TIME energy

Russia and China Reach Major Gas Deal

Russian President Vladimir Putin
Mikhail Klimentyev—Presidential Press Service/AP

A major Russia-China gas deal comes at a propitious time for the embattled President Putin

Updated at 9:35 a.m. ET

Beijing and Moscow reached a long-awaited natural gas deal Wednesday that would supply hundreds of billions of dollars of Siberian gas to China, Chinese media reported, as Russian President Vladimir Putin seeks reorients his gas sales toward the East.

A $400-billion deal for a 30-year supply of natural gas has been negotiated for nearly a decade, with Russia hesitant to concede a lower price for China than its European customers, the New York Times reports. Russia would invest $55 billion in infrastructure for transporting the gas to China, Gazprom CEO Alexei B. Miller said.

The contract is for 38 billion cubic meters of gas each year, the Wall Street Journal reports, implying a price of about $350 per thousand cubic meter—at the low end of what Gazprom currently charges clients.

“Russia needs this China deal very badly because it needs to signal to [Brussels] and to some EU nations that it’s taking a step that’s economically profitable and that it’s found a new market for its gas,” said Shamil Yenikeyeff, a research fellow at the Oxford Institute for Energy Studies.

Putin has sought to sell gas in China and diversify out of stagnant European markets, particularly now in the face of sanctions and political tensions in the West. Experts said Putin’s meetings with German chancellor Angela Merkel and President Obama in June were a key motivator in completing a deal with the Chinese.

[NYT]

TIME Autos

The Incredibly Simple Way to Get Drivers to Buy Fuel Efficient Cars

Japan Nissan
Itsuo Inouye—AP

The secret lies in making it crystal clear how much they’ll save in gas costs over the long haul.

In every car dealership, a new vehicle for sale is required to have an EPA car label slapped on the window. The labels are loaded with numbers and ratings and have a dozen different features, including the estimated fuel economy (with city and highway breakdowns), the estimated annual fuel cost for operating the car, a fuel economy and greenhouse gas rating, a smog rating, and a smartphone QR code that can be scanned for additional information.

But a new study by Duke University researchers makes the case that one critical bit of information is missing from the labels. The labels today show how many gallons of gasoline a vehicle uses over the course of 100 miles of driving, and they also provide an estimate for annual fuel costs, based on a rate of $3.70 per gallon and 15,000 miles of driving per year. Researchers say it would be helpful—for consumers and the environment alike—to do some more math for potential buyers and show how much owners can expect to spend on gas for the long haul. Like, say, 100,000 miles.

In the study, participants were presented with a variety of different scenarios and asked to pick the vehicle they preferred. For instance, one group was asked to choose either: Car A, which costs $18,000 and $20 in gas over 100 miles of driving; or Car B, which costs $21,000 and $16 in gas over 100 miles of driving.

Another group was asked to choose either: Car A, which costs $18,000 and $20,000 in gas over 100,000 miles of driving; or Car B, which costs $21,000 and $16,000 in gas over miles of driving.

Both scenarios are essentially the same: The upfront costs and fuel economy in Car A and Car B are the same in both scenarios. But guess which scenario resulted in way more consumers choosing Car B, the more fuel-efficient and cost-effective option? Yep, the second hypothetical, which did the long-term math for consumers and demonstrated that an owner would save $1,000 over the course of 100,000 miles by choosing Car B over Car A.

In fact, in the many scenarios presented—including several instances when the vehicle with better mileage didn’t pay for itself in gas savings—would-be buyers were most likely to select the more fuel-efficient vehicle when the costs were shown over the course of 100,000 miles. That doesn’t mean that the average consumer would actually buy a fuel-efficient vehicle if it didn’t make financial sense.

“People are very sensitive if the vehicle paid for itself or not,” Adrian Camilleri, one of the study’s authors, said in a phone interview. “People don’t like cars that don’t pay for themselves. But they show the greatest interest in more fuel-efficient cars when they’re shown the gas costs over 100,000 miles.”

Overall, in the sum total of all scenarios—including, again, some in which the more fuel-efficient car didn’t pay off—among the participants who selected the more fuel-efficient car, 61.6% did so when shown the gas costs over 100,000 miles, versus 46.6% when gas costs were simply shown over 15,000 miles, like they are currently on new-car EPA stickers. Specifically, when given costs over 100,000 miles, participants chose the more fuel-efficient model 87% of the time when it paid for itself, versus 36% when the gas costs savings didn’t pay off. But when shown costs over 15,000 miles, participants chose the more fuel-efficient model 73% of the time when it paid for itself, versus only 20% when the fuel-efficient car didn’t pay off.

What may come as somewhat of a surprise is that showing consumers gas costs over 100,000 miles significantly increased the odds of someone choosing the car with better mileage even when the choice didn’t result in an overall cost savings. “What we found is that many people want to buy more fuel-efficient cars when they’re close to paying for themselves,” said Rick Larrick, a Duke management professor and one of the authors of the study, published in the spring issue of the Journal of Public Policy & Marketing. “That’s when their sense of environmentalism kicks in. They might not be willing to pay a large premium, but they realize how close the difference gets when they see gas costs over 100,000 miles.”

Larrick said that consumers may also do a little more math for themselves and see that if they drive the car well over that marker—the life of many cars nowadays extends well over 200,000 miles nowadays, after all—that the vehicle with better mileage will, in fact, make more sense financially.

As for the EPA stickers, Larrick thinks that instead of adding the estimated gas costs over 100,000 miles to the already clogged label, it would be best to substitute it in there for one or more of the other fuel cost data points. “They already have the annual fuel costs and the amount drivers would save over five years compared to the average vehicle, which is pretty redundant,” said Larrick. “There’s a way to simplify this. The cost over 100,000 miles is just a more important metric.”

TIME Autos

One of Life’s Annoying Regular Expenses Is Getting Cheaper

Prices are on the rise for everything from meat to limes, from rent to Netflix. But one of life’s commonplace expenses is surprisingly on the decline.

According to AAA, the average cost of owning and operating a sedan in the U.S. is now $8,876 per year, which is lower than it was in 2013 ($9,122) and 2012 ($8,946). The figures are all based on an owner driving 15,000 miles per year in an average sedan. Naturally, annual costs are much higher if you’re the owner of an SUV (average of $11,039 this year, versus $11,599 a year ago) or a minivan ($9,753 vs. $9,795).

Costs aren’t coming down because of decreases in purchase prices. The average price of a new car last summer hit a record high of $31,252, a figure that’s been topped lately with average prices over $32,000 in recent months.

(MORE: Could It Be? Gas Prices Have Probably Already Peaked for 2014)

Even so, the overall cost of ownership is down, and the largest factor bringing on the decrease is the fall in the price of fueling one’s vehicle. AAA estimates that the average price of regular gasoline is down nearly 6% this year compared to 2013. (In past years, it’s been fairly standard for gas prices to shift in only one direction: up.) Combine that with the fact that the average fuel economy for vehicles has been climbing (over 25 mpg lately), and the costs of gassing up one’s car are down over 10% this year. (In a somewhat ironic twist, the widespread improvement in fuel economy in today’s traditional internal combustion-run cars is one reason that consumers aren’t turning to even more efficient (but expensive) electric vehicles and plug-in hybrids in larger numbers.)

Costs related to tires, insurance, and depreciation are all also down slightly this year, though in most cases the effect on one’s overall costs is marginal: The average insurance premium, for instance, fell from $1,029 last year to $1,023 now. So a savings of a whopping $6.

TIME Syria

U.N. Official: Syria’s Last Chemical Weapons Are ‘Inaccessible’

Kaag, special coordinator of the OPCW-UN joint mission on eliminating Syria's chemical weapons programme, speaks during a news conference in Damascus
Sigrid Kaag, special coordinator of the Organization for the Prohibition of Chemical Weapons–U.N. joint mission on eliminating Syria's chemical weapons, speaks at a news conference in Damascus on April 27, 2014 Khaled Al Hariri—Reuters

Fighting between rebel groups and government forces is blocking the removal of Syria's last chemical weapons, says mission chief Sigrid Kaag, who is calling for a truce

The last chemical weapons slated to be removed from Syria are “inaccessible” because of fighting between rebels and the government, a U.N. official said Thursday.

The 16 containers of dangerous chemical agents are located close to the capital, Damascus, in an area being fought over by both sides, the Associated Press reports.

The head of the U.N. mission in charge of destroying Syria’s chemical weapons, Sigrid Kaag, called on countries with clout over the rebel groups to help arrange the cease-fire needed to allow for the safe removal of the chemical weapons.

“Obviously the issue is that the materials leave the country as soon as possible,” she told reporters.

Danish and Norwegian ships are waiting to transport the containers from a nearby port to a U.S. vessel for destruction.

Last month it was revealed that almost all of Syria’s declared chemical weapons had been removed ahead of the June 30 deadline. However, at a U.N. Security Council meeting, several countries, including the U.S., France and Britain, expressed concern over whether President Bashar Assad’s regime was holding on to undeclared chemical weapons, Reuters reports.

[Associated Press]

TIME Autos

3 Next-Gen Plug-In Cars That Could be Game Changers

Japan Nissan
Itsuo Inouye—AP

The biggest complaints about electric cars are that they’re too expensive or have limited driving range, or that don’t have enough space for hauling gear or a family.

In one way or another, all of these issues are being addressed in forthcoming new versions of the Nissan Leaf and Chevy Volt, and a new plug-in hybrid Chrysler Town & Country—yep, a minivan—planned to hit the marketplace in the near future.

The Next Nissan Leaf
The second version of the Nissan Leaf, introduced in early 2013, addressed the sticking point for a lot of drivers who weren’t yet convinced to bite on an EV: By dropping the Leaf’s base price by over $6,000, Nissan was able to make a purely electric-powered car affordable, starting at under $19,000 once incentives were factored in.

The third-generation Leaf, due to hit the marketplace sometime around 2017, as reported by Automotive News, is expected to have a dramatically improved battery and therefore, a dramatically improved driving range. The goal is for the next the Leaf to have a driving range of 186 miles before needing a charge, up from 73 miles originally and 84 miles on a full charge for the 2014 version. If and when that happens, Nissan will be able to make a much stronger argument that the Leaf is truly affordable and practical.

The Next Chevrolet Volt
Car and Driver offers a sneak peak of the new plug-in hybrid Volt, which is expected on the market for the 2016 model year—and which gives drivers improvements in electric driving range and a cheaper base price to boot. Not long ago, General Motors announced that the price of the next Volt would start at around $30,000 before incentives, around $10,000 less than the original model. The driving range when powered strictly by battery, meanwhile, is expected to jump from 38 miles today to 50 to 60 miles in the forthcoming Volt—though likely only for a 2016 Volt with an optional more powerful (and more expensive) battery.

The Plug-in Chrysler Town & Country
Bigger, heavier cars need more power to operate, which makes the prospect of a battery-powered large vehicle problematic. The lithium batteries now in use are exceptionally heavy, and bigger vehicles would require bigger, heavier batteries—which in turn would weigh the cars down further. At some point, the math doesn’t add up, with prices for larger hybrids and EVs getting so high as to become impractical. That’s why the vast majority of EVs (and hybrids for that matter) are on the small size, and why they employ as many technologies and strategies as possible to keep their weight down.

Nonetheless, Fiat Chrysler just announced plans for a plug-in hybrid minivan, a first-of-its-kind Town & Country model that’s expected to get an astounding 75 mpg (or rather, the equivalent with electric and gas power combined), available for purchase around 2016. Chrysler anticipates its lineup will include a full-size plug-in hybrid crossover SUV by that time as well.

What’s curious is that Chrysler’s announcement comes at a time that, as USA Today noted, many automakers are pulling the plug on fuel-efficient hybrid versions of big SUVs such as the Cadillac Escalade and Chevy Tahoe due to poor sales and lack of interest from buyers. The most common reason cited for the failure of such models is that they were just too expensive to justify the bonus of getting a few more miles to the gallon.

The takeaway for Chrysler is that the next-generation large hybrids it’s rolling out must be vastly more fuel efficient than their traditionally-powered counterparts (that looks to be the case, with the 75 mpge figure), and they must avoid being astronomically expensive (we’ll have to wait and see).

TIME

Better Fuel Efficiency Is Hurting the Most Efficient Cars of All

A Toyota Prius hybrid car.
Toyota Motors / AFP / Getty Images

Why aren’t sales higher for electric vehicles and hybrid plug-ins? A big reason has to do with the technology that EVs are supposed to replace, the internal combustion engine.

Last year, Nissan Leaf sales more than doubled the total from 2012. Sales for the entire plug-in category, which includes pure battery-powered vehicles like the Leaf and gas-electric hybrids such as the Chevy Volt, nearly doubled as well last year.

Even so, automakers have recently launched major incentives and price-cutting measures in order to win over potential buyers. And the reason they’re doing so is that sales, while on the rise, haven’t been as strong as many had hoped.

“EVs have been a disappointment, compared to what we expected,” Morgan Stanley analyst Ravi Shanker flatly said, according to Automotive News. “Their cost hasn’t come down enough. Batteries haven’t gotten better. And gas prices haven’t gone up like everyone expected. And at the same time, the automakers have done a great job of making the internal combustion engine better.”

Yes, some of the explanation for why electric vehicles aren’t selling better is directed squarely at plug-ins themselves. As skeptics have pointed out since EVs hit the marketplace, the limited driving range, high initial price, and/or slow and inconvenient charging procedure of plug-in cars are deal breakers for many drivers.

But as Shanker noted, underwhelming plug-in sales can also be partially explained by the other parts of the equation affecting consumer car-buying decisions. When gas prices are high, and the assumption is that they’ll keep on increasing, opting for an electrified car makes more and more sense as a long-term money saver. Likewise, when comparing the costs of commuting and running routine errands in a battery-powered car versus an old-fashioned gas guzzling SUV or sedan, the EV can seem like an especially savvy move for the household budget.

What’s hurting plug-in sales, however, is that gas prices aren’t sky high, and few experts today are forecasting the impending arrival of $5 per gallon like they were two years ago. The other factor is that gas guzzlers are disappearing, with new studies indicating that half of the new cars sold this year get 23 mpg or better, and new cars now averaging over 25 mpg thanks to improved efficiency in the internal combustion engine, as well as automakers (and buyers) generally embracing lighter, smaller cars.

Amazingly, car dealerships and sales staffers themselves often don’t seem sold on the wisdom of going electric. Secret shoppers from Consumer Reports just concluded a broad investigation of car dealerships and plug-ins, and during the course of visiting 85 dealerships, they found out that few dealership lots have decent selections of plug-ins, and that many sales employees aren’t knowledgeable about EV sales incentives and technology. Perhaps unsurprisingly, sales staffers who weren’t fully up to speed about plug-ins were particularly likely to try to steer customers away from EVs and toward traditional cars powered solely by internal combustion engines.

“Many seemed not to have a good understanding of electric-car tax breaks and other incentives or of charging needs and costs,” the CR report stated, referring to dealership sales staffers encountered by secret shoppers. “Many also didn’t seem to recognize that for people who intend to go with an electric car, the reasons for leasing are broader than for ordinary cars, including that you don’t have to wait until tax time to receive a generous tax incentive.”

If professional car sales employees don’t understand how all of this works, and can’t (or won’t) lay out a simple, sensible case for switching to a plug-in car, and can’t (or won’t) explain the smartest way to do so, imagine how the average consumer feels.

TIME energy

Could It Be? Gas Prices May Have Already Peaked for 2014

We’re still weeks away from Memorial Day and the peak travel days of summer. But it looks like gas prices mercifully won’t go much higher in 2014.

The commonly held theory is that gas prices rise hand in hand with both temperatures and consumer demand. In other words, gas prices tend to inch up in spring and peak in the height of summer. Many years, this theory holds true. For instance, the priciest day ever for gas in the U.S. was in July 2008, when the national average spiked over the course of a few short weeks, eventually hitting $4.11.

In more recent years, however, the summer spike hasn’t been quite as reliable. In 2012, the national average for a gallon of regular reached a summertime low of around $3.35 in early July, before shooting to over $3.80 in mid-September, after the peak summer travel period had passed. And the peak time for gas prices in 2012 was actually reached in early April, when the average topped $3.90.

Last year, the trajectory was a little different. Gas prices rose in early winter, then took the nearly unprecedented step of retreating in March, remaining in the vicinity of 3.50 through mid-summer. In any event, prices at the pump didn’t inch up slowly and steadily as the days grew warmer and longer, like the theory holds.

Analysts say that 2014 is shaping up as yet another year that blows a hole in the theory. As a recent NPR story noted, warmer days are here, the nation’s peak road trip period is approaching, and “predictably, the price of gasoline is rising.” The national average for a gallon of regular shot from $3.53 in late March to around $3.70 a month later.

But drivers will be relieved to hear that gas prices have already plateaued. As of Friday, the AAA Fuel Gauge Report indicated that the national average was $3.683, which is 12¢ more than a month earlier, but also 1¢ less than a week ago.

Most importantly, the experts have reason to believe that, based on crude production and demand domestically and around the world, prices at the pump are only going to go down from here. The Energy Information Administration forecast calls for a national average of $3.57 through September, and an overall average for 2014 of $3.45, which would be lower than the last two years.

“Prices could inch higher another week, but we’re definitely near the top for the year,” Brian Milne, energy editor of industry tracker Schneider Electric, told USA Today.

Likewise, the experts at GasBuddy wrote this week that their best guess is that “we’re starting to see clearer signs that we’re closer to top,” and that “the rally that started in February is nearing its peak.”

For the sake of the family vacation budget this summer, let’s hope we already got there.

TIME Environment

Cowboys And Indians Descend on Washington To Protest Pipeline

A coalition of ranchers, farmers and native tribes are staging protests against the Keystone XL pipeline on the National Mall this week with teepees, horses and a sacred fire that will burn for days

The National Mall in Washington, D.C., will look like a scene out of an Old Western this week, as the Cowboy and Indian Alliance holds a multi-day protest against the Keystone XL pipeline complete with teepees, horses and religious ceremonies.

The confederation of ranchers, farmers and members of Native American tribes kicks off the week of protest and civil disobedience Tuesday, Earth Day, with a horse ride on the Mall and the erection of a ceremonial teepee soundtracked by live music from the Indigo Girls.

The week’s activities will include religious rituals and a water ceremony “that will highlight the threat Keystone XL poses to water sources, especially the Ogallala Aquifer, along the pipeline route,” according to organizers. Events through the week are expected to draw about 200 participants, with a much larger group of 5,000 expected for a larger march on Saturday, Politico reports. Organizers said acts of civil disobedience and arrests will be part of the spectacle but wouldn’t offer details.

Protestors will not be sleeping in teepees on the Mall overnight because they did not receive the proper permits.

[Politico]

 

TIME Autos

Here Comes the Next Big Push to Get Drivers to Buy Electric Cars

Japan Nissan
Itsuo Inouye—AP

Everybody understands that one big upside of owning an electric car is that you’ll never have to spend a penny on gasoline. Now, you won’t have to pay for the electricity needed to charge the car either.

Thanks to a new “No Charge to Charge” initiative from Nissan, drivers who purchase or lease a new battery-powered Nissan Leaf will receive a special card that allows them to plug in at public charging stations at no cost whatsoever starting July 1. The program will be available in 25 U.S. markets, which have collectively accounted for 80% of all Leaf purchases thus far, and owners will be able to charge their vehicles for free for two years. Anyone who purchases outright or leases a new Leaf as of April 1 or later is eligible in the participating markets, which include many major cities along the West Coast, as well as Nashville, Houston, and Washington, D.C.

According to the U.S. Department of Energy’s FuelEconomy.gov site, a Nissan Leaf owner can expect to pay an average of $550 in “fuel cost” annually, based on driving 15,000 miles per year. So Nissan’s program would seem to be the equivalent of a $1,100 bonus for buyers. Whether or not an owner actually realizes such a return will depend a lot on how easy it is to use the public charging stations where plugging in is free. Most electric car owners charge their vehicles at home at night, and Nissan isn’t going to pitch in with any portion of your house’s electricity bill.

Even if “No Charge to Charge” offers less of a return that it initially seems like at first glance, the program obviously makes it more enticing—and more cost-effective—to buy a Leaf, so it could push some potential buyers off the fence. “The net effect here is it really increases the utility of the Leaf for the driver,” Norman Hajjar, research director for the electric-car app creator Recargo, said of Nissan’s new initiative, via the San Francisco Chronicle.

Nissan’s move comes at a muddled time in the electric car market, when Tesla is clearly the runaway success at the high end of the field, and when a wide range of less expensive EVs, plug-ins, and hybrids continue to vie for consumer attention. Despite the arrival of more and more plug-in models into the market, hybrids and electric cars remain a very small niche, representing around 3% of new car sales.

In a statement that’s about as definitive as you can get, Michelle Krebs, senior analyst with Edmunds.com, told the Detroit Free Press, “Plug-in vehicles aren’t going away, but how many will sell, at what price and using which technology, is yet to be determined.”

The Nissan Leaf ended 2013 on a high note, with its best sales month ever in December: 2,529 units sold, bringing the year’s total to 22,610, more than double the amount in 2012. But the disappearance of end-of-year incentives, combined with brutally cold weather that hurt all auto sales, resulted in a big electric car sale slump in early 2014. According to MarketWatch, there were 918 Chevy Volts and 1,252 Nissan Leafs sold in January 2014, compared to 2,392 Volts and 2,529 Leafs the previous month.

Leaf sales have rebounded with the onset of warmer weather, including 2,507 units sold in March, its second-best month ever, and a 12% increase over March 2013. For the first three months of 2014, meanwhile, sales of the gas-electric hybrid Volt decreased by 15% compared to the same period in 2013.

In any event, it’s clear that for any plug-in to achieve true mainstream appeal, some work needs to be done to convince the average driver of the cost-effectiveness of an electric car. Basically, the cars need to be cheaper to own and operate, or automakers need to do a better job of proving to consumers that these vehicles are indeed cheap to own and operate.

Throwing in two years’ worth of free charging, as Nissan is doing, certainly helps the equation. So does the tried-but-true practice of simply lowering the retail price. That’s what Nissan did in early 2013, which resulted in the automaker selling twice as many Leafs in 2013 that it did the previous year. And that’s what GM is planning for the next Chevy Volt, with the recent news that an entry-level Volt should hit the market for the 2016 model year with a list price starting at around $30,000—roughly $10,000 less than the base price of the original Volt.

TIME russia

Putin Warns Europe To Expect Gas Shortages If Ukraine Doesn’t Pay Debts

Russia's President Vladimir Putin delivers a speech during a session of the board of the FSB security service in Moscow April 7, 2014.
Russia's President Vladimir Putin delivers a speech during a session of the board of the FSB security service in Moscow April 7, 2014. Mikhail Klimetyev—RIA Novosti/Kremlin/Reuters

Russian President Vladimir Putin has sent a letter to European leaders asking them to help Ukraine pay its gas debts, which he claims amounts to over $35 billion, or they'll face the prospect of gas shortages

Russian President Vladimir Putin sent a letter to 18 European leaders Thursday saying that a dispute over Ukraine’s gas debt to Russia could impact gas distribution throughout the continent, urging them to offer financial assistance to the indebted country.

“The situation in urgent,” Putin’s press secretary, Dmitry Peskov, said of Ukraine’s debt. Putin’s letter stated that Ukraine’s failure to make payments to Gazprom, Russia’s gas extractor, will “completely or partially cease gas deliveries,” exacerbating tensions between the feuding countries.

Although the International Monetary Fund has already agreed to provide Ukraine with between $14 and $18 billion to avoid a default, that figure is far smaller than what Putin claims the country owes. In his letter, Putin says that Ukraine owes Russia $17 billion in gas discounts on top of a potential $18.4 billion debt due to a 2009 fine. He said that this debt grows by billions every day.

“No other country provided such support except Russia,” he said, according to Russian state media, adding that European partners offer Ukraine no real support, “only promises that are not backed up by real actions.”

Russia almost doubled its gas prices in Ukraine after President Viktor Yanukovych was ousted in February, amid an uprising against the country’s pro-Russian leadership.

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