Finally, an answer to E85’s chicken-and-egg problem
The more people I talk to about fuel choice, the clearer the picture becomes as to why we still lack widely available alternatives. Read more →
The more people I talk to about fuel choice, the clearer the picture becomes as to why we still lack widely available alternatives. Read more →
In the 1976 movie “Network,” the news anchor Howard Beale, sopping wet and on the edge, invited viewers to stick their heads out their windows and yell that they were mad as hell, and they weren’t going to take it anymore.
To listen to our audience, all Fuel Freedom has to do is poke our heads into the modern window to the world, Facebook, and hear people venting about what they’re mad about. Lately, that’s the price of gas.
When we posted yet another rising-gas-prices story to our Facebook page last week, we asked our followers to tell us what gas prices were where they lived. More than 70 people chimed in, from all over the country, to let us know. ($3.87 in Pasadena, really?) They also shared their unvarnished feelings about the impact that the recent price spike has had on their family budgets.
I followed up with one of the mad-as-hellers, Ann Kooi of Pahrump, Nevada. Her husband Larry drives 150 miles round-trip, east to North Las Vegas and back, for his job as a heavy-equipment mechanic. He has to fill up his Kia Soul every other day, bringing his total gasoline bill to almost what it was last year before prices plummeted, roughly $75 a week.
“When the price of gas goes up, it hurts us bad, big time,” said Ann, 59. “We rob Peter to pay Paul.”
She and Larry, 60, know it would be easier to move to Las Vegas, but they feel they’re priced out of the market. They had rented an apartment in the city for $500 a month, but Ann says their rent went up and they couldn’t afford to stay.
The price of gas in Nevada averaged $2.826 a gallon Tuesday, up from $2.219 a month earlier, according to GasBuddy.com. Nationally, it was $2.453, compared with $2.060 a month earlier. It has to be said that prices were much higher one year ago: $3.45 in Nevada and $3.463 nationally.
But the average national price for E85 ethanol blend, we should point out, was just $1.96 on Tuesday, according to E85Prices.com.
It’s the volatility, the unexpected price shock, that makes it impossible to predict how much cash you’ll need to get to payday. And consumers everywhere are frustrated by the multiple factors, and lack of warning, that went into the latest spike.
“They find every excuse in the book to raise the prices. And they keep us in limbo, and we can’t get ahead, no matter how hard we try,” Ann said.
Tell us your story about what the rising price of gas has cost you, and tell us what you’re prepared to do about it.
If you want to be profiled in a “Share Our Story” post, send your contact info to [email protected]
Nobel-Prize winning economist, Dr. Robert Shiller, is one of the top economists in the nation, actually, let’s make him an imperialist, in the world. He is best known, perhaps, as the co-creator of the S&P/Case Shiller Home Price Indices. His books on economic theory and issues populate many college classrooms and personal libraries, including mine. He is an impressive, smart and accomplished intellectual giant.
It’s tough, given Dr. Shiller’s pedigree, to even suggest a bit of criticism. But because I think it’s important to current policy debates concerning economic, energy and transportation fuel policies, I do want to take issue with his recent short piece in Project Syndicate (What Good Are Economists?). In it, he defends economists and their mistakes concerning economic forecasts.
Shiller seems oversensitive to the pervasive criticism of economists in the media and literature. Because of the esteem with which he deservedly is held, his somewhat-thin response may mute a needed dialogue concerning the weaknesses attributed by respected critics of the work of economists. Shiller admits they failed to warn the nation in advance of economic downturns as far back as 1920-1921. By implication, he also suggests that because of this fact economists did not have a major impact or may have even had a negative impact at the policy table and often gave up their places to business and political leaders. Certainly Dr. Lawrence Summers and Alan Greenspan have not escaped criticism for failing to predict both the recent recession and for instituting policies that may have exacerbated the recession itself.
Over the past several years, many Americans have been frustrated by the errors of omission and commission made by respected economists from America’s think tanks and its government institutions, like the EIA, concerning analyses, forecasts and predications of the price of oil and gas as well as, demand for and supply of fuel and the role alternative fuels have and will play in America’s future economy. Their numbers and analyses often seem like the “once a day” or maybe “once a month” variety. Many of you don’t remember the famous (now clearly seen as a sexist) joke by I believe Ilka Chase in the old Reader’s Digest that a “woman’s mind is cleaner than a man’s because she changes it so often.” The comment now fits many energy-related economists. Their minds may be cleaner than those of normal folks because, as seen in many of their energy and fuel forecasts, they change it so often. But by doing so, they present obstacles to government, congressional leaders, industry, academic and environmental officials anxious to develop sound energy and fuel policies and program initiatives.
Can you name — on more than one hand — the economists who predicted the recent significant decline of oil and gasoline prices? Can you find consensus among economists concerning oil and fuel prices in the future? Can you identify economists willing to go out on a limb and describe, other than in generalities, the causes of the current decline in prices? Put two economists in a room and you will get three or more different reasons, most resting on opinion and not on hard data. Paraphrasing, oh, yes, the reason(s) are (or is): the Saudi Kingdom and its unwillingness to limit production and desires to gain market share; another favorite: the American producer’s recent oil shale largess is too good to pass up by slowing down drilling significantly; and don’t forget: the rise of the value of the dollar and the fall off in travel mileages resulting from the global recession. For the politically susceptible and sometimes cynical economists, throw in the genius of American and Saudi foreign policy as a factor. They fail to sleep at night, believing the decline is the purposeful result of the State Department and/or their counterparts in the Kingdom. If you keep prices low, who does it hurt most…Russia, Iran and Venezuela, of course!
There are many theories concerning recent price declines but no real hard answers based on empirical evidence and factor analysis.
Energy and transportation fuel economists, at times, seem to practice art rather than science. Diverse methodologies used to forecast oil and gasoline prices; demand and supply are unable to easily manage or accommodate the likely involved complex economic, technical, geopolitical and behavioral factors. As a result, specific cause and effect relationships among and between independent and dependent variables concerning oil and gas trends are difficult to discern by expert and lay folks alike.
Understandably, American leaders often appear to value what they feel are the good artists among economists, particularly if they lend credence in their speeches and reports to their own views or ideological predilections. Shiller’s question about economists in his piece is not a difficult one to answer. He asks, “If they were unable to foresee something (the 2007-2009 financial crisis and recession) so important to people’s wellbeing, what good are they?”
The best in the profession have provided insights into the economy and what makes it tick or not tick. They, at times, have increased public understanding of corrective public and private-sector actions to right a weak economy. They, again at times, have helped lead to at least temporary consensus concerning options related to fiscal and monetary policy changes and the need for regulations of private sector activities. But Dr. Shiller goes too far when he offers a mea culpa for the profession by comparing its failure to predict economic trends to doctors who fail to predict disease. Doctors probably do suffer more than economists for their mistakes, particularly when their analyses result in increased rates of morbidity and mortality. At least economists can bury their errors in next week’s or next month’s studies or reports; many times doctors can escape their errors only by burying their patients. The article could have been a provocative and an important one, given Dr. Shiller’s justifiable stature. It might have stimulated self examination among some of the best and brightest if it had linked weaknesses in economic forecasts to proposals to strengthen the rigor of methodological approaches. Presently, the brief article regrettably reads as an excuse for professional deficiencies. Res ipsa loquitur.
PUMP the new documentary about America and oil to be released September 19th.
Average retail gasoline prices in Fort Wayne have risen 11.1 cents per gallon in the past week, averaging $3.53 a gallon Sunday, Augus t10, 2014 according to GasBuddy’s daily survey of 201 gas outlets in Fort Wayne. This compares with the national average that has fallen 1.7 cents per gallon in the last week to $3.47 a gallon, according to gasoline price website GasBuddy.com which powers wane.com’s Gas Gauge.
First the good news: Gasoline prices are at their lowest level in months, according to AAA. Now more good news. Flex-fuel prices have been falling, too, and are about $1 less per gallon than regular gasoline now, according to the Kiplinger Agriculture Letter.So maybe you’re scratching your head wondering what flex fuel is and why you should care that it’s cheaper than gas.
E85, or flex fuel, is a blend of 85 percent ethanol and 15 percent gasoline that can be used in vehicles specially designed to run on it as well as regular gasoline. There are more than 10.6 million flex-fuel vehicles on the road, according to the U.S. Energy Information Administration. You might even be driving one and not realize it.
Ethanol produced in the United States has been the most economically competitive motor fuel in the world over the past four years and has played an important role in reducing consumer fuel costs, according to a newly released analysis by the Renewable Fuels Association (RFA).
Both CNG and LPG powertrain systems are cheaper and more eco-friendly in cars than diesel or gasoline systems.
“USA, USA, USA, USA.” No, I didn’t just come from watching the U.S. playing in the 2014 FIFA World Cup. But after reading the glowing, cheerleading, overly enthusiastic, often-nationalistic media accounts of the U.S. overtaking the Saudis in oil production, the win-lose aspects of the soccer chant somehow became embedded in my persona (like counting sheep or gas pumps at night when I can’t sleep). We beat the Saudis at their own game — oil. We’re number one…wow! Next, will we emulate the Saudis and place onerous and discriminatory restrictions on women drivers and, unlike the Saudis, argue that it’s a conservation measure? Of course not! We don’t have to be number one in everything. But oil does make strange bedfellows, and equally strange behavior, as well as policies.
Unfortunately, most of the media stories avoid analysis of what the new oil prominence of the U.S. means to the nation and world. Yes, increased production likely means less dependence on the Middle East, particularly Saudi oil. Indeed, we now import about 33% of oil needs, the lowest percentage in years.
But oil independence remains a myth. Oil interests are pushing for a reduction of regulations concerning exports of U.S. crude oil and have always exported considerable refined oil products allowed by the law. Their motives, despite frequent public comments to the contrary, are generally to sell to the price, which means to the buyer who offers the most return. He, she or it frequently is a global purchaser. Independence is a slogan that often blurs motive and reflects good politics but bad substance and contrary to reality.
The U.S., as the most powerful western nation, irrespective of any mathematical domestic surplus, will continue to extend its role as defender of the global supply chain from the Middle East or elsewhere. While we may be less dependent on foreign oil, U.S. leaders have, in the past, and likely will in the future, use a combination of diplomacy and military threats and action to defend and sustain the flow of foreign oil to allies or assumed allies. In this context, the role we play in the world extends our dependency. Unfortunately, wars will be fought and U.S. soldiers will die because of this felt dependency.
Most of the “USA, USA, USA” chants in the media coverage of our new oil prowess, implicitly neglects the difficult juxtaposition between increased oil production and supplies and higher gas prices. Less dependence hasn’t brought the reduction, or even stabilization, of gas prices promised by the oil industry. Gasoline in California is now generally well over $4 a gallon for regular, and averages over $3.60 a gallon across the nation. Why? We have a surplus, don’t we? Oil companies want to export more, and it appears that they will be able to do just that, soon. As Dr. Pangloss asked in “Candide,” is this the “best of all possible worlds” (let me add, for the U.S.)?
Clearly, the cost of oil at the pump is not strongly linked (at the present time) to the amount of U.S. oil that shows up on EIA calculations and projections. Both price and supply are going up simultaneously. Yes, there is uncertainty, given events in the Middle East and yes, uneven growth around the world has increased demand in some areas and suppressed it in others. The link between high prices and the Middle East is difficult to measure precisely. Consumer costs per gallon are likely affected more by investors, as well as speculation on Wall Street, than the actual numbers concerning increased production of U.S. oil.
So, apart from prayer and penitence, what can we do to get a better deal for consumers, and to prevent gasoline from becoming a negative factor concerning U.S. GDP growth and the environment? How can we help assure that being number one means robust economic growth, more income in the wallets of Americans (particularly low-income Americans), increased security and fewer dirty emissions?
These are not easy questions, and they do not lend themselves to simple ideological responses. Clearly, as renewable fuels and vehicles that meet the incomes and desires of most Americans become available, both will play a vital role in America’s future. But reliance on coal-fired utilities for power in some areas of the nation, battery costs, mileage limitations from single battery charges, and lack of infrastructure impede their ability to have a significant positive impact at the present. The market for renewable fuels and vehicles is relatively small and will remain so until technological advances catch up with potential demand.
Where is the Greek philosopher Diogenes when we need him? We have a path in front of us that would buy time toward a better American future, one that could offer competition to gasoline — competition that would be good for the economy, the consumer and the environment. Increased availability of replacement fuels, particularly natural gas-based ethanol, combined with large-scale conversion of older cars to flex-fuel vehicles (FFVs) and increased production of new FFVs by Detroit, would give gasoline a run for the money, if gas-only stations become fuel stations and provide consumers with a choice. According to the Renewable Fuels Association, less than one percent of all gas stations in the U.S. that are branded by the big oil companies offer E15 or E85.
I remain an optimist that more freedom will reign soon at the pump. The noted people’s philosopher, Charles M. Schulz, creator of “Peanuts” comic strips, lessened my fears about the future when he said, “Stop worrying about the world ending today. It’s already tomorrow in Australia.” USA, USA, USA. Fuel choice, fuel choice, fuel choice!
The Hawks are out again. One of my favorite service organizations, the American Automobile Association (AAA), in conjunction with media outlets, has again attacked the use of ethanol in cars. It’s quite sad.
I will still keep my membership card. The AAA is the Walmart, Costco or Nordstrom of the automobile industry when it comes to service at relatively low costs to its members. If you get a flat tire on a sparsely traveled road when it’s raining or snowing, the AAA, following the Postal Service norm, “come rain or snow,” will get there reasonably quickly to help you. Get stuck in your four story garage with a dead battery! Don’t fret or fear, your neighborhood AAA repair truck will be at your side within a relatively short time. It,generally, will “get you to your work on time.” Do I sound like Julie Andrews or the cast in “My Fair Lady?”
While I don’t lose sleep over the question (I only get two hours of sleep even without thinking about the AAA), I often wonder why the AAA appears to join with those, particularly in the oil industry, who seem to want to confuse flex fuel vehicle owners and owners of older cars able to convert their engines easily and cheaply, about the wisdom of using ethanol.
Conversion of older cars and extended use of already approved flex fuel cars as well as increased use of ethanol by both sets of vehicles will result in many benefits, particularly when compared to gasoline. For example, ethanol according to many, many independent studies by qualified researchers is a safer, cheaper, and more environmentally friendly fuel than gasoline. While what is and what is not a fact often becomes a metaphysical question and 100% certainty becomes a question often for philosophers more than scientists, trust me — ethanol is a good but is not a perfect alternative fuel. It is better than gasoline. Right now a perfect fuel does not exist! Remember that the enemy of the present good is often the distant perfect.
Despite AAA’s press releases, EPA studies involving more rigorous methodology, including strategic sampling of a range of cars, indicate that engine damage is almost a nonoccurrence when using E15. E10 has been around for a long time with no discernable engine impact and E85, after extensive testing, has been approved for flex fuel cars.
Understandably, ethanol, given improvements in new car engines and tighter fuel standards, reflects fewer benefits than shown in relatively recent studies concerning ghg emissions, and pollutants like SOx and NOx. But ethanol still provides significantly more environmental benefits and less costs to the consumer now than gasoline.
The differences between ethanol and gasoline will become even more apparent if you assume that Americans use their God-given noggin and opt to convert their older cars to accept alternative fuels. It’s cheap and safe and can be done with a kit, or with quick software or tuning fix for some cars. Similarly, there are nearly 15,000,000 flex fuel cars in the U.S. Most owners do not know they have such a car. Look at the sticker in the back of the car or fuel cap. You probably are the proud owner of a flex fuel vehicle and, once you recognize this fact, you can use ethanol without risk. Using ethanol, both for flex fuel cars and converted older vehicles will likely lower your gasoline costs and will contribute to a healthier environment. Tell your neighbors! Tell your friends! Tell your significant other! Tell your spouse!
Clearly, you will see the environmental benefits to your community, state and nation, if you abandon the conventional way of measuring emissions and pollutant reductions and use tons. The new graphic will portray a visible and important increase in the actual emissions and pollutants eliminated from the atmosphere. It also will emphasize the importance of extending the number of vehicles that can use ethanol through conversion of older cars to flex fuel vehicles and the production of increased numbers of flex fuel vehicles. If the owners of both sets of cars increasingly fuel their vehicles with mostly ethanol (an objective of a number of demonstrations and pilot programs in several states), the President’s desire to wean the nation off of gasoline will come closer to fruition. The scale up will provide a transition approach to open fuel markets until competitive renewable fuels become ready for prime market time.