Oil brings us to a better place by Caroline Glick

Israel has the means to achieve energy independence and pave the way for the free world to neutralize the economic power of the Islamic world. Unlike the situation with Better Place, economic laws of supply and demand work in favor of Israel's energy solution. The only force standing in the way is a coalition of radical environmentalists who oppose all oil consumption because they believe that the greatest threat to the world is global warming. They don't want cheap oil.

Caroline Glick..
CarolineGlick.com..
14 June '13..

By all accounts, Shai Agassi, the founder and original CEO of Better Place, Israel's bankrupt electric car company, is an extremely charismatic man. His charm had politicians, venture capitalists, celebrities and non-automotive industry reporters slobbering over him. Everyone wanted to get their picture taken with the man who would transform Israel's auto industry into the first electric powered industry in the world and transform the start-up nation into the transportation hothouse for the world.

Agassi's vision was simple and easy to understand.

By 2020, half of Israel's cars would be battery powered electric cars supplied by his company, Better Place. We would replace our internal combustion engines, powered by oil produced by our worst enemies, with batteries produced by Better Place. Better Place would overcome the technological deficits of batteries that are only capable of powering a car for short distances by building battery changing stations throughout the country. Instead of filling up our tanks with gas, we would replace our battery.

And our enemies would go bankrupt.

The only ones not convinced by Agassi's plans were people who actually understand the car market generally and the Israeli car market in particular.

Automotive industry reporters warned as early as 2008 that Israeli drivers would need incentives to buy into a new technology. Cars in Israel are prohibitively expensive. The government charges 82 percent customs duties on imported cars. If electric cars could be cheap cars, then they had a chance of succeeding.

To help Better Place succeed, the government gave the company a massive discount on import taxes. Better Place, which signed a deal with Renault to produce a battery-charged model of the Fluence family car, paid only 10% import duties for the car.

Instead of passing the savings off on its customers, Better Place cars cost the same amount as regular gasoline powered cars. And that's not including the cost of the battery or the monthly subscription to Better Place battery charging services.

So there was no economic incentive to buy the car.

Many have chalked the failure of Better Place up to its poor management. And no doubt Agassi's management skills didn't hold a candle to his skill as a salesman. The company's business model was an incoherent study in overreach and hubris.

But the fact remains, the car was too expensive.

And that makes some sense. Building a whole national infrastructure for electric cars is expensive.

The only incentives Better Place gave consumers were ideological. And as it worked out, only 900 people were willing to pay full price to own a car whose actual battery life was between 100 and 120 kilometers, just to reduce their carbon footprint or to screw the Arabs.

To summarize, the government gave Better Place a massive tax break. Investors poured $840 million into the company. The media showered the company in fabulous free PR.

And in four years, it only managed to sell 900 cars.

That tells you something about economics.The iron rule of supply and demand is foolproof. If the price is too high, people won't buy your product. And if the ticket price of being the pioneers in a risky market, of having to go out of your way to get to the battery swap stations, and of swapping your battery three to four times more often than you have to fill up your gas tank is the same as the price of a normal car, then no one will want to be a pioneer. And no one did.

Indeed, according to Channel 2, more than a hundred of the 900 owners of Better Place cars worked for the company. And the majority of the other owners purchased the electric car as a second or third car.

People warn that Better Place's failure will harm the reputation of Israel's hi-tech economy. But these warnings make little sense. Better Place wasn't a hi-tech firm. It was an electric car company. And it wasn't selling new technology.

It simply packaged old failed technology in a new way.

What failed with Better Place wasn't the idea of Israeli hi-tech prowess and ingenuity. What failed - again - was the notion that there is a way to use alternative energy sources - like electricity - to replace the internal combustion engine. And there isn't. There isn't because laws of supply and demand govern the economics of the car industry even when Shai Agassi is the one selling alternative economic laws.

One of the attractive aspects of the alternative fuels market is that it allows people who care about security to partner with radical environmentalists who oppose the consumption of oil.

No other issue brings far-right security hawks together with far-left environmentalists. And while most environmentalists are unmoved by the presence of conservative hawks in their coalitions, conservatives are overjoyed at the opportunity to rub shoulders with members of Greenpeace and the Sierra Club. Maybe one of the reasons that many security hawks remain enamored of alternative fuels despite their clear inability to replace oil on an open market is because they are unwilling to abandon their one common cause with the Left.

But the time has come to abandon the environmentalists.

Israel has the means to achieve energy independence and pave the way for the free world to neutralize the economic power of the Islamic world.

Unlike the situation with Better Place, economic laws of supply and demand work in favor of Israel's energy solution. The only force standing in the way is a coalition of radical environmentalists who oppose all oil consumption because they believe that the greatest threat to the world is global warming. They don't want cheap oil.

They want oil at $500/barrel. They don't want clean oil at cheap prices. They want us all to live in crowded cities, become vegetarians and travel around on mass transit or ride bicycles.

Four years ago, Israel discovered that it is sitting on top of a massive amount of oil. South of Jerusalem, in the Shfela Basin beginning around 15 km. from Kiryat Gat, Israel has an estimated 150 billion barrels of oil - or 60% of Saudi Arabia's reserve capacity. The oil is located in shale rock located 300 meters below ground. It is separated from Israel's underground aquifer by 200 meters of impermeable rock on either side.

Israel's Future and Natural Gas

Jonathan S. Tobin..
Commentary/Contentions..
03 April '13..

For decades, one of the standard jokes of the Jewish world was how it was that Moses had led the Children of Israel to what seemed to be one of the few spots in the Middle East without oil. Indeed, part of the narrative of modern Israel’s first 65 years has been its struggle to maintain its existence in the face of a siege financed by an Arab world awash in oil revenue. Its survival was a testimony to the fact that oil money is no match for Jewish brains and courage. But the story of the next 65 years of Israeli history is not likely to be the same kind of David and Goliath tale. As the opening of the Tamar natural gas reservoir in the Mediterranean off of Haifa indicates, the era of Israelis being victimized by an energy industry controlled solely by their enemies is over.

The flow of gas from the Tamar field didn’t get the attention devoted to Palestinian terrorism and slanted stories about Israeli measures of self-defense, but it may well turn out to be a turning point in the country’s history. The high-tech revolution that has galvanized the country’s economy had already made it the quintessential Start-Up Nation, as Dan Senor and Saul Singer’s book termed it. The drive toward energy independence and eventually toward the status of energy exporter will only accentuate Israel’s economic strength that will make the country not only richer but also more secure.

The flow of gas and the possibility of the country also being able to develop shale oil deposits are to be celebrated as signs that Israel is, as President Obama put it last month, “not going anywhere.” But no one should be under the impression that a strong economy or even a gas export business will end the conflict with the Muslim and Arab worlds. As much as Israel’s isolation has been exacerbated by the power of Arab oil, economics does not explain the level of animus directed at it in Europe or elsewhere. A hundred Tamar fields cannot make anti-Semitism disappear.