[VIDEO] Utah may boast abundant energy resources such as cool, natural gas and crude oil, but the message Gov. Gary Herbert drilled home…
[VIDEO] The governor made the announcement at his annual Utah Energy Development Summit on Wednesday, before a crowd of about 1,300 people. The technology, a form of “liquid natural gas” could be used to fuel cars and cut pollution levels, Herbert said…. Read the article
You must remember the famous community activist who once asked, “To be, or not to be, that is the policy and behavior question; whether ‘tis nobler in the mind to suffer the slings and arrows of outrageously high, constantly shifting gasoline prices or to take arms against a sea of troubles generated by monopolistic fuel markets and open them up and end them.” I’m paraphrasing, of course.
Unfortunately, Shakespeare, now that we need him, is no longer available. But his question, articulated by his political friend Hamlet, still needs to be answered. I suggest we respond to his query in the context of another question: Is competition in the market for vehicular fuel a public good and in the public interest? Ah ha, you ask, why must we ask this question? Don’t we live in a capitalist or quasi-capitalist nation? Gosh, ever since we all were kids, were we not brought up on the wisdom of free markets and their ostensible link to freedom and democracy, a trifecta holy grail?
Sure we were! But the presented wisdom apparently didn’t mean all markets, and most important for this article, the market where most of us purchase fuel. By and large, the market for fuel is limited to a single, generally similar, primary product — gasoline. Competition, when it exists, generates from relatively small price differences, more often than not. Overblown value propositions in advertising concerning engine performance benefits from brand X or Y notwithstanding.
Consumers who, many times, assiduously read the papers or go online to find out where different brands of tires are cheapest or travel miles to visit dealers to get a perceived “good deal” on a car are frequently constrained to their neighborhood gas stations or the stations located near the nearest shopping center or big box store. While price may be a key factor in driving their decision as to which station will fill up their tank, absence of diverse fuel alternatives results in a relatively narrow band of prices per gallon and a competitive floor on consumer savings and costs.
Opening up gas markets will be tough. The oil industry controls or strongly influences over 40 percent of the stations and holds a big, profitable stick concerning what can be sold and how it can be sold at its franchised facilities. Prices are set low enough to scare independents into selecting less-than-favorable locations, or pricey enough to give them some room to keep their own costs relatively high.
To date, state pilot or demonstration programs concerning alternative fuels like ethanol and methanol have had mixed results. Why? Their costs of production and their environmental/GHG costs are lower than gasoline. Are we Americans just dumb? No. Initiatives to date have had to surmount problems including: consumer access to fuel stations with flex-fuel pumps (their costs range from $50,000 to over $100,000); a growing but still relatively small percentage of flex fuel autos compared to the total number of vehicles; the lack of consumer information concerning their own flex-fuel vehicle’s ability to use ethanol; the fear generated by some interest groups often related to the oil industry about the impact of alternative fuels on engines; the seeming ability of the oil industry to manage local prices; and the decisions by supply chain participants, particularly retailers to raise alternative fuel prices to capture immediate profits (reducing their intermediate and long-term ability — as the new kid on the block — to compete with gasoline.)
Evidence from Brazil suggests that demand emanating from an educated public, combined with a commitment to increase the pool of alternative-fuel vehicles and readily accessible fuel stations with ethanol pumps will cause a reduction in gasoline prices. Juliano J. Assunção, Joao Paulo Pessoa and Leonardo Rezende noted in a December 2013 London School of Economics publication, “Our estimates suggest that the model prediction is correct and that as the percentage of flex cars increase by 10%, ethanol and gasoline energy equivalent prices per liter fall by approximately 8 cents and 2 cents, respectively. Considering the volume of sales and size of the flex fuel fleet in 2007, a rough estimate suggests consumer savings to the order of 70 million Reais in the Rio de Janeiro state that year. Our estimates also show that the price gap as well as the price correlation between the two fuels has increased with the increased penetration of flex fuel cars.” Other studies have suggested similar positive impacts.
A U.S. recipe appears clear and consistent with America’s assumed belief in letting the market decide most resource allocation issues connected to the production of non-social welfare related goods and services. Ingredient one: Amend laws and regulations to encourage individual owners to convert older cars to flex-fuel automobiles; ingredient two: mix the resulting converted cars with newer flex-fuel vehicles to create a large flex-fuel pool; ingredient three: liberally sprinkle in enough information to inform consumers and potential-ethanol-supply-chain participants, including potential blenders and retailers, of the potential demand for ethanol as a fuel; ingredient four: add real, solid seasoning to the mix by fostering development, distribution and the sale of natural-gas-based ethanol to achieve significant increased environmental and cost benefits. Julia Child couldn’t build a better dish for the nation as it simultaneously tries to expand the viability of renewable fuels, and Shakespeare’s friend, Hamlet, would not need antidepressants.
If there’s an Achilles’ heel to the efforts being made to introduce compressed natural gas (CNG) into the country’s vehicles, it is that somebody is going to come along with a liquid fuel that works much better.
CNG has many things going for it. Natural gas is now abundant and promises to stay that way for a long time. That puts the price around $2 a gallon, which is a big savings when gas costs $3.50 and diesel costs $3.70 per gallon. Trucks — mid-sized delivery trucks and big 18-wheelers — are the target market. Delivery vans usually operate out of fleet centers where a central compressor can be installed to service many vehicles. Meanwhile, pioneering companies such as Clean Energy Fuels are busy building an infrastructure at truck stops along the Interstate Highway System to service long-hauling tractor-trailers on their cross-country routes.
But there is a weakness. As a gas, CNG requires a whole new infrastructure. Compression tanks must be built at gas stations, much stronger than ordinary gas tanks and tightly machined, so gas does not escape. Even under compression, CNG has a much lower energy density than gasoline. This requires special $6,000 tanks that must still take up more space. In passenger vehicles they will devour almost all the trunk space, which is why vendors are concentrating on long-distance tractor-trailers.
As a result, there always seems the chance that some liquid derivative of methane is going to come along and push CNG off the market. Methanol has been a prime candidate since it is already manufactured in commercial quantities for industrial purposes. M85, a mixture of 85 percent methanol and 15 percent gasoline, is legal in the United States, but has not been widely adopted.
Now a new candidate has emerged in the long-distance truck competition — dimethyl ether or “DME.” Two methane ions joined by a single oxygen molecule, DME is manufactured from natural gas and has many of the same properties as methanol. It is still a gas at room temperature but can be stored as a liquid at four atmospheres or -11o F. It can also be dissolved as a gasoline or propane additive at a 30-70 percent ratio. In 2009 a team of university students from Denmark won the Shell Eco Marathon with a vehicle running on 100 percent DME.
So is it practical? Well, we’ll soon find out. Volvo has just announced it will release a version of its D13 truck in 2014 that runs on DME. At the same time, Volvo pushed back the launch of its natural gas version of the same line, meaning it may be changing its mind about which way the technology is going to go. In case you haven’t been keeping abreast, Volvo is now the largest manufacturer of heavy trucks in the world, having acquired Mack, America’s oldest truck company, in 2000.
So does that mean that CNG may turn out to be a dead end and Clean Energy Fuels is going to get stuck with a lot of unused compressor pumps? Well, hold on a minute. Technology does not stand still.
Last week at the Alternative Clean Transportation Expo in Long Beach, Calif., Ford and BASF unveiled a new device for the Ford F-450 CNG fuel tank. It’s called a Metal Organic Framework (MOF), a complex of clustered metal ions built on a backbone of] rigid organic molecules that form one-, two-, or three-dimensional structures. Lots of surface area is created, making MOFs porous enough to hold large amounts of gaseous material such as methane.
MOFs create the possibility that on-board CNG tanks will not have to operate under extremely high pressure or extremely low temperatures. Like a metallic sponge the high-surface material soaks gas right up, where it can be easily dislodged as well. According to BASF and Ford, the same amount of natural gas that requires 3,600 pounds per square inch (PSI) can be stored in an MOF tank at close to 1,000 PSI. That makes a big difference when it comes to designing an automobile.
So does that mean natural gas is going to be able to hold its own against DME and other liquid competitors? Well, wait a minute, there’s still more. Not only is MOF technology good at storing methane, it also works with hydrogen! That means the hydrogen-fuel cell — still the favorite among Japanese manufacturers — may be able to work its way back in the game as well.
In fact, Ford isn’t playing any favorites. Equipped with its new MOF tanks, the F-450 will offer drivers a choice of seven — that’s right, seven — different fuel options using the same internal combustion engine. “Ford has no idea which of these fuels will make the most sense,” Ford’s Jon Coleman told Jason Hall of Motley Fool. “So we need to build vehicles that have the broadest capability and the broadest fuel types so our customers can choose for themselves.”
That’s the name of the game. It’s called Fuel Freedom.
Correlation or causation, correlation or causation
Misleading numbers, mistaken assumptions. Who will be the joker?
Okay, I am neither poet nor composer. I can’t even sing. But Fiorello Laguardia was an early hero from the time I met him in my sixth grade history books, and the musical Fiorello! was good fun.
Mayor Laguardia would be amused and bemused by recent articles suggesting that the Monterey Shale isn’t what it was cracked up to be a year or two ago. The story lends itself to his famous encounters with comic books. Despite earlier media hype, its development will not lead to economic nirvana for California and could well lead to real environmental problems.
Why were the numbers that were put out by the oil industry just a couple of years ago wrong? Maybe because of a bit of politics and polka! The articulated slogan concerning oil independence from foreign countries mesmerized many who should have known better.
Similarly, why, while once accepted by relevant federal agencies, have the production numbers concerning the Monterey Shale been recently discounted by the same agencies (EIA) and independent non-partisan analysts? Quite simply, they now know more. Succinctly, it’s too expensive to get the oil out and the oil wells, once completed, will have a comparatively short production life.
Drilling an oil field that is located under flat land is easier than drilling for very tight oil — oil that lies underwater or under a combination of flat as well as hilly, rolling, developed, partially developed or undeveloped areas known for their pervasive, pristine, beautiful environment. Further, the geological formations in the Monterey Shale area are a victim of their youth. They are older than Mel Brooks, but at 6-16 million years, the Monterey Shale is significantly younger than The Bakken. Shale deposits, as a result, are much thicker and “more complex.” According to David Hughes (Post Carbon Institute, 2013), existing Monterey Shale fields are restricted to relatively small geographic areas. “The widespread regions of mature Monterey Shale source rock amendable to high tight oil production from dense drilling…likely do not exist…” “… While many oil and gas operators and energy analysts suggest that it is only a matter of time and technology before ‘the code is cracked’ and the Monterey produces at rates comparable to Bakken and Eagle Ford,” this result is likely is not in cards…the joker is not wild. “Owing to the fundamental geological differences between the Monterey and other tight oil plays and in light of actual Monterey oil production data,” valid comparisons with other tight oil areas are…wishful thinking. Apart from environmental opposition and the costs of related delays, the oil underwater or underground in the Monterey Shale is just not amenable to the opportunity costing dreams of oil company CEOs, unless the price of oil exceeds $150 a barrel. According to new studies from the EIA, the recoverable reserves, instead of being as it projected earlier from 13.7 to 15.4 barrels, will be closer to 0.6 barrels.
If you believe in “drill, baby, drill” as a policy and practice, the cost/price conundrums are real. Low costs per barrel for oil appear at least marginally helpful to consumers and increases in oil costs seem correlated with recessions. Increased production of tight oil depends on much higher per barrel prices and, in many instances, increased debt., Neither in the long term is s good for the economic health of the nation or its residents.
Breaking the strong link between transportation and oil (and its derivative, gasoline) would make it easier to weave wise policy and private-sector behavior through the perils of extended periods of high gasoline prices and oil-related debt. Expanding the number of flex-fuel vehicles (FFVs) through inexpensive conversion of older cars and extended production of flex-fuel vehicles by Detroit would provide a strong market for alternative transition fuels and put pressure on oil companies to open up their franchises and contracts with stations to a supposedly key element of the American creed-competition and free markets. The result, while we encourage and wait for renewable fuels to reach prime time status, would be good for America, good for the environment and good for consumers.
Star light, star bright, I wish I may, I wish I might, have this wish I wish tonight… How many of you said these words on a starry night, particularly if you were with your best girl or boyfriend as a teenager? Or, as a loving parent, how many of you taught your child to say these words as part of your effort to build his or her vocabulary or memory…or just to instill their capacity to dream?
Now Kate Gordon, the, legitimately well respected, president of Next Generation, seems to have forgotten the difference between wishing, hoping, dreaming and reality. Her recent brief “expert” article in the Wall Street Journal departs from reasonable projection into fanciful wishes.
Gordon is correct that the “average car” on the U.S. road is about 11 years old and that their negative impact on GHG emissions and our health is significant. She is also correct in pointing to the large impact that high gas prices have on “our wallets,” (I would add) particularly for low and moderate-income households. Clearly, for the poor and near-poor families and for the economically fragile moderate-income households, present gas prices mean less of the basic necessities: modest job choices, good food, housing and healthcare.
Where Gordon and I part company is with her suggestion that an auto replacement initiative or what she calls an Enhanced Fleet Modernization programs would generate a visible, short-term impact and would likely be supported now, by assumedly the federal or state governments, in a significant way. (I should indicate that while I was head of the urban policy in the Carter administration, HUD senior officials thought about offering support by providing older cars to carless, low-income folks to permit them to secure job opportunities in the suburbs. How times have changed. The concern about GHG emissions and other pollutants emitted from older cars that run on gasoline are now seen as a real environmental problem.) The difficulty with Ms. Gordon’s proposal is number one, money and bureaucracy; number two, money and bureaucracy; and number three, money and bureaucracy. Even California, which she touts, has had mixed results with its replacement and incentives to replace older car programs. Clearly, exporting California’s experience to many other states, given economic and political constraints, would be difficult and would likely result annually in a relatively small impact on the nearly 300,000,000 cars in the U.S of which approximately 85-90 percent are over six years old.
Car replacement is a nice thought, but probably, at this time, an exotic one. If policymakers are seriously looking for a way for large numbers of owners of older cars to immediately reduce their vehicle’s negative effect on the environment, air quality and their own costs of fuel, there are better ways. While we wait and hope for the advent of vehicles that are ready to run on renewable fuels and that simultaneously meet the travel as well as budget needs and demands of most low, moderate and middle-income Americans, we should look at natural-gas-based ethanol as a fuel for newer flex fuel cars and for large numbers of older vehicles converted to flex-fuel vehicles.
Ethanol is not perfect as a fuel but it is better than gasoline. It emits fewer GHG emissions and other pollutants harmful to the nation’s quality of life. Recent regulations, like ones initiated by Colorado, that significantly reduce emissions from drilling now will likely make life cycle environmental evaluations of natural gas changed into ethanol a much better environmental deal. The process appears technologically feasible at a cost lower than the production costs of gasoline. If ethanol is allowed to compete with gasoline by oil companies on an even playing field — oil companies generally control who gets what and where at most “gas” stations — ethanol will be cheaper than gasoline for the consumer.
It is relatively inexpensive to convert older cars to flex-fuel vehicles — perhaps as little as $100 to $200. Finding a way through lessening the cost of certification to expand the number of conversion kits certified by the EPA and, or, where relevant, allowing recalibration of software and engines, would expand the benefit-cost ratio for many older cars. Star light, star bright, we can have the wish we wish tonight concerning a cleaner environment and lower consumer prices in a relatively short time, while we continue to push for electric vehicles and a whole range of renewable fuels to achieve prime-time performance for most Americans.
Supporters call it “clean diesel” to differentiate it from “biodiesel,” and indeed, there is a difference. Soybeans, the main feedstock for biodiesel, have only a 2-3 percent oil content. Some species of algae can have up to 60 percent oil content. This reduces the land requirements for growing a crop by a factor of 30.
So is algae biodiesel one of those great ideas that is always just over the horizon? Or has it germinated long enough that it may finally about to become a reality? The outcome still appears to be up for grabs.
The term “algae” actually cover a whole spectrum of organisms, from the 20-foot ribbon-like “seaweed” that grows in ponds and along littoral shores to the mid-ocean, microscopic “plankton” that is the diet of whales. All have one thing in common – they use carbon and sunlight to photosynthesize organic material. And they are good at it. Some species can double their mass within 24 hours. Thousands of species thrive in varying environments. Last summer, a red algae “tide” that feeds on farm runoff at the mouth of the Mississippi River “bloomed” to cover 5,000 square miles of the Gulf of Mexico, killing all manner of birds, fish and marine life, including hundreds of manatees. “If we can figure out how to make energy out of that,” President Obama told an audience at the University of Miami, “we’ll be doing alright.”
The idea of harvesting algae for energy was first suggested by Richard Harder and Hans von Witsch, two European scientists at the outbreak of World War II. Nothing much developed, however, and interest didn’t revive until the Energy Crisis of the 1970s, when the Department of Energy set up an Aquatic Species Program to pursue research.
Funded with $25 million over the next 18 years, the Aquatic Program investigated thousands of species, finding the Chlorella genus the most promising. It also made an important discovery. When Chlorella is deprived of nitrogen, it can increase its lipid (fat and oil) content to a remarkable 70 percent of mass! Remember, soybeans are only 2-3 percent lipids. But this created a conundrum. While depriving algae of nitrogen might may increase lipid content, it also severely inhibited growth. The Aquatic Program had not yet resolved this dilemma when it was disbanded in 1996.
Private companies picked up the research, however, and have tried to overcome it with genetic engineering. While pursuing this, they have developed two methods of cultivation. The easiest is to grow algae in open pools or “raceways” that devour large areas of land, since sunlight can only penetrate a few centimeters into the algal mat. The problem here is that most species are highly sensitive to variations in acidify, temperature and humidity. Their high lipid content also means they synthesize fewer proteins, which makes them extremely vulnerable to invasive species. This makes it very difficult to bring them up to commercial scale.
The more advanced technology is “photobioreactors,” conducted in large networks of glass or plastic tubes. The system overcomes environmental difficulties but is very expensive. In 2009 Exxon combined with J. Craig Venter, the decoder of the human genome, to try to develop a commercial method for developing algae-based fuels. After investing $600 million, however, Exxon pulled out of the enterprise in 2013, saying commercialization was 25 years away.
Nevertheless, several small companies say they are now making progress. Algenol, a Fort Myers, Fla. company, says it has developed a revolutionary “3rd generation” technology that can produce ethanol, jet and diesel fuel 8,000 gallons per acre, 18 times the output of corn-based ethanol, at $1.25 per gallon. Sapphire, a San Francisco company, has opened a 100-acre Green Crude Farm in New Mexico and hopes to be producing 100 barrels a day next year with full-scale commercialization by 2018. And Aurora Algae, a Hayward, Calif. firm which has operated a test facility in Western Australia for the last three years, has just announced an open-pond operation in Harlingen, Texas that it hopes to expand to 100 acres.
There is one great irony to all this. A full-blown algae industry already exists, providing feedstock for food additives, cattle silage and nutritional and pharmaceutical products. Some highly specialized fatty acids derived from exotic species can fetch $10,000 per gallon. In fact, the current industry sees algae-for-fuel as a rather low-grade use. “Until more federal funding is available, my members are going to continue growing for the higher-value products,” Barry Cohen, executive director of the National Algae Association, told Slate’s John Upton. “We have algae companies that are growing for the ingredients industry, the food industry and the nutraceutical industries. If they can grow the right species, those companies will buy every drop they can make.”
What makes these operations viable, of course, is their high-value end products, which cover the costs of growing algae in commercial quantities. An algae-for-fuel industry will either have to: a) develop new species that are much more efficient or b) perfect mass-production techniques that can bring prices down to an acceptable range. Only then will “clean diesel” become a competitor. For now, the industry seems headed in the right direction.
Wall Street was abuzz last week as Clean Energy Fuels, the leading supplier of natural gas for use in delivery and heavy-duty trucks, jumped 11 percent in one day after a long slump in which investors were questioning its business model.
“We’re at the very beginning of a major shift to natural gas for trucking – a shift that could take a decade before the growth slows – and Clean Energy Fuels is the leader in the market,” added Jason Hall of Motley Fool, who had been skeptical of the company in the past but is now turning enthusiastic.
“Natural gas vehicles are here to stay,” added James E. Brumley on SmallCap Network, in one of the many enthusiastic endorsements the company received last week. “So Clean Energy Fuels is very much a right-time, right-place idea. It’s not just that the company is the biggest and the best at what it does. There’s a market of scale for what it has to offer.”
It hasn’t been easy. The company, the brainchild of legendary oilman T. Boone Pickens, seemed poised for growth last year but suddenly hit a sudden downdraft in January. Skepticism grew over whether compressed natural gas (CNG) or liquid natural gas (LNG) would be the best substitute for diesel in heavy-duty trucks. The debate is really inconsequential since the two are interchangeable – LNG for large-scale storage and transport with some use in the biggest rigs and CNG for fueling smaller commercial vehicles. Nevertheless, the controversy drove down CEF’s stock price 25 percent since the first of the year.
“Much of the conversation in the investor community over the past six months has been dominated by the false idea that CNG and LNG were competing fuels,” wrote Hall in a recent evaluation. “But while we’ve been arguing, Clean Energy Fuels has been opening stations for trucks across the country. And the company is a leader in both.”
Once again, it seems to have been a case of investors becoming absorbed in short-term focus while ignoring the long-term prospects of the company. True, Clean Energy Fuels has not yet delivered a profit but its progress in building infrastructure to enable us to use significant portions of our natural gas resources as a substitute for diesel fuel has been significant. Here’s what the company has accomplished so far:
- Clean Energy Fuels has delivered 800 million gallons of CNG and LNG to light and heavy-duty trucks.
- The company has built approximately 500 fueling stations across the country.
- It has installed over 1,500 compressors for delivering CNG to vehicles worldwide.
- It has two LNG production plants.
- It has 60 LNG tankers making 5,000 deliveries every year.
- It has two renewable natural gas plants producing bio-methane.
- It has 39 major airport fueling stations.
- It now fuels over 35,000 trucks, large and small, with CNG each day.
As you can see, this is no fly-by-night operation. Whether the company is profitable or not right now, Pickens is obviously in it for the long haul.
Clean Energy Fuels’ long-term goal is a “CNG superhighway” that will offer fueling stations to long-haul trucks along all the major interstates that crisscross the country. But its major success to date has been in servicing fleet vehicles for delivery companies and municipalities.
- CEF currently services 230 trucks a day for UPS with big plans for expansion.
- CEF has contracts with Owens-Corning, Lowe’s, Proctor & Gamble and other commercial establishments’ fleet owners for their delivery vehicles.
- Garden City Sanitation of San Jose has converted 23 refuse trucks to natural gas using CEF’s services.
- CEF will be fueling Kroger’s new 40-unit fleet of LNG trucks later this year.
Analysts believe that refuse and delivery fleets, especially those that are garaged overnight and can be refueled at a central CNG station, will become one of the company’s major markets.
CEO Andrew Littlefield just announced a loss in revenues for the first quarter of 2014 but said this was because of the expiration of the federal volumetric excise tax credit (VETC), which had provided $26 million in 2013. Overall, the trend is definitely upward:
- LNG fuel deliveries increased 22 percent to 16.7 million gasoline gallon equivalents.
- CNG deliveries increased 16 percent.
- When the VETC is excluded, overall revenues were up 43 percent.
- Sales of Redeem, the company’s renewable bio-methane product, increased 45 percent.
Sean Turner, COO for Gladstein, Neandross & Assoc., a leading consulting firm for the development of alternative fuels, notes that the NGV market in the United States is actually larger than in countries such as Argentina and Pakistan, which have been at it for a longer time. “While North America might lag behind in the adoption curve of other countries, natural gas usage per vehicle is actually near the top worldwide,” he said. “This is because other countries have tended to employ NGVs for passenger cars, whereas the U.S is now concentrating on medium-sized and heavy-duty trucks.” And as T. Boone Pickens likes to point out, natural gas will be unrivaled in this marketplace since electric vehicles cannot produce the torque needed to power those long-haul vehicles.
Whether all this makes Clean Energy Fuels a hot stock again is something Wall Street will have to decide. But in terms of moving America toward greater reliance on homegrown natural gas, the news is all favorable.
It’s a free county, ain’t it? Americans have many choices that are denied to citizens of other less-fortunate nations. But we forget how many decisions are made for us, sometimes out of necessity, such as paying taxes; sometimes out of greed, such as the monopolistic actions of oil companies in denying many Americans the ability to purchase alcohol-based fuels at their corner gas station. Try it someday! On your way home from work, on your shopping trip to your friendly supermarket or on your way to see a movie at your favorite theater, make a stop for fuel at a gas station. Make sure to have some gasoline in your tank, because it likely will take you a lot of time to find a gas station that sells E85 or even E15.
Now, I went to Harvard Law School for four days, before I decided that there were too many lawyers around and memorizing case studies was not my forte. But Harvard provides significant value added, apart from being near Harvard Square and Boston. I was exposed to terms and content related to antitrust, restraint of trade, collusion and monopolies. Now, I didn’t stay long enough to know whether those concepts applied to oil companies that restrict consumer choices of alternative fuel. Probably not, because I am sure, by now, one of my Harvard colleagues would have filed a well-reimbursed case to break open the fuel market to options like ethanol, methanol and more. But whether legal or not, oil companies deserve their comeuppance for limiting many of us who, too often, are required to use more expensive, environmentally harmful gasoline, instead of existing, safe, alternative fuels.
How do they do this? Well, if you are a gas station owned or franchised by an oil company, your contract and rules related to behavior often prevent you from adding a pump or adding to an existing pump to sell E15 or E85. As relevant, since oil companies generally require the stations they own to buy fuel from them, and since they don’t sell E15 or E85, adding a pump would be akin to waiting for the hereafter (and acting on faith that you will get there).
Wait, there is more! Every now and then an oil company wants to publicly show it is a bit beneficent (for image purposes), but don’t hold your breath with respect to proof that image and reality are the same. Sure, you might find an alternative-fuel pump near the rear side of the garage proximate to the men’s room, or, if you are lucky, on the side of the station near the air pump. Most oil-company-owned stations and franchisees are generally precluded from putting an alternative-fuel pump under the covered island or space out front. They also face restrictions on advertising alternative fuels as an available product and oil-company pricing limits competition from alternative fuels.
Congress has refused to enact open fuels legislation, which would require oil companies to open up their gas stations to other fuels. Ongoing efforts by public and private sector advocates, as well as nonprofit groups, to encourage policies that would convert older cars to flex-fuel vehicles and to encourage Detroit to build more FFVs could well lead to a large consumer market for alternative fuels and generate a positive market reaction among independent gas companies and, perhaps, even some smart oil companies. While I have been wading through the pros and cons of allowing oil companies to increase exports to other nations, I do believe that if increased exports are in the nation’s future, they should be approved only if the oil companies agree to require their stations and franchises to offer alternative fuels in a primary space alongside gasoline. A bit of tat for tat is in the public interest. Let freedom ring for consumer! Let capitalism mean competition for gasoline and alternative fuels at your nearby gas station! Oh, I forgot, alternative fuel station!