to be able to match OPEC's market power any time soon.