There is a lot of trouble out there in the world at the moment and we will have to see if any of it is going to affect the more insular world of Formula 1. Today police raided Renault headquarters and a number of technical offices, wanting to check equipment that might have been designed to cheat emissions tests. Renault said that the there was no evidence of anything of the sort but said that it was cooperating fully with the investigations. The French stock market reacted badly to the news with the Renault share price diving 20 percent before bouncing back to just 10 percent down. The car industry has been under suspicion in recent months following revelations that Volkswagen created systems that deliberately skewed emissions tests. It remains to be seen whether any of this will lead to any actual problems, but if it does it will be a huge embarrassment for the the French government, which owns a significant share of the the company. There has been speculation in recent days that Renault might be looking at dropping Pastor Maldonado, amide rumours that his sponsorship payments from Venezuela’s PDVSA have not appeared on time. This would not be a surprise given the political troubles going on in Venezuela where President Nicolás Maduro and the opposition-controlled National Assembly are at loggerheads over who should control what, following the recent elections. On Tuesday the Supreme Court, which the opposition says is biased towards Maduro, declared the National Assembly null and void after it ignored a ruling that three opposition leaders could not be sworn in because there is an investigation into alleged vote-buying. Without the three the opposition does not the super-majority it needs to remove judges from the Supreme Court and even remove the President himself. While this is going on, Venezuela remains in a state of serious economic crisis with the sinking price of oil undermining the country’s economy.The country gets almost all of its export income from oil but it is now losing money on every barrel because it has high extraction costs. The country needs a barrel at $90 to break even and the price is currently at around $30. In the circumstances it is hard to imagine how PDVSA could be keeping up with its payments to Renault. The word is that the team may call in Kevin Magnussen, although the Dane is also talking to Manor. Joining Renault might not be the best thing to do because the word is that the team will be using a 2015 car, converted to use a Renault engine. Manor on the other hand will have a new car and Mercedes engines.
Meanwhile, there is trouble too in Azerbaijan where the F1 circus is due to make its first appearance in June, on the streets of Baku. The falling price of oil has put pressure on the manat, the country’s currency, leading to a decision by the Azerbaijan Central Bankto stop supporting the manat after going through half of the country’s foreign currency reserves in an attempt to prop up the manat. The currency has fallen more than a third in value as a result, which means that everything will cost 30 percent more for the locals. The result of this has been protests across the country and the arrests of some of the protesters. This may not have any impact on the race fee that Azerbaijan has to pay to the Formula One group, but it may influence the costs involved in staging the race.
joeblogsf1 
Joe, if Azerbaijan winds up taking a nose dive and Austin tanks, how would that effect F1 from a financial standpoint? I’m thinking that the loss of $40 – $50M would have to make an impression?
“2014 car converted to use a Renault engine” – the 2014 was Renault (under) powered? And yes, lots of external factors outside of F1 having a direct impact.
While on the topic of messes Joe, must be about due for an update on the fortunes, or lack of, of Force India. Has Vijay been locked up yet, for example?
No not yet
The Veuve Clicquot is still on ice then 😉
He aint popular is he? Who would buy the former Jordan team do you think?
This is ever so slightly starting to look like the implosion (sorry, terrible pun) of the internal combustion engine as we know it. Since pure electro power is nowhere near ready for full scale deployment as a replacement, the technology of F1 (and WEC for that matter) is looking like it’s moving from being relevant to downright essential for producing cars that don’t flaunt environmental regulations. Shame about F1’s state of PR, then.
no way does Venezuela need 90 dollars to break even, thats utter tosh, even Canadian oil cooked out of sands, one of the most expensive production methods known comes in at 45 Dollars, anybody pumping liquid works much much cheaper, but what I dio believe is that Venezula needs 90 dollars to balance its budget…
RE
I am sure you know best, but this is the number being reported and other countries are way more than that.
Break even point for tar sands company Syncrude is about $45 a barrel.
I think this is a problem with the reporting (or the reporters), and Rudernst has the right of it.
There was a good discussion on BBC Radio 4 this morning (possibly yesterday morning, I’m not really a morning person) regarding issues around the current low price of oil, and the difference between actual cost-of-production and the economically-required price of different states.
The point was made that a certain Middle-Eastern state, about to have it’s sanctions lifted, will turn a small profit when it is able to sell at the current price, but needs ~USD60 a barrel in order to meet it’s budgetary commitments. Interestingly, the low world price is being created by a “competing rival” Middle-Eastern state dumping huge quantities of oil on the market, in order to screw the former’s economy.
BTW, by no means do I mean this as a slight on your exemplary reportage, Joe. Happy New Year.
Whilst I don’t know the numbers I totally agree with your scenario and would add that it’s a good way to have a go at the Russians too.
If I didn’t know better I’d say that someone’s are trying to start a war.
So much for “The Market”
Actually, as the two Middle-Eastern states are effectively involved in proxy wars in a few locations, the suggestion was this is to reduce the ability of one to finance their combat efforts.
I would rather this than them dropping bombs directly on each other, as the former keeps the oil price low, but the latter would see it explode (quite literally).
Interestingly, the Radio 4 report also included that Russia, as you suggest, is now finding it harder to finance their operations in Syria. Perhaps if the price drops to USD20, they’ll reconsider their activity in Ukraine also…
“………I would rather this than them dropping bombs directly on each other……”
That’s a bit like saying “Let’s have a fight to the death, but not hit each other too hard”. In the end someone will blink and your alternative scenario comes into play!
I suspect the $90 per barrel figure quoted is not meant to represent the break- even point on the cost of oil production but more likely the price needed to balance the country’s budget. Think massively subsidised petrol prices, social welfare programs instigated by the late Hugo Chavez etc. etc.
No way, the economy is a disaster…
‘No way, the economy is a disaster…’
Exactly. I’ve been there twice, the last time four years ago. I thought the crime, poverty and inflation rate bad then… but now it is beyond repair I think.
The issue with their oil is that it has to be sent to the US to be processed which is an added expense but its something they can’t avoid now as the great hope which was China, has reduced petro needs due to that market having its own issues.
On another note: I believe the currency ‘exchange’ investigation is still on going and hasn’t been concluded. This revolves around sports stars rumored to have been able to make a profit on currency exchange (Bolivars to USD) over and above the amount allowed (per year) by the Government. The opposition were all set to root out corruption but that is unlikely to occur for some time – if it all.
There is virtually no middle class left and the professional class are moving out as soon as they can get a work VISA – the preferred location being Miami. The brain drain is a greater threat right now than the reduced oil revenues.
It does not surprise me to hear that there may be an issue of funds clearing from PDVSA considering the cost of the medal barrel is greater than the oil it contains.
The $50mil paid for Maldonado’s seat would buy a fair number of rolls of toilet paper for the citizens.
PDVS needs $90 per barrel in order to pay for replacement noses, wings, side pods and front corners on Crashtor’s Lotus
As I understand it, the 90 dollars figure isn’t cost of production, but the price needed to balance Venezuela’s budget.
Venezuela is in much worse trouble. As their break even is around 120$/ bbl
I’m assuming race fees are paid by the different race promotors to FOM in US$. As of today a US$ costs CDN$1.47 when just 36 months ago it was at par. I would think that the Canadian GP organisers are starting to breathe rather hard at this stage…………as are other countries with resource based economies. I can see N America having just one GP in the near future, that being Mexico.
While you certainly have a point, there are financial instruments for coping with fluctuating exchange rates that provide stability and allow for planning.
The organisers probably (hopefully) hedge the rate, i.e. enter a contract to buy the required amount of USD for a certain amount of CAD at a certain time (when the payment to Bernie is due), already when budgeting for a race. In doing so, they know the cost, in CAD, for the fee and once they know that they can figure out how much to charge for tickets and everything else and if everything goes as planned (which it never does, but that is another matter), they can turn a profit. In theory at least this should be a very good scenario to implement a hedge in since all factors should be known in advance.
Last year’s car was pretty good wasn’t it, bearing in mind there wasn’t any real cash for development? A podium at Spa was a good result. The Enstone team have a reputation for being efficient with their budget. I hope it goes well (and they rebuild around a quick, young driver like Magnussen).
It had a good engine.
By year end, the chassis was inferior to that of all the other Mercedes-, Renault- or Honda-powered teams, plus Ferrari. It was I think better than Sauber or Manor, both of whom are likely to have superior engines to Renault next year, as are Haas.
I would imagine that any of Manor, Haas or Renault could find themselves right at the back of the field this year, and possibly by a considerable margin in each case. Even Sauber could find themselves at the back, though I’d suggest that that’s less likely.
On the other hand, the Renault might be a better seat to get in to looking forwards. Even if Manor have a good year in 2016 (as they very well might), I can’t see much promise of further progress unless another buyer or major sponsor come on board. Both Haas and Renault might reasonably expect to move forwards in 2017, and I can’t see Manor in their current form being able to stay ahead of them then. Of course, *I* thought Lewis was daft to join Mercedes…
Joe, Lotus were claiming recently that they had ongoing development design through the year on the 2015 car, even though the parts weren’t manufactured. As such,it seems odd to me that they wouldn’t have devoted at least as much effort to 2016 car design. Have they really not got a viable new 2016 car design ready? Oh, dear. I didn’t expect much from them for 2016, but this sounds like a recipe for utter embarrassment. Why didn’t they keep the Lotus name (and Mercedes engines?) for a transitional year, as they did when they bought Benetton F1?
Azerbaijan should never have been on the calendar to begin with…
I’ll be watching LeMans cette 18-19 Juin, thank you. Just like Bernie.
Speaking of manufacturers’ troubles, I suspect Ferrari is, despite the flotation, not entirely unaffected by what happens to FCA.
Last year’s car. The engine’s a Renault. Maybe we all have this the wrong way round and PDVSA are thinking of pulling out of Lotus and buying a Manor seat!
Even if the Renault next year turns out to be a modified 2015 Lotus, surely in the longer term Renault is a better bet as a competitive race seat. Especially if the 2017 rules do bring in a lot of aero/chassis changes, as I’d have to think the Enstone team (assuming Renault realise some money has to be put in to be competitive), would be better equipped and resourced to deal with that and keep up development under the new rules than Manor. Ok, the PU is terrible, but surely one way or another that’ll be sorted out.
Terrible? Let’s exaggerate shall we?
Nick may well be over dramatising but for KM picking between Manor for what they could do this year and the potential of Renault in the medium term is not straightforward. That’s if in reality he is free to chose.
I was willing Ricciardo to win in Austin to see how Red Bull would explain how such a terrible engine, that won 3 races in 2014, had won: “rain is a great leveller, blah, blah, chassis compensates, blah, blah”.
The Renault may well be better long term but the seats are likely to be filled by up and coming Renault sponsored drivers and thus unavailable for purchase . They have probably only stuck with the existing driver contracts for legal expediency and they have a lot to sort out so even the team themselves are probably expecting a difficult year and driver choice is probably not their main concern for now.
Very relevant article Joe. This is one of the very few specialist F1 websites that doesn’t exist in a F1 shaped bubble. Your efforts to relate the goings-on of the sport to the wider world are quite rare and insightful, and much appreciated.
I’m curious to see how the Renault investigation evolves. I personally struggle to believe that the VW emissions deception is isolated within an automotive industry that shares most of its supply chain, and everyone know’s each others business….
You will be aware that a BBC program on the VW emission cheating scandal also tested a Renault and found it many times over the limits. Renault reacted as expected.
However all this must be tempered by the knowledge that none of the tests or quoted figures mean anything at all in real driving use. All the figure issued by manufacturers are laboratory derived, and carried out without air resistance. (Which you will recall is a cubed function of speed, thus of critical and drastic effect)
The EU is currently trying to devise real world “in use on the road, mobile” test levels. Since the real in use figures are so far from the currently quoted and accepted targets, there will be a major credibility gap (more of a chasm really) for the public and environmentalists to leap.
Let us not even consider the different engine load modes, or that maybe 50% of driving is done before cleaning components reach operating temperature, thus even if working properly they would never reach theoretical cleanliness levels.
Until one changes fuel type there is little or no chance of clean driving.
If the unelected Eco zealots get their way, the emission targets will soon be unattainable. Yet (and i have not tried to verify this) it would apparently take 43 million VW diesels to produce the NOx output of a large coal fired power station! That could be wrong but it illustrates the ‘attack on cars’ dimension to the discussion and that if the Ecos get their way we may have less personal mobility in future! Diesel is not very homogeneous and burning with extremely low NOx in ICEs is difficult and may soon become very expensive. When the Saudis stop flooding the market and prices rise this will add to the misery! Ramble over, coffee finished!
It wasn’t a ramble. It was a rant
Yes indeed. Also they need to introduce new laws to stop emissions from volcanoes. Apparently these can wipe out years of good intent by humans in about half an hour.
It is worth noting that so called “Eco zealots” (I assume you mean humans who care about the effects of climate change and the potential future of the species) are campaigning a hell of a lot harder to shut down coal fired power stations than they are about car emissions.
In some ways car emissions were a focus for business as a halfway measure to buy time whilst they sat on their hands about the much bigger issue of power generation. This has more to do with vested interests, and futures tradings against resources not even dug out of the ground yet than any imagined campaign to limit personal mobility.
Typed with a gentle smile, I just think it worth keeping things in perspective – once you start painting people as zealots when all they are doing is trying to replace outdated and dangerous technologies with modern and friendlier ones you paint yourself into a corner. As Obama pointed out in the most recent State of the Union the debate has been had, the verdict is in.
I hope they are also working on farting cows, which is the same level of problem as road transport
Not sure what we can do about farting cows. If people are getting upset over discussions about car emissions I can’t imagine the outrage we will see if we start taking meat off the table. Then it would be Eco Vegan Zealots.
We either deal with what we can in a sensible manner or we don’t bother at all and roll the dice, which would appear stacked increasingly against us. So I hear you about the farting cows, but if you or anyone else have a practical suggestion in that regard by all means get out there and spread it. In the meantime though we should work with what we can, and as I state above we all know there are a lot of big steps we can make to improve the situation, car emissions are one small part of a much bigger problem – you know this very well Joe, you aren’t a denialist, and you are truly smart enough to have a grasp on the bigger picture.
I love motor cars, I grew up in a truly V8 society, I still live in a street where my windows shake to the sound of hotted up lads cars regularly breaking speed limits. Cars were the only thing that my father and I bonded on, it is in my blood. However, I know that our species existed for thousands of years without the ICE. That our history with cars is only a blip on the radar, and that the amount of that blip spent on ICE and fossil fuel demonstrates an industry that has sat on cleaner technology for decades simply to look after profit margins and fat executive pay cheques. I will always love Motorsport but when I hear people whine about the impost of a cleaner future on their god given right to pump as much crap into the air as they like I shake my head. If that is all that life is about, if that is the greatest concern people think they have to complain about, they need a reality check.
Farting cows are an issue, vehicle emissions are an issue, coal burning into the atmosphere is an issue, there are many issues. Many people are doing many things to do their best to sort many of these issues – we will make progress with those we can, and not with those we can’t. If we need to kill all the cows to keep motoring enthusiasts on side with emissions targets, fine I’m up for that, let’s go. Otherwise people can choose to be part of the solution or sit on the sidelines whinging that they can’t belch as much smoke as they used to.
I’m not a zealot, I’m not a green warrior, I’m a human being who lives in a country that sees increasing temperatures, the greater frequency and intensity of bush fires that destroy homes and take lives, the increase of dangerous tropical sealife in our otherwise relatively safe swimming spots. I look at my beautiful 9 year old daughter, as I ponder the continuing rise in temperature and I believe that by the time she is my age she will be living a lesser, more restricted life than mine. Farting cows is a throwaway line. It may keep some of your followers happy, allowing them to smugly laugh away the incredibly difficult work some people are doing on behalf of the rest of us, but you are better than that, and if you aren’t then I am truly surprised.
Maybe we need a few more zealots
I really love what you do Joe. I really love your ability to turn text into poetry. I truly love your willingness to give us all a voice, even when we sometimes sound cantankerous, or like zealots. Thank you for everything you do. I’ve pretty much given up on tv broadcast of F1 (will watch what I can), but I will rely on GP+ and your blog to keep the sport alive for me.
Additionally, I love your endless patience for those of us that visit your wonderful world. Many of us could learn a hell of all a lot from the willingness you show to accept and debate various opinions. You shine like a beacon. I do truly LOVE steak, but not as much as I love a hard revving engine.
Not quite right rpaco. Drag increases with the square of velocity.
Yes but power required to overcome drag is a velocity cubed function. This greatly affects exhaust output.
No it’s not. The drag equation is:
Drag = CD X d X V²/2 X A
V is the velocity term; note the squared term. The other terms don’t matter for this discussion. Drag is the aerodynamic force to be overcome to push the object through the air at constant velocity. Double the velocity and you have four times the drag, not eight times.
Quote:
Note that the power needed to push an object through a fluid increases as the cube of the velocity. A car cruising on a highway at 50 mph (80 km/h) may require only 10 horsepower (7.5 kW) to overcome air drag, but that same car at 100 mph (160 km/h) requires 80 hp (60 kW). With a doubling of speed the drag (force) quadruples per the formula. Exerting four times the force over a fixed distance produces four times as much work. At twice the speed the work (resulting in displacement over a fixed distance) is done twice as fast. Since power is the rate of doing work, four times the work done in half the time requires eight times the power.
“CD” itself used in your given equation contains a V squared function.
Great fun 🙂
Except that if you substitute the equation for CD in the drag equation all the terms cancel and you simply get Drag = Drag. You are using circular logic; the Cd is unitless and considered a constant:
Cd = 2Fd/µV²A
Really enjoying this discussion between yourself and rpaco though I need to take sometime to get my head around the math.
Power required is what I was on about and is relevant to the amount of emissions exuded.
From http://physics.info/drag/ about two thirds of the page down:
“P = (½ρCAv^2) v
P = ½ρCAv^3
Thus, if drag is proportional to the square of speed, then the power needed to overcome that drag is proportional to the cube of speed (P ∝ v3). You want to ride your bicycle twice as fast, you’ll have to be eight times more powerful. This is why motorcycles are so much faster than bicycles.”
If Renault are in F1 for the long haul then surely getting your foot in the door at Enstone is the sensible option for K-Mag. Manor may very well improve greatly but what are their realistic chances of being better than a factory team in years to come? Not a great deal. If he has the choice, IF, then Renault seems like a no brainer. Take the early hit of a few seasons of hard grind for the rewards that will surely follow from a factory team. That being said Manor is a decent second choice and could help him display his wares to other better teams. I’m just excited by the possibility of K-Mag being in a race seat and Maldonado going home.
As at 15:20 GMT Brent is now at $29.48/barrel while WTI is $29.46 and looking ready to fall further. Unfortunately the market is largely driven by speculation which amplifies the expected supply and demand character of the commodity. However calling the bottom is difficult and we may not be there yet. To me there seems to be a bit of a way to go purely from the chart pattern. (I dare not mention where the “-.213” Fib line comes)
So basically Maldonardo has had it. There was already an investigation into the currency rule avoidance for other sports. Pity just when he seemed to be getting better.
Maldonado has gotten worse, not better
I thought he would turn a corner after that 2012 season but he didn’t he stopped turning corners and turned into other cars!
Maldonado’s had an odd year in 2015.
Had lots of accidents. Many of which weren’t really his fault (although some were). He has reason to feel hard done by because he was consistently blamed for incidents that ruined his races and weren’t his fault.
But in a way, all of this was great news for his career.
Because it completely distracted attention away from the fact he was *dog slow* all year.
If he hadn’t had all those crashes, we’d be talking about how he was utterly destroyed by Grosjean. Where’s the promise?
If Maldonado is dropped, is there any sign that Jean-Eric Vergne could get the second seat??
The Washington Post quotes PDVSA saying their extraction costs are among the worlds lowest, at less than $10.00 per barrel. With other production and transportation costs added the figure is closer to $20.00.
The 2016 Renault will be a brand new chassis, it may have been designed for a Mercedes engine, but it is new. They will not be using last years car.
Also:-
France’s energy minister Segolene Royal said tests conducted on Renault cars had not shown any presence of fraudulent emissions concealing software.
She said: “There is no fraud at Renault. Shareholders and employees should be reassured.”