Fuel Freedom Staff

Auto-makers put on notice over inflated mileage

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Will U.S. auto-makers pay more attention to the claims they make about the mileage drivers can get from their cars?

Greater scrutiny is expected now that South Korean manufacturers Hyundai and Kia have been ordered to pay a total of $100 million in fines, and $250 million in other penalties, for overstating the miles-per-gallon claims on 1.2 million vehicles.

The settlement, announced Monday by the EPA, was praised by environmental groups.

“Consumers deserve accurate information on emissions and fuel economy when they go to the showroom,” Luke Tonachel, a senior vehicles analyst at the Natural Resources Defense Council, told The Los Angeles Times.

EPA Administrator Gina McCarthy declined to comment on whether other auto companies, like Ford, BMW and Mercedes-Benz — all of which have restated their own fuel-economy claims — would face any punishment.

According to The Detroit News:

“This is by far the most egregious case,” McCarthy told reporters, referring to Hyundai and Kia. She said the “discrepancies” by other automakers were “not as systemic.” She called testing by the Korean automakers “systemically flawed” and not in line with “normal engineering practices and inconsistent with how any other automaker has been doing this.”

As Bloomberg notes, vehicle owners curious about whether they can collect money can visit hyundaimpginfo.com and kiampginfo.com.

The L.A. Times says EPA investigators learned that Hyundai and Kia, corporate siblings who are South Korea’s two largest auto-makers, “chose favorable results rather than average results from a large number of tests that go into the certification of the fuel economy ratings.” The companies blamed the inflated results on “procedural errors.”

Christopher Grundler, director of the EPA’s Office of Transportation and Air Quality, said: “I am quite certain that automakers will be paying attention to this announcement. They don’t want to find themselves in this same situation.”

Arctic Leaf

The decline of oil and gas prices, replacement fuels and Nostradamus

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“It’s a puzzlement,” said the King to Anna in “The King and I,” one of my favorite musicals, particularly when Yul Brynner was the King. It is reasonable to assume, in light of the lack of agreement among experts, that the Chief Economic Adviser to President Obama and the head of the Federal Reserve Bank could well copy the King’s frustrated words when asked by the president to interpret the impact that the fall in oil and gasoline prices has on “weaning the nation from oil” and on the U.S. economy. It certainly is a puzzlement!

What we believe now may not be what we know or think we know in even the near future. In this context, experts are sometimes those who opine about economic measurements the day after they happen. When they make predictions or guesses about the behavior and likely cause and effect relationships about the future economy, past experience suggests they risk significant errors and the loss or downgrading of their reputations. As Walter Cronkite used to say, “And that’s the way it is” and will be (my addition).

So here is the way it is and might be:

1. The GDP grew at a healthy rate of 3.5 percent in the third quarter, related in part to increased government spending (mostly military), the reduction of imports (including oil) and the growth of net exports and a modest increase in consumer spending.

2. Gasoline prices per gallon at the pump and per barrel oil prices have trended downward significantly. Gasoline now hovers just below $3 a gallon, the lowest price in four years. Oil prices average around $80 a barrel, decreasing by near 25 percent since June. The decline in prices of both gasoline and oil reflects the glut of oil worldwide, increased U.S. oil production, falling demand for gasoline and oil, and the likely desire of exporting nations (particularly in the Middle East) to protect global market share.

Okay, what do these numbers add up to? I don’t know precisely and neither do many so-called experts. Some have indicated that oil and gas prices at the pump will continue to fall to well under $80 per barrel, generating a decline in the production of new wells because of an increasingly unfavorable balance between costs of drilling and price of gasoline. They don’t see pressure on the demand side coming soon as EU nations and China’s economies either stagnate or slow down considerably and U.S. economic growth stays below 3 percent annually.

Other experts (do you get a diploma for being an expert?), indicate that gas and oil prices will increase soon. They assume increased tension in the Middle East, the continued friction between the West and Russia, the change of heart of the Saudis as well as OPEC concerning support of policies to limit production (from no support at the present time, to support) and a more robust U.S. economy combined with a relaxation of exports as well as improved consumer demand for gasoline,

Nothing, as the old adage suggests, is certain but death and taxes. Knowledge of economic trends and correlations combined with assumptions concerning cause and effect relationships rarely add up to much beyond clairvoyance with respect to predictions. Even Nostradamus had his problems.

If I had to place a bet I would tilt toward gas and oil prices rising again relatively soon, but it is only a tilt and I wouldn’t put a lot of money on the table. I do believe the Saudis and OPEC will move to put a cap on production and try to increase prices in the relatively near future. They plainly need the revenue. They will risk losing market share. Russia’s oil production will move downward because of lack of drilling materials and capital generated by western sanctions. The U.S. economy has shown resilience and growth…perhaps not as robust as we would like, but growth just the same. While current low gas prices may temporarily impede sales of electric cars and replacement fuels, the future for replacement fuels, such as ethanol, in general looks reasonable, if the gap between gas prices and E85 remains over 20 percent — a percentage that will lead to increased use of E85. Estimates of larger cost differentials between electric cars, natural gas and cellulosic-based ethanol based on technological innovations and gasoline suggest an extremely competitive fuel market with larger market shares allocated to gasoline alternatives. This outcome depends on the weakening or end of monopolistic oil company franchise agreements limiting the sale of replacement fuels, capital investment in blenders and infrastructure and cheaper production and distribution costs for replacement fuels. Competition, if my tilt is correct, will offer lower fuel prices to consumers, and probably lend a degree of stability to fuel markets as well as provide a cleaner environment with less greenhouse gas emissions. It will buy time until renewables provide a significant percentage of in-use automobiles and overall demand.

Fuel Freedom Staff

Here’s where nearly half the oil from Gulf of Mexico spill went

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About 2 million of the estimated 4.9 million barrels of oil that escaped from the undersea Macondo well following the April 2010 explosion and fire aboard the Deepwater Horizon rig apparently came to rest on the floor of the Gulf of Mexico, according to new research. It now covers an area of about 1,235 square miles, possibly migrating near deep-sea coral.

Here’s an excerpt from a story in the Houston Chronicle:

“Our findings suggest that these deposits come from Macondo oil that was first suspended in the deep ocean and then settled to the seafloor without ever reaching the ocean surface,” [UC Santa Barbara microbial geochemist David] Valentine said.

Light, freshly released oil normally is generally not expected to sink, and even dispersed oil is more likely to remain suspended in water.

Valentine described the footprint as a “shadow of the tiny oil droplets that were initially trapped” higher up, in the water above. “Some combination of chemistry, biology and physics ultimately caused those droplets to rain down another 1,000 feet to rest on the seafloor,” he added.

Fuel Freedom Staff

U.N. climate report: Our carbon budget will be used up in 30 years

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It doesn’t get much more dire than this: A major new report by the United Nations’ Intergovernmental Panel on Climate Change forecasts irreversible damage if the world doesn’t begin to reduce greenhouse-gas emissions now.

According to The New York Times:

If governments are to meet their own stated goal of limiting the warming of the planet to no more than 3.6 degrees Fahrenheit, or 2 degrees Celsius, above the preindustrial level, they must restrict emissions from additional fossil-fuel burning to about 1 trillion tons of carbon dioxide, the panel said. At current growth rates, that budget is likely to be exhausted in something like 30 years, possibly less.

Fuel Freedom Staff

Energy Quote of the Day: ‘Natural Gas is Often Described as a Bridge Fuel…How Long Should that Bridge Be?’

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A new report released by the Canadian Pembina Institute and the Pacific Institute for Climate Solutions looks at British Columbia’s (B.C.) liquefied natural gas (LNG) strategy to serve the lucrative Asian gas market through the prism of global climate change in a carbon-constrained world. “Natural gas is often described as a bridge fuel. The question is, how long should that bridge be?” says Josha MacNab, B.C. Regional Director for the Pembina Institute.

Read more at: Breaking Energy

Fuel Freedom Staff

Falling oil prices may strengthen U.S. hand in talks with Iran

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The United States has been in protracted negotiations with Iran over a settlement that would reduce or eliminate economic sanctions against Iran, in exchange for that country delaying its nuclear program.

With oil prices falling — one expert notes that Iran needs a price of $140 per barrel to balance its national budget — the U.S. position could be strengthened. But as this excellent story by Thomas Erdbrink of The New York Times shows, Iran isn’t likely to give away everything, even if it halts the nationwide economic pain.

“They will remain focused on getting a deal, but not any deal,” said Ali Khorram, a former Iranian ambassador to China who is close to the negotiating team.

Landon Hall

Hey Nebraskans, 1 in 10 of you drives a flex-fuel vehicle

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Nebraska is the nation’s third-leading corn producer (behind Iowa and Illinois), and it’s also fertile ground for the ethanol industry.

As the state Department of Agriculture notes, Nebraska has 25 operating ethanol plants that produce more than 1.2 billion gallons of ethanol a year. These operations employ about 3,000 people.

So it’s no surprise that Nebraskans are ahead of much of the nation when it comes to adopting ethanol as a transportation fuel. There are 67 stations in the state where E85 (a blend of up to 85 percent ethanol and the rest traditional gasoline) is available, according to the Alternative Fuels Data Center.

About 10 percent of Nebraskans drive a vehicle that is branded flex-fuel, with the tell-tale badge on the rear or a yellow gas cap, meaning it can run any ethanol concentration (including E85) or gasoline or any blend of the two. The benefits of running E85 in a flex-fuel vehicle are numerous: It’s often cheaper than regular gas, even when you account for the roughly 30 percent reduction in fuel economy compared with gas; ethanol produces less toxic pollutants that harm health, and fewer greenhouse-gas emissions that harm the environment. The vehicle’s engine also has more power and better performance on ethanol.

In a story in the Grand Island Independent by Robert Pore this week, Gov. Dave Heineman encouraged Nebraskans who own flex-fuel vehicles to support the state’s ethanol industry, and take advantage of a renewable resource grown locally, by filling up with E85. “E85 continues to gain popularity across our state and country – allowing us to continue to reduce our dependence on foreign oil,” Heineman said.

Nebraskans will have the opportunity to learn more about ethanol and other replacement fuels during a free screening of the Fuel Freedom Foundation-produced documentary “PUMP” on Nov. 12 on the University of Nebraska campus in Lincoln. The film will be shown at 7 p.m. at the Mary Riepma Ross Media Arts Center, 313 N. 13th Street. As this calendar notice on the Lincoln Journal Star website notes, the screening will be hosted by the Nebraska Ethanol Board, the Urban Air Initiative and the Association of Nebraska Ethanol Producers. After the film, Doug Durante, executive director of the Clean Fuels Development Coalition, will lead a brief panel discussion and take questions from the audience.

“PUMP” is playing in theaters in several other cities, including Anchorage and Tucson. Visit PUMPTheMovie.com for more information.