Media organizations and analysts who follow the oil industry have been playing their sad fiddles for companies that once posted jaw-dropping profits. Stories seldom focus on the global benefit that low oil (and gasoline prices) provide to consumers, who have enjoyed a $3 trillion “transfer of wealth” since oil was at $115 two summers ago. Read more
Natural gas normally gets a great deal of attention as a feedstock for power generation: As the U.S. makes the gradual transition from coal, natural gas has taken center stage in the spotlight because it burns more cleanly than coal. Read more
Many Americans think of the shale revolution as all about oil. Those thousands of wells bring up plenty of oil, after all. But they also bring up a treasure trove of natural gas, Fuel Freedom Foundation co-founder and chairman Yossie Hollander told Atlanta radio station WCFO recently.
And boy, are there a lot of fools.
The global oil trade is a “contrived market” not subject to the usual laws of supply and demand, and the United States has an “absolute requirement” to use alternatives if it hopes to wean itself off imported oil, former Shell Oil president John Hofmeister said during the keynote speech at the National Ethanol Conference. Read more
We hope you’re enjoying cheap gasoline for the holidays. Because the party will end sooner or later, and the hangover will be a doozy.
For thousands of years, there was a commodity that people across the globe, from China to Rome to Texas, fought bloody conflicts to secure. A product that was used to pay solders and decided the outcomes of wars. No, I’m not talking about gold — I’m talking about salt.
Ever since oil prices, and with them gasoline prices, began plummeting last fall, the trend has been portrayed in varying forms as a “gift” or an “early holiday present” or a “tax rebate” for consumers, who are expected to give thanks for this free stuff.
The big oil companies aren’t blind to the threat posed by ethanol. And now it appears they’re doing all they can to hamstring wider access to the fuel by artificially increasing the price of E85 at their gas stations.
Even with a surge the past two days, oil prices have been on the downward slide the past 14 months, dropping from about $115 a barrel to around $40. But that hasn’t translated to savings at the pump for all drivers.
In some areas of the United States, gas prices have remained stubbornly flat during the oil plunge, or have inexplicably risen. Fuel Freedom Policy Manager Gal Sitty has put together this informative graph that tracks the price of oil (an amalgam of Brent crude, the international benchmark, and West Texas Intermediate, the U.S. standard) compared with the average price of gasoline in three big states: California, New York and Ohio.
Experts have no shortage of explanations for these anomalies. They usually sound like this: Something-refineries-inaudible. Cue Charlie Brown’s teacher talking wah-wah speak.
It’s true that a unit at the BP refinery in Whiting, Indiana, one of the largest refineries in the Midwest, is back online after breaking down Aug. 8. Media outlets report that gas prices in the region already have begun falling again, but they’re sure not doing so as quickly as they shot up. And it doesn’t explain that gentle slope of a line for New York above.
In California, where gas prices pushed toward $5 in July after a sudden, insufficiently explained shortage, prices remain high, purportedly owing to the Exxon Mobil refinery in Torrance still being below capacity six months after a fire. As Sue Carpenter, automotive writer at the Orange County Register, explains:
Crude oil typically accounts for just 46 percent of the cost of a gallon of gasoline, according to U.S. Energy Information Administration. Taxes account for 16 percent, 13 percent is marketing and distribution, and 25 percent is refining.
In California, though, crude oil is just 34 percent of the cost of a gallon of gas, and refining is 35 percent, according to the California Energy Commission.
Still, it’s curious that just as California motorists were getting hammered, oil refineries weren’t sharing the pain: Refineries in the state collected $1.61 per gallon in July, the highest since the state began keeping records in 1999.
It’s clear that there isn’t enough refinery capacity in the U.S. (Raise your hand if you’d like one built in your back yard. There are people in Whiting who still remember what happened there 70 years and a day ago.) But even if refinery disruptions are partially to blame, it’s only further evidence that we’re too beholden to a volatile global oil market, and we’re dependent on an aging, infrastructure for refining.
The only way to make the fuel pricing structure sustainably affordable is to introduce fuel choice so gasoline has to compete with cheaper, cleaner alternatives like ethanol and methanol.
Until that happens, wild price swings and supply disruptions will be the norm in America.
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