Shai Agassi Understands Oil

What a relief! Shai Agassi understands oil. In this regard, he stands apart from many global CEOs and even many who work in the oil industry. Better still, his company, Better Place, is actually very well positioned to do something about our energy problem. Agassi has come up with a brilliant model for Electric Vehicles (EV). It’s not a surprise, frankly, that the same intellectual curiosity which led him to his EV solution would also lead him to understand oil.

Readers should watch the entire video of Shai’s presentation at the TED conference, from earlier this year. It’s only twenty minutes. However, play very close attention to his remarks on oil starting at the 10.00 minute mark.

Although I originally heard and read about Agassi’s presentation during the TED conference, this video is getting alot more play now that it’s been released to the public. What you’ll find is that Agassi understands two, key concepts about oil. First, he understands that the structure of North American oil demand is different than most other countries in the world. This is an idea that I have harped on for some time. The North American user, and in particular the US user, is much more leveraged to oil via the distances and infrastructure of this country, than most other users in the world. Pay attention to the way Agassi describes “coming up to the US” with his company, and how that means crossing a big threshold. Watch the way he uses the following phrase: “but when the aggregate comes up, you’re dead.”

The second insight which Agassi shares, is his lucid understanding that the volatility of oil prices is tracing out a depletion pattern. Pay close attention to his slides and the chart he uses, and his broad understanding that oil volatility will keep killing the economy in waves. And, killing it over and over again each time the economy tries to get back off the floor. Why can’t we hear such versatile, conversant perspectives from Congress, other CEOs, or even our new Energy Secretary? Why is current energy policy being launched from a platform that cedes the oil depletion problem to a time 10 to 15 years from now?

While I don’t necessarily see the EV as a total replacement vehicle for all of North America, if Better Place was only able to make good penetration into North American cities–along with new Light Rail, Commuter Rail, and Bus Rapid Transit (BRT)–the introduction of EV on such a scale would make an enormous difference.

It’s time to stick a fork into biofuels as a matter of public policy. Beans, Corn, Sticks, Algae, Switchgrass. There simply isn’t enough meaningful quantity of energy to unlock from young, organic material. And there never will be.

-Gregor

Update: there is actually a third nugget of oil understanding, also in this video. Perhaps readers will spot it. And, discuss.

Second Update: Shai Agassi has reopened his blog, just yesterday: The Long Tailpipe – Shai Agassi’s Blog

  • Fascinating. thx

  • Fascinating. thx

  • benjie t

    If I know your line of thinking, you're referring to how Indians fill up their cars 2-3 gallons at a time so battery is a range EXTENDER?

    I am just dying to know what you think the third nugget is. To me, all of Shai, Willie Smits, and Barry Schwartz presented the meta-idea of SYSTEMATIC THINKING as the real nugget of this year's TED… and this life. Check them both out; no surprise they were among the very first posted from this year's conference.

  • benjie t

    If I know your line of thinking, you're referring to how Indians fill up their cars 2-3 gallons at a time so battery is a range EXTENDER?

    I am just dying to know what you think the third nugget is. To me, all of Shai, Willie Smits, and Barry Schwartz presented the meta-idea of SYSTEMATIC THINKING as the real nugget of this year's TED… and this life. Check them both out; no surprise they were among the very first posted from this year's conference.

  • Steve

    Fascinating. He noticably skips over how recharging will be isolated to renewable energy…it was the only thing he couldn't connect the dots on, and I'm afriad it's not a trivial matter.

  • Steve

    Fascinating. He noticably skips over how recharging will be isolated to renewable energy…it was the only thing he couldn't connect the dots on, and I'm afriad it's not a trivial matter.

  • gregor.us

    Thanks for your comments both here and on Twitter.

    The Better Place video and EV story is getting good play this week. Did you know the FT has a new Energy Blog? They have been very friendly towards me, and visa versa:

    See today's: Is Better Place getting more love?

    G

  • gregor.us

    Thanks for your comments both here and on Twitter.

    The Better Place video and EV story is getting good play this week. Did you know the FT has a new Energy Blog? They have been very friendly towards me, and visa versa:

    See today's: Is Better Place getting more love?

    G

  • gregor.us

    That's true. He does indeed over-promise on the zero carbon issue. He really has/had no need to do that, imo. He could have said look “when this starts, the power will still be sourced from nearly half coal in the US power grid.”

    Ironically, I think he could actually drive the need for new power generation from solar.

    I keep saying the following: if people would stop prioritizing Global Warming or CO2, and simply concentrate on oil depletion, then CO2 issues would get taken care of in the process.

    G

  • gregor.us

    That's true. He does indeed over-promise on the zero carbon issue. He really has/had no need to do that, imo. He could have said look “when this starts, the power will still be sourced from nearly half coal in the US power grid.”

    Ironically, I think he could actually drive the need for new power generation from solar.

    I keep saying the following: if people would stop prioritizing Global Warming or CO2, and simply concentrate on oil depletion, then CO2 issues would get taken care of in the process.

    G

  • I did not know

    And of course as my friend Ben likes to point out, Better Place is the way to deny funding to radical Islam, make Israel safe, and all the while allow modern civilization to continue.

  • I did not know

    And of course as my friend Ben likes to point out, Better Place is the way to deny funding to radical Islam, make Israel safe, and all the while allow modern civilization to continue.

  • gregor.us

    Look for the third nugget. It has to do with his comparison between batteries, and oil wells.

    G

  • gregor.us

    Look for the third nugget. It has to do with his comparison between batteries, and oil wells.

    G

  • Last I looked, the Industrial Revolution in England started in the 17th century, not the 19th …

    Roughly 69.6 trillion Btus/d … roughly 20.4 GWhs/d of electricity via windpower? Well I guess we're at something like 32.2 GWh/year just now.

    Also, it's more than electric power for cars … it's batteries for trucks, planes, and ultimately ships that will be required. Trucks, planes, and ships are a considerable percentage of the 60% transportation fuel cost in the US.

    In the CO2 equation, oil is bad … but coal is fucking awful. A lot of energy consumption in CA–including ole SF–comes from coal.

    Sure, electric cars are a potential solution … but the story he's selling is crack.

  • Last I looked, the Industrial Revolution in England started in the 17th century, not the 19th …

    Roughly 69.6 trillion Btus/d … roughly 20.4 GWhs/d of electricity via windpower? Well I guess we're at something like 32.2 GWh/year just now.

    Also, it's more than electric power for cars … it's batteries for trucks, planes, and ultimately ships that will be required. Trucks, planes, and ships are a considerable percentage of the 60% transportation fuel cost in the US.

    In the CO2 equation, oil is bad … but coal is fucking awful. A lot of energy consumption in CA–including ole SF–comes from coal.

    Sure, electric cars are a potential solution … but the story he's selling is crack.

  • gregor.us

    Yes. He'll never reach the penetration he speaks of in the presentation. He frankly doesn't need to, imo. I would advise him to respect that aspects of North America are simply insurmountable. He should, imo, simply go for the cities and declare victory if he gets that far. Which I think he will.

    Not sure about his Moore's Law analogy to the electric mile either.

    That said, I think there are some other less-easily-seen possibilities for Better Place that may extend beyond just building EVs. If B.P. can actually sell cars and start making profits, it may be able to drive some investment in power gen.

    G

  • gregor.us

    Yes. He'll never reach the penetration he speaks of in the presentation. He frankly doesn't need to, imo. I would advise him to respect that aspects of North America are simply insurmountable. He should, imo, simply go for the cities and declare victory if he gets that far. Which I think he will.

    Not sure about his Moore's Law analogy to the electric mile either.

    That said, I think there are some other less-easily-seen possibilities for Better Place that may extend beyond just building EVs. If B.P. can actually sell cars and start making profits, it may be able to drive some investment in power gen.

    G

  • inegoveritas

    Ghosn's mermaid analogy for hybrid cars is certainly a nugget IMO.

    As for North-America, indeed, the problem is our suburbian way of life and unfortunatly it'll always be more expensive in terms of energy. We'll have to try to live in communities a bit more so that public transport can become economically viable again.

  • inegoveritas

    Ghosn's mermaid analogy for hybrid cars is certainly a nugget IMO.

    As for North-America, indeed, the problem is our suburbian way of life and unfortunatly it'll always be more expensive in terms of energy. We'll have to try to live in communities a bit more so that public transport can become economically viable again.

  • gregor.us

    The really hard-bitten view, which is “somewhat” my view, is that eventually North American oil production will have to be devoted almost entirely to food production and food and goods distribution.

    Personal transport will have to become much rarer, the cities will have to use electrified public transport entirely, and very few individuals will have either the right or the means to use oil.

    I encourage everyone reading this thread to look at the looming connections between Water and Water desalination, and Solar power. And, to look at the good work being done in that area.

    G

  • gregor.us

    The really hard-bitten view, which is “somewhat” my view, is that eventually North American oil production will have to be devoted almost entirely to food production and food and goods distribution.

    Personal transport will have to become much rarer, the cities will have to use electrified public transport entirely, and very few individuals will have either the right or the means to use oil.

    I encourage everyone reading this thread to look at the looming connections between Water and Water desalination, and Solar power. And, to look at the good work being done in that area.

    G

  • What would Malthus think of our current predicament? Its more than suburbia being unsustainable anymore. Its a race to adapt with our current populations to be more sustainable before we lose control of the situation.

  • What would Malthus think of our current predicament? Its more than suburbia being unsustainable anymore. Its a race to adapt with our current populations to be more sustainable before we lose control of the situation.

  • Gil Ward

    My idea uses photons, electrons, and gravitons. My car goes fast (reduces commute times 50% and can go 200 mph), safe (virtually eliminates accidents), is universal (goes to every address and carries disabled, blind and deaf persons), can be operated as utility (doesn't require taxpayer support), eliminates congestion (roadway will carry 50 times what a four lane highway will carry.

    If you are interested will send a more complete description.

  • Gil Ward

    My idea uses photons, electrons, and gravitons. My car goes fast (reduces commute times 50% and can go 200 mph), safe (virtually eliminates accidents), is universal (goes to every address and carries disabled, blind and deaf persons), can be operated as utility (doesn't require taxpayer support), eliminates congestion (roadway will carry 50 times what a four lane highway will carry.

    If you are interested will send a more complete description.

  • vladimir

    Hey
    very interested in your concept
    can you send more info to vladimir@ketnaa.com?

    I agree with most of the rationale Agassi is using. The CO2 does indeed need to be tackled through oil and coal first than through other means. Transportation first, production second ect.. all the while the economy takes care of creating all the services needed to improve those areas.
    Mostly I agree with the speed of change needed. We've soared over the CO2 emissions “health barrier” 80 years ago, it is urgent by now to change our behavior and adapt.

    Definetly though also the other side od CO2 should be taken care of: photosyntesis – more trees or rather lowering the rate of forest extermination for paper.

    best regards and wishes to such enterpreneurship endeavours and b.r. to gregor.us

  • vladimir

    Hey
    very interested in your concept
    can you send more info to vladimir@ketnaa.com?

    I agree with most of the rationale Agassi is using. The CO2 does indeed need to be tackled through oil and coal first than through other means. Transportation first, production second ect.. all the while the economy takes care of creating all the services needed to improve those areas.
    Mostly I agree with the speed of change needed. We've soared over the CO2 emissions “health barrier” 80 years ago, it is urgent by now to change our behavior and adapt.

    Definetly though also the other side od CO2 should be taken care of: photosyntesis – more trees or rather lowering the rate of forest extermination for paper.

    best regards and wishes to such enterpreneurship endeavours and b.r. to gregor.us

  • We ALL know that one fuel is not the answer. The Understanding is that fuel will be derived from many sources therefore the ANSWER is an ENGINE that will burn ALL the Liquid – Vapor – Powered FUELS SINGLE OR MIXED. The ENGINE has exhaust temperatures of less than 200degrees F and emmissions minimal and with organic fuels (algie, wood, etc.) be carbon neutral. ONE ENGINE ALL FUEL
    http://WWW.CYCLONEPOWER.COM

  • We ALL know that one fuel is not the answer. The Understanding is that fuel will be derived from many sources therefore the ANSWER is an ENGINE that will burn ALL the Liquid – Vapor – Powered FUELS SINGLE OR MIXED. The ENGINE has exhaust temperatures of less than 200degrees F and emmissions minimal and with organic fuels (algie, wood, etc.) be carbon neutral. ONE ENGINE ALL FUEL
    http://WWW.CYCLONEPOWER.COM

  • We ALL know that one fuel is not the answer. The Understanding is that fuel will be derived from many sources therefore the ANSWER is an ENGINE that will burn ALL the Liquid – Vapor – Powered FUELS SINGLE OR MIXED. The ENGINE has exhaust temperatures of less than 200degrees F and emmissions minimal and with organic fuels (algie, wood, etc.) be carbon neutral. ONE ENGINE ALL FUEL
    http://WWW.CYCLONEPOWER.COM

  • nitroglycerin

    Excellent presentation. I think the ending remark was particularly notable — JFK got the moon program going with a strong mission statement. By contrast, this kind of leadership has been absent within the US for quite some time. To add insult to injury, our national issues have been cluttered with too many distractions and there is an absence of the willingness to even do a half-decent spring cleaning. Four decades (counting from the '70s) of worth of lost decades for the US insofar as proper energy and infrastructural policies are concerned?