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Thanks to ‘Project Better Place,’ Israel (Not S. Arabia or Iran) is Most Important Mideast Country for Energy (Pt. 1 of 2)

Monday, July 14th, 2008


The most important country in the world today in terms of energy is in the Middle East. But it’s not Saudi Arabia, Iran or Iraq. It’s Israel.

Israel, the country whose goal is to be completely off of oil within 10 years, is to be the launching pad for a full-scale assault on global oil addiction.

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The name of this assault is “Project Better Place.” In April EnergyTechStocks.com wrote about Project Better Place as a company that “belongs on investors’ radar screens.” (See Follow the Money: 5 Firms Grabbing Big Bucks That Belong on Investors’ Radar Screens: #2 Project Better Place.) But our first story only scratched the surface of what is starting to shape up as a possible seismic shift in global economics and politics, a shift that would affect every investor’s portfolio.

Project Better Place is all about switching the world to cars that run on electricity instead of gasoline. Most energy and transportation planners think such a transformation would take several decades, but Project Better Place thinks it has a blueprint for changing over a country’s vehicles in just 10 years. The firm makes a compelling case for the economics of electric vehicles. “The operating cost of an electric car, including the depreciation of the battery, is now about 6 cents a mile. The average American, getting 25 miles per gallon and paying $4 per gallon, is paying 16 cents per mile,” according to Project Better Place founder and CEO, Shai Agassi. Still, as Agassi told a U.S. Congressional committee last month, only if electric cars have a consumer-friendly infrastructure will they be embraced by oil-addicted motorists around the world.

To eliminate the price premium of an electric vehicle, as well as the uncertainty of maintaining a vehicle whose technology is brand new, motorists will buy the cars, but not their batteries, which will be owned by Project Better Place. “For the first time, we treat the battery not as part of the car, but as part of the infrastructure,” Agassi told the committee. The company plans to make recharging simple by having recharging stations virtually everywhere. For motorists making trips longer than a battery’s 120 mile range, Project Better Place plans to have the equivalent of service stations where drivers can switch batteries “in less time than it takes to refill a tank of gas,” according to Agassi.

Critics of Project Better Place question its feasibility but the fact is things are quickly moving beyond the theoretical stage. Israel, Denmark and Portugal are committed to the scheme and Agassi told Congress he expects “four to six other countries or regions” to sign on “in the coming months.” In addition, “We are in active discussions with more than 30 other countries, and with dozens of regions, provinces, states and large cities. Many of those discussions, both in the U.S. and globally, are well advanced.”

If successful on a global scale – and that’s still only an “if” – Project Better Place’s mega economic and political impacts could include:
* A sharp fall in the price of oil and in both the economic prosperity and political prowess of OPEC member countries;

* An end to rising worldwide political tension caused by the equivalent of an arms race for new supplies of oil and natural gas in Africa, north of the Arctic Circle, at the bottom of the sea, etc.;

* A multi-billion-dollar annual influx of fresh capital into Western economies as a result of not having to pay OPEC hundreds of billions of dollars per year, raising the possibility of decades of fiscal prosperity for Western nations now under the gun on trade deficits, healthcare, retiree costs, etc.

* A rebirth of the global auto industry, as well as the creation of millions of “green” jobs on top of the more than two million the world already has;

* A massive reduction in greenhouse gas emissions (GHG) – autos being the second leading cause of GHG after power plants – possibly enough to eliminate the need for a carbon tax and a carbon trading market, both of which are proving to be politically divisive, especially in the U.S. and Canada.

On top of these mega impacts that would affect every investor’s portfolio, there would be plenty of companies that might pay off for investors because they would likely do well alongside Project Better Place. Tomorrow in Part 2 we’ll name some names.