Consumer Energy Report is now Energy Trends Insider -- Read More »

By Robert Rapier on Mar 30, 2011 with 97 responses

Debunking Five Myths about Gas Prices

An Expanded Look at Five Myths about Gas Prices

This past week I had an article published in the Washington Post called Five Myths about Gas Prices.

I will discuss each particular myth in detail below, but the five myths I addressed were:

  1. Fighting in Libya is sending gas prices higher.
  2. Tapping the Strategic Petroleum Reserve is a smart way to reduce gas prices.
  3. Oil companies produce less in the spring to make gas prices increase.
  4. The Obama administration is driving up gas prices.
  5. Americans can’t live without cheap gas.

Because such articles go through an editing process and must conform to limits on the length of the article, some topics couldn’t be addressed in sufficient detail. Sometimes during the editing process there is a disagreement over what is and is not a pertinent piece of information. This can result in some misunderstanding of the information I am trying to convey.

The article received 153 comments in just a couple of days, after which commenting was closed. Some of the common complaints were that I didn’t sufficiently explain an issue, or that I omitted certain issues. For instance, one person stated that the issue of seasonal blends is more complex than I stated. That’s true, which is why I have written entire articles on the subject. Some people complained that I left out the role of speculators. Actually, I didn’t, and ironically this was one of the myths that I had been asked to look into. My response was that it wasn’t a myth; that speculation does play a role in oil prices.

Some people believe strongly in myths, and when one is busting their cherished myths they can get angry and view you as a liar and a purveyor of misinformation. I suppose for them that justifies the nastiness that sometimes shows up in the comments. Many people seem to need a culprit to blame for high gas prices, but the issue is more complicated than that.

Needless to say, some of the responses were amusing. On speculation, some people suggested that due to my role in the oil industry, of course I was happy to deflect attention away from price gougers and speculators. After all, I am a typical George Bush conservative, and a former oil industry employee who is blind to the dangers of our fossil fuel dependence. On the other hand, some said that since I presently work on renewable energy, of course I am against expanded drilling because that benefits my company. After all, I am a typical Al Gore liberal who knows nothing about the oil industry and believes biomass can replace our current levels of oil consumption. Some people apparently felt that these ad hominem arguments excused them from having to argue the actual points of the article.

So I decided to reproduce the article, but fill in some of the gaps that opened up during the editing process and led to some of the comments. Ultimately, some people will still view this through filters that place most of the blame for high gas prices on ExxonMobil, speculators, or misguided environmentalists. For those people, this expanded article isn’t going to help much. For the people who understand that this is a complex issue, you may find some utility in the expanded version below. As appropriate, I will add commentary that seeks to address some of the common complaints/questions about the article in italics as RR: Comment…

Five Myths about Gas Prices – The Unabridged Version

Gasoline prices have been steadily climbing for several months, and Americans are feeling the pain at the pump. The possible culprits (from greedy oil execs to Mideast turmoil) are as plentiful as the proposed solutions (more offshore drilling, green energy or government reserves). But what is really driving prices up? And what, if anything, can be done about it? Let’s take a moment to fill up on information about our fuel.

1. Fighting in Libya is sending gas prices higher.

Libya is not a big enough global oil supplier for the battles there to have a meaningful effect on gas prices. In the 1970s and early 1980s, Libya was a major U.S. supplier, selling us around 700,000 barrels of oil per day. But today, we import less than 50,000 barrels per day from Libya — a tiny fraction of the 9.2 million barrels per day the United States imported in 2010. Worldwide, the story is no different: Of the 86 million barrels consumed globally each day, less than 2 percent come from Moammar Gaddafi’s regime.

So why are gas prices up? Though Gaddafi’s fate is largely irrelevant to the oil market, unrest throughout the greater Middle East is not. The Persian Gulf region produces almost 24 million barrels of oil per day, more than 25 percent of global oil consumption. The Arab spring that has brought protests to Egypt, Saudi Arabia, Bahrain and Yemen makes markets nervous, and when markets fret over a possible disruption to oil supplies, gas prices rise — whether the disruption materializes or not.

RR: However, as I explained in a radio interview that I did with KSL news-radio in Salt Lake City, there isn’t a lot of excess global capacity relative to a decade ago. Therefore, the ramifications of taking even 2% off the world market will be disproportionate when there aren’t a number of suppliers who can step up and fill that void with increased production. We are drawing down our oil reserves even as demand is increasing, and that more than any other factor explains the rise in fuel prices over the past decade.

Further, many people complained that I didn’t address speculators at all in the essay. If you understand what speculation is, then you can see that I did address it under this first myth. The fact that oil prices would spike on the basis of what is happening in Libya is based on speculation around several themes. This has also been referred to as a “fear premium” because it is based on the fear that the outage will be extensive, that other producers won’t be able to fill the supply gap, and/or that the unrest spreads across this important oil-producing region. But a price increase based on fear is one based on speculation — which also isn’t to say that the speculation won’t materialize.

2. Tapping the Strategic Petroleum Reserve is a smart way to reduce gas prices.

The U.S. government maintains a 727 million-barrel oil reserve — 38 days’ worth at current levels of consumption — to protect against potential supply disruptions. But just about every time prices rise, politicians want to access the oil in the reserve to increase supply and bring prices back down. Sen. Charles Schumer (D-N.Y.), for instance, has been calling for oil releases from the SPR for more than a decade. In a letter to President Bill Clinton in 1999, he requested the release of several hundred thousand barrels a day from the SPR because oil prices had made a “meteoric ascent to nearly $25 per barrel.” He even introduced legislation to make it easier for the Administration to tap into the SPR in order to combat rising prices.

Had Clinton dipped into the reserve then, as Schumer requested, we almost certainly would have gotten a raw deal as prices continued to climb over the next decade. What if that $25-per-barrel oil could be replenished only at $75 per barrel? Tapping the SPR makes the government an oil speculator, and any nation running record deficits that becomes a commodity trader is playing a dangerous game.

The SPR exists to buy time in a true supply emergency. If we use it as a political tool to keep voters happy by attempting to stem rising gas prices, we may be forced to buy back oil at even higher prices, or we may be left with an insufficient supply in a real crisis.

RR: Elsewhere, and again on the radio interview with KSL news-radio, I explained the difference between high gas prices and a true emergency. Before my radio interview, I had filled up my car at a gas station in Hawaii. I paid $4.67 per gallon of gasoline. While prices like that will cause additional financial hardship for many, at least the gasoline was available for purchase. We take this for granted; there is always gasoline at the service station when we need it. When you pull into the gas station and there is no gasoline at any price, then that could start to qualify as an emergency.

Fuel shortages have happened in the U.S. before, and could happen again for a variety of reasons. If a major source of U.S. oil imports was cut off, shortages could quickly develop. The SPR could then be tapped to ease those shortages, and if it appeared that they would be extensive it would buy time to implement emergency measures such as rationing. So the SPR is an insurance policy, and if that insurance is used up just because politicians are hoping to influence the price of oil, we may find ourselves lacking insurance in a time of crisis.

3. Oil companies produce less in the spring to make gas prices increase.

Almost every year, gasoline prices rise in the spring. This is usually preceded by falling gasoline inventories and reduced refinery outputs, leading many to believe that oil companies are constraining supplies to drive prices higher.

But there is a valid reason this happens; indeed it is written into the law. In the spring refiners have to switch from winter blends of gasoline to summer blends. This is based on EPA regulations designed to reduce air pollution in the summer.

Butane plays the biggest role. Butane is a cheap ingredient relative to most components in gasoline, but it boils at low temperatures. In winter, this isn’t a big problem so refiners are able to put more butane into the gasoline. But in summer, butane evaporates from gas, polluting the air while leaving us with less fuel in the tank than we paid for. As temperatures rise, refineries replace butane with more costly ingredients and draw down winter inventories just as beach season begins. So summer gasoline blends cost more to make, and supplies are more constrained since butane is off limits.

An additional factor is that during this seasonal gasoline transition, refineries often do annual maintenance. The timing is driven by a combination of improving weather and moderate demand prior to the start of summer driving season. So the production of gasoline generally falls in the months before summer, leading many to incorrectly conclude that there is a corporate conspiracy at work.

But the same thing takes place in the fall. During the transition to winter gasoline, maintenance takes place and inventories are drawn down. The differences are that this is leading into a season of lower demand, and cheaper butane is coming back into the gasoline blends. So the fall transition doesn’t have the same impact on prices.

RR: For more details on seasonal gasoline changes see my essays Refining 101: Winter Gasoline and Why Summer Gasoline Means Higher Prices.

4. The Obama administration is driving up gas prices.

Sen. Mitch McConnell (R-Ky.) says EPA regulations are a “back-door national energy tax” that pushes prices up. Former Alaska governor Sarah Palin says the White House drilling moratorium shows President Obama’s “culpability in the high gas prices hurting Americans.”

Blaming the president for rising gas prices is nothing new, and it’s a bipartisan tactic. In 2004, Sen. John Kerry (D-Mass.) blamed President George W. Bush for higher gas prices because he continued to fill the Strategic Petroleum Reserve as oil prices climbed.

Just one problem: Even if more domestic access is suddenly granted, it won’t do much to control current prices. The U.S. government has estimated that there are 18 billion barrels of oil in the outer continental shelf of the lower 48 states that are off limits to development. That may sound like a lot, but it is only about 2.5 years of supply for the United States, and it would take several years to allocate leases and drill exploratory wells. Even if the estimated 10 billion barrels of oil in the Arctic National Wildlife Refuge were available for development, today’s policy decisions would have no impact on gasoline supplies for as much as a decade. Obama can’t dictate what you’ll pay for premium tomorrow.

RR: This one elicited a number of hostile responses, many from people who apparently think we can in fact drill our way to energy independence if not for the meddling of environmentalists who work to keep domestic supplies off limits to development. The premise of this point is straightforward, but it apparently strained the comprehension abilities of some. At issue is whether Obama’s policies are impacting gasoline prices. My point is that estimates indicate that there isn’t all that much oil there in the first place relative to our consumption, and even if it is all opened up for development today the supplies won’t hit the market for several years. So what Obama does or doesn’t do today with respect to development isn’t impacting gas prices today.

The single biggest misconception on this point involved readers adding their own additional interpretations to what I said. Since I am pointing out that it would take years to develop and thus won’t impact today’s gasoline prices (which I did write) then I am saying we shouldn’t develop our resources at all (which of course I didn’t write). The latter misinterpretation was often accompanied by a few liberal insults about my inability to think about the future, or about ulterior motives for not developing our resources.

5. Americans can’t live without cheap gas.

Yes, Americans love to drive, and Americans love cheap gas. But across an ocean, there’s a continent filled with people a lot like us who’ve lived with high gas prices for years. They’re called Europeans.

While U.S. gasoline heads toward $4 per gallon, Europeans have been paying much higher prices for years because of high taxes on fuel. This month in Britain, gas hit 6 pounds, or about $9.76, per gallon. Because gas is so dear, Europe’s per capita energy use is half that of the United States, leaving Europe less vulnerable to oil price shocks yet not undermining its citizens’ standard of living.

The United States, built on cheap oil, is much less densely populated than the Old World, with more wide-open spaces to traverse. But that doesn’t mean we can’t embrace some of the things that have helped Europeans keep their gasoline bills down — such as high-speed rail, public transportation and green energy.

In fact, Americans have shown that they can adjust their behavior when faced with sticker shock at the pump. As gas prices rose from $2.31 per gallon in 2005 to $3.30 per gallon in 2008, sales of the Toyota Prius eclipsed those of the Ford Explorer, and public transit use reached a 50-year high. When it costs $30 to fill up a Geo Metro with regular, all options are on the table.

RR: This one also elicited strong responses, mostly along the lines of “I don’t care what Europeans do. We are Americans.” One person pointed out “yeah, but what you don’t say is that European prices are high because of high taxes.” I concluded that this person couldn’t read. Other responses were that Europeans had transportation options that we don’t have here in the U.S., apparently never stopping to wonder why they have some of these options.

I believe that when you are faced with a complex problem, one of the first things you want to do is to see how others have approached the problem. You may decide that their solution isn’t applicable to your situation, but you may find that it is at least partially applicable. In the case of European gas prices, their solution is at a minimum partially applicable. After all, what kinds of cars do you see on European roads? Almost no pickups, very few SUVs, and very few gas guzzlers period. They are behaving exactly as we would in the U.S. after a sustained period of high gas prices. So the most significant thing you can do personally to limit the impact of high gas prices on your budget is to do as the Europeans do: Get fuel efficient.

Conclusions (not in the original article)

It is always an adventure to see my writing exposed to a broad cross-section, many of whom don’t know the first thing about me. The ratio of uninformed comment and just generally insulting comments runs much higher than when I write in familiar locales. Too many people dismiss factual statements on the basis of ad hominem arguments, and I never cease to be amazed at the number of people who will extrapolate what I write, and then attack that extrapolation.

A large number of people also believed that I had ulterior motives for writing this article. At the end of the day, what I am trying to do has nothing to do with any personal financial agenda. Some will believe that, some won’t, but I want to state it clearly in any case. What I want to do is to bring a higher level of understanding to our energy issues so we can make more informed energy decisions. Based on some of the comments, we still have a steep hill to climb, and until more people climb that hill we will continue to have politicians trying to use the SPR as a political tool to appease angry, but uninformed voters.

  1. By cheryl on March 30, 2011 at 8:21 am

    RR –

    Can you comment on the following story:

    http://www.sciencedaily.com/re…..135635.htm

    [link]      
  2. By rbm on March 30, 2011 at 9:16 am

    Robert,

     

    Do you feel the editing price is worthwhile to pay, going forward ?

    [link]      
  3. By John H on March 30, 2011 at 9:36 am

    This reminds me of something Scott Adams posted on his blog after stirring up an unrelated hornets’ nest:
    http://dilbert.com/blog/entry/…..ds_needed/

    In particular, he said:
    “And we need a new word for people who misunderstand another person’s point of view and proceed to debate that misunderstanding as if it were the real point of view. I think we should call that person a masturdebator.

    Masturdebator: One who takes pleasure in furiously debating viewpoints that only exist in the imagination”

    In the comments that followed he decided to rename it “Unibator”.

    I hope unibator makes its way into common usage.

    [link]      
  4. By paul-n on March 30, 2011 at 2:24 pm

    cars that were electrically powered and that recharged the battery as you drove the car there would be no problem.

    Yes, that would be a perpetual motion machine, and IF you could invent it, there would indeed be no problem.  Don’t bother applying for a patent until you have a working model – the US patent office flatly refuses any patent that claims over-unity/perpetual motion without a working prototype – of which there has never been even one.

     

    [link]      
  5. By Curtis Keith on March 30, 2011 at 2:03 pm

    I agree with your article, however i think you should mention the fact that if our car makers would start producing cars that were electrically powered and that recharged the battery as you drove the car there would be no problem. I think we would like electric cars if we could drive them for several hundred miles without having to stop to recharge them. This can easily be done, but if they did the electric car would become less expensive (no engine or transmission) so they dont have the incentive to do it. It will take an independent person with no ties to the car manufacturers. with a little cash to manufacture the car.

    [link]      
  6. By rrapier on March 30, 2011 at 12:04 pm

    cheryl said:

    RR –

    Can you comment on the following story:

    http://www.sciencedaily.com/re…..135635.htm


     

    Hi Cheryl,

    I think it’s one of those thing where someone perhaps made an improvement in a complex and multi-step process, but there are still a lot of other costly steps involved. For instance, cracking ketones to diesel fuel still has vexing issues around efficiency and cost. Further, the research announced here is still at lab scale.

    I have worked in a university lab, and over the years I have seen so many press releases like this that suggest that the researcher has cracked the code for low cost biofuels. I think there are two reasons behind all of these press releases. One is that we are simply too close to the subject matter to be truly objective, thus sometimes ascribing more importance to the research than is warranted. After all, if all of these press releases panned out, we would never have any energy concerns.

    The second motivation is of course money. These press releases generate attention, and attention often translates to the government funding that keeps work like this ticking.

    RR

    [link]      
  7. By rrapier on March 30, 2011 at 12:07 pm

    RBM said:

    Robert,

     

    Do you feel the editing price is worthwhile to pay, going forward ?


     

    That’s a good question, and one I had to think about. I suppose it is, because it does open the way for me to clarify and explain in more depth as I did on the radio a couple of days later. But editing can be a nasty process in which sometimes meaning is lost. On the other hand, I think most edits did tend to improve the quality of the article. Some I did take a hard stand on, and some I compromised on. It was the comprimises where most of the complaints seemed to arise.

    RR

    [link]      
  8. By rrapier on March 30, 2011 at 12:10 pm

    John H said:

    This reminds me of something Scott Adams posted on his blog after stirring up an unrelated hornets’ nest:

    http://dilbert.com/blog/entry/…..ds_needed/

    In particular, he said:

    “And we need a new word for people who misunderstand another person’s point of view and proceed to debate that misunderstanding as if it were the real point of view. I think we should call that person a masturdebator.

    Masturdebator: One who takes pleasure in furiously debating viewpoints that only exist in the imagination”

    In the comments that followed he decided to rename it “Unibator”.

    I hope unibator makes its way into common usage.


     

    John, I hadn’t heard that. It’s pretty funny and apt. But there are also people — and you can see them in the comments following the article — who take it a step further and get quite nasty with their comments when “unibating.” They are the ones who will write: “So, you don’t think we should develop our own resources? You are an idiot and this column is utter tripe. Why don’t you stick to something you actually understand?”

    RR

    [link]      
  9. By russ on March 30, 2011 at 12:15 pm

    Excellent post Robert – full of sense and the real world. Unfortunately a good portion of the population (maybe 90%) have no use for accurate information.

    Right or left just want to hear or read what supports their own often silly ideas.

    Look at the conspiracry theories that manage to hang on even though no one with a bit of intelligence should ever believe most of them.

     

    [link]      
  10. By Walt on April 1, 2011 at 3:19 pm

    Although my questions above may not be useful to this current discussion, I did get a clarification today from EPA on a question I asked…it applies to those who are interested in methanol as well in their choice for fuels for vehicles.

    —————————-

    Thank you for your inquiry.
    This rule applies to methanol-fueled vehicles.

    Please
    see the definition in 40 CFR 85.502 Clean alternative fuel conversion
    means “…any alteration…that allows the vehicle/engine to operate on
    a fuel or power source different from the fuel or power source for
    which the vehicle/engine was originally certified…”

    Let me know if I can be of further assistance.

    —————————-

     

    This is great news for those ofr us who historically could not modify the vehicles without potential legal consequences.

    [link]      
  11. By Benny BND Cole on March 30, 2011 at 1:12 pm

    RR-Congrats on an excellent article, and on braving the unwashed masses.

    My only quibble is that I do not think we have much of a hill to climb in front of us. I think the price mechanism will make a slow transition to a post-crude-oil transportation economy rather easy, despite mind-numbingly poor US energy “policies.”

    I suspect once USA gasoline prices get up into the $5 and $6 a gallon range, we will see widescale adoption of high mpg cars, CNG, and PHEVs. From that point on (as in Europe and Japan) crude oil demand will fall continuously.

    Oil above $100 may complee China to mandate PHEVs, thus permnantly crimping oil demand. China has already mandated electric motorcycles. India is exploring CNG.

    Crude oil demand has been falling in Europe and Japan for 30 years–the USA will soon join the bandwagon, with huge benefits for our environment and economy.

    I see a cleaner and more prosperous future, even with Bush and Obama.

    [link]      
  12. By thomas398 on March 30, 2011 at 1:18 pm

    My #6: Domestic oil production can be increased.

    U.S. crude oil production peaked in November 1970 at about 310 million barrels/month and has dropped precipitously since.  On average, tens of  thousands of barrels go offline every month. Any drill baby drill strategy would work to slow this decline or tread water in the short run, while causing a steeper drop off in the future. 

    My #7: An increase in domestic oil production guarantees lower prices at the pump.

    The drill baby drill crowd never seems to mention that if the U.S. were magically able to return to its 1970′s peak production levels there is nothing to stop the net exporting countries from cutting production.  Oil is the most globalized commodity and if Russia, Venezuela, OPEC etc. slowed production gasoline prices in the U.S. would be affected.

    http://eia.gov/dnav/pet/hist/L…..S1&f=M

     

    [link]      
  13. By paul-n on March 30, 2011 at 2:42 pm

    Great article Robert, but this concerns me;

    After all, I am a typical George Bush conservative, and a former oil industry employee who is blind to the dangers of our fossil fuel dependence. On the other hand, some said that since I presently work on renewable energy, of course I am against expanded drilling because that benefits my company. After all, I am a typical Al Gore liberal who knows nothing about the oil industry and believes biomass can replace our current levels of oil consumption.

    Clearly you are a deeply divided human being, either bipolar , or schizophrenic, or both.  Go to therapy, go directly to therapy, do not pass go, do not collect $200…

     

    It would seem many of the erroneous comments could have been avoided had you been able to publish in full.  

    I certainly have no argument with the content/direction of the article, but this detail struck me as odd;

    When it costs $30 to fill up a Geo Metro with regular, all options are on the table.

    That doesn’t seem very expensive.  According to Edmonds.com, a ’90 Geo 2dr has a 10.6gal tank capacity, so the fuel price would be $3/gal for a complete fill – that’s less than what everyone is paying today. 

    [link]      
  14. By rrapier on March 30, 2011 at 2:51 pm

    Paul N said:

    cars that were electrically powered and that recharged the battery as you drove the car there would be no problem.

    Yes, that would be a perpetual motion machine, and IF you could invent it, there would indeed be no problem.  Don’t bother applying for a patent until you have a working model – the US patent office flatly refuses any patent that claims over-unity/perpetual motion without a working prototype – of which there has never been even one.

     


     

    I once did a calculation to see the impact of putting solar panels on the rooftop of a car; i.e. could they provide enough electricity to provide a meaningful amount of energy to the batteries of an electric car? I found that even if the car sat around in the sun all day, it would consume the generated electricity very quickly when it started to move.

    RR

    [link]      
  15. By rrapier on March 30, 2011 at 2:51 pm

    Paul N said:

    I certainly have no argument with the content/direction of the article, but this detail struck me as odd;

    When it costs $30 to fill up a Geo Metro with regular, all options are on the table.

    That doesn’t seem very expensive.  According to Edmonds.com, a ’90 Geo 2dr has a 10.6gal tank capacity, so the fuel price would be $3/gal for a complete fill – that’s less than what everyone is paying today. 


    They put that sentence in during editing. That was not part of my original. :)

    RR

     

    [link]      
  16. By Wendell Mercantile on March 30, 2011 at 3:12 pm

    I once did a calculation to see the impact of putting solar panels on the rooftop of a car; i.e. could they provide enough electricity to provide a meaningful amount of energy to the batteries of an electric car?

    GM also did that in the early days of planning for the Volt. They found if they built a solar panel into the roof of the Volt, it would take more than a week of sitting in the Sun to fully charge the battery.

    Solar panels don’t generate that much electricity. As rule of thumb, it takes ~ one meter-square solar panel to power a single 150 watt light bulb.

    [link]      
  17. By rate-crimes on March 30, 2011 at 4:25 pm

    One can’t help but notice how different the conversation is today from only a few years ago when Bush and Kerry held three debates and did not once mention energy.

    [link]      
  18. By Citizen on March 30, 2011 at 4:37 pm

    Wind, heat pumps, solar, and conservation (city & family planning) are easily meeting the futures energy demands.
     

    Oil, Gas, Coal, Nuclear, & SprawL are unnecessary prescriptions for pain either by accident, natural disaster, WAR, climate change, market speculation, or peak supply.

    [link]      
  19. By rate-crimes on March 30, 2011 at 4:44 pm

    “As rule of thumb, it takes ~ one meter-square solar panel to power a single 150 watt light bulb.” – Wendell Mercantile

    Good rule of thumb, but should we not first ask ourselves the question, ”how many watts does it take to produce ‘X’ lumens?”  Or, “how many joules does it take to move ‘X’ kg how far”?

    Why does every vehicle need to be heavier than the next?  Why does anyone need to move three tons ten miles to gather 40 lbs. of groceries and get a nail job?

    [link]      
  20. By paul-n on March 30, 2011 at 4:51 pm

    They put that sentence in during editing. That was not part of my original. :)

    I am amazed (and dissapointed) that they would add such an incorrect statement – what is the point of having information from an expert in the field if you then contradict it with your own incorrect information?  

    They are turning your horse into a camel, and from the reader’s point of view it reflects badly on you, not them

     

    On the topic of solar roof panels, the current version of the Toyota Prius has them as an option;

    The air circulator — which is powered by solar panels — prevents the interior air temperature from rising while the vehicle is parked. This, in turn, makes cool-down time shorter when the driver returns to the vehicle.

    This has long been recognised as the simplest/best benefit of PV on a car – the hotter thew sun, the more power for cooling.  Of course, you can get the same cooling benefit, cheaper, by having a car with a white roof and leaving your windows down a half inch- not all solutions have to be high tech and expensive, though that certainly seems to be the carmakers preferred approach. 

     

     

    [link]      
  21. By rbm on March 30, 2011 at 6:13 pm

    RR,

    I see that WaPo has no link to your blog, They provide enough personal information that a WaPo reader could find their way here – if the reader had the will.

    I’m of the view, that the bar, to allow for dialog, should be as low as possible.

    I don’t see any signs in the WaPo format that indicates view the dialog intrinsically important. Given your stated goal of educating others on the topic, I’m hoping this is just one more step closer to others who exhibit more emphasis on the dialog.

    [link]      
  22. By rrapier on March 30, 2011 at 8:07 pm

    Paul N said:

    They put that sentence in during editing. That was not part of my original. :)

    I am amazed (and dissapointed) that they would add such an incorrect statement – what is the point of having information from an expert in the field if you then contradict it with your own incorrect information?  

    They are turning your horse into a camel, and from the reader’s point of view it reflects badly on you, not them


     

    Well, there was a reason that I brought it over here and expanded upon it. I understand the need to edit, and ultimately there will be differences of opinion on what is worth fighting a battle over. I did fight several and won, and as I said I compromised on some. But you definitely give up some freedom for the opportunity.

    RR

    [link]      
  23. By rrapier on March 30, 2011 at 8:08 pm

    RBM said:

    RR,

    I see that WaPo has no link to your blog, They provide enough personal information that a WaPo reader could find their way here – if the reader had the will.

    I’m of the view, that the bar, to allow for dialog, should be as low as possible.

    I don’t see any signs in the WaPo format that indicates view the dialog intrinsically important. Given your stated goal of educating others on the topic, I’m hoping this is just one more step closer to others who exhibit more emphasis on the dialog.


     

    I had put some links in that got stripped out, mainly because these things get reprinted and the authorship is sometimes lost. For instance, I have already seen this article republished with the Washington Post identified as the author. In that case, there is no hope of anyone finding our little forum here for some intelligent energy discussions.

    RR

    [link]      
  24. By carbonbridge on March 31, 2011 at 1:08 am

    Robert Rapier said:

    In that case, there is no hope of anyone finding our little forum here for some intelligent energy discussions.
    RR


     

    A bit off topic – but how about sharing with those individuals who are reading/reviewing/posting on ‘our little forum’ an update from your webstats package.  it has been a couple of years [it seems like] since you last did this.

    I note the new members joining these quality discussions each week.  They and most others probably don’t realize that there are 100 looky-lous for everyone who actually posts.  I sure hope ole’ Rufus isn’t sick…

    –Mark

    [link]      
  25. By tennie davis on March 31, 2011 at 1:53 am

    Mark, Rufus is fine, I saw him on another blog today.
    He has not been Whacked by “big oil”

    [link]      
  26. By paul-n on March 31, 2011 at 2:10 am

    Tennie – that’s good to hear – I was about to start searching the obituaries for Tunica County!  Have you got a link for that blog – I’d like to see what ol’ Rufus is saying these days – though I think I have a pretty good idea…

    [link]      
  27. By Walt on March 31, 2011 at 3:56 am

    RR: Elsewhere, and again on the radio interview with KSL news-radio, I explained the difference between high gas prices and a true emergency. Before my radio interview, I had filled up my car at a gas station in Hawaii. I paid $4.67 per gallon of gasoline. While prices like that will cause additional financial hardship for many, at least the gasoline was available for purchase. We take this for granted; there is always gasoline at the service station when we need it. When you pull into the gas station and there is no gasoline at any price, then that could start to qualify as an emergency.

    Fuel shortages have happened in the U.S. before, and could happen again for a variety of reasons. If a major source of U.S. oil imports was cut off, shortages could quickly develop. The SPR could then be tapped to ease those shortages, and if it appeared that they would be extensive it would buy time to implement emergency measures such as rationing. So the SPR is an insurance policy, and if that insurance is used up just because politicians are hoping to influence the price of oil, we may find ourselves lacking insurance in a time of crisis.


     

    Our reliance upon the government to act in an emergency to help buy time before measures of rationing begins is a concern for me.  I recognize that most people as the article demonstrates are mostly disconnected from reality of the energy and fuel markets, but I really would like anyone to see if this press release from EPA yesterday is a game changer.  I could not find methanol included, although they do say “alcohols” in the mix, so I wrote to the contact to inquire whether methanol blends are allowed.  In most people I have spoke with about the issue of cars/engines/etc. problems with alcohols, they all pointed back to the EPA saying they were the problem…not the auto companies.  Of course, if you look at the lawsuits by the oil companies and auto companies against the EPA for 15% blends, they also think the EPA is the problem.

     

    However, is this press release the ‘game changer’ to resolve these lawsuits with the auto companies for alcohols coming into the fuel sector?

     

    FOR IMMEDIATE RELEASE

    March 30, 2011

    EPA Streamlines Regulations for Car and Truck Fuel Conversion Systems

    New options encourage innovation, maintain air quality protections

    WASHINGTON – The U.S. Environmental Protection Agency (EPA) has updated
    rules making it easier for manufacturers to sell fuel conversion
    systems. The conversion systems allow vehicles to run on alternative
    fuels, which may appeal to consumers concerned about energy security,
    fuel costs, or emissions.

    These changes reflect the EPA’s interest in encouraging innovation and
    spurring conversions that optimize clean air and clean energy
    technologies. It is also in keeping with the president’s January 18,
    2011, executive order, which directs agencies to identify and consider
    regulatory approaches that reduce burdens and maintain flexibility and
    freedom of choice for the public.

    The revised procedures will vary based on the age of the vehicle or
    engine being converted. EPA has found that the procedures for older
    vehicles and engines can be streamlined, while maintaining environmental
    safeguards. As opposed to a one-size fits all approach, EPA’s process
    is now based on whether a vehicle or engine is new, intermediate age, or
    outside its expected useful life.

    Conversion systems alter an existing vehicle or engine to enable it to
    run on a different type of fuel.  An example of this type of conversion
    includes switching a car designed for gasoline to run on compressed
    natural gas. While properly engineered conversion systems can reduce or
    at least not increase emissions, poorly designed systems can lead to
    much more pollution.

    More information: http://www.epa.gov/otaq/consum…..tfuels.htm

     

    I’m want to discuss solutions to these potential emergencies in the future.  I agree we should accept higher gasoline prices, and let both the oil producers and gasoline blenders make higher margins.  Europe has high gasoline prices so we can accept it here too.  If higher gasoline prices are coming like Europe, then someone is going to take those margins.  Higher crude development costs are already here in some areas, but we have been looking at the cash flows of crude production and the yield spreads to refiners and retailers.  I have a lot more emphathy with the margins of retailers with the pump than I do with my colleagues who are at the production end of crude…especially with the gas flares they pour out into the atmosphere without a second thought.  High oil prices makes gas less valuable in some economic calculations if you are a numbers guy….so higher production (even if you damage the reservoir) has been used for generations to put cash in the pocket today.

     

    If people can show me the margins increasing for retailers with higher oil prices and higher gasoline prices, I would welcome the data.  For example, Robert wrote:  “This month in Britain, gas hit 6 pounds, or about $9.76, per gallon.” my question is:

     

    Will this higher price at the pump go to the retailer?

     

    As we know, the crude price is the same in Europe as in America generally speaking.  If we don’t want to pay the European gasoline prices, is there another solution to this potential emergency situation beyond rationing for extended periods of time?  Is the answer more alcohols or natural gas or electric or hydrogen?  I’m not willing to pay $9.76 a gallon without speaking out a bit more than I do now.  I’m looking at the margins and I know who is racking in the money…and they will not be complaining about high gasoline prices…however, their employees are going to get noisy! :)

    [link]      
  28. By tennie davis on March 31, 2011 at 4:43 am

    R squared,very good post,

    I have tried to explain things like gas prices/free markets ect. to friends and family, they sometimes don’t get it.
    They say stuff like, I had this uncle who made carburetor for Caddy 100 mpg!!
    When you ask who uncle is, they can’t tell you.
    Big conspiracy.
    @ PaulN, if I give you link for Rufus I might get Whacked.

    [link]      
  29. By paul-n on March 31, 2011 at 5:09 am

    Tennie, your friends are probably referring to the “Winnipeg”  carburettor, built by Charles Nelson Pogue of Winnipeg, Manitoba in the 1935.  The 100mpg is not a big conspiracy, it is a tall story that old folks like to tell to their grandchildren.  A good article debunking the 100mpg myth here

    if I give you link for Rufus I might get Whacked.

    Well, wouldn’t want that – we are into safe blogging here.  Nice to know he lives on in the blogosphere anyway, if not in the real world. 

     

     

    [link]      
  30. By moiety on March 31, 2011 at 5:54 am

    Rate Crimes said:

    Why does every vehicle need to be heavier than the next?  Why does anyone need to move three tons ten miles to gather 40 lbs. of groceries and get a nail job?


     I posted this link before. I reckon that you could build a car like this.

    http://www.youtube.com/watch?v…..JfSS0ZXYdo

    The reality is that people do not think about conservation. In the current market, using excessive amounts of energy (for eg high home heating) will not cost you much.

    [link]      
  31. By rate-crimes on March 31, 2011 at 8:12 am

    Moiety said:

    Rate Crimes said:

    Why does every vehicle need to be heavier than the next?  Why does anyone need to move three tons ten miles to gather 40 lbs. of groceries and get a nail job?


     I posted this link before. I reckon that you could build a car like this.
    http://www.youtube.com/watch?v…..JfSS0ZXYdo

    The reality is that people do not think about conservation. In the current market, using excessive amounts of energy (for eg high home heating) will not cost you much.


     

    Thanks, Moiety, that’s brilliant! . . . both the Peel P50 and the BBC program.  I have a friend from the Isle of Man:  perhaps not coincidentally, I met her at an ecovillage workshop.

    My only worry though, is that the driver in the video was a small guy.  I’m even bigger than him, and my knees are the crumple zone even in an SUV.  If only Peel had made an ‘extended cab’ version of the P50!

    [link]      
  32. By Wendell Mercantile on March 31, 2011 at 10:56 am

    Why does anyone need to move three tons ten miles to gather 40 lbs. of groceries and get a nail job?

    We don’t — it’s just that we became addicted to the luxuries that cheap energy has given us. I too get get upset whenever I see a 120 lb woman driving a 6,000 lb SUV. Burning energy to move 6,000 lbs of steel, rubber, glass, and plastic in order to move a single 120 lb pink, brown, black, or red body is the height of inefficiency and foolishness.

    98% of the transportation mass we move is the delivery vehicle — only 2% is the payload. Multiply that by the tens of millions of commuters that move between their homes and work each day in the U.S. and Canada, and it’s easy to see most of the transportation fuel we burn does nothing more than shuttle massive amounts of steel, rubber, glass, and plastic back and forth.

    It’s one of those things about which a century from now people will ask, “What in the world we’re they thinking?”

    [link]      
  33. By Kit P on March 31, 2011 at 11:43 am

     

    “I too get get upset “

     

    You may want to seek out professional counseling.

     

    I think it is pretty great that we have the freedom to do such things.

     

    “It’s one of those things about which a century from now people will ask, ..,”

     

    Gosh Wendell how much time do you spend asking why people did things 100 years ago? Here is what mystifies me. The better things get the more people worry about how awful the future will be .

     

    We did not care very much what women thought 100 years ago, we did not even let them vote. Not that they had time unless they had servants to cook and clean for them. It was a rich farmers wife that had a cook stove but splitting wood was woman work. Man’s work was plowing the fields. No doubt Wendell would be very happy with the thermal efficiency of his draft animals. Of course Wendell is on the internet whining about the how the we make the electricity he is using. I bet Wendell would not have time to get upset about trail stuff if he adopted the Amish lifestlye.

     

    Electricity and the infernal combustion engine changed all that. Al Gore a book telling you how awful it is. I am not sure if Al Gore is an idiot or smart like a fox.

     

    Everyone was familiar with coal and farming 100 years ago. Life was hard but things like the steam engine was making things better. I am not sure how the set bones and did dental work before X-rays. I cringe at the the thought.

     

    I will say it again. There is no problem providing food energy for modern society. It take so for of us these days that it is a mystery to the rest of you.

    [link]      
  34. By Wendell Mercantile on March 31, 2011 at 12:03 pm

    You may want to seek out professional counseling.

     

    Why do I need professional counseling when you’re around? Wink

    [link]      
  35. By Wendell Mercantile on March 31, 2011 at 1:25 pm

    It take so for of us these days that it is a mystery to the rest of you.

    Kit P.

    I need your professional help parsing that sentence.

    [link]      
  36. By rrapier on March 31, 2011 at 1:32 pm

    Paul N said:

    Tennie, your friends are probably referring to the “Winnipeg”  carburettor, built by Charles Nelson Pogue of Winnipeg, Manitoba in the 1935.  The 100mpg is not a big conspiracy, it is a tall story that old folks like to tell to their grandchildren.  A good article debunking the 100mpg myth here

     


     

    Thanks for that link, Paul. I had not seen that. I bookmarked it for future reference.

    Cheers, Robert

    [link]      
  37. By rate-crimes on April 1, 2011 at 11:44 am

    “There is no problem providing food energy for modern society.” – Kit P

    Food prices hit “dangerous levels”: World Bank chief  Feb 15, 2011

    “World Bank chief Robert Zoellick on Tuesday said global food prices have reached “dangerous levels,” and warned that their impact could complicate fragile political and social conditions in the Middle East and Central Asia.

    World Bank data released on Tuesday showed higher food prices — mainly for wheat, maize, sugars and edible oils – have pushed 44 million more people in developing countries into extreme poverty since June 2010.”

    [link]      
  38. By paul-n on April 1, 2011 at 3:50 pm

    Walt – If I understand all the gov speak –  that means you can run the vehicle on anything that burns – as long as it will pass the emissions standards the vehicle was certified to when new?

    [link]      
  39. By Kit P on April 1, 2011 at 5:50 pm

    “reached “dangerous levels,””

     

    Danger Will Robinson, Danger!

     

    I also recall a story about a little boy who cried wolf.

     

    While food and and energy prices may vary with time like most commodities, there is not a problem with producing what the population of the world needs. Words like ‘dangerous’ and ‘crisis’ should be reserved for times when danger is present and if the correct action is not taken, there will be a crisis.

     

    How can you tell the difference between fear mongering and a real problem? The purpose of the headline is to catch you attention. The first sentence should tell you what the danger is and the second should tell you what to do. For example, if a tornado or hurricane is coming, you should be prepared to take shelter or evacuate. Since such events often lead to a loss of electricity, it is not a bad idea to have a few gallons of water and a couple days of food that does not need refrigeration.

     

    Good news like the ability to produce food and energy must be dismissed. People like Rate Crimes hate good news. Notice how Rate Crimes links stories with scary headline but no substances.

     

    In fact one of the marvels of the modern world is our ability to identify and problem and use energy to mitigate the crisis. So it drought or flooding causes a crop to be lost in one part of the world, food can be transported from someplace else preventing a famine. The corresponding decrease in supply causes the cost of food to increase. This price signal encourages farmers to produce more bring food prices back down.

    [link]      
  40. By Rufus on April 1, 2011 at 5:55 pm

    Still alive in cyberspace.

    The “Real” world? A bit of a tougher call. :)

    [link]      
  41. By rate-crimes on April 1, 2011 at 8:12 pm

    “This price signal encourages farmers to produce more bring [sic] food prices back down.” - Kit P

     Fuel Costs Go Beyond Sticker Shock for Farmers, Ranchers

    “Americans are experiencing sticker shock at the gas pump these days, but high fuel costs are hitting America’s farmers and ranchers especially hard.”

    High fertilizer prices likely to stick around this time

    “But this time, fertilizer prices may stay high longer than normal. That will cut into farmers’ profit margins and possibly discourage them from planting more corn acres when supplies of corn are the tightest since the mid-1990s.”

    Price of milk continues to climb

    “Higher milk prices don’t help dairy farmers much”

     

     

    [link]      
  42. By rate-crimes on April 1, 2011 at 8:23 pm

    “So it [sic] drought or flooding causes a crop to be lost in one part of the world, food can be transported from someplace else preventing a famine.” – Kit P

    2010 Sahel famine

    2007–2008 world food price crisis

    Pollyanna

    [link]      
  43. By rrapier on April 1, 2011 at 10:03 pm

    Kit P said:

    How can you tell the difference between fear mongering and a real problem?


     

    I have come to realize that if it doesn’t impact directly upon your world so you can actually see the results, then it’s just fear-mongering.

    RR

    [link]      
  44. By Kit P on April 1, 2011 at 11:39 pm

    This might surprise Rate Crimes but we often discuss energy supply and costs. I often do not provide links because often the information comes from experience and not WIKI. Thank you for the links. You do not have to look very far to find bad news. For example from one of Rate Crimes links,

     

    “Farmers began slaughtering their cows to try to cut production. At one point, an average of 50,000 cows a week were being killed in an effort to reduce the milk glut.”

     

    American and world dairy farmers are very productive producing more milk than rich people can afford to buy in a recession. It is sad that governments did not find a way to get this resource to the poor.

    [link]      
  45. By paul-n on April 2, 2011 at 12:07 am

    Hmm, don’t think that was the real Rufus there – it is April 1, after all…

     

    @ Rate Crimes – you can;t seriously think that good prices don’t encourage farmers to produce more?  Try asking a farmer that question..

    And what are the real figures on crop plantings for 2011? – from businessweek, 31 Mar 2011;

    March 31 (Bloomberg) — U.S. corn acreage this year will be the second largest since 1944, as farm profits rise while increasing demand for food and fuel cuts world stockpiles.

    Sure sounds like a response to prices there…

    About 92.178 million acres (37.3 million hectares) will be planted with corn, up 4.5 percent from 88.192 million last year and exceeding the 91.751 million expected by analysts, the U.S. Department of Agriculture said today in a report based on a farmer survey. Futures have doubled in the past year..

    Just to be clear – prices have risen over the last year, and farmers are planning to produce more

    Rising crop prices will lift U.S. farm income to $94.7 billion this year, the highest ever, the USDA said on Feb. 14.

    Doesn;t sound like they are hurting too bad – most other industries would be happy to trade their forecasts for that.

    Of course, all industries will complain about fuel and input costs all the time – farmers are  no different.  Starbucks complains about the rising cost of coffee beans, but they keep buying them.  

    And finally;

    Overseas purchases of agricultural products from the U.S., the largest exporter of corn, soybeans, wheat and cotton, jumped 18 percent to a record $115.81 billion in 2010, the government said earlier this month.

    Compared to this;

    Russia’s grain export ban is set to continue until the autumn, the country’s agriculture minister confirmed.

    That ban has been in place since Aug 2010.

    So, the country that uses some part of its grain for fuel is experiencing record crop production, and exports, while a country that doesn;t, is seeing reduced crops and has an export ban (as do numerous other countries).

    So can we leave this myth of the US being responsible for high world food prices in the mythical world, and get back to reality?  The US is producing more food than it consumes, and has always done so.  If other countries followed this very simple philosophy themselves there simply wouldn’t be a problem.  

     

    [link]      
  46. By Rufus on April 2, 2011 at 1:20 am

    Last year was just one of those years. Anomalous weather, everywhere. Everyone knows about Russia, but less well publicized was the fact that China, the world’s 2nd largest corn producer had a miserable crop (as a result they went from importning no corn to being a Major corn importer.)

    Then you had crappy crops in Australia, Argentina, India, and danged near every place on the globe that grows food, and fiber.

    “WE” had a horrible corn crop. Too much rain, early, and way too hot in late June, July, and August. We reversed our trend of better crops every year, and suffered about a 10% reduction in yield (from approx. 165 bu/acre to 151 bu/acre.)

    If we revert to trend this year, the Total Production is going to be shocking. One caveat is: Global Meteorological Conditions are very similar to 2008 when planting was set back severely by floods in the upper midwest. We’ll just have to wait and see; that’s farming. :)

    [link]      
  47. By Andrew on April 2, 2011 at 5:55 am

    Furthermore, if ANWR is drilled out, in ten years, gas prices will be roughly one penny lower than it would have been if ANWR is kept as a wildlife preserve.

    ANWR’s .001% of worldwide oil supply will not lower oil prices at the pump!

    [link]      
  48. By mikeb on April 2, 2011 at 7:34 am

    Thanks for the article.

     

    Over the past year or so, I’ve undergone a sea change over the issue of “peak oil.” I simply cannot stand to read the flaming nonsense on the various blogs by art critics, astrologers, Luddites, 9-11 conspiracy theorists, and agrarian romantics. I believe peak oil is not the issue the fear-mongers said it would be.

     

    So thanks for bringing rationality and calm to the subject of oil prices.

    [link]      
  49. By Herm on April 2, 2011 at 8:28 am

    Andrew said:

    Furthermore, if ANWR is drilled out, in ten years, gas prices will be roughly one penny lower than it would have been if ANWR is kept as a wildlife preserve.

    ANWR’s .001% of worldwide oil supply will not lower oil prices at the pump!

    The reason we should be drilling at ANWAR now is to get all the oil out before the “stuff hits the fan” using proper environmental clean methods, with respectul attitudes towards Mother Nature and caribou.. otherwise IF things get read bad and we HAVE to drill then we will even render polar bears for their fat. :)
     

    [link]      
  50. By Walt on April 2, 2011 at 8:58 am

    Paul N said:

    Walt – If I understand all the gov speak –  that means you can run the vehicle on anything that burns – as long as it will pass the emissions standards the vehicle was certified to when new?


     

    Paul, I’m going to focus on solutions which I think are practical for me to play a positive role.  It is certainly important to focus on the problems with each fuel blend, and the more I study all the work with methanol fuels in the 70′s and 80′s, I need to just focus on those solutions.  I’m not funded to evaluate multiple technologies, nor a paid lobbyist to promote false statements to pass legislation.  I’ve been studying the ethanol/methanol debate back into the 70s/80s/90s and it has reversed much of my own thinking.  I came into this controversy totally ignorant 10 years ago working in the oil & gas industry.  I had one purpose and that was to convert natural gas-to-liquids…that is it.  The past 12 months has confirmed much of what I thought was a bit confusing and fishy in this controversy, and it has been healthy to open my eyes.

     

    The debate and lawsuits over E15 and the black listing (harsh word) of methanol in America comes from big oil to a large degree, and a handful of greedy politicians.  My work in the oil & gas industry gives me an inside view as who is funding which politicial agenda and why.  The complaint about fixing pumps and engines are small pocket change compared to what is at stake, and this debate is laughable from what I see worldwide.  I know nobody is going to talk about fixing these pumps, nor fixing these engines, as it costs money and while they wait for the government to provide them the money to make all these changes…or be sued…(often the tool that industry can use to get the money they want), I want to build on the EPA decision locally.  That was holding several people I know locally from even touching my vehicle.

     

    For those who would rather buy a hybrid, electric car, or pay top dollar for gasoline at the pump like England, by my guest.  Don’t let me pursuade you otherwise…everyone has their own family decisions to make.  I frankly think the general population is nearly brainwashed by corrupt politicians, lobbyists and madison avenue advertising campaigns.  Therefore, let’s drop this discussion on the EPA announcement.  It changes the game for me…I will not be buying an electric car, nor will I be running my car on natural gas anytime soon.

    [link]      
  51. By Duracomm on April 2, 2011 at 9:12 am

    Paul N said,

    So, the country that uses some part of its grain for fuel is experiencing record crop production, and exports, while a country that doesn;t, is seeing reduced crops and has an export ban (as do numerous other countries).

    A massive drought and fires in Russia destroyed much of their crop, causing the government to ban exports.

    The only relationship between US ethanol policy and the Russian crop failure is this: It shows the risk US ethanol policies pose to world food supply.

    Drought, fire hinder Russian wheat

    MOSCOW – A severe drought destroyed one-fifth of the wheat crop in Russia … and now wildfires are sweeping in to finish off some of the fields that remained.

    Russian farmers have little incentive to export. Even though grain prices are rising on world markets, with further gains Monday, they are growing even faster in Russia, so many farmers are holding on to their harvested grain in the hopes of still higher profits.

    [link]      
  52. By Seven7 on April 2, 2011 at 9:43 am

    Supply and demand; plus conception of inevitability; plus laziness is the reason for much of the increase in gas prices.

     

    Going all the way back to Katrina the largest oil companies have posted record profits every quarter.  The supply events surrounding the damage done by Katrina showed the oil companies the true elasticity of fuel prices and they have been capitalizing on what they learned ever since.

     

    It is easy to find gas prices range up to 25 cents per gallon any day of the week in any metro area.  People do not comparison shop for fuel and they will seldom wait more than 2 minutes to get fuel.  If there is a line caused by cheaper prices they will just go to the more expensive station rather than wait.  Local dealers will again and again say that they are only making a cent or two a galon and this is because the supplier is setting the price to match the conduct of the buyer.

     

    If everyone started to spend just 5 extra minutes a day searching out the cheaper fuel on a site like gasbuddy.com somewhere along their driving route, and taking the time to buy that fuel; the price would likely fall at least 50 cents a gallon.

     

    25 cents a gallon times 20 gallons is $5.00.  Multiply that times hundreds of cars a day and you will see why the richest 5% of Americans receive 63 cents of every dollar of GDP. 

    [link]      
  53. By Walt on April 2, 2011 at 10:28 am

    Seven7 said:

    It is easy to find gas prices range up to 25 cents per gallon any day of the week in any metro area.  People do not comparison shop for fuel and they will seldom wait more than 2 minutes to get fuel.  If there is a line caused by cheaper prices they will just go to the more expensive station rather than wait.  Local dealers will again and again say that they are only making a cent or two a galon and this is because the supplier is setting the price to match the conduct of the buyer.


     

    This can be a hot potato issue locally in my area.  A few years ago the locals got enranged because before every weekend and holiday our local gas stations all raised their prices.  Our local enonomy is tourism focused, and we get all the visitors during weekends, holidays, etc.  Most locals don’t pay attention to gasoline prices even when they raise 10 cents on the weekends.  A few do, but most do not.  The tourists flock in on the weekends, complain about the high prices, and head back home.  Our pump prices drop again on Monday morning.  This is capitalism and provided there was no collusion (which was the controversy), we can live with this business model.  However, the controversy created smaller jumps as people were trading their loyal to others who held their prices just outside the area.  Again, free market at work.

     

    However, what is changing is that Washington, Detroit, Houston and Wall Street are becoming better and better at dictating what local companies will do about gas prices, and fuel options.  Talk to the local stations, and it is almost like their “hands are tied” and “threats” to do what the “market” demands is their only option.  Sit down with some of the managers and owners of the stations, and it is not so flowery as raising prices “25 cents per gallon any day of the week” as mentioned.  There is certainly wild price swings in some markets, but in poorer areas people (including station owners) are not making a killing like people might think.  Those days are over…politics is driving the issue that blended fuels with ethanol or methanol will destroy all pumps and engines…and people will be forced to carry their children during severe winter storms on their back while their cars are stranded…please buy Exxon and Shell….the only true blended gasoline that will make your car operate even in those storms! :)

     

    Forgive the sarcasm…it gets me into trouble more often than not.  I am so looking forward to Shell Pearl coming online in Qatar.  RR has an article on line discribing the project if I recall.  That project is going to produce so much revenue it is mind blowing according to some very well respected insiders.  That is a cash flow machine.  You think Exxon and BP are complaining about refinery margins and struggling financials on gasoline yields due to high crude prices…just watch what Shell Pearl will do to the idea of GTL.  It will make ADM and Cargill envious they cannot stop it with ethanol margins and government support.

    [link]      
  54. By carbonbridge on April 2, 2011 at 10:37 am

    Seven7 said:

    25 cents a gallon times 20 gallons is $5.00.  Multiply that times hundreds of cars a day…


     

    After reading the new comments this morning I come across this article which seems to fit certain attitudes of ‘confusing at best.’  The author evaluates Prez Obama and a recent energy speech he gave in Georgetown.  And RR’s essay here has attempted to provide some rhyme and reason for increased pump price of petroleum-derived liquid hydrocarbon fuels.  Obviously – energy supply, price, use, efficiency, unburned emissions, smoggy oil spills in the sky are all of topical concern without a solid and easily interpretable backbone adequately explaining to Joe & Jane Motorist what really is going on.  Oh, I forgot wars for Oil.  Sorry…  Maybe I’ll share some images of radiation plumes circling the globe next – or we can discuss rads showing up in domestic food and milk supplies… 

    Not an easy time amid very serious problems and political unrest in the Arab world.  Have a good weekend and I hope that Spring is in the air for most readers.

    –Mark

     

    Obama sells energy gimmicks, not policy

    http://www.politico.com/news/s…..52354.html

     

    [link]      
  55. By Walt on April 2, 2011 at 10:59 am

    CarbonBridge said:

    After reading the new comments this morning I come across this article which seems to fit certain attitudes of ‘confusing at best.’  The author evaluates Prez Obama and a recent energy speech he gave in Georgetown.

    Obama sells energy gimmicks, not policy

    http://www.politico.com/news/s…..52354.html

     


     

    I did not read the speech, but I did see this in the article:

     

    ———————————-

    Right now, 40 percent of U.S. corn — that’s 15 percent of all global

    corn production or 5 percent of all global grain — is being diverted to

    ethanol distilleries to produce the energy equivalent of 0.6 percent of

    global oil needs.

    The amount of grain likely to be consumed this year for U.S. ethanol

    production – 4.9 billion bushels – boggles the mind. That’s more than

    twice as much as all the corn produced in Brazil; more than six times as

    much as is grown in India. Put another way, it’s more corn than the

    output of the European Union, Mexico, Argentina and India combined.

    Read more: http://www.politico.com/news/s…..z1INTwcrWV

    ———————————

    This cannot be true…  This is insane if this is true.  I spend a substantial amount of my time defending myself about how evil methanol in my inbox, and how much damage it cause to the environment and ground water, but nothing about ethanol issues.
    You cannot tell me that 40% of the US corn production is being diverted to ethanol distilleries…and then even being exported from USA?
    The next ethanol person that sends me an evil letter about methanol I’m just going to delete, and not respond.  They are insane if that is true.

    [link]      
  56. By rrapier on April 2, 2011 at 1:37 pm

    Duracomm said:

    The only relationship between US ethanol policy and the Russian crop failure is this: It shows the risk US ethanol policies pose to world food supply.


     

    I have said that many times. By tying the fuel supply into the food supply, you greatly increase the risk of volatility. And just as we saw backlashes against drilling over Deepwater and now nuclear with Japan, imagine the backlash if the Midwest goes through a major drought while we still try to supply the ethanol industry with their corn. If something like that happens this decade, it will probably mark an end to our affair with corn ethanol.

    RR

    [link]      
  57. By paul-n on April 2, 2011 at 2:19 pm

    It shows the risk US ethanol policies pose to world food supply.

    Duracomm/RR – I just can’t agree on this point.

     World grain production is about 2.22bn tons/yr, according to the USDA, with the US producing about 415mt of this, so the “rest of the world” produces about 1.8bn tons per year.

     Here is a chart of world corn exports since 1960;

     

    US exports look like an average of about 50mt for the last three decades.

    So US corn exports are 50/1800 = 2.8% of the “rest of the world” grain supply.

    Year to year fluctuations of world grain, from weather, pestilence, war, etc are more than this.

    Even if the US banned all corn exports (as some other countries have done),  I just don’t see how a 2.8 % decrease can hardly qualify as a “risk to the world supply”.

    Libya represented a similar portion of world oil supply, and everyone has pointed out how this (alone, not wider ME unrest) is not a risk to world oil supply.

    What am I missing here?

     

     

    [link]      
  58. By Rufus on April 2, 2011 at 2:53 pm

    After taking into account DDGS the number is more like 2.4 Billion Bushels.

    We could, easily, have a 15 Billion Bushel Harvest this fall. I would almost bet on 14.5 Billion.

    2.4/14.5 = 16% of harvest.

    [link]      
  59. By paul-n on April 2, 2011 at 9:53 pm

    Walt,  I don’t accept another talking head saying ethanol is the cause.  

    I feel like I’m doing Rufus’ job here, but in keeping with the basis of this blog, let’s look at the data.

    Here is another chart from the USDA

     

    From this chart, three things are apparent;

    1. Total corn production has increased fairly consistently since 1995 (187mt) to 2010 (316mt) an increase of 130mt and 68%.
    2. The rapidly increasing volume used for ethanol over the last decade, to about 115mt (4.5bn bushels) , is less than the corn crop increase 
    3. The only sector that has decreased is the use of corn for animal feed – and this is mostly related to a reduction  in the size of the US cattle herd over recent years.

    So, if the volumes for export, and FSI (food, seed and industrial{non-ethanol}) are pretty much the same, where is the problem?

     

    I think it is not on the supply side at all, it is on the world demand side – more people wanting corn.  Many countries are pointing the finger at the US, and ethanol, to distract attention from their own performance.  

    Kinda like a country that is a major oil importer, and wantonly wastes the oil, blaming the oil exporting countries for not exporting enough, cheaply enough – who is really to blame here?

    That analogy is, of course, purely hypothetical…

     

    [link]      
  60. By Duracomm on April 2, 2011 at 9:55 pm

    Lots of whistling past the graveyard going on.
    Russia was the number three exporter of wheat before the drought hit. Apparently US corn supplies are already tight.

    Corn supply comments

    The latest USDA numbers provided further confirmation that both US and global feed supplies remain particularly tight, with the stocks to use ratio now matching the lowest point of the last 15 years

    Beginning stocks for the 2011/12 marketing year are going to be some of the tightest on record and we will need record yields to bring projected ending stocks above the 1 billion bushel mark.

    Some early analysis, however, indicates that given dry weather patterns, it will be difficult to get corn yields above 160 bu/acre.

    [link]      
  61. By Rufus on April 2, 2011 at 10:16 pm

    Nah, we’re coming off a warm (hot) year, and on the tail end of a La Nina. This is 2008 all over again. The risk is to too much rain, and heavy Spring flooding in the Upper Midwest. If we get the heavy floods look for yields in the 160 range. If not, look for 170.

    Good chart, Paul; but, really about 1.6 Billion bushels ought to be taken out of the ethanol section, and inserted into the cattle feed, and export sections to allow for Distillers Grains.

    [link]      
  62. By Duracomm on April 2, 2011 at 10:18 pm

    Paul N said,

    So, if the volumes for export, and FSI (food, seed and industrial{non-ethanol}) are pretty much the same, where is the problem?

    The problem is droughts are an inevitable fact of life.

    The unwanted and therefore politically mandated usage of corn ethanol has taken up all of the slack capacity in corn production.

    Corn growers have an amazing ability to pull out good crops in challenging times. The problem is mother nature always bats last.

    Care to consider the variety of nasty impacts a 34 % reduction in corn yields would have on the US food production system that is already running at redline?

    The 1988 drought did that.

    Drought Seen Cutting Corn Harvest 34%

    The searing heat and lack of rain was reflected in an average yield per acre of 83.2 bushels for corn forecast by USDA’s Agricultural Statistics Board.

    That was down 37.1 bushels from last year but 2.1 bushels above the level contained in last month’s forecast.

    [link]      
  63. By Wendell Mercantile on April 2, 2011 at 10:23 pm

    Lots of whistling past the graveyard going on. Russia was the number three exporter of wheat before the drought hit. Apparently US corn supplies are already tight.

    I’ve got to agree with Duracomm. It’s manageable now, but all it takes is one severe drought across the “Three-I states,” (Iowa, Illinois, and Indiana) or a newly evolved fungus or disease that runs unchecked in what is now a monoculture crop without much genetic diversity against new diseases. We’re literally betting the farm on companies such as Monsanto being able to keep new strains of hybrid seed corn ahead of newly evolving plant diseases.

    Look what happened to the wine industry in France during the Great French Wine Blight in the second half of the 19th century. That wasn’t resolved until they introduced new grape root stock to France from the United State that had a natural resistance to the blight — after the French wine industry had practically collapsed, and many French grape growers and wineries had gone out of business, bankrupt, or committed suicide.

    It’s extremely perilous to set our entire economy on a linchpin that could disappear in months were a new corn blight or fungus to suddenly appear. We can’t put on blinders and think there is no chance it could happen.

    [link]      
  64. By rrapier on April 2, 2011 at 10:31 pm

    Rufus said:

    Good chart, Paul; but, really about 1.6 Billion bushels ought to be taken out of the ethanol section, and inserted into the cattle feed, and export sections to allow for Distillers Grains.


     

    Really, Rufus, those are the talking points the ethanol lobby has been using lately to deflect attention away from the amount of corn going into ethanol production. They are trying to push for changes in the way that’s accounted for now. I am sure you know this.

    RR

    [link]      
  65. By Rufus on April 2, 2011 at 10:54 pm

    Heck, RR, as you well know I’ve been talking about DDGS for years.

    It may be someone’s “talking point,” but it’s also the dead solid facts.

    It is interesting, isn’t it? 20 years ago they were raising 4.5 billion bushels, and now we’re looking at 14.5 Billion Bushels. The seeds, today, are quite a bit more “drought resistant,” and the extra CO2 in the atmosphere doesn’t hurt, either. :)

    [link]      
  66. By paul-n on April 2, 2011 at 11:35 pm

    That’s more like the Rufus of old…

     

    But, incase you missed it in reading that USDA link I provided, it seems they have already taken this into acount;

    The projections assume that each 56-pound bushel of corn that goes into dry-mill ethanol production results in 17.5 pounds of DDG as a coproduct.

    But yes, the USDA is now looking to count DDG’s as corn – which is a deceptive way of accounting for DDG’s

     

    Surprised also you haven;t commented on the Congress push this week to abolish the VEETC – looks like your prediction might come true, after all.

    [link]      
  67. By paul-n on April 2, 2011 at 11:48 pm

    Duracomm/Wendell,

     

    I don’t disagree that a drought or some other natural (or man made) event may make a big hole in the US corn crop – that is why it is risky for the country to rely on it for any meaningful portion of its fuel – (along with environmental pressures, etc.).  

    It is even riskier for other countries to rely on the US corn crop, because both Nature and the US get first bite (not bat) at the corn crop.  The US can do whatever it likes, for better or worse, to its domestic crop.  As long as it is not defaulting on international supply agreements (and it isn’t)  - I just don;t see how that gives the other countries the right to blame the US for their own failure to feed their own people.  

     

    [link]      
  68. By Rufus on April 3, 2011 at 12:43 am

    Paul, it appears to me that they took DDGS into account when projecting how much corn livestock would eat, but they still deducted 4.5 ish billion bushels for ethanol (w/o adding anything into the livestock feed category (on the chart.)

    That being said, it was an excellent link, and I learned quite a bit from it. Thanks.

    Corn farmers didn’t just start doing this, yesterday. They’ve seen a lot of this before. That’s why they didn’t bring any fallow land into production this year (they just switched some acreage around between crops.) If high prices persist look for a couple of million more acres to come into production next year.

    If prices stayed in the $4.00 to $5.00/bu range for a few years it would be likely that you would see a Humongous amount of corn come on the market, internationally (for ex: Russia has over 100 Million Acres of *Black Land* lying fallow. Brazil has 150 Million Acres lying fallow in the Cerrado.) You don’t even want to think about “Africa.”

    The thing is, those people can’t make a profit at $3.00/bu. (We couldn’t, either, w/o that $0.30/bu subsidy in the crop insurance program.:))

    [link]      
  69. By Rufus on April 3, 2011 at 1:07 am

    As for the VEETC, Paul: I don’t much care any more. It’s up to the real “Big Boys,” now. The Senators are going to do what the Senators are going to do. From here on out it’s strictly Power Politics.

    Grassley’s got Coburn blocked for the time being, but I expect that to change after the next election. If the Pubs take the Senate, which is quite likely, he’ll get it attached to a piece of legislation that Obama just can’t veto; and, that will be that.

    With Demand starting to outrun Supply in the world oil markets, I really don’t think it matters a lot. Gasoline is going to be so expensive, it seems to me, that even without the blenders credit E85 (the only part of the puzzle I care about) will survive.

    Frankly, I’m wearied of the whole mess. That’s one reason you haven’t heard much from me, lately. I’ve been watching the Budget battles, and the Libyan debacle, and Japanese Nuke Catastrophe, and messing around with the family some. I, also, had a hard drive crash, and had to replace my computer.

    Anyways, that’s my story. Believe it or not; It’s either me or it isn’t. :) (I feel an Eddie Izzard routine coming on.) Later.

    [link]      
  70. By paul-n on April 3, 2011 at 1:38 am

    That’s more like it Rufus.

    Well, you did say before Xmas you were tired of the ethanol wars.   Me – I am just tired of American politics – i don’t even live in the country and I can’t avoid it!  though it is akin to watching some weird reality show…

    Now, one other piece of news you must be aware of – Buick finally released the flex fuel Regal – the 2L turbo version in February.  There is a 3min review of a test drive here

    This guy got 30mpg on gasoline and 26.4 on E85, not quite the same mileage, but close.  He paid $3.09/gal for reg, and the breakeven point for E85 would be $2.71 (a 12% discount to reg unleaded)

    Looking at the thermal efficiency, you get 30miles on 115,000btu, and 26.4 on 80,000 btu, or 3833 btu/mile for reg and 3030 for E85.  So, the Regal is actually using 21% less btu per mile than regular gasoline!

    This illustrates the fact that ethanol (and other alcohols) can be a more efficient fuel than gasoline, and if only the engines were designed to not use gasoline at all, they would be more efficient still.  The addiction to gasoline is what is holding the country back.  

    Now that the Regal shows it can be done, the gov ought to require all new flex fuel models get the same 20% improvement in btu/mile – if they don;t the automaker should lose the CAFE credit for that model – seems like a good quid pro quo to me.

     

    [link]      
  71. By rrapier on April 3, 2011 at 2:14 am

    Paul N said:

    It shows the risk US ethanol policies pose to world food supply.

    Duracomm/RR – I just can’t agree on this point.

    But that’s not exactly the point I made. The point I am making is that you are compounding risks, and if there is ever a crop failure in Iowa, it is going to impact upon food prices and fuel prices; the competition between the two will likely drive prices very high.

    RR

    [link]      
  72. By carbonbridge on April 3, 2011 at 3:01 am

    Paul N said:

    Looking at the thermal efficiency, you get 30miles on 115,000btu, and 26.4 on 80,000 btu, or 3833 btu/mile for reg and 3030 for E85. So, the Regal is actually using 21% less btu per mile than regular gasoline!  This illustrates the fact that ethanol (and other alcohols) can be a more efficient fuel than gasoline, and if only the engines were designed to not use gasoline at all, they would be more efficient still.  The addiction to gasoline is what is holding the country back.  


     

    Paul, — you’ve hit the nail squarely upon its head once again!  We’ve had other discussions on this topic here before.  A simple $35 FFV chip (M-85 or E-85 version) automatically adjusts air/fuel ratios based upon dissolved Oxygen content in the fuel – then advances the spark ignition timing through the roof – and away the motorist goes, realizing more combustion efficiency [snappier engine torque] than before while achieving a seriously reduced emissions profile as well. 

    Pretty simple and the technology is nearly 30 yrs. old.  This isn’t rocket science…  And now the EPA is relaxing standards regarding off the shelf FFV conversions.  How nice…

    –Mark

    [link]      
  73. By Duracomm on April 3, 2011 at 9:10 am

    Paul N said,

    Surprised also you haven;t commented on the Congress push this week to abolish the VEETC – looks like your prediction might come true, after all.

    That still leaves the mandate for ethanol usage in place. Ethanol producers don’t need a subsidy they have used raw political power to force consumers to buy ethanol.

    Entertaining watching disingenuous / two faced ethanol boosters brag about getting rid of subsidies while the mandate is still in place.

    [link]      
  74. By Duracomm on April 3, 2011 at 10:30 am

    Paul N said,

    It is even riskier for other countries to rely on the US corn crop, because both Nature and the US get first bite (not bat) at the corn crop.

    The US government has spent years subsidizing the export of commodities like corn, cotton, and wheat.

    This dumping of subsidized commodities destroyed the ag production capacity of other countries (third world farmers could not economically compete against the US taxpayer) making them completely dependent on imports of US ag commodities.

    in other words other countries are dependent on US ag exports because of US ag policy.

    The Fabric of Their Lives U.S. cotton subsidies make the poor poorer

    …this welfare program for the well-to-do has a ruinous impact on poor farmers in other countries who do not enjoy such largess.

    For American cotton farmers (whose average net worth is about $800,000) the subsidies may be the difference between growing cotton and growing something else…

    For African farmers who earn something like $800 a year, the subsidies can be the difference between eating and starving.

    [link]      
  75. By paul-n on April 3, 2011 at 12:53 pm

    Duracomm, 

     

    This is the part of the “other countries’” complaints that really gets me – if the US makes it cheap, they complain, and if it is expensive they complain.  What then will make these people happy?

    They complained for years about subsidised corn exports, and so now the US has subsidised domestic use and let exports find their market price, and still they complain?   

    I should add the US has not been alone in egregious ag and export subsidies – the EU is equally good at that game.

    This dumping of subsidized commodities destroyed the ag production capacity of other countries (third world farmers could not economically compete against the US taxpayer) making them completely dependent on imports of US ag commodities.

    I just don;t buy that – 50m tons of exports into world consumption of 1800 m tons?  Exports are just a drop in the bucket.  What has really destroyed ag industry in those countries are corrupt governments – just look at Zimbabwe, Haiti, and all the Arab countries (almost all of whom are grain importers).  Those countries could have refused or put a tariff on imports – like the US does on all sorts of things.  

    They have to be responsible for their own actions, and to their own people, first.  In the countries that do that, (e.g. Chile), the problem seems to go away.

     

    [link]      
  76. By Rufus on April 3, 2011 at 1:44 pm

    My work here is finished.

    :)

    [link]      
  77. By Herm on April 3, 2011 at 1:44 pm

    Thanks for the link on the Regal and E85, been looking for that all over.. you really need variable compression to get the best out of ethanol, and a turbo does that to some degree.. the other way to do it is a very high compression engine using plain gasoline with direct injection of E85 to cool the charge.. the only issue is that you got problems if you run out of E85, but little of it used. Ford is/was working on this

    [link]      
  78. By Duracomm on April 3, 2011 at 1:46 pm

    Paul N said,

    This is the part of the “other countries’” complaints that really gets me – if the US makes it cheap, they complain, and if it is expensive they complain. What then will make these people happy?

    We have a four step process here.

    1. Subsidized overproduction and exports kill farming sector in developing countries.

    2. Ethanol boondoggle causes price bubble in all commodities.

    3. Developing countries can’t produce their own food to reduce impact of bubble because of damage done to their ag sector in step 1

    4. People in developing countries have insufficient food supply.

    As far as I can see these folks are right to be angry, we are talking about hunger and starvation after all. No doubt corrupt governments are part of the problem. In that case US ag subsidy policy serves to make a bad situation worse.

    This problem is not limited to developing countries either. You might look around and see what Australian wheat producers think about US and EU ag subsidies.

    IIRC the line I read from an Australian producer was “when elephants fight bystanders get trampled”. EU and US subsidies were the elephants and Australians were the bystanders.

    [link]      
  79. By Walt on April 2, 2011 at 6:53 pm

    4 Reasons why food prices are rising

    http://www.youtube.com/watch?v…..ure=relmfu

    [link]      
  80. By Duracomm on April 3, 2011 at 2:08 pm

    The US corn ethanol mandate boondoggle is nothing more than an innocent bystander damaging ag subsidy on steroids. Here is another example of the destruction ag subsidies like ethanol mandates cause.

    Cling peach leader blames Greek subsidies

    Cling peach grower Randy Fiorini holds bright prospects for his crop this year. Dimmer, however, is the outlook for the California industry’s ability to compete with subsidized, imported canned peaches from Greece, a sore spot for him and the other 700 cling growers in the state.

    “Because of the unfair subsidy schemes provided by the EU to the Greek peach industry, California has lost nearly every export market in the world and we are now seeing a rapid increase in imports of Greek peaches here in the U.S., particularly on the east coast,” he said.

    Although no cling peaches were produced in Greece before 1972, Fiorini said today they are that nation’s major crop, with imports to the U.S. expected to exceed two million cases this year.

    When Greece joined the EU, it became eligible for subsidies, which dramatically increased planting there. Fiorini said the amount and method of subsidies varies from year to year, but “it is fair to say they receive monies in excess of our raw product value. That means the subsidy can be more than the $225 a ton we might receive from processors. We’ve been fighting the subsidy issue for the past 15 years with very little success.”

    Lets pull one part of the quote out for emphasis.

    “it is fair to say they receive monies in excess of our raw product value. That means the subsidy can be more than the $225 a ton we might receive from processors.

    [link]      
  81. By Oxymaven on April 3, 2011 at 10:15 pm

    I’m someone who thinks that corn is getting very close to equalling sugar cane as an ethanol feedstock, and might surpass it soon. That is because of steadily increasing grain yields and also the likelihood that high starch varieties can boost ethanol yields as well. I’m also ok with recognizing the role of DDGs in displacing some corn, although I think it is overstated a little bit.

    However, I think it is an act of substantial hubris to believe that we are not in dangerous territory. I’ll violate one of my pet peeves by stating that the US is the Saudi Arabia of corn – we dominate world exports. Note that in the last 4 years the US has had the 4 largest harvests on record, yet we have the lowest stocks to use ratio in 15 years. Low stocks usually only happen after poor harvests, not after 4 successive record harvests. Clearly world demand is very important too, but nothing has grown as fast as the demand for corn for ethanol over the last 5 years.

    [link]      
  82. By Oxymaven on April 3, 2011 at 10:31 pm

    Sorry to rain on the Buick Regal parade but EPA’s official fuel economy guide still shows a 25% mileage penalty for the Regal FFV.  Don’t believe EPA?  Then listen to this interview with a very knowledgeable and ardent advocate for FFVs and the Regal, Mark Maher, GM Executive Director for Powertrain and Vehicle Integration.  He states that GM consistenly sees only a 3.25 – 3.5% increase in energy efficiency of E85 vs gasoline (not fuel economy) when its FFVs run on E85, in other words, you get a little more bang for your buck out of the 84,000 BTUs in a gallon of ethanol, but not much.  So by my math that means only a 24% mileage penalty instead of 25% . . .  

    And I find the NJ video on the Regal’s mileage to be very unpersuasive.  For one thing, since they didn’t run the tank dry, there was probably about 2 gallons of E10 in the tank when they filled with E85.  Also, winter blends of E85 may actually be a lot closer to E70, so it is impossibly to figure out what ethanol blend they were actually testing.  It would seem that if the Regal turbo was a true game-changer, we’d be hearing a lot more about it, and the silence is deafening. 

    [link]      
  83. By Rufus on April 4, 2011 at 12:46 am

    On the other hand, he said it was a 2.4 L Turbocharged engine.

    It wasn’t. It was a 2.0 L Turbocharged engine. Simply mind-boggling that he would make that mistake.

    He, also, said that “On Average the FFVs attained a 3.25 to 5% increase in efficiency on E85. The Buick Regal 2.0L Turbo, Direct Injected isn’t their “average” FFV.

    It costs a lot of money to have the EPA test an engine. Then, if they happen to get a different number than you do they fine the dickens out of you. If you don’t pay for the test they just go by btu content. My hunch is they are waiting for the 2nd iteration which they stated, before, would be essentially the Same mpg on E85 as on gasoline.

    Having said all that, I have heard rumors of one problem that’s driving all the manufacturers nuts; it seems it’s almost impossible to get some of these engines to throw a “rich” code. If that’s true, I suppose they’ll work it out, but I haven’t heard any scuttlebutt as to “how.”

    As for the guy’s road test: You do make valid points. If there was E10 left in the tank it would make a difference, and E70 would be expected to get a bit better mileage than E85.

    On the other side, the University of N. Dakota found that you had to run 3 tankfulls of E85 to achieve the maximum mileage. I’m sure we’ll start to get more info as the year wears on. My hunch is that when all is said and done this guy will end up being pretty close. That seems to be how these thing usually work out, doesn’t it?

    [link]      
  84. By paul-n on April 4, 2011 at 6:06 am

    Duracomm,

    I still don;t buy what you are selling;

    1. Subsidized overproduction and exports kill farming sector in developing countries.

    3. Developing countries can’t produce their own food to reduce impact of bubble because of damage done to their ag sector in step 1

    4. People in developing countries have insufficient food supply.

     

    But you did have the good sense to say;

    You might look around and see what Australian wheat producers think about US and EU ag subsidies.

    You are talking to one.  My family has farmed in Australia for over 100 years – my brother just started planting this year’s crop last week.  So, since I can give you an informed opinion, let’s look at your claims first.  

    I think step 1 is a bit dramatic.  Since the dictum of this blog to start with the data, lets look at the USDA data (via indexmundi)for a random handful of  developing countries, though I have deliberately included some known disasters like Haiti and Zimbabwe;

     

    So did the US policies really “kill” the farming sector?  Not even close, not even in Haiti – Kenya, Angola and Ghana all up, Haiti stable – all but one maintained or increased production over the last five decades.  The only killing was in Zimbabwe in 2002 when Mugabe’s thugs killed most of the white farmers, including the father of a long time family friend of mine.   However, since you seem very certain of your convictions, I’ll be happy to take a look at the data of the countries you have in mind – show me a country with declining production and I’ll show you a corrupt government.

    Now, lets take a look at the populations for these countries over the same period from world bank data;

    {graph doesn;t seem to work, so here’s the data}

    Angola 1960: 5m 2010: 18.5m increase = 270%

    Ghana 1960 6.8m  2010 23.8m  increase= 250%

    Kenya 1960 8.9m 2010 39.8m  increase = 347%

    Haiti 1960 3.9m 2010 10m increase = 156%

    Zimbabwe 1960 3.75m 210 12.5m increase = 233%

     

    For comparison;

    US 1960 181m   2010 307m increase = 70%

    Australia 1960 10.3m  2010 21.9m increase = 112%

     

    Can you see the problem here?  If your population trebles while your food production only doubles, or stays the same, you are going to have a serious problem, regardless of what the US does or doesn;t do.  

    Your points 2&3 are now irrelevant because overpopulation has led directly to 4 – “People in developing countries have insufficient food supply.”  Though this should really read “People in developing countries have exceeded their food supply” – though the starving kids won;t know the difference.

    So, then the governments of these countries do what most governments (even Aust and the US) do – blame someone else for their own problems – they have been doing this for decades – long before ethanol was on the scene.  Remember Live Aid in 1985?  That wasn’t because of corn being too cheap,  (Kenya had a record harvest that year!) it was because they have too many mouths to feed.

    But really, given that these five countries alone have increased their population by 76million in this time, when do you think they should look in the mirror to see the source of their problems?

     

    As to what we Australian farmers think of subsidised US and EU farmers – quite frankly – a joke.  They get twice the average yield (any grain) of (unsubsidised) Australian farmers, have cheaper equipment and fuel, and yet still say they need subsidising.  It’s like racing your older brother but he always demands a head start. As for the US and EU farm industries as  a whole, yes, elephants – but they each have hundreds of millions of people to feed.  Have the policies hurt Australian farmers – absolutely.  Can we do anything to change that – absolutely not -we have zero influence on the ag policies of these two entities.   The difference between Aust (and NZ) and the developing countries is that Australia and NZ realised this long ago, worked out their  best ag industries to focus on, and just got on with the job, as farmers tend to do.  

    To be clear – I am not supporting US subsidies, or the ethanol policy.  As RR points out, relying on corn for fuel compounds risks – but then so does relying on the ME too.  What I am saying is that the food problems of developing countries are largely their own making – they were in population overshoot/food undershoot long before the US got serious about ethanol in 2005.  And, likely, they will still be in overpopulation long after the US gives up on ethanol.

    They need to solve their own problems first – after that, US ag subsidies will be of purely academic interest – as they are in Australia. 

     

    As for the California peach growers, and the subsidised Greek stuff, this indeed illustrates the folly of subsidies.  The US can always put a tariff or quota on them – they do this with Cdn lumber, potatoes and other stuff all the time.   If Greece wants to sell subsidised peaches, the US should buy all it can (it would if it was subidised oil!), feed them to the military, food stamp people, or something, and those growers can grow something else – they have had since 1972 to see this coming.  

    But really, two wrongs don;t make a right.  The US should just go the same way as Aust and new Zealand and give up all ag subsidies completely.  Yes, some ag sectors suffer/die, but the industry as a whole in those two countries is far stronger for it.

    Like the Australian farmers, the Ca growers can;t control what other governments (or even their own) do, so they might as well move on to something they can control.  

    That’s farming – no one ever said it was easy – or fair.

     

    [link]      
  85. By Wendell Mercantile on April 4, 2011 at 9:52 am

    I’ll violate one of my pet peeves by stating that the US is the Saudi Arabia of corn

    Not really. Big difference between corn and oil. Oil is either there or it isn’t — while corn production is built on a tripod of water and weather; resistance to plant disease, blight, and pests; and the availability of synthetic nitrogen fertilizers.

    Balancing corn supply and corn demand is now such a close run thing, that were any leg of the tripod to be kicked out (such as a severe drought across Iowa, Illinois and Indiana), the corn markets and world economy would be thrown a kilter with devastating effect..

    [link]      
  86. By paul-n on April 4, 2011 at 11:52 am

    Actually Wendell, if a corn supply disruption in the US rattles world corn markets and then the  world economy, is that not then the same as Saudi and oil?  It doesn’t really matter whether it is there or not, what matters is whether it is getting to market, and if the traders think it will keep getting to market, or not.

     

    For the record, I don’t think a disruption in US corn supply is in the same league as Saudi and oil.  Saudi oil exports are 10% of world consumption, and other countries have very little scope to increase oil production.   US corn exports are 2.3% of world grain consumption, and other countries do have the ability to produce more grains.  Not saying it wouldn’t have an influence, but it is not on the same level as a collapse in Saudi oil production – that will make for some interesting times!

    [link]      
  87. By Wendell Mercantile on April 6, 2011 at 3:12 pm

    Oklahoma is not a big player when it comes to raising corn for ethanol, but if the Dust Bowl is about to return, it won;t only be in OK. We’ll find out soon enough what effect a shock to our food production system means if we come to depend on using food for fuel: Oklahoma sees driest four months since Dust Bowl

    Neighboring states are in similar shape as the drought stretches from the Louisiana Gulf coast to Colorado, and conditions are getting worse, according to the U.S. Drought Monitor.

    The Ogallala Aquifer won’t last forever.

    [link]      
  88. By paul-n on April 6, 2011 at 8:45 pm

    Yep, looks OK is getting what Australia had until last year…

    Difference is Australia has no Ogallala Aquifer to start with.  That aquifer will be depleted, just like an oil reservoir, and will never recover.  That is a race to the bottom if ever there was one.  

     

    Reading that article you can see part of the problem;

    Mike Spradling, the president of the Oklahoma Farm Bureau, said many wheat farmers have considered just plowing under their fields and switching to another crop.

    That is about the worst possible thing they can do, but they probably will.  In a dry year to plough the fields will kill what little vegetation cover there is, destroy the soil structure, leaving broken brown soil to dry out in the summer sun.  You couldn’t create better conditions for wind erosion if you tried.  These guys need to learn the only plow you ever need is a deep ripping plow, like this one, and otherwise you never plough the surface soil, unless you actually want it to blow away.  Looking at the photo in that story, they could do with planting some tree windbreaks too.

    You can farm successfully in dryland conditions, but the first step is to realise that you are in dryland conditions.  These guys are ploughing and farming as if they are in a temperate climate, and are just asking for trouble in drought year.  

    [link]      
  89. By Wendell Mercantile on April 7, 2011 at 1:20 pm

    Drought in Oklahoma; a possible return of the Dust Bowl; the Ogallala Aquifer drying up; and now the food v. fuel issue raises its ugly head again: Rush to Use Crops as Fuel Raises Food Prices and Hunger Fears

    But with food prices rising sharply in recent months, many experts are calling on countries to scale back their headlong rush into green fuel development, arguing that the combination of ambitious biofuel targets and mediocre harvests of some crucial crops is contributing to high prices, hunger and political instability.

    [link]      
  90. By Rick on April 14, 2011 at 12:47 pm

    Great article.
    I know many people in the US, who have never heard the term Peak Oil.
    They think there’s plenty of oil left, and everything will be fine. They’re in for a rude awakening. I’m a big fan of http://www.kunstler.com – I think that says it all.

    [link]      
  91. By Wendell Mercantile on April 14, 2011 at 1:06 pm

    They think there’s plenty of oil left, and everything will be fine.

    Actually, there is a lot of oil left. Problem is there are too many people who want to use that oil for the increased quality of life it provides.  Yes, there will be a rude awakening.

    [link]      
  92. By paul-n on April 15, 2011 at 12:51 am

    Actually, there is a lot of oil left.

    Yes, and as long as you are prepared to pay upwards, and maybe well upwards, of $100/bbl for it, you can have some, otherwise a good deal of that oil will stay right where it is.

    [link]      
  93. By Walt on April 15, 2011 at 11:28 am

    Paul N said:

    Actually, there is a lot of oil left.

    Yes, and as long as you are prepared to pay upwards, and maybe well upwards, of $100/bbl for it, you can have some, otherwise a good deal of that oil will stay right where it is.


     

    It looks like Natural Gas is getting even more interesting with multiple zones and formations.  These volumes are also staggering if possible.

    http://www.rigzone.com/news/ar….._id=105984

    [link]      
  94. By fuel efficiency on July 30, 2011 at 9:23 am

    This should be an effective wake up call to all of us. Oil and gas conservation is now at high stake that everyone of us must do our share.

    [link]      
  95. By Florida Lemon Law on October 5, 2011 at 7:11 am

    I dont know about some of you but $21.00 more a week for gas is a lot of money for a lower middle class family. We dont all make $50,000 a year. Also this section only deals with the cost of putting gas in your own vehicle(s). What about the increase of transportation cost due to rising fuel prices? When the price of fuel goes up, so does everything else.

    [link]      
  96. By kmullinsf on December 30, 2011 at 1:38 pm

    Its time to wake up people…Lets key on the biggest oil company in the usa,,(exxon),,and stop using there gas and oil for one month,,Lets see what happing then..WE CAN DO IT

    [link]      
  97. By Wendell Mercantile on December 30, 2011 at 9:31 pm

    stop using there gas and oil for one month, let’s see what happing then..WE CAN DO IT

    After you.  Be specific about what action you ae personally taking.

    [link]      
Register or log in now to save your comments and get priority moderation!