The Energy Independent Future of Israel


israel_cars_0118Originally published in The Jerusalem Post.

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.

If tapped into, Israel’s domestic oil supply could provide us with energy independence for hundreds of years. At the initial stage, we could produce enough to satisfy entirely the IDF’s fuel requirements – 50,000 barrels a day. And we could refine it at Ashdod without even having to expand our refining capacities. In later stages, we could produce enough oil to satisfy the entire country’s consumption needs of 80 million barrels a year.

A visit with the senior executives of Israel Energy Initiatives is frustrating journey into Israel’s political pathologies. IEI holds the license to develop Israel’s shale oil deposit. CEO Relik Shafir, a retired air force brigadier- general, explains that due to a well-funded campaign of radical environmentalists directed by Greenpeace in Turkey, IEI has entered a “Kafkaesque regulatory universe,” where a pilot project to demonstrate its technology has been held up for four years.

First through petitions to the Supreme Court spearheaded by the far-left, New Israel Fund-supported Adam Teva V’Din environmentalist movement, IEI’s pilot project was delayed for a year. The pilot, which will take three years, involves demonstrating IEI’s technology for oil extraction by extracting 500 barrels from a test area south of Beit Shemesh.

The Supreme Court found in favor of IEI, but required the government to rewrite the law governing oil explorations. Radical environmentalists at the Environmental Protection Ministry coupled with incompetent bureaucrats at the Ministries of Justice, Energy and Interior delayed the project for another three years by delaying the drafting process.

Now the law has passed. And all that stands between IEI and the pilot program is the Jerusalem Planning Board. The board will likely begin deliberations on the plans in the fall.

IEI’s chief scientist, Harold Vinegar, worked as chief scientist for Royal Dutch Shell. There Vinegar developed the technology for shale oil extraction. To transform the shale rock into liquid crude oil, shale oil needs to be heated to 300 degrees Celsius. Heated at that temperature, in three years, the rocks melt into liquid fuel that is extracted through production wells.

Vinegar developed the means to heat the rocks inside the earth with heaters dropped 300 meters. Due to the shale rock’s isolation from the aquifers, and the fact that 9 meters from the heated area, the rock temperature remains 25 degrees Celsius, IEI’s technologies will have no impact on the environment, either below or above the surface.

The basic rationale of the environmentalists’ campaign against IEI’s pilot is to kill Israel’s ability to develop its oil fields before the public realizes what is involved. Once the pilot is approved, assuming it lives up to IEI’s projections that it will be able to mass produce oil at $40/barrel, public support for the initiative will be so great, and the economic logic of moving forward will be so overwhelming, that the project with be unstoppable.

Unlike Better Place, IEI won’t need a charismatic salesman from Silicon Valley to sell its product.

Today Israel pays $100 per barrel for Brent crude, or NIS 2.2 per liter. Consumers pay NIS 8 per liter at the gas pump, which includes refining and transport costs and taxes. If Israel produced its own fuel, although the government would certainly continue to overtax it, and it would still need to be refined and transported, there can be little doubt that the price for consumers would be significantly lower. And most important, the supply would be guaranteed.

One of the IEI’s minor investors is Australian news mogul Rupert Murdoch. Murdoch is interested in IEI because there are also massive deposits of oil shale in Australia. If IEI’s pilot is successful, Australia will doubtlessly follow Israel’s lead in developing its own energy independence through oil shale development.

Unlike the situation with Better Place, there is no hype surrounding IEI – except the negative hype generated by the radical environmentalists.

For an oil company sitting on the license area covering an estimated 40 billion barrels of oil, IEI’s appearance is shockingly modest. Whereas Better Place wasted tens of millions on glamorous offices and a huge workforce, IEI office suites are as plain as can be. President Effi Eitam, former minister of national infrastructure, works in a tiny, cluttered office and sits behind a nondescript desk on an inexpensive chair. Employees work in cubicles.

IEI has not waged a campaign to counter the environmentalist propaganda because it believes that the facts will speak for themselves. The minute IEI is able to run its pilot, it is convinced that the public will back it. Whether or not this is the proper strategy will be determined in the coming months by the Jerusalem Planning Committee.

In the meantime, due to shale oil fracking, the US has moved from net oil importer to net oil exporter in five years. In the same period, Israel has seen IEI’s pilot delayed year after year as politicians and reporters have followed alternative fuel pied pipers into bankruptcy.

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  • Manaphy

    Why the hell do FPM and other “consevative” websites even publish articles from Caroline Glick? I mean, I read through this whole article and her other articles and hardly any of them talk about conservatism, and 99% of her articles are about how Israel is sooo much better than America and Americans should keep sending money and aid and keep having Americans die in endless wars for Israel, once again because Israel is supreme to America, and any legitimate criticism of the Israeli government’s policies is VICIOUS ANTISEMITISM and not being 110% pro-Israel means that you are a Neo-Nazi Fascist Anti-semite. FrontPage Mag may call this conservatism, but Ronald Reagan wouldn’t recognize it.

  • 1Indioviejo1

    It is sad to see an admirable nation confronting so many foreign enemies to have to defend itself constantly from Israeli traitors who battle to bring obstacles to Israeli security.

  • Texas Patriot

    Excellent article. With a 140 billion barrels of recoverable shale oil, Israel can meet all of its own energy needs and become one of the largest oil exporters in the world. With revenues from oil exports, Israel will have all the cash it needs for the foreseeable future to develop and maintain state of the art military defenses, state of the art schools, and a state of the art health care system, not to mention a high tech industrial economy second to none. Let me know if you need Texas wildcatters to help you out with the job. Together we can transform the world.

  • herb benty

    Man-made global warming is a biased, peer-pressured, aide to leftist causes..LIE. The earth contains hundreds of years worth of oil, coal, gas, methane, ice-gas! that will keep us warm, deliver us to school, work or to have fun. It will also POWER our military, our DEFENCE. Our wonderful OILSANDS project here in Canada is under attack from an array of SOROS- OPEC- LEFTIST fronts, ie. Greenpeace, Sierra Club, Western Canada Wilderness Commitee, Canadian Centre for Policy Alternatives, World Wildlife Fund ad nauseum. Between Canada, Israel and Americas known reserves, we could and should BREAK the monopoly that RADICAL ISLAM- COMMUNISM holds.

    • spyeatte

      The modern far-left environmental scourge is one evil construct. Their goal is deindustrialization on a global scale as outlined in the UN Agenda 21. It is a prescription for an age of darkness and tyranny, the likes of which the world has never seen. Everyone who loves freedom needs to become acquainted with Agenda 21 and resist it where ever it is encountered.
      The father of Greenpeace, Dr. Patrick Moore, eventually had to resign from that organization because it had gone insane.

  • Alex Bury

    Since when have any Americans died in ANY of the wars Israel fought in? Name one.

  • Bamaguje

    Another raving anti-Semite.

    • Manaphy

      Wrong. I don’t have any problem with Jews, but I do have problems with Israel-Firsters like Caroline Glick and David Horowitz.

  • Bamaguje

    This is good news for Israel. With this massive oil find, the Jewish nation could be exporting crude or refined oil within a decade, and earning her own petrodollars.

    But are we sure Palestinians won’t stake a claim on Israel’s oil finds?

    I remember them making noise about the newly discovered Israeli offshore gas fields in the Mediterranean.

    • spyeatte

      Ignore the Palestinians. There is a reason God didn’t put oil or gas on their lands. Israel has enough oil and gas for their permanent future.

    • http://israel-thrives.blogspot.com/ ziontruth

      “But are we sure [Arab settler-colonist land-thieves] won’t stake a claim on Israel’s oil finds?”

      You can be sure they will. It’s what they do. It’s all they do. It’s all the conflict has ever been about.

      The question isn’t what they will do, but whether Israel’s leadership will have the intestinal fortitude to tell them (and the do-gooder sympathizers of theirs in the world) to pound sand when they do.

      “I remember them making noise about the newly discovered Israeli offshore gas fields in the Mediterranean.”

      That was Hezbollah. Same difference, seeing as they’re all Islamic imperialists with the goal of appropriating the riches of the infidels.

      • Drakken

        Well for christsake eliminate the bloody problem once and for all time!

        • ConcernedCitizen999

          Yea Drakken. I like your thinking.

  • Gee

    Another xenophobic anti-Semite. Go put your white hood back in the closet – get off your mommy’s computer and leave us adults alone. You are bothering us

    • Manaphy

      Exactly my point. I offer an opposing viewpoint about American relations with the State of Israel (but no criticism of the Jewish or Israeli people) and all of a sudden I am a xenophobic Anti-Semite? What a joke you people are.

  • spyeatte

    Batteries will never be the solution for the electric car. I don’t care how good your batteries are, the required power distribution charging density would be intractable. The only intermediate step for electric cars is the hydrogen fuel cell with an efficient methane-to-hydrogen generator on board. When I say intermediate, you may have to think in terms of a hundred years because the ultimate source is the yet pie-in-the-sky cold fusion generator or in two hundred years a direct mc2 generator. In the meantime, keep fracking.

  • spyeatte

    Sorry crazy man, but Caroline Glick is brilliant.

  • George Surname

    Typical poor IL management, the company founders are only interested in sucking out of them what they can then selling the companies on.

  • Luis C.

    Very good news for Israel and the jewish people. Shalom.

  • tic…tic…BOOM

    You should be required to read the article before commenting. The goal is to give Israel energy independence. Israel gives back to the US and humanity with its technology and intelligence. It may or may not be a 50/50 proposition, but it is better than the “deal” the USA gets from Saudi Arabia or Egypt. From them we terrorists.

  • Texas Patriot

    With the discovery of its enormous oil shale deposits, Israel is now in a position to control its own destiny. It can choose to remain dependent on Arab oil and the fickle winds of American politics, or it can chart a course of energy independence and military and economic self-reliance. In other words, Israel is at an inflection point and a crossroads in its young history. The choices it makes at this juncture are certain to be far-reaching, one way or another.

  • OfficialPro

    why doesn’t Israel drill for oil? there has to be oil there!

  • http://israel-thrives.blogspot.com/ ziontruth

    “…and Americans should keep sending money and aid…”

    If you think this article is about how America should keep sending money and aid to Israel, it’s clear you haven’t read a word of it, not even the title.

    Go back to the hole you crawled from, you faux-isolationist, Islam-appeasing Buchananite scum.

  • Angielaw

    This is very good article for Israel and the jewish people.

  • PowertodaPeople1848

    “Israel” already steals water and most of its natural resources from the Palestinians and other neighboring nations, so the whole concept of energy-independence over there is laughable.

    • Texas Patriot

      “”Israel” already steals water and most of its natural resources from the Palestinians and other neighboring nations, so the whole concept of energy-independence over there is laughable.”

      I wonder if God is laughing yet. I suspect not. But he will. He always gets the last laugh.

    • PowertodaPeople1848

      “God” is a Stone Age-delusion. You might as well believe in Swiss cheese on the moon; it has potentially tastier rewards.

      • Texas Patriot

        There is nothing else worth believing in. He is the harmonizing, enobling, and uplifting force of the Universe. As Voltaire said, if God did not exist, it would be necessary for us to invent him.

      • defcon 4

        And, obviously, atheism has made the world a better place for all humanity. The millions murdered in the name of atheist Communism in Stalin’s, Mao’s and Castro’s purges would agree I’m sure, if they were still alive.

    • herb benty

      Hey twit! God brought the Jews back to their own country and there is nothing idiots like you can do about it. Ever heard of DNA? It takes DNA to make DNA, in other words, irreducible complexity. “Nature” does not select, save, favor anything, nature is unthinking. God is real and you should quit hating the people HE chose, I got a feeling you live on hate…your choice!

    • UCSPanther

      Palestine won’t last the 21st century at the rate that its incompetent and corrupt leadership is going, so that will be moot…

    • defcon 4

      Islam, where thinly disguised antisemitic hatred drives lies that are only believable to those w/a room temperature IQ’s.

    • Drakken

      For a commi you sure do talk out of your ass a lot, instead of putting your money where your jihadist loving commi mouth is, your a bloody coward who has to depend on people better than you could ever hope to be to defend your right to run your suck, because heaven forbid you would ever put your worthless ass on the line for your beliefs.

    • ChuckFinley

      One of the things that I genuinely do not understand about Israel is why they do not just deport all of the Palestinians to somewhere else. They could just dump them in Somalia where there is no government to complain about it.

  • PerpetuallyConfused

    Great news for Israel as long as the underground water supply is not damaged.

    • Texas Patriot

      There is really very little risk to the water supply using the techniques required to develop oil shale formations like the ones in Israel. Harold Vinegar, the gentleman mentioned in Caroline’s article, gave a talk recently outlining the process. http://www.youtube.com/watch?v=RyK6dzLwXek The biggest risks are the political, economic, and military risks of not going forward in an aggressive way.

  • herb benty

    God loves the Jewish people and Israel, I would not want to be an anti-Israel, anti-semite very soon, your days are coming to an end.

  • defcon 4

    Your thinly disguised antisemitic delusions won’t play here Ahmed.

  • defcon 4

    I’d drive 20 miles out of my way to buy Israeli petroleum products — to the exclusion of anything else. If US big business wants to support islamofascism, they don’t need my business.

    • Texas Patriot

      That’s a great idea. Let the American people decide which foreign products they want to patronize. Right now there is no alternative but to buy Arab oil without knowing where it’s coming from or what sort of terrorism is being supported with your purchase.

  • Sheik Yerbouti

    Perhaps we can get nuclear flashlights as well! Seriously folks, we’ll be married to oil for another century. The only thing that will change that is the cost. If the US had $7 per gallon gasoline and really cheap LNG, how would the industry adapt? And how quickly? The US is the model to watch on this issue. If you want real innovation in this realm it will require more Americans to be squeezed.

    • ChuckFinley

      We have expensive gasoline and cheap natural gas right now but EPA regulations make a $1000 conversion that would allow you to use either gasoline or CNG cost $25,000 in order to comply with EPA regulations. All that is needed for Americans to adapt to the relative prices of fuels if for the government to stop preventing them from doing so.

  • ConcernedCitizen999

    Israel’s energy supply for her military should be taken over by the military as priority one, regardless of cost, and no consideration whatsoever should be given to environmentalists. This should include conventional energy from fracking but also energy from nuclear. Military energy needs are existential. Environmental considerations should only apply to civilian energy needs.

  • Texas Patriot

    Energy is the lifeblood of any nation. To become dependent on an enemy for energy is to have a knife permanently at your throat. Israel has an opportunity for energy independence. She should seize it, whatever the cost and whatever the risk.

  • VoiceofReason613

    Caroline Glick downplays global warming and derides “radical environmentalists” who support steps to reduce climate change
    and other environmental threats:

    Perhaps Ms. Glick is unaware of the following:

    · 97 percent of climate scientists and science academies worldwide
    believe that climate change is largely caused by human activities and is a
    great threat to humanity;

    · Some climate scientists are warning that we may soon reach a
    tipping point when climate change will spin out of control, with disastrous
    consequences, unless major changes are soon made;

    · Glaciers all over the world and polar ice caps have been melting
    at very rapid rates;

    · There has been a major increase in recent years in the number
    and severity of climate events;

    · All 12 of the warmest years since temperature records have been
    kept in the 1880s have occurred since 1998; last year was the warmest year in the US.

    It is time that Jews apply Judaism’s splendid environmental teachings toward helping avert a climate catastrophe and moving our precious, but imperiled, planet onto a sustainable path.

    Ms. Glick feels that exploiting Israel’s recently discovered shale deposits would help Israel become energy independent. Unfortunately, there are many problems and dangers related to obtaining oil from shale. Please visit http://www.dangersoffracking.com/ for many examples. Among them is that obtaining the oil requires vast amounts of water, which then becomes polluted with many chemicals.

    • ChuckFinley

      Even if global temperatures had not remained static since 1998 and the whole CO2 based AGM theory were true, the actions of the United States and Israel are irrelevant since China is adding two new coal fired electric power plants every week. India is also adding significantly to its production of CO2 as its economy grows and its population improves their standard of living. Africa is on the same road, although a bit slower.

      The point is that the United States and Israel could reduce their CO2 production to zero and world wide CO2 levels are going up because so much of the world is rising out of poverty. If you really believe the anthropogenic global warming theory then you have to either 1) support a brutal imperialism that will keep much of the world in their traditional grinding poverty, 2) widespread construction of nuclear power plants so that all electricity is produced that way and there is enough electric power to displace other forms of energy 3) sequester CO2 by encouraging plant growth, including algae in the mid ocean regions or by injecting enough of it under ground.

      Israel could easily fertilize enough of the oceans to counteract the effects of all the petroleum it produces and consumes.

      • VoiceofReason613

        You raise some good points Chuck, but please also consider:

        1998 was a very warm year, Chuck, but the warmest 12 years since temperature records have been kept have been since 1998, and last year was the warmest year for the contiguous US. I assume you have been seeing on the TV the scorching temperatures in the western US and the massive wildfires.in Colorado and in Arizona, where 19 elite fire fighters lost their lives.

        Averting a climate catastrophe will not be easy, but everything possible should be done. The US and Israel should play leadership roles.

        One important factor that is generally being overlooked is the significant contribution of animal agriculture to climate change. A shift tooward plant-based diets would reduce greenhouse gas emissions.

        • ChuckFinley

          I live in the scorching temperatures in the western US. It is what we locals call “summer”. So far it is not as hot as it was last year.

          If you want to do everything possible, you should be advocating the construction of nuclear power plants both in the US and in Israel. In fact Israel could develop an expertise in nuclear power plant construction and operation and then build nuclear power plants in Africa and the rest of the third world in order to help guide their economic development in a less carbon intensive direction. Given the fragile financial state of many third world nations, it may seem too financially risky for investors to invest in nuclear power plants in third world countries so here is an alternative: a nuclear power plant, complete with containment building, can be built on a ship in Israel and then the ship can sail to a third world country in need of more electric power where it will tie up at the dock and connect into the local power grid. If the locals stop paying the bills, the ship disconnects and sails on to somewhere else. This also allows the ship to sail back to Israel for servicing of the nuclear reactors and replacing the fuel rods.

          Israel could also use some of its scientific talent to research ways to promote plankton growth in the mid ocean areas which are today mostly devoid of life. Promoting the growth of phytoplankton would have a number of side effects such as vastly increasing the numbers of fish and whales. If you are worried about the global warming effects of methane from cow farts, it might be worthwhile to consider increasing the availability of fish as a food protein source to the world’s population.