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By Robert Rapier on Mar 16, 2007 with 2 responses

Refining 101: Summer Gasoline

Just what is summer gasoline? Twice a year, in the fall and in the spring, you hear about the seasonal gasoline transition. However, most people probably don’t understand what this actually means. AAA recently provided a Top 10 list explaining the recent rise in gasoline prices, and summer gasoline checked in at #7: 7. The summer blend switchover. This transition from winter-blend to summer-blend fuel, a concoction that causes less smog, occurs every spring. It causes a dip in gasoline supplies as refineries in the U.S. shut down temporarily to retool their production facilities. That’s only partially correct, and is probably the extent of most people’s understanding of this transition. But given that I am very keen that people should… Continue»

By Robert Rapier on Mar 15, 2007 with no responses

Energy Heating Up Inflation

I am not quite sure why this was a surprise: Producer prices unexpectedly jump 1.3% There were two major culprits identified: Energy and food. However, the food component was also related to energy: Food prices rose 1.9%, as prices for unprocessed foods rose 11.2%. Fresh fruit prices rose 15.7% and fresh vegetable prices rose 8.3%. Pasta prices rose 4.3%, the most in 11 years. Food prices have been rising rapidly, in part in response to the diversion of corn into the ethanol market as a substitute for gasoline. Food prices have now risen more than 1% for three months in a row and are running at an annualized rate of 18.1% in that time. Other than a spike in 2004… Continue»

By Robert Rapier on with no responses

OPEC Holds Steady

I have been trying to get inside the mind of OPEC lately and predict what they would do at this week’s meeting. Worldwide crude inventories have been falling, so the market appears to be undersupplied heading into high-demand season. So, if I was in charge of my country’s oil, do I open the taps a bit and risk bringing the price down, or do I hold steady and hope that I can react fast enough if prices start to spiral out of control? Or, do I make additional cuts in an attempt to stabilize prices at a higher price band? After mulling this over, I think I would take the middle-ground. The current prices have not stemmed demand. The money… Continue»

By Robert Rapier on Mar 14, 2007 with no responses

When Will Saudi Arabian Oil Production Peak?

The eventual decline of oil production in Saudi Arabia will likely have a profound impact on all of our lives. This event will result in energy shortages around the world, and depleting oil supplies will be bid up to higher and higher levels. Poor countries will no longer be able to compete, and they will be the first casualties of oil depletion. The richer countries will bid against each other for the remaining supplies, and if the depletion rate is high enough we will be in for some very tough times. The Saudis say they have plenty of oil. However, there are a lot of skeptics. So, I am very interested in understanding what’s going on inside Saudi Arabia. One… Continue»

By Robert Rapier on Mar 13, 2007 with no responses

Conflicts of Interest

Critics often charge me with a conflict of interest for my position on grain ethanol. They suggest that I have something to gain by opposing grain ethanol. Often, a charge of bias will be the extent of my opponent’s argument, which is of course an ad hominem fallacy. While it is certainly fair to suggest that I might have a bias, at the end of the day it is the arguments that must be addressed. This is true whether I am employed by Greenpeace, or on the staff of Dick Cheney. Furthermore, as I have pointed out, ethanol producers use a lot of natural gas, and my company sells a lot of natural gas to them. Given our market share… Continue»

By Robert Rapier on Mar 12, 2007 with no responses

Inventories are Falling Fast

There has been a lot of speculation lately over whether the Saudi oil production cuts over the past year have been voluntary. I have argued that they were voluntary based on a combination of what was happening with inventories last spring (crude inventories were very high and trending higher), and then price (started falling in the summer and fell for the rest of the year). But I think we will soon know for sure. This is subscriber information from the daily OPIS report, so I will only post a small portion of the report: Over the past five weeks, there has been a fundamental shift in the oil Market — a shift that has resulted in increasingly higher prices. The… Continue»

By Robert Rapier on Mar 8, 2007 with no responses

The Handy-Dandy Khosla Refuter

The web site Seeking Alpha has just published a new article on ethanol: Ethanol: A Few Myths Debunked To be honest, there are so many misconceptions and myths in the article that a better name for it would have been Ethanol: A Few Myths Repeated. I think all of these “myths” have been covered at one time or another in this blog, but he does quote Vinod Khosla at length. So, this might be a good time to re-debunk Khosla, given that he has repeated this claims many times since the first debunking. So, once again, here are Vinod Khosla’s claims, repeated from the above article, dissected and debunked. VK: Energy balance is not even the right question to answer…. Continue»

By Robert Rapier on with no responses

More Amateurs to Build Ethanol Plants

I couldn’t make this stuff up if I tried. The following was called to my attention in an e-mail earlier today after Ron Steenblik uncovered the story: Yuma doctor hopping on board booming ethanol trend Continuing the trend that I reported on previously, amateurs continue to jump onto the ethanol bandwagon: Dr. Sultan Lalani doesn’t lose sleep over the biggest project he has ever done. And he said he doesn’t lose any sleep over criticism of the proposed 55-million-gallon per year ethanol plant he hopes to build near Tacna either. With a construction cost of $125 million, this plant is serious business, but Lalani said it doesn’t overwhelm him. He wants to do the project, located at Avenue 47-1/2E and… Continue»

By Robert Rapier on Mar 5, 2007 with no responses

How to Make an Easy $875,000

No experience or special skills are required. You don’t even need good credit. But you are going to need a post office box and a (preferably catchy) company name. Looks like some of the good citizens of North Carolina are up in arms because $875,000 in taxpayer dollars is being given to a person with absolutely no experience (but a catchy company name) to build an ethanol plant. The backer of the plant is an Indian billionaire (but not Vinod Khosla). Here are some excerpts from an article discussing the controversy, Passing Bad Gas: E85 is described as a Delaware-based corporation with corporate offices in the Seattle area. What the CCBC has not publicly disclosed, perhaps because they do not… Continue»

By Robert Rapier on Mar 1, 2007 with no responses

The FTCR Slander Continues

I have written previously about the Foundation for Taxpayer and Consumer Rights (FTCR). You can see a list of these essays here. Their web site states: FTCR is a non-profit, non-partisan consumer watchdog group. We fight corrupt corporations and crooked politicians every day. Now that sounds like a noble goal. That is, until you start to dig a little deeper, and find out that “corrupt corporations” too often means “we are paying too much for gasoline, and it must be because of corrupt corporations.” In fact, they have stated that they think gasoline should be under $2.00/gallon for everyone. They seem to feel that this is some sort of a birthright for Americans. Given my often-repeated mantra that we need… Continue»