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Declare your independence from oil with Fuels 101

Fuel Freedom has something new this Fourth of July to help Americans declare their independence from oil and its monopoly on the U.S. transportation fuels market.

This week we launched Fuels 101, a set of tools you can use to learn about alternative fuels. The pages include:

  • Check Your Car. An interactive feature that allows you to determine whether your car, truck or SUV is a flex-fuel vehicle, and thus can run on any combination of gasoline and ethanol, up to E85 (85 percent ethanol, 15 percent gasoline).
  • Fuel Types. A guide to the different transportation fuels, including ethanol and methanol. All facts, no myths.
  • Find a Fueling Station. We’re using the Alternative Fuels Data Center’s cool interactive map, which helps you find not only E85 stations, but CNG and others.

Consider Fuels 101 an introductory course in all the alternatives to fuel. Although they come from different sources (ethanol, for instance, can be made from a variety of starchy plants, not just corn) and are made in different ways, their commonality is that they burn cleaner than petroleum-based fuels, reducing toxic pollutants that befoul our air and water. Domestically produced fuels also create American jobs and strengthen our national security.

Give Fuels 101 a spin. Don’t worry, none of it will be on the final.

Fuels 101 is the kickstart to what we’re calling Fuel Freedom Month. Our goal is to raise awareness coast to coast about ways we can all help create a genuinely competitive fuels market for the first time in America.

To learn more about how you can help, visit our Take Action page. And while you’ve got some down time between barbecues and fireworks displays this weekend, watch our all-American documentary film, PUMP the Movie, starring Jason Bateman.

You can also get regular updates on social media by following Fuel Freedom’s Facebook page and Twitter feed. PUMP has cool content as well (it has an independent streak of its own), so check it out on Facebook and Twitter as well.

Happy Independence Day, America!

Related posts:

Time to declare independence from expensive oil
Fuel Freedom to Hannity: ‘We can bankrupt terrorism’

Shall we overcome? The negative impact of gas prices on jobs and housing choice

money-gas tank2Recently, the New York Times ran an editorial on “fair housing.” Its content portrayed a nation at risk concerning housing resegregation. According to the Times, minorities now face fewer choices when looking for housing in the suburbs because of the absence of strong, fair housing laws and the lack of enforcement of current laws on the books. For me, the Times’ story brought back memories of the stirring, hopeful and emotional civil rights-era anthem, “We shall overcome!” It also brought back my own experience as a tester, with respect to housing discrimination, and my later involvement in efforts to strengthen fair housing policy at the U.S. Department Housing and Urban Development (HUD) and training real estate salespersons and brokers to sell to minorities, while dean at the University of Colorado.

A bit of history: After WWII, discriminatory practices were often overt and blatant. Builders, brokers, bankers, homeowners and public officials found reasons and ways to impede housing sales to minorities and low-income households in mostly white areas in the growing American suburbs and urban sprawl surrounding American cities. Racist zoning, refusal to finance mortgages, refusal to show empty units or pre-construction empty lots were some of the key impediments to the American Dream for far too many minorities and, many times, low-income households. As a result, would-be black, Latino and low-income white homebuyers were denied the ability to recapture income from housing appreciation in growing areas.

Through appreciation, affluent and white families were able to pay for their kids’ college education through the purchase and resale of their homes — choices not open to many minority or lower-income white families. Limited housing choices restricted black, brown and sometimes low-income white families to older, deteriorating areas of American cities and the ghetto or barrio areas for minorities. Children of poor families — white, black or brown — were required to attend failing schools. Poor healthcare, higher costs for food and other basics, increased crime and inferior public transportation often tracked low-income, one-race communities. They made life difficult for residents and kids.

While racism in the housing market still exists, America has made progress. Minorities, particularly middle- and upper-income minorities, who can afford the price, have been able to increase their housing choices throughout most metropolitan areas. Laws on the books are aimed at eliminating discrimination and opening up housing choices for minorities.

But the nation still has a long way to go before it meets the goal of the 1949 bipartisan housing act to seek a “decent home and a suitable living environment” for every American family. Housing costs and income stagnation remain obstacles for low- and moderate-income families, irrespective of color. Add residual racism to the mix, and less than affluent minorities still have a very tough time entering the housing market. Very few scholars and practitioners have looked at gas costs as a barrier to housing choice and the American Dream. But they are barriers! Gas prices have become a serious variable limiting housing and neighborhood choices for the least advantaged — moneywise — among us, including a proportionally large share of minority households. Contrary to public perceptions, vehicle ownership is now readily available to most low- and moderate-income households, including minorities. Isabel Sawhill, a highly regarded policy analyst from The Brookings Institution, reported that in 2012, 80% of households with annual incomes below $50,000 owned vehicles. She noted that in 2010, when prices per gallon hovered at around $2.80 a gallon, low- and moderate-income households spent about $1,500 on fuel per year. Further, each dollar increase in gasoline (holding miles driven constant), would cost these households an extra $530 a year. According to many observers, increases in gas prices during 2014 constituted as much as 10-15% of the total income of low-income folks.

Sawhill and others suggest that low- and moderate-income households will adjust to higher costs of fuel by cutting back on other basics. To some extent, the inelasticity of price demand among the poor and the near-poor, concerning the purchase of gas, results in reduced expenditures for needed goods and services, including transportation. Higher gas prices limit the distance that low- and moderate-income households can, or are able to (in light of budget constraints), travel to secure jobs (or better jobs) and to access improved housing opportunities. Going back to Sawhill, “rising gas prices produce a level of hardship for a group that is already suffering from higher levels of unemployment and stagnant or declining real wages.” The cost of gas has and will remain a key civil right issue.

David Leonhardt et al. recently reported in The New York Times that data from a massive 100-city study indicates that children who grow up in some cities and towns have a greater chance to escape poverty than children who grow up in other cities. The ability of households to move from bad neighborhoods to better ones, from bad communities to better ones, makes a visible difference in the lives of their children and their children’s future income.
Household mobility is a key variable. The quality of neighborhood and community for low-income folks is important — very important-with regard to the quality of their lives and the lives of their children. Raj Chetty from Harvard, one of the authors of the study, suggests, “Every extra year of childhood spent in a better neighborhood seems to matter…”

Clearly, more analysis is needed to determine the precise relationship between mobility, locational change, race, education and family stability. Just as clearly, we now know that increased housing and job opportunities are critical to the ability of poorer households to improve their quality of life and environmental conditions. But the negative link between rising gasoline costs and mobility impedes the ability of low-income families and their children, whatever their skin color, to achieve their American Dreams. The link, if it remains, will test our nation’s willingness to expand and sustain housing and job opportunities for those other than the more affluent among us.

Oil companies and their franchisees are not practicing racism or income discrimination when they attempt to play with and set prices that limit competition at the pump. Indeed, most company leaders and franchise owners are color blind, except for the color green. Through monopolistic restrictions or economic Viagra and monogamous relations with franchisees, they try their best to limit consumer choices concerning alternative fuels and, as a result, generate higher costs for and profits from their favorite fuel — gasoline.

Cheaper fuels would provide lower- and moderate-income families with an increased ability to seek decent jobs and housing in decent neighborhoods and communities. Added to fair housing reform and enforcement, America could begin to overcome de facto housing segregation and extend job choice and job mobility. Breaking up oil monopolies at the pump, combined with initiation of competitive open fuel markets and increasing the numbers of FFVs should be part of the civil rights agenda in the 21st century. The result will be lower fuel prices and a quantum leap in opportunity for many disadvantaged Americans. Paraphrasing Dr. Martin Luther King, Jr., “I have a dream”…and “we shall overcome!”

Gas stations are adding ethanol, because it’s good for business

If you were to build a gas station today, from the ground up, you’d scribble out a list of the types of fuel you’d want to offer your customers. At the top, of course, would be regular 87-octane unleaded gasoline, which contains 10 percent ethanol. But next on the list likely would be E85 ethanol blend.

That’s right: Cheaper, cleaner-burning E85 might just be a hot seller, if you did it right. Mike Lewis, co-founder of Pearson Fuels in San Diego, has been selling it for 12 years, and he knows there’s a customer base out there for it. Last month he sold more than 34,000 gallons of E85 at his flagship station, accounting for 20.7 percent of his overall fuel sales.

map2Customers consistently buy more E85 at the station than mid-grade gas (89 octane), premium (91) or diesel combined.

“The reality is that there are flex-fuel vehicles everywhere, all over California, roughly 5 percent of the vehicles,” Lewis said. “So if you have a gas station, and you’re selling a lot of gasoline, then you can sell a lot of E85.”

Pearson supplies about 60 fueling stations with E85 and is partnering with station-retailer G&M Oil to put the fuel in 13 new stations in Southern California over the next year. The expansion is part of a national trend: Since 2007 the number of stations selling E85 has more than doubled, to about 3,000 today, roughly 2 percent of the nation’s total stations. E15 ethanol blend also is spreading across the country: Georgia got its first pumps Friday, and retailer Kum & Go added the fuel at its station in Windsor Heights, Iowa, and plans to introduce it at 60-some more over the next two years.

There are ample vehicles on the road that are ready to take the fuel: more than 17 million flex-fuel vehicles that can run on ethanol blends up to E85, including 1 million in California. And more customers are taking advantage of the many benefits of ethanol, including lower emissions and the fact that it’s made in the U.S.

Price is still the main attribute for customers, however. At the Pearson location in San Diego, the first station on the West Coast to sell E85 when it opened in 2003, E85 was priced at $2.44 a gallon earlier this week, compared with $3.55 for 87 octane. At one point, two station employees walked out with a long pole to change the 87 price to $3.65. Digits were added to the other gasoline grades accordingly.

“E85 customers are typically interested in one of two things: higher octane, because these guys have race cars,” Lewis said. “But the great majority of the customers buy it because it’s cheaper. They’re not out, frankly, to save the planet, they’re out to save a buck.”

Pearson_sign-360It can be difficult to price ethanol attractively if the price spikes or gasoline prices drop, narrowing the spread between the fuels. Unfortunately, both trends occurred late last year and early this year, as cold winter weather slowed the rail system that transports ethanol around the country, constricting supply. Meantime, the price of oil — and thus gasoline — dropped by 50 percent. It’s climbed again steadily this year.

Retailers often wipe out the normally sizable profit margin on ethanol by selling it for below wholesale. That’s what Lewis urged his retail clients to do as the least-bad option.

“But some of our retailers, if the price goes up and they happen to buy at the wrong time, they’ll say, ‘Tough, I’m making 25 cents [margin] a gallon, no matter how long it takes. So they’ll sit on that fuel for months. Whereas I would dump it [sell it for less], because if you dump it, you can go buy it for 50 cents a gallon less, and it’s just hard to get that through their heads sometimes. Some get it, and those do better.”

For retailers considering adding ethanol to their fuels menu, the equipment costs can be less than they’ve been led to believe, says Ron Lamberty, a gas-station owner who’s also a senior VP at the American Coalition for Ethanol in Sioux Falls, South Dakota. His answer is to take that tank full of unpopular fuel and put E85 or E15 in it. All steel tanks, and fiberglass tanks built since 1994, can take higher ethanol blends, he said.

“I’ve been in the business for 30 years, and I remember when [premium gas] came in, in the mid-’80s, and the oil companies were saying, ‘If you don’t carry premium, you can’t carry our brand. We’re gonna take your sign down, we’re gonna take whatever remedy we can against you with your contract, and you’re gonna have to put premium in. And so there was all that expense of adding a tank and all those other things, to sell a fuel that cars didn’t need, that cost them more.”

Pearson_customer_450

Tim Farnum, filling up his Chevy truck with E85.

At the Pearson station in San Diego, just off Interstate 15, vehicles come and go all day. Customers fill up on gasoline, E85, diesel and biodiesel. There’s an electric-vehicle charging station. There are nearly as many choices as there featured in the candy racks and beverage coolers at the store a few feet away. Lewis figures an average of 77 customers fill up on E85 each day. Tim Farnum, 47, who owns Farnum Electric with his brother, fueled up his Chevy 2500HD flex-fuel pickup. A while back they switched to the FFV trucks to save money. He figures he saves about $35 a tankful. “I only wish there were more stations around,” he said.

Lewis, like many of his customers, isn’t an environmentalist. He’s in business. And he’s selling ethanol because it makes money. E85, in fact, helped keep the station afloat before sales began to turn around about five years ago.

“I’m not out there protesting on the street, and tying myself to trees,” he said. “But I think that if you can make a business model that saves the consumer money, then you can make huge impacts by doing that. I mean, look at Tesla and what they’ve done for electric cars, look at what Toyota has done with hybrid cars. That’s what we’re doing with E85 and flex-fuel in California, and I think that you can make a massive difference if you make a business model work.”

Oil, petrodollars and war. Does the U.S. need to permanently police the Middle East?

Soldiers Conduct Combined Clearing OperationThe U.S. interest in going to war or supporting war efforts on behalf of our “democratic” allies like Iraq, Qatar, the United Arab Emirates, Egypt and Saudi Arabia is not based, as said by some political leaders, on converting those countries to democracies or providing their citizens with increased freedom. Neither is it, primarily, aimed at reducing terrorism possibilities here at home. For the most part, it is instead aimed at protecting the U.S. and our allies’ interests in oil and stability in some of the most corrupt, autocratic oil-producing states in the Middle East.

Surely, recent history indicates that use of patriotic and compassionate language reflecting America’s historical ethos to justify our actions often wins initial public support for “Operation This” or “Operation That,” but as conflicts drag on and U.S. soldiers, sailors or marines suffer physical and emotional wounds, the gap between articulated justifications and reality becomes clearer to the public. When the fog of war or near-wars lifts a bit, support for U.S. military activity, often becomes muted among the citizenry.

Concern for protecting oil resources, production and distribution has been, and is currently, a paramount objective of the U.S. The U.S. and its allies have helped overturn governments, remake global maps, redefine national or tribal borders, create new nation states and abandon old ones and dispatch national leaders. Contrary to Gen. Powell’s admonition, we sometimes have failed to own the disastrous results of the wars that we have fought (Libya, Iraq, etc.). Based on our own desire for oil, we have tolerated sometimes exotic and many times terrible behavior among private oligarchs and despotic rulers, which, regrettably, often, escapes coverage in text books and in the media. Clearly, the link between our large-scale addiction to oil and its negative political, social and economic consequences in several Middle Eastern countries lacks sustained attention in our public policy dialogue.

The importance of oil and the U.S. willingness to go to war or engage in covert activities to protect it has been intensified by the relationship between petrodollars and the U.S. economy. Since 1944 at The Bretton Woods Conference, the global reserve currency has been the good old U.S. dollar. First, gold was the back-up to the dollar. As reported by the Huffington Post, the dollar was pegged at $35 to an ounce of gold and was freely exchangeable. “But by 1971, convertibility of gold was no longer viable as America’s gold resources had drained away. Instead, the dollar became a pure fiat currency (decoupled from any physical store of value) until the petrodollar agreement was concluded by President Nixon in 1973. The essence of the deal was that the U.S. would agree to military sales and defense of Saudi Arabia in return for all oil trade being denominated in U.S. dollars.” We as a nation committed to go to war in return for ostensible economic benefits and access to oil.

Was it good for the American economy? Sure, at least in the short run. The dollar became the only currency for energy trading. All foreign governments desiring to secure and trade for oil had to hold U.S. currency. The dollar was easily converted into barrels of oil. As the Huffington Post indicated, the dollar costs for oil flowed back into the U.S. financial system. What a deal!

Recently, lower U.S. interest rates, a troubled, slow-growing U.S. economy and the rise of oil-shale production in the U.S. has muted the almost-absolute, four-decade direct relationship between the dollar, and other nations’ need for oil and or export of oil. Instead of “next year in Jerusalem,” some nations like China, Russia and even France and Germany have indicated next year either a return to gold or the use of their own currencies as a peg to trading. However, the petrodollar still plays an important role in the exchange of oil in the global trading system. Its demise, as Mark Twain suggested about reports of his death, is, if not greatly, (at least) somewhat exaggerated. I suspect the petrodollar will be with us for some time.

Our nation’s willingness to militarize support of countries that depart radically from supposed U.S. norms of global behavior (encoded in the U.N Charter and other international agreements), because of their oil resources and the post-World War II emergence of dollar-based trading in oil and its benefits, has muddled U.S. foreign policy. Critics have questioned our not-so benign initiatives in countries throughout the Middle East and, as a result, they have raised issues concerning supposed American exceptionalism.

We have more than just a Hobson choice (that is, there is no real choice at all) if we choose to break from oil dependency. Increased U.S. oil production to secure profits and reach demand will still require both importing and exporting oil. This fact, coupled with the desire to keep the dollar the key oil-trading denomination, will sustain U.S. entanglements and the probability that we will continue to play oil policemen in many places.

A different future could be achieved if we took the president seriously and tried to “wean” ourselves off of oil. Paraphrasing liberally and adding my own meaning, Léon Blum, former French leader, “Life doesn’t give itself to one [nation] who tries to keep all of its advantages at once…morality may consist solely in the courage of making a choice [between energy sources and fuels].” The U.S. has not had the political guts yet to really focus on converting from an oil- and gas-based economy and social structure to an alternative energy and fuel-based one (e.g., natural gas, ethanol, methanol, biofuels, electricity and hydro fuels). Such a strategy would allow consumers greater freedom at the pump. It would be fuel agnostic and let consumers pick winners and losers based on cost, and impact on the quality of their lives and the nation’s life. We know that if we do make alternative energy and fuel choices now, based on equity, efficiency, GHG emissions and pollution reduction criteria, we can secure important environmental, economic, social and security benefits. To fail to act is an act itself, one that will harm the nation’s efforts to become the country on the shining hill and pave the way for other countries and itself to access a better, more peaceful future for present children and their children.

 

Photo Credit: www.defense.gov

 

The Saudis and oil prices — the diminishing value of conspiracy theories

saudi_1880139cEveryone likes hidden conspiracies, either fact or fiction. Covert conspiracies are the stuff of great and not-so-great novels. Whether true or false, when believed, they often cause tectonic policy shifts, wars, terrorism and ugly behavior by groups and individuals. They are part of being human and sometimes reflect the inhumanity of men and women toward their fellow human beings.

I have been following the recent media attention on conspiracies concerning oil, gasoline and Saudi Arabia. They are all over the place. If foolish consistency is the “hobgoblin of little minds” (Ralph Waldo Emerson), then the reporters and editorial writers are supportive stringers for inconsistency. Let me briefly summarize the thoughts and counter thoughts of some of the reported conspiracy theorists and practitioners:

  1. The Saudis are refusing to limit production and raise the price of oil because they want to severely weaken the economy of Iran. The tension between the two nations has increased and, to some extent, is now being framed both by real politics (concerning who’s going to carry the big stick in the region) and by sectarianism. Iran’s oil remains under sanction and the Saudis hope (and may even be working with Israel, at least in a back-office way) to keep it that way.
  2. No, you’re wrong. The Saudis are now after market penetration and are lowering the price of oil to impede U.S. development and production of oil from shale. Right now, they are not worrying so much about oil from Iran-given sanctions…but they probably will, if there is a nuclear deal between the West and Iran.
  3. You both are nuts. The Saudis and the U.S. government are working together to blunt Russian oil sales and its economy. The U.S. and Saudis can withstand low oil prices, but the Russians are, and will be, significantly hurt economically. If it hurts Iran so much, the better! But the Cold War is back and the reset is a failure.
  4. Everyone is missing the boat. The Saudis don’t really control prices or production to the extent that they did in the past. Neither does OPEC. Don’t look for conspiracies, except perhaps within the Kingdom itself. The most powerful members of the Saudi royal family understand that if they limit production to raise prices per barrel, it probably wouldn’t work in a major way. The U.S. has become a behemoth concerning oil from shale. If a nuclear deal goes through, Iran will have sanctions lessoned or removed relatively soon. Should the Russian and West reach some sort of cold peace in Ukraine, Russia will become a player again. When you add Canada, Iraq, Libya and the Gulf States to the mix, lower global demand, and increase the value of the dollar, you get an uncertain oil future. The Saudis, led by their new king, are buying time and casing out their oil future.

To me, the Saudi decisions and the subsequent OPEC decisions were muddled through. Yet, they appear reasonably rational. Saudi leaders feared rising prices and less oil production. Their opportunity costing, likely, went something like this: “If we raise prices, and reduce production, we will lose global market share and maybe, in the current market, even dollar or riyal value. Our production costs are relatively low, compared to shale development in the U.S. While costs may go higher in the future, particularly once drilling on flat desert land becomes more difficult in light of geology, we can make a profit at the present time, even at $30-40 a barrel. Conversely, we believe that for the time being, U.S. shale developers cannot make a profit going below $40-50. Maybe we are wrong, but if we are, our cost/profit equation is not wrong by much. By doing what we are doing, we will undercut American production. Sure, other exporting countries, including our allies in the Gulf will be hurt temporarily, but, in the long run, they and we will be better off. Further, restricting production and assumedly securing higher prices is not a compelling approach. It could cause political and social tension in the country. We rely on oil sales, cash flow and profit as well as reserves to, in effect, buy at least short-term civic peace from our citizens. Oil revenue helps support social services and basic infrastructure. We’ve got to keep it coming.”

The Kingdom understands that it can no longer control prices through production — influence, yes, but, with the rise of U.S. oil development, it cannot control production. Conspiracy theories or assumed practices don’t add much to the analysis of Saudi behavior concerning their cherished oil resources. Like a steamy novel, they fill our reading time, and sometimes lead to a rise in personal adrenaline. Often, at different moments, they define the bad guys vs. the good guys, or Taylor Swift vs. Madonna.

No single nation will probably have the power once held by OPEC and the Saudis. While human and institutional frailties and desires for wealth and power suggest there always will be conspiratorial practices aimed at influencing international prices of oil and international power relationships, their relevance and impact will diminish significantly. Their net effect will become apparent, mostly with respect to regional and local environments, like Yemen and ISIS in Syria and Iraq.

Recently, I asked a Special Forces officer, “Why is the U.S. fighting in Iraq?” I expected him to recite the speeches of politicians — you know, the ones about democracy, freedom and a better life for the citizens of Iraq. But he articulated none of these. He said one word, “Oil”! All the rest is B.S. I think he was and remains mostly right. His answer might help us understand part of the reason for the strange alliance between the Saudis and U.S. military efforts in or near Yemen at the present time. Beyond religious hatred and regional power struggles, it might also help us comprehend at least part of the reasons for Iran’s support of the U.S.-led war against ISIS — a war that also involves other “democratic” friends of the U.S. such as the Saudis and the Gulf States.

The alliances involve bitter enemies. On the surface, they seem somewhat mystifying. Sure, complex sectarian and power issues are involved, and the enemies of my enemies can sometimes become, in these two cases, less than transparent friends. But you know, these two conflicts — Yemen and ISIS — I believe, also reflect the combatant’s interest in oil and keeping oil-shipping routes open.

President Obama has argued that we should use alternative energy sources to fuel America’s economy and he has stated that we need to wean the U.S. off of oil and gasoline. Doing both, if successful, would be good for the environment, and limit the need to send our military to protect oil lifelines. Similarly, opening up U.S. fuel markets to alternative fuels and competition would mute the U.S. military intervention gene, while curing us, to a large degree, of mistakenly granting conspiracy advocates much respectability. Oh, I forgot to indicate that the oil companies continue their secret meetings. Their agenda is to frustrate the evolution of open fuel markets and consumer choices concerning fuel at the pump. Back to the conspiracy drawing boards! Nothing is what it seems, is it?

 

Photo credit: http://blogs.telegraph.co.uk/finance/

Simple antidote to Earth Day guilt: Use more ethanol

It’s Earth Day. Fuel Freedom is here to absolve you of your feelings of guilt.

Forty-five years ago today, on April 22, 1970, the first Earth Day was observed, in what is generally considered the birth of the modern U.S. environmental movement.

Earth Day-NYT2Even though there were plenty of other causes to occupy the minds of activists, 20 million people turned out at various gatherings around the country. Check out The New York Times front page from the next day:

No offense meant to contemporary agitators, but today many Americans just don’t have the sense of urgency commensurate with the enormity of the threat. As John Robinson, associate provost of sustainability at the University of British Columbia, notes, the goal of activists “is to get to a point where we don’t need special occasions” to raise awareness.

Earth Day as an annual event also might have the unintended consequence of overwhelming the casual observer — someone who wants to protect the planet but views the task as impossibly huge. Robinson says:

When you’re guilt tripped, it often leads to denial or apathy – and neither of those is a good basis for action. Denial means that you resist the whole message. A lot of climate change skepticism is of that nature – people feel beaten over the head with this stick of bad behavior. And so they just deny that anything is happening. Or they throw up their hands and say this is intractable – “what can I do, as a single individual, about this global problem?”

At Fuel Freedom, we’ve stayed out of the hitting-over-the-head business. Our message is simple: fuel choice for vehicles can bring a long list of benefits, from reduced overall costs for fuel; to greater stability for the overall economy; strengthened national security; and of course less impact on air, water and health.

Using more ethanol-blended fuel would achieve all these objectives: It’s a cleaner fuel than gasoline, and so there are fewer heat-trapping emissions (like carbon dioxide) produced. Because the nation’s gasoline supply contains 10 percent ethanol, last year the equivalent of 39.6 million metric tons of CO2 didn’t go into the atmosphere. That’s like removing 8.4 million cars from the road for a year.

If you’re concerned about the environmental impact of using corn for ethanol, which accounts for virtually all ethanol produced today, you should know that most corn ethanol is made from inedible, starchy varieties of the plant, and a co-product of the process is feed for livestock. Also, ethanol doesn’t have to be made from just corn: Natural gas, and a range of inedible plants, serve as “feedstocks.” A lot of this info is in our new documentary, PUMP, which you should check out, since it’s now on Netflix.

If saving the planet still seems like too Herculean a task, focus only on the issues we can see, smell and taste: Displacing more oil with ethanol would reduce harmful tailpipe emissions, like particulate matter, ground-level ozone and nitrogen oxide. This pollution has a devastating effect on health, worsening problems like asthma and heart disease. The American Lung Association says 47 percent of Americans live in places “where pollution levels are too often dangerous to breathe.”

Ethanol works, and there are about 17 million flex-fuel vehicles on the road, ready to take blends up to E85 (which is actually 51 percent to 83 percent ethanol). It doesn’t damage engines, it’s often much cheaper, vehicles run with more power on it, and it’s available if you go looking. In fact, new stations are opening all the time.

So all you Chevy Tahoe and GMC Yukon soccer moms out there, and you tough-guy pickup drivers. Everyone with a flex-fuel vehicle. You can make a difference, today.

And every day will be Earth Day for you.

Adam Smith is dead! Will moving his body help secure absent competition in fuel markets?

Former Gov. Richard Lamm of Colorado and I once led a group of CEOs on a trip to London. It was focused on what Colorado could learn from the British healthcare system. During the trip we visited St. Elizabeth Hospital. There in the lobby was a stuffed, mummified body of Sir Jeremy Bentham, so I took a picture with him. He was not very talkative.

But the resulting photograph brings back memories, perhaps apropos to the oil industry. Seeing Bentham looking so well and remembering how much he meant to my life — both the pain and joy — I propose we bring back Adam Smith, and place him in the lobbies of the big oil companies. Why? Easy: they seem to have forgotten about the value of free markets, competition and capitalism. A little dose of recall and guilt every morning when they go to work and when they leave their offices every evening wouldn’t hurt. Over time, maybe there would be substance behind their luncheon or dinner speeches concerning free markets and capitalism. Maybe they would remember Smith’s warning that, “People of the same trade [in this case, the oil industry] seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Right on, Adam! You are not my favorite economist or ethicist, but your quotation appears to fit the behavior of the oil industry. Sen. Dianne Feinstein, during California’s increase in gas prices a couple of years ago, suggested that oil companies and investors might have tried to set prices and blur their actions by casting blame on the refinery fires for gas price spikes. Her view was that market variations alone did not explain the high prices consumers were paying at the pump. Her comments implied some sort of collusion or manipulation.

E85 and E10 PricesThe general behavior of the big five oil companies concerning competition from E85 lends credence to Feinstein’s suspicions. Listen, my reader, and you shall hear some examples of big oil’s apparent, sometimes seemingly coordinated, efforts to restrict the growth of E85 sales here (sorry, Longfellow), even though E85, at the time, posed no real immediate competitive threat to overall gasoline sales. Of the just over 150,000 retail fuel or gas stations in the nation, only 2.5 percent offer E85 and less than one half of one percent of the major brands provide E85 under their branded canopy. How nice of them! Read a franchise agreement from Exxon or Texaco, and see if you can find a provision for an E85 pump…maybe there are words suggesting a location in the back of the station, near the men’s or ladies’ room or in front of the station, clearly off center and not under the canopy.

Look hard at the language and the decisions of nationally branded retail stations. Franchisees are generally limited as to price, fuels, location of pumps and marketing strategies. Maybe these restrictions are legal and from a monetary and profit point of view, understandable. But from a consumer perspective, they limit choice and often frustrate competition.

Some have charged oil companies with price fixing or collaboration in setting prices (a nicer way to say fixing). “No, not in America,” you say? Adam Smith would turn over in his grave! According to a report by AJW company in 2014, “Since RIN prices began to rise in 2013, the nationwide average discount for E85 vs. E10 at independent stations has been 14 percent or greater for all but one month. During the same period, the nationwide average discount for E85 at major branded stations reached 14percent only once. This discount is only a price comparison and does not factor in relative energy content of the fuels. As long as there is limited availability and unattractive pricing at major branded stations, low E85 demand likely will persist among consumers using those stations.”

Generally, I am not a fan of special-interest group research or funded research. I prefer to rely on, at least, relatively independent think tanks, universities and scholars. Yet, recently gifts of money for research blurs the line between the interest of funders and the integrity of the word independent. Caveat emptor!

A 2014 case study by the Renewable Fuels Association (RFA), an advocacy group funded, in part, by self-interested donors, tracked the per gallon fuel costs of all nine retail stations selling E85 in St. Louis during the summer of 2014. Each station had the brand names of one of the five largest oil companies.

The data indicated that there is some support for the notion that gasoline producers/suppliers and their franchised retailers in at least St. Louis purposely employed pricing strategies to discourage E85 consumption. They, apparently, wanted to negatively influence the consumer perceptions about the fuel.

Oil companies appeared to control key price behavior at the nine stations and, to some extent, worked together to set prices, either formally or informally. RFA argues that it’s hard to believe that the price similarities at stations in St. Louis happened by chance. For example, the average E10 retail prices were $3.45 dollars per gallon while the average E85 retail price was $3.47 dollars per gallon. Wholesale prices of E85 were an average of $2.58 per gallon, while E10 averaged $2.93 per gallon. “Based on prices for locally available ethanol, hydrocarbon blend stock, RFS RIN credits and a typical markup, E85 could have been offered at retail for $2.44-2.55 dollars per gallon.” There probably are many reasons why average E85 prices were more expensive than E10 and almost one dollar larger than their wholesale price….like someone from outer space tampered with the pumps or consumer demand for E85 overwhelmed supply and the stations responding to market pressures raised the E85 price to mute interest from buyers. Neither, of course, was true!

Oil companies and their retailers appeared to set the price of ethanol to steer E85 and fuel-agnostic buyers to gasoline. They also wanted to keep the loyalty of gasoline buyers. The similarity of prices could have occurred by chance. Sometimes, I wear a blue shirt in the morning and so does my colleague. We never discussed what we would wear. But our color schemes are coordinated. What the study doesn’t answer is why other St. Louis stations, independent from national brands, did not see an opportunity to come in below the prices of majors and sell E85. Personally, I would have liked the analysis better if other cities were included as cases for comparison and if the time period went beyond the summer. But it was an interesting provocative report and you can’t have everything.

Anecdotes and studies based on the relatively recent California methanol fuel experience and Colorado’s effort to build E85 sales seem to support the RFA study. They suggest that the fear of competition from alternative fuels among oil companies and or retailors led to, at best, begrudging support for both methanol and ethanol. They often located pumps (if they agreed to have them at all) in unfavorable positions in their or their franchisee’s retail stations. Marketing strategies were marginal at best, and non-existent at worst. Stories from some astute observers suggest that relatively high methanol and E85 prices were put in place to detour customers to gasoline. Among other factors leading to problems with each state’s initiatives, there was a lack of sustained interest by major oil companies in building and sustaining sales of both alternative fuels with competitive pricing.

Maybe things will change. The present downturn in oil and gasoline prices has led some oil company leaders to think more charitably about alternative fuels —natural gas, ethanol, methanol, biofuels — particularly in light of the development of more flex-fuel cars coming from Detroit, and from consumers who convert their older cars to be flex-fuel vehicles. They have begun to view alternative fuels more favorably as part of their future business and strategic plans. If they go further, they will have to face questions, which include: whether they integrate gasoline and alternative fuels under one organization and canopy or separate both, perhaps, as different brands. Real competition, probably, will require Congress to consider some variations on a theme of open fuels legislation. Success in building competition at the pump would make Adam Smith happy, were he alive, and be good for the environment, the economy and consumers.

PUMP debuts on Netflix, so stream at your leisure

PUMP the Movie is now available on Netflix, giving millions of Americans the chance to watch an important film that shows the patch forward to ending our dependence on oil.

The documentary, produced by Fuel Freedom Foundation and narrated by Jason Bateman, was originally released in theaters last September. In fact, it’s still showing on big screens around the country, as the foundation has worked with partners to host screenings on college campuses and for nonprofits.

(For a full schedule of showings, as well as movie reviews and other content, check out PUMPtheMovie.com.)

But Netflix is a whole new level. The video-on-demand service is now available in 36 percent of U.S. homes, compared with 13.5 percent for Amazon Prime and 6.5 percent for Hulu Plus. Thirty-five million people watch movies and TV shows using Netflix’s streaming service, while another 5 million still get DVDs by mail. (We have DVDs for sale too, in an attractive blue case, on our website).

PUMP charts the century-long story of oil and how it built its monopoly on the U.S. transportation-fuel industry. There are interviews with major energy and auto-industry players like John Hofmeister, former president of Shell Oil Company, and Tesla Motors founder Elon Musk.

Much of the film is dedicated to solutions to our oil addiction: For example, ethanol, which is cheaper than gasoline and burns cleaner, with fewer toxic emissions, can be made from plenty of “feedstocks” besides corn.

Here’s a clip from the film featuring alcohol-fuels expert David Blume, telling us about the possibilities:

Another voice in that snippet belongs to Marc Rauch, editor of the Auto Channel website, who says: “Ethanol is not just any competitor [to gasoline]. It is the better fuel. It has always been the better fuel.”

The point is choice: American drivers deserve more than just one. To learn how we can achieve it, in the cars, trucks and SUVs we drive today, pick up the remote and watch PUMP.

The flex-fuel Dodge Charger shows you can be both green and cool

Aaron Walsh’s first car was a 2008 Chrysler Sebring flex-fuel, meaning it could take E85 or any other ethanol blend. It was a good car.

But his new car … wow. The 2012 Dodge Charger, in Tungsten Metallic gray. Now that’s a proper car for a young man. And Walsh never would have bought it if it didn’t come in a flex-fuel version.

“That’s my biggest reason for using it,” says the student from Haslett, Mich., just east of Lansing. “I absolutely hate the petroleum industry.”

His reasons are mostly environmental: the BP spill in the Gulf, etc. “I could go into it, but it would take a long time.”

The point is, he did something about it, and that something came around the time he decided he needed a vehicle upgrade. Walsh already knew the benefits of ethanol because of his father, who works for the state of Michigan, which encourages state employees to put E85 into their flex-fuel vehicles. So right around his 21st birthday, last June, he found the Charger and its 3.6-liter Pentastar V6 engine.

“I wanted something that didn’t have to run on gasoline,” he said. “And the first thing I wanted was an electric; I was really into the Chevy Volt. But then I realized a college student doesn’t have $40,000. Then I looked and saw that the Charger is $24,000.”

Walsh, who attends Lansing Community College, says finding an E85 station isn’t difficult. “It keeps getting easier and easier,” he says. He posts his fill-up data to his Twitter feed, @gasisoutrageous (his account name is #Number1BigHero6Fan … hey, dude has other interests besides ethanol), and he regularly gets in the twenties for mpg. Also, E85 is a lot cheaper than regular gasoline at many stations in the Lansing-Haslett area. Nationally, E85 was only $1.86 a gallon Thursday, 23.7 percent cheaper than E10, according to E85Prices.com.

Price isn’t the only benefit to buying E85. Higher ethanol blends burn more cleanly and efficiently than E10 (what most of us call regular gas). Using more alcohol fuels displaces oil, strengthening the overall U.S. economy, creating domestic jobs; reducing oil consumption is better for our air, water and health.

But the price at the pump is still a big factor, and most Americans know this. Walsh knows it, and needs it. He works at a convenience store, and says his dad has been helping him out covering the cost of payments and upkeep. The vehicle is also not exactly ideal for the brutal Michigan winters, with is rear-wheel and slick tires.

But he loves it. Using ethanol doesn’t mean you can’t enjoy your car at the same time. And that roaring engine runs great on high-octane E85.

“When I started driving, whenever I would slam on the accelerator pedal, I’d just hear dollar signs. Now I like the performance. I actually bought that car just because of the engine.”

Other posts in our “Share Your Story” series:

10 people who turned anger into solutions for high gas prices

So we’ve heard from Americans who say high gas prices have disrupted their lives and their work. Let’s shift to the people who are more than mad as hell. They’re mad enough to turn their energy into action.

Among these 10 ideas, what’s the most practical for your life?

 

“I just ditched my old 1998 Volvo S70 for a used Prius, and it is so much more fun to fill a 10-gallon tank than an 18-gallon one. And have it last more than a week of heavy Los Angeles commuting. It’s still new to me, so I still kind of giggle every time I fill up the tank. I’m thrilled to put the money I save toward better things.”
— Jennifer

“We save a lot of money in the summer because my wife takes the bus to the south side of Madison to go to work, and I pick her up in the afternoon, about 4 miles south of our home. If I was to take her to work and pick her up, it would be 48 miles round-trip, morning and afternoon. The bus is cheaper.”
— Laverne F., Madison, Wisconsin

“As gasoline was so high for so long, I made a bio-diesel processor from a old electric water heater and made my own fuel for the oil furnace and my old 1984 GMC van with a diesel engine. I still received 21 mpg. Begging for grease was the hard part.”
— Willis W.

“I wish I had a good story for you, but my wife and I drive a plug-in Chevy Volt. We hardly ever stop at a gas station, except perhaps once every 6 weeks or while on an occasional trip. When we top the tank, it seldom takes more than 5 1/2 gallons, i.e. less than $20 worth of premium fuel. The main reason that we stop at gas stations these days is to get an automatic car wash.”
— David and Barbara G., Gaithersburg, Maryland

“Still wondering how to convert my 99 Ford Expedition to NG?”
— Gary S., Laguna Woods, California

(We’re checking around to find a SoCal CNG conversion business. Will update later.)

“I have not visited a gas station since September 2014, when I took delivery of my Tesla. However, I still pay for my daughter’s gasoline, suffer the financial cost, and contribute to the oil industry’s wanton environmental degradation. Savings at the pump could help me fund her college education.”
— Dr. George

“Go electric. I did and am receiving my Tesla next week. No more gas at all.”
— Bob

“Today we bought a 2014 Ford Focus, a flex-fuel vehicle which enables us to use E85 for fuel. A small contribution to energy independence.”
— David

“We need a blender pump [for ethanol] in every station.”
— Melvin M.

“I top off my cars with E85 when I can. I fill up once a month with a discount at Kroger. I am really pushing to get Kroger to provide ETHANOL pumps and shop at the same place!”
— Gerard R., Stone Mountain, Georgia

 

Incidentally, here’s a handy guide to flex-fuel vehicles on the market.