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By Robert Rapier on Jun 1, 2007 with no responses

The Cost of Environmental Regulations

That title will immediately raise some eyebrows, but I am not suggesting that we don’t need the environmental regulations we have. Rather, I just want people to understand that this is part of the cost for gasoline. I want them to understand that they aren’t getting a free lunch here. But by no means do I condone the watering down of environmental regulations in order to make gasoline cheaper. Rather, I want to reiterate something I wrote in a previous essay. When politicians enact new regulations, they need to have an understanding of what this means. First, this necessarily redirects capital that might have gone into expanding refining facilities. Second, it increases the costs of producing the fuel. Third, this… Continue»

By Robert Rapier on May 31, 2007 with no responses

The Crumbling Ethanol Facade

I have seen it all now. When the biggest ethanol boosters are starting to suggest that maybe we have a problem, you know we have a problem. And that is exactly what is happening. I can remember U.S. Sen. Chuck Grassley’s giddiness as President Bush talked about his strong support for ethanol during the 2007 State of the Union Address (discussed here). This is a man who has ethanol in his veins (no, I don’t mean he is an alcoholic). So, you can imagine my surprise when I read yesterday’s OPIS report in which he admitted to cracks in the coalition: U.S. Sen. Chuck Grassley (R-Iowa), one of ethanol’s most ardent supporters, said he is beginning to see “cracks” in… Continue»

By Robert Rapier on May 29, 2007 with no responses

This Week in Petroleum 5-30-07

2nd Update: The data have been released: Summary of Weekly Petroleum Data for the Week Ending May 25, 2007 As I have been predicting, this was an all-time record low gasoline inventory for Memorial Day Weekend. This is 2.7 million barrels lower than the previous low inventory mark for Memorial Day. Woo-hoo? U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell by 2.0 million barrels compared to the previous week. At 342.2 million barrels, U.S. crude oil inventories are at the upper end of the average range for this time of year. Total motor gasoline inventories increased by 1.3 million barrels last week, but remain well below the lower end of the average range. Distillate fuel… Continue»

By Robert Rapier on May 27, 2007 with no responses

The Mythical Ethanol Threat

There have been many claims in recent years that ethanol is going to help wean us off of fossil fuels. In fact, many of our political leaders claim that as long as we just keep subsidizing the ethanol industry, eventually cellulosic ethanol will take over and we will all motor happily along on E85. We are making energy policy decisions based on this assumption. As this analysis will show, the data we have to date don’t support those kinds of projections. Let’s consider the effect to date of the explosive growth in grain ethanol production. The difficulty in producing ethanol from cellulose is probably an order of magnitude greater than it is for producing ethanol from corn. Therefore, it is… Continue»

By Robert Rapier on May 25, 2007 with no responses

Record Prices = Record Profits?

So, I am running through some of my daily news searches – things like “gas prices”, “gas gouging”, “alternative energy”, etc. I ran across this gem: Gas price gouging becomes even more obvious It is basically just another ignorant screed from someone who apparently thinks oil companies can just raise and lower prices at a whim: As long as no significant gasoline retailer breaks ranks and the price at the pump remains fairly constant from one street corner to the next within a region, there is no reason for any oil company not to raise prices. So they do. An absolutely abysmal understanding of the issues. It is funny that people seem to understand that when the price of gold… Continue»

By Robert Rapier on May 24, 2007 with no responses

API Conference Call on Gas Prices

On May 16th, I participated in another conference call with the American Petroleum Institute. The subject was gas prices. Since I am probably not the best person to challenge the API on gas prices, I put out an invitation at The Oil Drum for others to join the call. (The reason I am not the best person to challenge them is (1) I understand why gas prices are rising; (2) I work in the industry; and (3) I think prices should be even higher to spur conservation efforts). So, joining me on the call were 2 of my colleagues from TOD – Alan Drake and Chris Miller. I will pull out some excerpts of our questions, but you can read… Continue»

By Robert Rapier on May 23, 2007 with no responses

This Week in Petroleum 5-23-07

Some Reactions to Gasoline Inventories From Bloomberg: Crude Oil Is Steady as U.S. Gasoline Supplies, Demand Increase “Inventories are growing but we are still in big trouble with gasoline supplies,” said Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago. “Supplies should be much higher going onto the Memorial Day weekend.” U.S. gasoline consumption peaks during the summer driving season, which lasts from the Memorial Day holiday in late May to Labor Day in early September. “We need to see 3-million-barrel builds,” said Peter Meyer, a commodity trader for Lehman Brothers Holdings Inc. in New York. “We need to see 95 percent refinery utilization in order to be comfortable about adequate gasoline supplies this summer. If… Continue»

By Robert Rapier on with no responses

Congress Takes Aim at OPEC

From the Houston Chronicle: House legislation would label oil cartel’s actions as illegal Championed by House Judiciary Committee Chairman John Conyers, D-Mich., the bill would essentially make it illegal for foreign nations like those in OPEC to operate a cartel. Under federal law, foreign governments cannot be sued for failing to comply with federal antitrust laws. “We don’t have to stand by and watch OPEC dictate the price of our gas,” Conyers said. “We can do something about … this anti-competitive, anti-consumer behavior. And we are.” That’s right OPEC! Quit hogging our gas! Cavaney argued that lawmakers could likewise be accused of withholding oil production, since they have refused to let operators drill off most of the nation’s coastline. “They’re… Continue»

By Robert Rapier on May 22, 2007 with no responses

Price Gouging Bill

Extracted from yesterday’s OPIS report: Congressional Democrats have said that they want to get an anti-price-gouging bill to the White House by Memorial Day and there is no indication of any presidential veto in the works. There are two bills pending. One, sponsored by Sen. Maria Cantwell, D-Wash., has already passed the Senate Commerce Committee and could come to a floor vote this coming week. Rep. Bart Stupak, D-Mich., is pushing a near-identical measure in the House. Both bills contain draconian penalties for violations. For example, Stupak’s seeks up to $3 million/day in civil fines. The criminal penalty is $150 million for a company, $2 million and up to 10 years in jail for an individual. Cantwell’s bill is less… Continue»

By Robert Rapier on with no responses

Mark Jacobson Responds to Vinod Khosla

Following the previous response by Vinod Khosla, I sent a link to Professor Jacobson and asked if he had any comments he wanted to make. I received the following, along with permission to post it: Thanks for your email. With regard to the comment that Khosla stated publicly my study was funded by Exxon Mobil, this was reported to me by a student who was at his talk at the Business School at Stanford. The student was the one who asked him the question what he (Khosla) thought of the study at Stanford about ethanol health effects and who told me of the response. I never solicited this information from the student nor even knew Khosla was giving a talk…. Continue»