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.


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