The Petroleum Market Watch Equation

It is a truism that understanding the basic elements to any subject is the key to understanding it. We decided to do a brief primer in today’s blog about the math behind our “inevitability calculations” of the increased speed now at which the country will convert to “alt” (whether CNG or not). Since we have done the calculations with CNG however, we will stick with that for today’s blog.

The first standard to set is to rethink your energy calculations in “scientific geek speak.” In that world, a gallon of petroleum equals 124,000 BTUs (or British Thermal Units) of energy.

The cost, in other words of 124,000 petroleum-fueled BTUs is now hovering around, well, let’s just bite the bullet for the sake of a few week’s relativity, $4.00. We know what we are about to tell you is shocking so in the interests of apples-to-apples comparisons, remember that this is “retail” price. The next one is “wholesale” price, which is usually about ½ to 1/3 of what consumers pay at point of purchase. It’s a bit harder (for us at least) to give readers a better benchmark for petroleum but let’s just assume for appreciably equal comparisons, we are actually talking about $1.00 a gallon “wholesale” petroleum costs.

Now, to this end, consider an entry in a recent MarketWatch report that came out a day after the Natural Gas Bill was introduced in the House of Representatives last week (H.R. 1380).

That story, which appeared on April 7, 2011, discussed that the price for natural gas fell $0.07 for supplies to be delivered in May to a number that should sound quite familiar to most motorists these days of $4.07. Of this year we hasten to add. We also must note here that this price decrease for natural gas (amidst a month of a $0.25 cent retail price at the pump at least – increase per (approximately) $1.00+ a-gallon of petroleum or 124K of petroleum BTUs) is for a whopping 1 million BTUs of natural gas powered energy.

To think of it this way, there are approximately 8 “gallons” of petroleum-fueled energy in a million gas powered BTUs. Now, if you compared the approximate price of “BTUs” fueled by different kinds of energy, the price of a BTU fueled by natural gas is approximately half that of petroleum.

And that is where the first real analysis should, we think be made. It is for that reason we hope that our cars at least open the doors to new innovation in the continued alteration of the combustion engine to another “hybrid dot one” version if not a whole other “dot oh” upgrade.

We do want to note with some humor that apparently the market had bet against natural gas, specifically that there was a smaller than expected decline in weekly supplies. We note this merely because we know the market, along with apparently many policymakers, does not understand what the every-person at the pump does.

As the perfect segue to end today’s blog, we were out for our morning dog walk this morning and happened upon a neighbor fixing his car. It turns out he is an employee at one of the largest cab companies in Charlotte. He does not look or sound like he was born in this country, in one of the long, proud, traditions of many immigrants to establish a (legal) foothold on these shores by working as a taxi driver (in many cities across this country). When we told him what we are doing, he looked at us for a minute, translating semi-unfamiliar words.

“Green taxis?” he said. “No gas?” We didn’t have the heart to say, well, sort of, but the point, we think should speak volumes.

He gave us the thumbs up at our affirmative, and may in fact be one of our earliest “poach” hires to the extent that we do much of that (and we don’t intend to do much). However having someone in the neighborhood who can walk to work and is enthusiastic about the core premise of our company in any language is something that is clean, green music to our ears.

Pain At The Pump

As MS-NBC reported yesterday, the average price of gasoline has risen to almost $3.75 a gallon nationwide, hitting a new high in San Francisco (of anywhere between $4.25 and $4.50). In North Carolina, the prices are about the national average, but it is obvious to all and sundry that (at least) a $0.25 cent per gallon increase (in a month no less) is not the direction we need to go to keep the fragile economic recovery going.

It’s also something which is going to cause an existential crises at most government agencies, particularly those which have line items for petroleum expenditure that is required under federal civil rights law. We understand the impetus to “suck it up and take the bus,” but the reality is that for many people that just isn’t possible. Starting, by the way, with everyone who lives in a rural community and going all the way to the state’s busiest cities (Charlotte and Raleigh).

We don’t mean to brag, but we think we have the silver bullet to put the ever-lurking zombies and werewolves of rising gas prices firmly back where they belong. We are hard pressed in fact, to figure out how government services (at least) can resist the siren song of instant and easy savings without any additional service model adaptations (although ours is highly efficient in that regard too).

We take a moment here to pause in reflection about how much things have really changed in America over the last decade. Despite all the bad news that seems to still surround us about the economy if not energy independently, the reality is when both are looked at together, we see silver, if not green linings to all those dark, seemingly everpresent clouds.

We encourage visitors to our site to take a look around at some of our “wonkier” offerings, including of course our tabs on “Green Business Math.” We actually hope that what we are doing is going to provide a cheaper alternative in transportation if not efficiencies of scale in other areas of non-negotiable transportation and energy expenditure costs. That goes for both the public and private sectors.

Tune in on a regular basis to find out what our plans might be as we continue to build up to company launch.

As a final note, we were tempted yesterday to update our price of petroleum as we have denoted it on a tab herein, but we then paused and thought perhaps we should just leave it there to establish a benchmark (if not to allow people to realize yet again what sticker shock at the gas pump means for the long term). This is not your parent’s (1970’s) petroleum shortage. This one is here for good. Perhaps it’s a tad gauche and may seem like gloating for us to constantly bring this up but that is not the intent. The real motive here is to finally wean America off it’s petroleum dependence. We think we have a few (but by far from all) of the answers in helping us get there or at least in beginning to take some of the earliest, easiest baby steps.

The “Greening” of Medicaid

It’s no accident that the real targets of “Republican” attempts to cut the federal budget focused on the environment (EPA) and of course “entitlements” (which always includes government-funded health insurance of some sort).  These are both complicated issues which of course our company is designed to address.  That said, we aim to tackle the problem as a private sector, bottom-line and profit-focused business.  As such of course we straddle a lot of divides, starting with “partisan identification.”

We aim to avoid that.  To create our business case, we have assumed that just about everyone needs clean air to breath, clean water to drink and well, when you get sick, you need care.

That doesn’t mean that you can always throw money at the problem, which is why we are attempting to be so bi-partisan.  The reality is that our first service model aims to actually increase and improve service while reducing the annual expenditure by the federal and state government of North Carolina by about $300 Million a year.  At present, the state only picks up about 1/3rd of the cost of Medicaid/Medicare in-state, so we are pretty confident that no matter what impact we have, the Feds, logically, will be twice as enthused as the neighbors.  We think also it’s hard to argue with our motives, no matter where on the political spectrum you place yourself.

The fact is that Medicaid, like most government services (and let’s face it, the private sector) is shot through with the costs of petroleum that until recently were all but invisible to both policymakers and advocates alike because of the drum-beat of pro-petroleum forces.  With the cost of petroleum now over $100 a barrel (again), and of course alternatives like ours readily available, there is no getting around this 600lb guerrilla in the living room.

As we were recently tasked to do, our first guidepost is to remove about 240,000,000 BTUs of petroleum-based energy (annually) from Medicaid (in Department of Energy lingo).   That’s only from our Charlotte HQ, FYI, at the smallest number of taxis we plan to operate.  The demand is so great that we could easily save far more than that.  Our first service model is so efficient, in fact, that it will also drastically reduce the amount of energy it takes (from a strictly scientific perspective) for the government to help Medicaid patients get their meds refilled (a requirement under both the ADA and Title VII).   As much wind that blows from Washington on the “people’s mandate” to cut the budget, when it comes to some government services (such as Medicaid) there is no getting around the reality that civil rights cost money.  That’s something that is always left out of these discussions.  It can’t be anymore.  It creates a “floor” of service provision that the federal government is required to meet per the Constitution.  The states must also follow under some “tricky” legal quirks, known broadly as “Title II.”

We know that this is an awfully academic subject filled with tiring legal mumbo jumbo, so in the interests of brevity, we are used to just saying “it’s required.”  Unlike say strict “treehuggers” however, we have the luxury of pointing to a document that can’t be dissed (too much), although it appears these days that everyone and their little sister is a Constitutional scholar (no matter how much some people also seem to think that other historical dates enshrined in paperwork, such as the 14th Amendment, happened at the time of George and Tom.)

We do advocate the recycling of paper and other appropriate items, but we are rather partial to the Constitution and think it shouldn’t be shredded for inclusion in the local landfill.  For that reason, we are taking the stance that we are.  We think ultimately, it will be seen as no more inciteful of anything other than a very comfortable and healthy if not “green” bottom line.