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Posts Tagged ‘Gasoline’

This past weekend I rolled the bike out of the garage to enjoy the blue sky and 59 degree weather.  Wow, it doesn’t get much better in the northwest for an early spring day!  Never mind that it snowed the very next day!

I headed to the local Shell station and as I topped off the gas tank I tried to recall which of the political candidates detailed how the oversupply in natural gas had caused its price to crash, and then, just when you thought they were about to blame Obama for destroying the income of all those poor natural gas folks, pivoted on a dime and used it as a supporting argument for why $2.50 a gallon gas is very do-able… right, just as the average price of gasoline has increased by 42 cents, from $3.36 to $3.78 per gallon since the beginning of the year.  And that’s from the U.S. Energy Information Administration, and it’s an average of all grades, all formulations, across all regions of the country.

Yet, somehow, the politicians know where there’s enough oil to cause a world oversupply, or something to drive the price down.   Huh?  All I know is that $4 a gallon “creates some very real challenges” for average American families and their household budgets.

The “drill baby drill” makes for a nice bumper sticker. But, the real answer, is there’s no quick fix.  Gasoline prices are linked very tightly to crude oil prices.  The rule of thumb is that a $1 increase in the price of crude produces a 2½-cent increase in the price of gasoline. Lately, gasoline prices have been linked most closely to the price of Brent crude, and since the beginning of the year Brent has gone up from $107 to $123, a $16 increase.   Clearly some of the price difference is also related to oil speculators on Wall Street. Sanctions on Iran may be hurting their ability to ship crude. Additionally, some analysts think that some of the price increase is driven by fear that Iran might cut off oil shipments entirely, or else slow or close the Strait of Hormuz. In other words, some of the pricing might be driven by fear, uncertainty and doubt (FUD).

Clearly demand for oil is pushing up against supply limits, and that’s a permanent condition.  And when supply and demand are tightly constrained, any small bump in demand or disruption in supply causes a big swing in prices for you and I. Last year it was the war in Libya that caused a price spike. This month it’s Iran. But it’s always something and it doesn’t take much anymore to produce a $30 swing in oil prices.

We need to change the conversation.

Yeah, I’ve read about the new shale oil finds in North Dakota too.  It might increase global supplies a bit, but probably not enough to make up for increasing demand from China and other emerging economies. Basically, prices are going to stay high for the foreseeable future.  Like it or not, this is our future.

I recommend buying a motorcycle!

Photo courtesy of Shell

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Ethanol Boosted Gasoline and Harley-Davidson

That’s horseshit!

No, I’m not afraid to put that in the title.  It’s just if I do, this finely crafted missive is unlikely to pass the blog filters.  In fact, those of you working at companies probably won’t see it pass through your company filter now that I’ve spelled out the word.  Because that’s how afraid of plain English this country is.  And if you’re protected from reality, how can you know the truth.

And speaking of truth…

What kind of crazy world do we live when environmental and industry groups who frequently oppose each other,  AGREE to jointly ask Congress for thorough and objective scientific testing before allowing an increase in the amount of ethanol in gasoline?  The ethanol industry, primarily lead by the Growth Energy trade group has been pushing hard to allow the amount of ethanol in gasoline to increase by 50%.  It’s called E15 and some 36 groups have signed a letter that went to the majority and minority leaders of the U.S. Senate urging opposition to any amendment to the coming energy bill that would authorize the sale of gasoline with more than 10% ethanol.

But, today the contrite attitude of the Obama administration granted the request of ethanol producers and will permit higher concentrations of the corn-based fuel additive in gasoline for vehicles made in 2007 and later.  The EPA announced its “rubber stamp” decision just minutes later on how they will allow refiners to blend as much as 15%.  The fact is that the Obama administration doesn’t have the power to order use of E15, however, the decision will have profound impact to motorcyclists.

Automotive manufacturers (GM, Ford, Chrysler) have all expressed major concerns and believe ethanol concentrations of higher blends can damage exhaust systems, engines, fuel pumps and destroy catalytic convertors.  By-the-way, this decision excludes ALL MOTORCYCLES, marine engines and non-road engines such as snowmobiles.

Who wins with this “boosted” blend ratio?  Well let’s follow the money…  Corn-ethanol lobby groups like Growth Energy (headed up by Wesley Clark) will benefit.  The U.S. pays a $0.45-cent tax credit to gasoline refiners that make a blend of as much as 10% ethanol.  They win.  Farm exports will increase and they win.  Poet LLC, based in Sioux Falls, SD is the largest U.S. ethanol producer followed by Archer Daniels Midland Co.  They win.  In fact, the annual market value for ethanol in the U.S. has risen to $27.1 Billion since federal support began under the Jimmy Carter administration.

Who loses?  Consumers.  Corn prices, cost of food, cost of fuel and cost of maintenance or repairs.  And then there is the ever present mis-fueling issue. Lastly, how long until measures are put in place for motorcycles?

Photo courtesy of Flickr

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