MAY 15, 2008

Why testing at Paul Ricard is really not important

The Formula 1 teams have been running cars in a test this week at Paul Ricard. It does not matter who went fastest. No-one gets paid on the results of test sessions.

On Tuesday the price of a barrel of crude oil reached a record $126.98. This was the result of a fall in the value of the US dollar, coupled with an expected increase in demand for diesel fuel following an earthquake in Sichuan province in China that measured 7.9 on the Richter Scale. The hike in the oil price came just a few days after a Goldman Sachs analyst said that oil is going to hit $200 a barrel in the next six to 24 months. The analyst added that a multi-year decline in oil demand is now needed to recreate spare capacity which is needed to bring down the costs.

This analysis echoed remarks made a few days ago by the Iranian oil minister Gholamhossein Nozari and in January by Chakib Khelil, the president of OPEC.

There are a number of different elements in these analyses that need to be explained to show that the rise in oil prices is not simply oil companies and governments ripping off the consumers. As long ago as 2004, when oil was $40 a barrel, there were suggestions that global oil production was peaking and it was becoming more and more difficult to find new oil. It is reckoned that there is still about 67% of all the world's known oil that has not yet been consumed. That may sound comforting, but what is decidedly worrying is that a quarter of all the world's known oil (ever) has been consumed in the course of the last 10 years. And demand is increasing all the time. There are predictions, for example, that there will be three times as many cars on the roads in 2050 as there are today as demand grows in Asia and Latin America. The real fear is not that the world's oil will run out more quickly than has been predicted, but rather that the world's economy will not be able to function in the same way as it currently does with the price of oil rising all the time. Economists argue that as costs increase for all businesses as a result of the rising oil prices there will be effects: thousands of companies will go out of business; house prices will fall; stock markets will crash. This will leave millions unemployed and there will be inevitable social and political ramifications such as increased crime, more extreme politics and so on.

Even without the alarmist theorists, there is no doubt that alternative fuels are going to be essential in the future. Transportation accounts for only around 25% of all oil usage (compared to electricity generation at 43% and industry at 19%), but it is the obvious target for those who see the world burning up its fuel supplies. The automotive world (and the aviation industry) need to be showing the world that they are doing everything possible to solve the problems. Refining conventional technologies will help and is cost-effective, but new ideas need to be invented.

Perhaps the greatest potential lies in fuel cells which generate electrical power by creating chemical reactions, but there are also major benefits to be found by using the cars themselves as power-generation tools. The idealists argue that when cars are parked at night the power they have created during the day could be used to power the electrical grids of the world. That power might one day be purchased from motorists by the power companies, enabling them to shut down their oil and coal-burning power plants.

It is a nice idea but it is a long way from becoming a reality and the automotive world needs to be moving such ideas forwards as quickly as possible. The FIA believes that the Formula 1 world can really help in this respect and that it needs to be at the forefront of the development rather than being seen as a wasteful exercise, designed to use energy, to sell more cars and to add to the world's problems.

The development of kinetic energy recovery systems (KERS) will almost certainly benefit from competition and the federation believes that F1 could then follow up with similar systems that turn energy (such as heat) into power. Teams may argue that they are not ready for this and that it will cost them fortunes but with oil prices edging ever upwards there appears to be sound logic in what the FIA is saying. F1 has become the great sport that it is by using its ingenuity both technically and commercially and if that same ingenuity can be used to help solve the world's problems, then it is hard to argue against it.

If the cars at Paul Ricard were running around generating more power each day from energy-recovery systems, then the F1 test down there would be important.