Lithium Drive: Renault Fluence ZE – the best pure electric car yet? ilc.v, tnr.v, czx.v, rm.v, lmr.v, abn.v, asm.v, btt.v, bva.v, bvg.v, epz.v, fst.v, gbn.v, hao.v, jnn.v, ks.v, ktn.v, kxm.v, mgn, mxr.v, rvm.to, svb, ura.v, nup.ax, srz.ax, usa.ax

  

  Finally, Renault is making headlines with its promised Electric Revolution. "Normal car", but better one - this electric car has all chances to make EV revolution to take to the streets. Pricing at the level of the ICE car and lease of Lithium batteries is making it the real game changer.

Lithium Drive: Electric Revolution: Renault announces order for over 15,000 Kango Z.E EVs by 19 companies

"Renault has promised us The Electric Revolution and now Kangoo Z.E. EV is launched at all Renault dealerships all across the France. We have expected more mass media attention in Europe, but event went quite low profile. Europe Kangoo EV launch is next and later Renault Fluence Z.E. will be coming out.

  The real revolution can be coming in the recently announced numbers of Renault Kangoo orders - 15,637 models have been ordered and it is compare to the Nissan Leaf world-wide sales of just above 7k units and GM Volt which are still below 4k. Even more impressive is the order from Better Place for Renault Fluence Z.E. for 115,000 electric cars! This is the way to move forward in electric space and we will monitor the delivery progress here.
  We are wondering what has happen with the massive GE order for GM Volts?"

theguardian:

"Renault Fluence ZE – the best pure electric car yet?

It may not be the breakthrough electric car the industry is waiting for, but the ZE makes big strides on range, price and looks

Will Dron

Jeremy Clarkson doesn't like electric cars. Among his more reasonable objections are that you can't go much further than 100 miles on a charge, and that the batteries might cost a bit to replace when they wear out.

Well, Renault's Fluence ZE might go some way to making him feel a bit warmer towards pure electric cars, at least on these fronts.

First of all, the Fluence "Zero Emissions" manages to look like a normal car. That's really not a given – the G-Wiz, for example, looks like something drawn by a sugar-addled five-year-old. The Fluence, by comparison, is a handsome and quite conventional saloon. Observers won't have a clue that it's powered by electrons instead of petrol.

Based on a petrol car's design, this electric version does 0-62mph in 13secs and a top speed of 84mph. Those aren't sports car numbers of course, but because the Fluence ZE delivers all of its torque from zero revs, it does manage to feel quicker than the numbers suggest.

The five-seat interior feels conventional. It's quite roomy up front and there is space in the back for a couple of adults. But because the battery pack lives between the back seat and the boot, the latter is a bit compromised. Otherwise, the only real clue that you're in a pure-electric car is the charge-level indicator where you'd normally find a rev counter. There is also a meter that shows how much energy you're using at any given moment.

And driving the Fluence ZE couldn't be easier. Turn the key and the word "Go" appears on the dash. Slot the automatic shifter into D and off you go. It really is that simple – once you're underway, the only clue that the Renault is electric is the eerie absence of noise at lower speeds and the seamless acceleration, unbroken by the usual gearshift jerks.

The Fluence ZE is actually quite good fun to drive on twisting roads, too. The ride quality, while firm, is not uncomfortable.

And now, the thing that everybody wants to know about – range. Renault says that the Fluence ZE can go 115 miles on a charge. But drive aggressively, as Clarkson might like to, and that could fall to 50 or 60 miles.

Renault is also attempting to address the battery life issue. When you buy the ZE, you own the car but only lease the battery. That means Renault sorts any problems that might arise and guarantees that the battery in your car will never have less than 75% of its original efficiency. And there's a wide range of battery hire options with Renault – for example, a three-year contract costs £81 per month with a 9,000-mile annual mileage allowance.

At £17,850 after the £5,000 government plug-in car grant, the Fluence ZE will be the least expensive pure-electric family car on sale mid-2012. Bear in mind, though, that you'll need to stump up another £799 to install the recommended home charging unit, as well as the monthly battery lease fee. Against that, running costs will be much lower than for a diesel or petrol-powered alternative.

I'm pretty sure that the Fluence ZE wouldn't convert Clarkson, but it could win over a great many others.

• Will Dron is managing editor of electric car site TheChargingPoint.com"

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Lithium Drive: Meet the The StreetScooter - $7,000 EV with a 74 mph top speed and an 80-mile range. ilc.v, tnr.v, czx.v, rm.v, lmr.v, abn.v, asm.v, btt.v, bva.v, bvg.v, epz.v, fst.v, gbn.v, hao.v, jnn.v, ks.v, ktn.v, kxm.v, mgn, mxr.v, rvm.to, svb, ura.v, nup.ax, srz.ax, usa.ax

  We have another game changer for the electric cars mass market in the making. Meet the The StreetScooter ... a $7,000 EV with a 74 mph top speed and an 80-mile range. You will have to lease the lithium battery - as we can see on the Renault example - it can be the way forward in order to bring the initial cost of EV ownership down. But $7,000 price tag? Is it too good to be true? We will monitor the situation.

  Today we can only say, that once the problem of Oil addiction will be moved into the technology space - new ideas, technology advance and creative marketing approach will bring the fast progress to this market place. 

Lithium Drive: Electric Cars - Hangover after the Oil Party and The Tipping Point

"It will be very difficult to break our addiction to Oil - Hangover after the Oil Party will be very strong. Nobody will give it up easily - Energy Transition will be painful, but it is the only way out. We are already late, but we still have the chance. At stake are billions of dollars and millions of lives. Now with the advance in Lithium batteries we have the economically viable technology to survive in the post carbon world. With everything happening so fast with technology in the Electric space we think that we are at The Tipping Point for the Electric Cars now to become the serious mass market game changer in the auto market.

  Why Electric Cars? Why is it called the Internet with another Zero? What is Peak Oil and Why there is NO more cheap oil out there left? What do we need to make it happen? Where is the generation investment opportunity in this Energy Transition? Why is China ahead of the game already?

  We will give you a few quotes and links in one place to follow our logic here. It is not the future - it is happening now and we all can vote with one electric car and charger at a time, spread the word and join the movement. Dump the pump."

  

Wired:

50 Companies Team to Create Open Source EV

By Keith Barry

The StreetScooter is a $7,000 EV with a 74 mph top speed and an 80-mile range. It relies on leased batteries and uses a heat pump for heating and air conditioning, and shipping company DHL has already ordered 3,500 of them — but the most interesting thing about the vehicle is how it came to be.

What began as a partnership of 10 companies has grown to a collaboration among more than 50 auto parts suppliers, tech companies and software developers. Each one of them had a hand not only in building the StreetScooter, but in creating it.

Traditionally, cars are built from a top-down approach. The original equipment manufacturer (OEM) designs a vehicle and dictates design requirements to suppliers. There’s back-and-forth, but it’s clear who is in charge. Unfortunately, the process can overlook what efficiencies supply chains offer.

“The problem with this approach is that there are huge additional amounts of innovative ideas in the supply chain that could not be followed given this type of OEM-focused development,” said Prof. Achim Kampker of Aachen University. He’s the managing director of the StreetScooter project, which implemented a collaborative approach that took into account the entire vehicle from design to disposal.

In business school jargon, that’s called product lifecycle management, or PLM. Each of the collaborators on the project was organized into a lead engineering group (LEG), made up of the foremost experts in each of the vehicle’s components, including the exterior, powertrain and electronics.

“Everyone is on par with each other. Everyone can bring in ideas to radically try whatever makes sense. The subject matter expert comes to the table and collaborates with the other LEGs,” said Kampker. “In case of a conflict that cannot be resolved, the issue is sent to the team of leaders in program management and it is resolved at that level.”

The method that participants took to build the StreetScooter echoes the car’s design. It’s a modular vehicle, with parts that can be added, removed and reused depending on customer preference. Even the batteries are leased separately so that fleets don’t have to deal with maintenance. Kampker says that relying on the strengths of individual manufacturers to create their own modules doesn’t just maximize customizability, but also allows the StreetScooter to be built quickly and inexpensively.

“Individual functions are each integrated in a module and offer the possibility to adjust the vehicle to the individual needs of the buyer before and after the sale,” Kampker said. “The ability to reuse the components in the various models and in another vehicle also leads to significant increase in production volumes at an early stage.”

Despite a team that was made up of members from different countries who spoke different languages, despite each participating company having its own interests at heart and despite a collaborative approach that had never been tried before to build an EV, the StreetScooter was developed in about a year. It’ll be hitting the streets in Germany in the spring of 2013, and there are plans to bring it to the US later on. Kampker thinks that was only possible thanks to the unique approach that put all participants on par with each other.

Could a traditional approach have yielded the same results? “In general yes, but rather than taking 12 months for the first physical prototype to be delivered, it may have taken 12 years,” Kampker said.

Photo: StreetScooter"

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  It will be very difficult to break our addiction to Oil - Hangover after the Oil Party will be very strong. Nobody will give it up easily - Energy Transition will be painful, but it is the only way out. We are already late, but we still have the chance. At stake are billions of dollars and millions of lives. Now with the advance in Lithium batteries we have the economically viable technology to survive in the post carbon world. With everything happening so fast with technology in the Electric space we think that we are at The Tipping Point for the Electric Cars now to become the serious mass market game changer in the auto market.

  Why Electric Cars? Why is it called the Internet with another Zero? What is Peak Oil and Why there is NO more cheap oil out there left? What do we need to make it happen? Where is the generation investment opportunity in this Energy Transition? Why is China ahead of the game already?

  We will give you a few quotes and links in one place to follow our logic here. It is not the future - it is happening now and we all can vote with one electric car and charger at a time, spread the word and join the movement. Dump the pump.

Lithium Jolt: You have the Right to hate your future: Fisker says federal loan money used only in U.S.

  "Something very important is happening these days in the Electric Car space. Electric Cars are moving from the Stage One - "Nobody notice and knows about it" to the Stage Two - "It is the Real Threat and we are better to deal with it right now". Everybody has the right to hate, but it looks like some has this right more than others and this right is well greased. Why somebody is so worried? Is it because Plug In Day was organised in more than 28 cities all across US with thousands of people taking part and it is with ONLY two models of electric cars on the market with still very limited supply? Is it because charging stations are mushrooming all across the country and Wall Street Journal complains about it? Is it because Chevy Volt and Nissan Leaf will be finally available in all markets in US by the end of the year? Or the matter to be worried now is that the next QEn+1 is coming and the price of Oil to be going up again? Maybe it is the coming twenty models of Plug In carsto be released next year? Or - we will throw the last one and you can continue - maybe it is the technological progress: with Tesla Model S coming next year with 300 miles range and Toyota announcing the lithium battery with 1,000 km miles range per charge by 2015 with Nissan working on 10 minute charger for the electric cars?

  An unprecedented campaign in mass media against Electric Cars is ongoing these days. Reasons are all the same: "Electric Cars are dirty, they are very expensive, they are ugly, they are not selling well and there are no places to charge them". Last week the new claims were added to the hating mix - "dirty money and dealings in the electric space": SolyndraGate is taking over the Fisker. Why this old no news was made the news by FOX all over the media we are not sure...maybe it is related to the election "silly season" somehow. 

  The real reasons are much deeper and crucial for us and our ability to go forward: without the clear plan for the Energy Transition not only Wall Street will be occupied very soon. Next round of Inflation and Oil shock will place all society on the edge of the social break down. We still have the time and can vote one electric car and one charging station at a time, make our opinion known or support the companies involved in the Next Big Thing, but we need to have our Manhattan project for the Electric Cars on the state level and we need it now."

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• Lithium Charge: Electric Cars: National Plug In Day, taking place on Sunday, Oct. 16, 2011 ilc.v, tnr.v, czx.v, rm.v, lmr.v, abn.v, asm.v, btt.v, bva.v, bvg.v, epz.v, fst.v, gbn.v, hao.v, jnn.v, ks.v, ktn.v, kxm.v, mgn, mxr.v, rvm.to, svb, ura.v, nup.ax, (sufiy.blogspot.com)

The Peak Oil Crisis: The Energy Trap: US gas bill to reach a new high of Half a Trillion this year. ilc.v, tnr.v, czx.v, rm.v, lmr.v, abn.v, asm.v, btt.v, bva.v, bvg.v, epz.v, fst.v, gbn.v, hao.v, jnn.v, ks.v, ktn.v, kxm.v, mgn, mxr.v, rvm.to, svb, ura.v, nup.ax, srz.ax, usa.ax

  There is a solution - Electric Car, but we need the Manhattan Project for Electric Cars in order to make its happen on a mass scale and we need it now. There is NO cheap Oil left and we do not have a plan.

Sprott: Oil or Not, Here They Come - Major Oil Companies’ Production in Decline

"We have a very insightful report from Sprott Asset Management on the Oil Supply and Demand picture and the pricing outlook. There is NO cheap Oil left any more and the competition for the declining supply is rising by the day. 

  Now we can get another clue why Lithium is at the heart of the race for the security of supply of strategic commodities for the next industrial revolution based on Electric cars.

FCNP.com:

The Peak Oil Crisis: The Energy Trap

BY TOM WHIPPLE

WEDNESDAY, OCTOBER 26 2011

While waiting to see how far the Europeans can kick their can of financial Armageddon down the road, let's revisit the damage being caused by high oil prices to life here in America.

Although the price of gasoline so far this year has not reached the rarified levels that we saw three years ago, neither has it plunged as far as in did in the fall of 2008. The price of a barrel of oil on the London futures exchange, which more accurately reflects what refiners must pay for oil, rose above $100 a barrel last January, and has essentially remained there ever since -- averaging about $25 a barrel higher than last year.

The Energy Trap is a project of the New America foundation, a non-partisan think tank funded by the Rockefeller Foundation, which recently conducted a survey on just how the American public is holding up under the high cost of energy. The idea of the trap is that an increasing number of Americans are caught between the cost of gasoline and a systemic inability to stop driving their cars. In the last 60 years America has become a "motorized society" in which most of our citizens have become totally dependent on daily travel by car for their existence. Take away our cars and most of us would be hard pressed to reorganize our lives to provide for the essentials of life - earn an income, and provide food, shelter, and education for ourselves and our families.

The current recession has compounded the troubles, forcing many to travel further afield to find employment - often in more than one underpaying job.

The Energy Trap study found cases in which more than 50 percent of a family's income was going into paying for and fueling the car. What is most alarming is that 30 years ago the spike in gasoline led to a 12 percent reduction in the demand for gasoline as consumers drove less, switched to smaller cars, and sort of adhered to the 55 mph speed limit that had been put in place to save gasoline. It is now more than three years since the $4+ price spike of 2008 and demand has only fallen some 3 percent.

The problem starts with the nation's collective gasoline bill which is on track to reach a new high of nearly $500 billion this year. This, of course, is only for gasoline; if we add in the other oil products we burn here in America each year - diesel for trucks and trains, jet fuel for planes, propane for heating, and numerous other uses the total is in the vicinity of $1 trillion.

Take away our cars and most of us would be hard pressed to reorganize to provide for the essentials of life.

It is looking as if this year's fuel bill will be on the order of $100 billion higher than last for gasoline and another $100 billion for other oil consumption. If we have to spend an additional $200 billion just to keep even, it is not hard to understand that the $200 billion increase in the cost of energy is coming out of other family expenditures.

There are geographic and income level differences in the impact the energy trap is having on families with rural and lower income families bearing more of the burden.

When gasoline was over $4 a gallon three years ago the average family in NY and Connecticut was spending 8 percent of its incomes on transportation, while in Montana it was over 19 percent. Drivers in Mississippi go twice as far each year as those in NY where many have easy access to buses, commuter trains and subways. As could be expected, families earning under $25,000 a year are spending around 9 percent of their incomes on transportation vs. 3.6 percent for those earning $75-85,000 per year.

The Foundation notes that most government policies aimed at helping with energy costs - tax rebates on efficient vehicles, subsidized public transit and telecommuting, benefit mainly those with higher incomes while the lower paid jobs such as those in the retail and service industries require lengthy and costly commutes just to earn a living.

If there is a way out of the energy trap, it is going to be hard to find. For now most of us are muddling along. Long vacation trips are down a bit but commuting, shopping, visiting, moving the kids about is going along about as usual. Those who can't afford driving, shopping, recreation, and eating are cutting back as much as necessary to keep the gas tank full.

The long term solution to all this is rather straight forward -- better public transit, far more efficient cars, housing closer to work. But these are all long term solutions, expensive and years to implement. All indications are that the energy trap can only get worse, perhaps much worse, in the next few years.

Within the next 18 months we are likely to see: either a steep economic downturn or much higher oil prices; major cuts in U.S. government spending; a deepening European debt crisis; and perhaps export-threatening political troubles in the Middle East.

Anyone of these factors would be enough to tighten the screws on the price and perhaps even the availability of gasoline and other forms of oil in the U.S. Taken together the diverse nature of the threats suggests that the situation will become far more serious for many American families over the next year or two.

The Energy Trap study suggests two possible short term actions that could mitigate the problem. The number of families that are hurting badly from high gas prices says there may more willingness than is generally believed to leave the convenience of the private automobile for some form of cost-reducing shared transport be it public transit, carpools or employer van pools. A second suggestion is that some geographic areas are being affected by the energy trap worse than others.

Concentration on bringing alternative forms of transport to these areas could bring big dividends in form of a more efficient and effective workforce."

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Lithium Drive: Electric Revolution: Renault announces order for over 15,000 Kango Z.E EVs by 19 companies ilc.v, tnr.v, czx.v, rm.v, lmr.v, abn.v, asm.v, btt.v, bva.v, bvg.v, epz.v, fst.v, gbn.v, hao.v, jnn.v, ks.v, ktn.v, kxm.v, mgn, mxr.v, rvm.to, svb, ura.v, nup.ax, srz.ax, usa.ax

  Renault has promised us The Electric Revolution and now Kangoo Z.E. EV is launched at all Renault dealerships all across the France. We have expected more mass media attention in Europe, but event went quite low profile. Europe Kangoo EV launch is next and later Renault Fluence Z.E. will be coming out.

  The real revolution can be coming in the recently announced numbers of Renault Kangoo orders - 15,637 models have been ordered and it is compare to the Nissan Leaf world-wide sales of just above 7k units and GM Volt which are still below 4k. Even more impressive is the order from Better Place for Renault Fluence Z.E. for 115,000 electric cars! This is the way to move forward in electric space and we will monitor the delivery progress here.
  We are wondering what has happen with the massive GE order for GM Volts?

Lithium Drive: All-electric Renault Fluence Z.E. saloon delivers quiet and relaxed zero-emissions driving at a sensible price

  "Renault talks about The Electric Revolution in 3 days and we think that Renault business model with lease of the lithium batteries will be the game changer in the electric cars market space. Can Europe lead the way in the electric cars space? By all means - if you consider the price of gas at over $8 per gallon in UK now."

TheChargingPoint:

Renault says “world’s first affordable 100% electric van” a massive hit

By Gavin Conway on October 28, 2011

No fewer than 19 French companies have placed orders for 15,637 Kangoo Van Z.E. pure electric vehicles. La Poste, which plumped for 10,000 of the Kangoo Z.E.s, placed the biggest order – this makes perfect sense because a post office van will have a fixed daily route, thus reducing the worry over range.

The order must be causing champagne corks to fly in Renault headquarters, coming as it does on the heels of an order for 115,000 of Renault’s pure electric Fluence Z.E family saloon. That came from the battery swapping Better Place scheme, which will be rolled out in Israel and Denmark to begin with.

Public authorities in France had called upon La Poste chairman Jean-Paul Bailly to form a group of orders from large companies interested in acquiring electric vehicles. Electric vehicle makers were then called upon to bid for the contracts.

Interestingly, Jerome Stoll, the Renault boss for commercial vehicle marketing, reckons that it was the company’s battery rental scheme that made the difference. That’s where customers own the vehicle but lease the batteries, significantly reducing the risk of high costs that could be incurred with failing batteries. Stoll said: “This success by Renault confirms the relevance of our electric vehicle offering – products and services alike – with business customers.”

So, is this more evidence battery leasing is the way forward?"

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Sprott: Oil or Not, Here They Come - Major Oil Companies’ Production in Decline ilc.v, tnr.v, czx.v, rm.v, lmr.v, abn.v, asm.v, btt.v, bva.v, bvg.v, epz.v, fst.v, gbn.v, hao.v, jnn.v, ks.v, ktn.v, kxm.v, mgn, mxr.v, rvm.to, svb, ura.v, nup.ax, srz.ax, usa.ax

  

  We have a very insightful report from Sprott Asset Management on the Oil Supply and Demand picture and the pricing outlook. There is NO cheap Oil left any more and the competition for the declining supply is rising by the day. 

  Now we can get another clue why Lithium is at the heart of the race for the security of supply of strategic commodities for the next industrial revolution based on Electric cars.

Why Electric Cars? Peak oil explained graphically

Why Electric cars?

Lithium Jolt: Exclusive Q&A With Elon Musk And Chris Paine: How The Electric Car Got Its Revenge (TSLA)

"We will not stop until all cars will be electric" - this is Elon Musk's motto and it speaks volume about his ambitions. The company now is closer than ever to become the game changer and the real electric car launch and is firing on all ... electrons."

Peak Oil explained: Video from the U.S. House Session presentation.

Mineweb: Demand for lithium expanding as battery manufacturers make major investments

"Lithium investments story is getting to the headlines again. With the end of the world postponed today in Europe we still have the luxury of market prices for Junior miners and Lithium developers as in the near end of the world scenario. You can not step twice in the same river, but Mr Market has again provided us with a time machine and we can accumulate the Lithium juniors at the very attractive valuation. Catalyst will be the more Electric Cars on the road, soft lending in China and the price of Oil above 80 dollars. Insiders are already signalling that the value is there - at least according to their personal view."

OCTOBER 2011
		Oil or Not, Here They Come By Kevin Bambrough Contributing Author:  Paul Dimitriadis Oil has been markedly absent in the financial headlines lately. While the recent clamor over EU solvency and weak global growth has temporarily displaced its media attention, oil’s crucial importance to the world economy has not dwindled in the slightest. Oil remains the world’s greatest single energy source today, providing over 1/3 of our energy supply. Although it is well understood that the oil price is critical to the global economy, we sometimes neglect to appreciate how tightly oil supply is correlated to global growth. By historical standards, the world has been coping with constrained oil production and high oil prices for most of the past six years. This tightness in oil supply has been a significant factor limiting global growth, and it would appear that no matter what financial solutions are eventually engineered by our politicians, global growth will remain significantly restricted by the real economy’s ability to produce oil. Limited global supply growth means that the Western world now faces significant competition for oil from emerging markets whose citizenry are willing to work much harder for far less. This will continue to result in a narrowing gap of per capita consumption between emerging and developed economies as the emerging economies continue to gain relative economic strength, wage growth, currency appreciation and purchasing power. We believe strategic investments in oil producers and service companies will offer an effective way to profit from this trend. Production – Where’s the Growth? We begin with a review of global oil production. We first wrote about Peak Oil back in 2005; and speculated that we were approaching the pinnacle of global crude oil production.1 As Figure 1 below illustrates, since that time, global oil production has grown very little, appreciating by a mere 2% in total production. This production plateau generated the 2008 oil price spike to nearly $150 per barrel. Subsequently, despite the economic stagnation experienced by developed economies, the price of Brent Crude Oil has averaged over $78 per barrel, four times higher than the ~$18 average that Brent traded at in the 1990s.2 Figure 1: World Oil Supply vs. Brent Crude Oil Price Source: US Energy Information Administration, ICE Futures Exchange Despite this extremely large and sustained increase in price, oil production has failed to grow meaningfully. Over the past ten years, most experts have consistently overestimated future production growth and have continually revised their forecasts lower as a result. Figure 2 from the U.S. Energy Information Administration ("EIA") below charts production forecasts made in 2000, 2005 and 2010. Over the last decade the EIA has revised its global oil production estimates lower for 2015 and 2020 by 14% and 18%, respectively. In light of these downward revisions, it still seems extremely optimistic that supply will increase significantly in the coming years. Figure 2: EIA Oil Production Forecasts                                                  Figure 3: IEA Oil Production Forecasts                   Source: U.S. Energy Information Administration,                                                      Source: International Energy Agency, World Energy Outlooks International Energy Outlooks (2000, 2005 and 2010).                                             (2000, 2005 and 2010). Figure 3 above illustrates that the International Energy Agency ("IEA") estimates have been just as inaccurate, forcing it to reduce its global oil production estimates year after year. It is also important to reflect on the pricing environments that were predicted years ago when these optimistic forecasts were made.　 Figure 4:  EIA 2002 Price ForecastLower 48 crude oil wellhead prices in three cases, (1970– 2025 (2001 dollars per barrel)                                                                                                        Figure 5:EIA 2010 Price ForecastAverage annual world oil prices in three cases, 1980 – 2035 (2008 dollars per barrel) Source: U.S. Energy Information Administration Above are charts of the EIA’s 2002 and 2010 oil price predictions. Over the last eight years its high case future price prediction has increased by over 600% from the low $30s to north of $200, while the median reference price has gone from below $30 to almost $150 by 2035. Reflecting on these historical price forecasts really puts into perspective the amount that production growth has disappointed. Had the oil price stayed in the EIA’s 2002 predicted price range, global production would have significantly declined. In fact, all of the production growth we have experienced since then can essentially be attributed to high cost oil operations which are economically dependent on very high oil prices. We highlight the magnitude of these forecast errors not to criticize their sources but to emphasize how terribly unprepared we are to deal with an oil production-constrained world. Economic growth is well correlated with oil consumption as increasing global GDP requires increased energy use that is heavily oil dependent. Conversely, if oil supply is limited or declines, real economic growth tends to stagnate, if not decline, in lockstep. If a country begins to lose its access to affordable energy its economy will likely shrink. Why are Prices High? – No More Giants There are a number of reasons why there has been so little growth in sup  Iply. First, and most importantly, global supply is struggling to grow because we are not finding and bringing into production any new "super giant" oilfields. This reality was well documented by the EIA in a study it published in 2008.3 The EIA study revealed that the largest 1% of oilfields (798 total fields) in the world account for over 50% of global production. Remarkably, in this group, there are 20 super giant fields which account for roughly 25% of global production. All of these super giant fields were discovered decades ago. What has been discovered and brought into production in the past few decades are smaller fields, which normally have higher decline rates. As these new smaller fields replace production from larger fields, and older larger fields age, we can expect the global observed decline rate to increase from the current estimated rate of 6.7% (or 4.7 million barrels per day annually).　 Rising Production Costs Necessitate High Prices Oil prices are also high due to rising production costs, and it’s worth noting that new production sources, such as offshore, tar sands and other unconventional sources are amongst the highest cost producers today. These oil sources now make up a significant and growing percentage of global production. As a result, it is becoming clear to many industry analysts that current oil production cannot be sustained under $75 a barrel and the price required to sustain production seems destined to continually rise. Figure 6: Production cost curve (not including carbon pricing) Source: International Energy Agency (http://www.iea.org/papers/2010/Flyer_RtoR2010.pdf) Middle East Exports are Increasing in Cost and Risk There have also been significant political developments of late which have permanently altered the dynamics of the oil markets. The so-called "Arab Spring" uprisings in countries such as Egypt and Libya are forcing these and other major oil producing nations to spend more of their oil revenue on social assistance programs. For example, as a result of newly announced social spending in Saudi Arabia, it is forecasted by The Institute of International Finance, Inc. that the budget balancing price of Saudi oil will jump from $68 per barrel in 2010 to $85 per barrel in 2011 and then continue to rise, but at a slower pace, to $110 per barrel by 2015.4 In general, it can also be said that political instability and social unrest are very detrimental for oil investment and production. Recently, as Libya collapsed into civil war, production went to near zero causing extreme volatility in the Brent Crude price. As the Middle East region continues to experience riots and protests, we can only assume that there will continue to be heightened risk of disorderly political change which could dramatically increase prices in the future. Regardless, it now appears that even if, politically speaking, the status quo is maintained, the majority of the Middle East exporting nations are now producing at or near capacity while domestic consumption is increasing. Their economies and populations are continuing to grow and mature and, as a result, their exporting capacity will in turn be limited and possibly begin to terminally decline.　 Major Oil Companies’ Production in Decline The struggle to grow oil production, especially non-OPEC production, was highlighted in a recent report by Deutsche Bank’s Paul Sankey that measured the dramatic oil declines for major oil companies in Q2 2011.5 Despite $120 per barrel Brent pricing during Q2 2011, the results of more than 20 major oil companies showed a 1 million barrels per day year-over-year decline. The sample group in the report accounted for over 1/3 of global production, so it would be difficult to expect smaller companies to make up their shortfall. Supply Constrained and Prices to Remain High In summary, even though the oil price has been averaging 4-5 times higher than the most knowledgeable industry watchers would have expected just eight years ago, global production has remained relatively stagnant. Government agency production estimates have been overly optimistic and a review of the oil market environment suggests production will continue to disappoint. High prices are now required just to maintain current global production. Even with robust pricing, it is beginning to appear that a tremendous amount of our existing production is at risk due to rising rates of decline and political instability. These factors may soon push global production into an irreversible decline. Demand – Who Will Win the Battle for the Limited Oil Supply? Given that increasing global supply will continue to be a challenge, individual nations will soon be forced to compete outright for oil. Emerging market economies are currently out-growing Western economies not just because of urban population growth but also because employment is naturally shifting to jurisdictions with lower labour costs. As this globalization path continues, we can expect job growth to be higher in countries where the citizenry are willing to work harder for less. This roughly characterizes the emerging market countries which for the most part are also large exporters of goods and services, run significant trade surpluses and have strengthening currencies. These factors are combining to put the emerging markets "in the driver’s seat" and enable them to continue to increase their per capita and total oil consumption. Conversely, higher wage Western nations are fighting rising unemployment, trade deficits, weakening currencies and, consequently, are being forced to reduce their oil consumption. Simply put, the emerging markets are outworking developed economies for a greater slice of global commodity production and the tight oil market is a key battleground. These developments are best illustrated in Figure 7 which contrasts the United States’ oil consumption decline of more than 2 million barrels per day with China’s 1.4 million barrels per day increase. We would argue that we are in the very early stages of this trend as the per capital consumption of the United States is still nearly 10 times that of China, hence the requirement for two axes on the chart.　 Figure 7: CHINA vs. USA, Oil Consumption Per Capita Source: US Energy Information Administration and US Department of Energy We should also reflect on the fact the global population is currently passing the 7 billion mark, which equates to a global production per capita of 4.5 barrels per annum. In order for China to move from its current per capita consumption of 2.4 barrels per annum without material domestic production growth, it will need to increase its imports from 5.5 million barrels per day to 13.5 million barrels per day. This would represent an approximate increase of 146% for the Chinese, who currently rank as the world’s second largest importer of oil. The United States, which is the largest importer of oil in the world with just under 9 million barrels per day of imports, would have to reduce consumption by 80% in order to consume in line with the global per capita oil production of 4.5 barrels per annum. Looking further into this China/United States relationship, we see that significant relative wage growth is underpinning the Chinese oil consumption increase as they are able to afford a greater portion of the global oil supply. As shown in Figure 8 below, the Chinese have achieved a 231% increase in disposable income over the last decade compared to very low growth in the United States. Figure 8 : China vs. USA Disposable Income                                                            Figure 9: China vs. USA Total Employment              Source: National Bureau of Statistics of China, US Bureau of Labor Statistics, China Economic Information Network and US Bureau of Economic Analysis The growth in Chinese disposable income has actually completely offset the rising crude price as shown in Figure 10. Relative to disposable income growth, the price of oil has gone down for workers in China while rising by over 150% for American workers. In addition, Americans have faced rising unemployment while China has created over 80 million jobs during the past decade.6Furthermore, those fortunate enough to stay employed in the USA also had to deal with the negative wealth effects emanating from multiple stock market declines and a housing market collapse. Figure 10: Change in Crude Oil Price Divided by Change in disposable Income – China vs United States Source: National Bureau of Statistics of China, US Bureau of Labor Statistics and Sprott Inc. We believe that this trend is destined to continue throughout emerging economies like China, which continue to demonstrate a willingness to work harder for a fraction of the wages (or a fraction of the oil) of workers in the developed economies. Figure 11: Net monthly salary (2009 US$) China USA Car Mechanic $445 $3,341 Carpenter $305 $3,883 Computer Programmer $733 $6,062 Engineer $632 $7,267 Miner $480 $4,164 Source: National Bureau of Statistics of China, China Statistical Yearbook; US Bureau of Labour Statistics, National Compensation Survey The wage comparison table above highlights the differential between US and Chinese workers for select occupations. We have a long way to go before the wage differential between emerging markets and Western economies shrinks enough to stop the flow of jobs and the redirecting of oil exports around the world. As frightening as this may be for the inhabitants of high wage countries like ourselves, it is best to acknowledge the change and to prepare for a reduction in relative purchasing power as these inevitable adjustments flow through the employment, trade and currency markets. In Figure 12 below, we have added a dashed line representing our revised US consumption estimate to the EIA’s forecasted consumption of barrels of oil equivalent per day (boe/d) for the USA, China and India. This revision is meant to reflect the poor history of EIA projections regarding production and account for the potential decrease in US dollar purchasing power of available future oil supplies. This dashed line is strictly illustrative but it neatly presents our view that the oil supply will remain constrained and concerted consumption growth for both developed and developing nations will not be possible. The forecasted consumption growth in India and China may well turn out to be accurate but we believe it will unfortunately have to come at the expense of US consumption – as there simply won’t be enough oil to go around. The price will eventually be driven high enough in US dollar terms to force a rebalancing in global consumption. Figure 12: USA/China/India Consumption Forecasts Source: US Energy Information Administration, World Petroleum Consumption, Annual Estimates, 1980-2008; 2009 International Energy Outlook report, Table A5: "World Liquids Consumption by Region, Reference Case" Conclusion – Hedge Yourself For North American workers and investors, one way to hedge against a decline in living standards is to use your current relative advantage in oil purchasing power to accumulate oil reserves that will be developed in the future. This purchasing power advantage, currently evident in the time a worker in the West must work to earn a barrel of oil, will eventually dissipate, as world labour markets recalibrate and shift wealth from West to East. This will mean that workers in the West will be working for less and the balance of trade will be increasingly settled in commodities, in particular oil, and not in inflated Western labour costs. This strategy of oil accumulation will help to preserve your standard of living, as it ensures each hour of your labour earns you many hours of someone else’s labour at current rates. The recent market decline and ongoing volatility is affording investors with an opportunity to invest in oil producers and service companies, in particular junior and mid-cap companies, at attractive valuations. Equities are pricing in much lower oil prices over the long-term. Our view is that while there may be additional volatility in the crude oil price in the short-term, long-term pricing will remain high and equity prices will rise to correct this disconnect. Although the newspapers might not be writing about oil as much today, we believe this is a great time to focus on it.  For more information about Sprott Asset Management’s investment insights and award-winning investment capabilities, please visit www.sprott.com. Kevin BambroughMarket Strategist - Sprott Asset Management LP Between 2002 and 2009, Mr. Bambrough held a number of positions with Sprott Asset Management, including Market Strategist, a role in which he devoted a significant portion of his time to examining global economic activity, geopolitics, and commodity markets in order to identify new trends and investment opportunities for Sprott’s team of portfolio managers. He is a recognized leader in the natural resource sectors and in 2007 founded Sprott Resource Corp. Since 2009, Mr. Bambrough has also served as President of Sprott Inc., one of Canada’s leading asset managers with $10 billion in assets under management. In 2010, Kevin was ranked as #1 in Casey’s NexTen list of next generation leaders in the natural resource industry. He also received an Honoury Chieftainship from the Blood Tribe in recognition for the valued partnership between the Tribe and One Earth Farms, a company founded by Mr. Bambrough. Paul DimitriadisChief Operating Officer - Sprott Resource Corp. Mr. Dimitriadis is Chief Operating Officer for Sprott Resource Corp. Mr. Dimitriadis originates, evaluates and structures transactions, coordinates and conducts due diligence and is involved in the oversight of the company’s operating subsidiaries. He serves on the board of directors of Waseca Energy Inc. and Stonegate Agricom Ltd. He has been with Sprott since 2007. Prior to joining Sprott, Mr. Dimitriadis practiced law at a national Canadian law firm. Mr. Dimitriadis holds an L.L.B. from the University of British Columbia and a B.A. from Concordia University. 1 Eric Sprott & Sasha Solunac, "Peak Oil – Are We There Yet?" (April 18, 2005) Markets At A Glance. 2 ICE Futures Exchange. 3 International Energy Agency, World Energy Outlook 2008 (Paris: OECD/IEA, 2008). 4 George T. Abed et al., "The Arab World in Transition: Assessing the Economic Impact" (May 2, 2011) Institute of International Finance, Inc. 5 Paul Sankey & Winnie Nip, "The Death of Non-OPEC:Oil Production declines Q2 for 40 Major Oils" (August 12, 2011) Deutsche Bank. 6 National Bureau of Statistics of China (www.stats.gov.cn). Sprott at a Glance With a history going back to 1981, Sprott Inc. offers a collection of investment managers, united by one common goal: delivering superior long-term returns to our investors. Sprott has a team of best-in-class portfolio managers, market strategists, technical experts and analysts that is widely-recognized for its investment expertise, performance results and unique investment approach. Our Investment Team relentlessly pursues a deeper level of knowledge and understanding which allows it to develop unique macroeconomic and company insights. Our team-based approach allows us to uncover the most attractive investment opportunities for our investors. When an emerging investment opportunity is identified, we invest decisively and with conviction. We also co-invest our own capital to align our interests with our investors. Our history of outperformance speaks for itself. Our BusinessesThe company currently operates through four distinct business units: Sprott Asset Management LP, Sprott Private Wealth LP, Sprott Consulting LP and Sprott U.S. Holdings Inc. Sprott Asset Management LP is the investment manager of the Sprott family of mutual funds, hedge funds and discretionary managed accounts. Sprott Asset Management offers a Best-in-Class Investment Team led by Eric Sprott, world renowned money manager. The firm manages diverse mandates united by the same goal: delivering superior returns to investors. Our team of investment professionals employs an opportunistic, high conviction and team-based approach, focusing on undervalued securities with the greatest return potential. For more information, please visitwww.sprott.com Sprott Private Wealth LP provides customized wealth management to Canadian high-net worth investors, including entrepreneurs, professionals, family trusts, foundations and estates. We are dedicated to serving our clients through relationships based on integrity and mutual trust.  For more information, please visit www.sprottwealth.com Sprott Consulting LP provides active management services to independent public and private companies and partnerships to capitalize on unique business opportunities. The firm offers deep bench strength with a highly-talented and knowledgeable team of professionals who have extensive experience and a proven ability to design creative solutions that lead to market-beating value improvement.  For more information, please visitwww.sprottconsulting.com Sprott U.S. Holdings Inc. offers specialized brokerage and asset management services in the natural resources sectors. Global Resource Investments Ltd., our full-service U.S. brokerage firm, specializes in natural resource investments in the U.S., Canada and Australia. Founded in 1993, the firm is led by Rick Rule, a leading authority in investing in global natural resource companies. More than just brokers, the team is comprised of geologists, mining engineers and investment professionals.  For more information, please visit www.sprottglobal.com Sprott Asset Management USA Inc., offers Managed Accounts that invest in precious metals and natural resources.  Led by renowned resource investors Eric Sprott and Rick Rule, we offer the collective expertise of Sprott’s investment team.  For more information on our brokerage services, please visit www.sprottusa.com "Performance has always been the core objective of our firm and in 2010, Sprott Asset Management delivered significant out-performance for our investors."
		Royal Bank Plaza, South Tower 200 Bay Street, Suite 2700, Toronto, ON M5J 2J1 www.sprott.com

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