Posts

Landon Hall

Angry about rising gas prices? Do something about it

/2 Comments/in , , /by

Silly American driver. Did you think gas prices were going to stay low forever?

When we say low, we should really say “low,” with derisive air quotes, because gas prices never really got to what a historian would certify as “low” anyway, even after crude oil dropped 60 percent between June and January. As New York Times columnist David Leonhardt noted in late January, for 17 years — from the beginning of 1986 to the end of 2002 — gasoline averaged $1.87 a gallon.

But gasoline had soared so high over the past decade that a sudden drop late last year, which pushed prices down to $2 or less in many places, felt like a tax holiday.

Well, holiday season is officially over. Oil set another 2015 high on Tuesday, with Brent crude, the international benchmark, rising $1.13 to $62.53. The peak of the session, $63, was the highest level it’s reached since Dec. 18.

The surge — which caught analysts and experts off-guard, just as the plunge did before it — wasted no time in carrying over to the pump. According to the AAA’s Daily Fuel Gauge Report, the national average Tuesday was $2.259, up from $2.185 a week before and $2.076 a month before.

In some states, obviously, it’s climbed higher and faster than others. At my neighborhood station in Southern California, the price for basic 87-octane went from $2.39 to $2.85 in only a few weeks. At a different station across the intersection, the price has tracked an identical arc. I imagine the owners watching each other with infrared binoculars late at night, ready to hoist new digits onto their respective marquees when one rival dares to up the ante a dime.

Patrick DeHaan, senior petroleum analyst at Gas Buddy, wrote Monday:

“Motorists in California are getting a taste of the sourness that will hit across the country in a month or two as Los Angeles switches over to cleaner burning gasoline, followed by San Francisco in short order, with the rest of the nation making moves in the weeks and months ahead. I’m also starting to hear more frustration from motorists about rising prices- and while the concerns are well rooted, they should take solace that gas prices this summer are still expected to be some $1/gal lower than last summer.”

Raise your hand if you’re in the mood for some solace.

Drivers are more likely to feel confused and exasperated by the inexplicable price spikes and the baseless predictions.

If you’re angry about rising gas prices ebbing away at the money you thought you were saving last fall, you can do something about it: First, watch PUMP the movie, on Amazon, iTunes, DVD or at a public screening. Second, convince your friends to watch it, or volunteer to host a screening in your city. (Do you get the idea we want people to watch this important film?) Third, sign our petition urging fueling retailers to make alternative fuels, like E85, available to consumers.

Ending our reliance on oil as the only fuel option for vehicles is possible in the next few years, but only if we act. It sure beats complaining about the price of gas.

Fuel Freedom Staff

Saudis pay only 45 cents a gallon for gas

/in , /by

The Washington Post has an interesting story about the impact of lower gas prices — meaning the overall price drop since June, taking into account the recent uptick — on consumers in Saudi Arabia. While the government might one day have to make a decision about lowering oil output, thus letting prices climb again, regular citizens aren’t noticing much difference. That’s because Saudis pay about 45 cents a gallon to fill up their vehicles, thanks to government subsidies.

In Saudi Arabia, the general response to the drop in global oil prices by half — from more than $100 a barrel six months ago to around $50 now — is a shrug. Remember all those $60 fill-ups at U.S. pumps when gas was running close to $4 a gallon over the past few years? While your wallet was getting hammered, Saudi Arabia’s was getting stuffed thick. The kingdom has more than $750 billion in cash reserves, which is more than enough to keep the lights on and stave off panic over oil markets.

Not only is the government not sweating the reduced price of oil, it’s continuing with an ambitious program of public works to benefit citizens.

the government could go seven or eight years without trimming back its plans, simply by using its massive reserves, which are equal to 100 percent of annual gross domestic product, to cover budget deficits. More likely … the government would monitor oil prices closely for about 18 months and rethink strategy if they did not rebound.

Saudi Arabia has prospered over the decades thanks, in part, to protection from the U.S., the world’s most prolific consumer of oil. According to this timeline on PBS’s “Frontline” program:

1940-45: Although Saudi Arabia officially maintained neutrality through most of the war, the U.S. began to court the kingdom as it realized the strategic importance of Saudi oil reserves. In 1943, President Franklin Roosevelt made Saudi Arabia eligible for Lend-Lease assistance by declaring the defense of Saudi Arabia of vital interest to the U.S. In 1945, King Abdel Aziz and President Roosevelt cemented the tacit oil-for-security relationship when they met aboard the USS Quincy in the Suez Canal.

Fuel Freedom Staff

Gas prices start to rise again, and drivers notice

/in , /by

Oil Gas prices are on the rise again, and consumers, who barely had time to enjoy their savings over the past few months, are taking notice.

“It’s still low by our standards,” Pete Diaz of San Jose told the Mercury News. “I’m not complaining — yet.”

Diaz paid a little less than $2.20 a gallon when he filled up Friday at an ARCO. That was actually a bargain: On Monday, according to AAA’s Daily Fuel Gauge Report, the average in San Jose was $2.636 for regular gas, up from $2.443 a week earlier.

The national average Monday was $2.177, up from $2.056 a week earlier.

Los Angeles-based Gas Buddy reports that, over the last week, the proportion of stations selling gas for under $2 a gallon has shrunk from more than 50 percent to 27 percent.

Stories are popping up all over the country about rising gas prices: from Maine to New Jersey to Texas to Arizona.

Oil prices dropped by 60 percent between June and January, a trend analysts spectacularly failed to predict. But in a four-day span between Jan. 30 to Feb. 3, oil surged 18 percent.

Gasoline prices, in turn, went up in an instant, a clear example of the market volatility that makes it nearly impossible to plan household budgets, much less a career. The latest round of job cuts was just announced by Weatherford International, one of the world’s largest oilfield services companies. It will lay off 5,000 employees, 85 percent of them in the United States.

Prices might keep on rising. Major media outlets reported Monday that oil was still on the rise, based on OPEC forecasting higher demand in 2015.

Other factors contributing to the price increase include:

  • The looming seasonal switch to “summer blends” of gasoline. As Gas Buddy notes: “As air temperatures warm, refineries also begin the progressive switch to cleaner variations of gasoline, which also adds to cost.”
  • Refineries are undergoing maintenance to prepare for the summer switch.
  • Refinery workers around the country are striking for better health benefits. It’s the largest such walkout since 1980.

Now it’s your turn to tell your story. How does the day-to-day price of gas affect you and your business?

 

Arctic Leaf

The laws of gravity, gasoline and alternative replacement fuels

/in , , , , /by

Newton-AppleWhat goes up in the physical environment, generally (at least until recently), must come down, according to Newton’s law of universal gravitation and Einstein’s theory of relativity. But does what goes down often keep going down? No, not when it’s primary a financial market measurement and the indices reflect a company or companies with a reasonable profile and future.

What goes down in the marketplace often comes up again — not always, but maybe, sometimes — and with varying degrees of predictability? Don’t be confused! The variables often aren’t subject to the laws of physics. The phrase, “it depends,” is often used by purported financial analysts to explain stock, hedge fund and bond trends and their predictions. Indeed, a whole new industry of cable economic shouters has grown up to supposedly help us understand uncertainty. Generally, their misinterpreted brilliance shows after the fact (the markets close) and their weaknesses reflected in their attempts to predict and project trends accurately in the future.

Happily, the ongoing decline of oil and gas prices has been seen as generally good for the overall economy, stimulating consumer purchasing and investing. Regrettably, the decline is becoming a lodestone tied to the necks of an increasing numbers of workers and communities affected by layoffs in some shale oil areas where production has started to slow down and where some small drilling, as well as service firms, have either gone out of business or have pulled back significantly. Texas is suffering the most. The state is down 211 rigs, about 23 percent of its 906 total rigs. The decline in production is not uniform because newer wells drill far more efficiently than older ones. Overall, however, several major petroleum and oil field service companies in Texas have cut budgets and employees.

I surmise that the number of psychotherapists in the nation has increased in areas where investors in energy, particularly oil and gasoline stocks, hedge funds and derivatives ply their trade, hopes and dreams. Little wonder, after often intense coverage by some of the decline, the media’s coverage, by many newspapers and TV outlets, of the modest increase in the price per barrel of oil and the minuscule increase in the price of gasoline per gallon reads like a secular holiday greeting. Happy days are here again, at least for the oil industry and their colleagues!

But the skeptics have not been silent. This week’s headlines based on stories from many analysts read like a real downer, particularly if you were in the market. Listen, my children, and you shall hear little cheer to sustain yesterday’s investment optimism. For example, as one journalist put it, “Sorry, but the oil rout isn’t over yet,” or another, “Report: U.S. production growth could stop this year,” or a third, “Careful what you wish for: Oil-price recovery may sting.” It’s a puzzlement that only a Freudian therapist can address if you have enough money to pay him or her.

Fact: Very few analysts, even the best, can now honestly claim with certainty that they know where the price of oil and gas will be a year from now and beyond. And they are probably overwhelmed daily by their egos, by their practice of magic and by (a few in the groups) their seemingly habitual exaggeration and what feels at times like prevarication.

There likely will be frequent, short-term blips in the economics of oil and gas until non-market behavioral variables concerning what the Saudis will do or what the American oil companies will do about production to secure market share and other objectives are settled. Further, tension in the Middle East, if it escalates, may well disrupt oil supply while other global, as well as internal U.S. factors, could well affect the value of the dollar and convert it into significant price changes. America’s oil and gas investors, big or small, should probably learn to count to ten and take a month or two off in Sedona, Ariz. It’s really nice there.

Current uncertainty concerning the economics of oil and gas should not make consumers or policymakers lethargic. It’s not time to take Ambien. While I am not certain when or by how much, what has gone down will likely begin to go up, relatively soon.

Regrettably, the world is still dependent on fossil fuels and market, as well as broad economic, social and political conditions, should relatively soon, begin to boost prices. If we are serious about providing consumers with a better long-term deal regarding gas prices, reducing monopoly conditions created by government policies and oil companies should be granted priority. Ending government subsidies for oil in an era of budget deficits would be a good start.

Low gas prices have diminished investor and provider interest in developing alternative replacement fuels. But this is short term. Fuels, like E85, once gas prices begin to rise, will once again become very competitive and consumer friendly. Because the extended use of renewable fuels that satisfy broad market needs — from low-income to high-income households and from short to long trips — is still probably at least 5-10 years way, a national and local leadership commitment to alternative fuels is important if the nation and the communities in it are to meet environmental, economic and social welfare goals.

The policy and behavior issues relate to perfectibility, not perfection. Ethanol is not a perfect fuel. But it is better than gasoline — much better. Arguing for reliance now on electric cars or hydro fuels makes for easy rhetoric and receipt of awards at dinners, but the impact on the environment, for example, and GHG emissions will be long in coming in light of the small share electric vehicles will have for some time among older cars. Let’s push for renewables and facilitate an early choice for alternative replacement fuels including ethanol.

 

Image from jimdakers.com/2013/10/15/are-you-in-motion/

Fuel Freedom Staff

NYT columnist: Gas really isn’t all that cheap

/in , /by

It’s about time somebody pointed out that gas, while cheaper than it’s been in the past few years, isn’t all that cheap, really. If you look at history.

New York Times business columnist David Leonhardt did just that, pointing out that the national average for regular unleaded — $2.03 per gallon — is “still more expensive than nearly anytime in the 1990s, after adjusting for general inflation. Over a 17-year stretch from the start of 1986 to the end of 2002, the real price of gas averaged just $1.87.”

Leonhardt notes that the era of cheap gas coincides with the “great wage slowdown.”

One of the surest ways to end the great wage slowdown would be for the United States to make sure it’s entering a new era of cheap energy. “It’s the proverbial tax cut,” says Daniel Yergin, vice chairman of the research firm IHS and author of a Pulitzer Prize-winning history of oil. If energy costs remain at current levels, it would put $180 billion into Americans’ pockets this year, according to Moody’s Analytics, equal to 1.2 percent of income and a higher share for lower-income households.

That’s why taking virtually every step to push oil costs even lower — “drill, baby, drill,” as the phrase goes — would make a lot of sense, so long as oil use did not have harmful side effects.

Ah, but it does have side effects. Leonhardt adds:

It leads to carbon emissions, which are altering the world’s climate. Last year was probably the planet’s hottest since modern records began in 1880, and the 15 hottest have all occurred since 1998. Oceans are rising, species are at risk and some types of severe storms, including blizzards, seem to be more common.

More oil production, then, involves enormous trade-offs: a healthier economy, at least in the short term, but a less healthy planet, with all of the political, ecological, health and economic downsides that come with it.

Leonhardt writes that it’s possible, in part, to retain the benefits of increased oil output without the drawbacks. Hydraulic fracturing is less carbon intensive than conventional oil drilling, although fracking comes with other issues. “Clean energy” offers a good solution, he says, “if it could become even cheaper.”

Arctic Leaf

What good are economists, including oil and fuel economists?

/in , , , , /by

RobertShillerNobel-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.

Fuel Freedom Staff

Obama mentions oil, Keystone in State of the Union

/in , /by

President Obama touched on several aspects of the energy debate during Tuesday night’s State of the Union Address, including:

Imported oil:

More of our kids are graduating than ever before; more of our people are insured than ever before; we are as free from the grip of foreign oil as we’ve been in almost 30 years.

Ramped-up U.S. oil production:

At this moment — with a growing economy, shrinking deficits, bustling industry, and booming energy production — we have risen from recession freer to write our own future than any other nation on Earth.

Consumers savings from cheap gasoline:

We believed we could reduce our dependence on foreign oil and protect our planet. And today, America is number one in oil and gas. America is number one in wind power. Every three weeks, we bring online as much solar power as we did in all of 2008. And thanks to lower gas prices and higher fuel standards, the typical family this year should save $750 at the pump.

The debate over the TransCanada Keystone XL pipeline:

21st century businesses need 21st century infrastructure — modern ports, stronger bridges, faster trains and the fastest internet. Democrats and Republicans used to agree on this. So let’s set our sights higher than a single oil pipeline. Let’s pass a bipartisan infrastructure plan that could create more than thirty times as many jobs per year, and make this country stronger for decades to come.

And something else about solar power:

I want Americans to win the race for the kinds of discoveries that unleash new jobs — converting sunlight into liquid fuel …

As The New Republic noted, it was the first time in his six SOTU Addresses that Obama mentioned Keystone:

It’s not surprising he’d weigh in now, given how Keystone has dominated the first few weeks of debate in the new Republican Congress. Lately, Obama has sounded skeptical of the pipeline’s economic benefits, but we still don’t have many clues as to how he will decide Keystone’s final fate in coming months.

(Photo: WhiteHouse.gov)

Fuel Freedom Staff

Poll: Most Americans think gas prices are going up

/in , /by

Give the American consumer credit: They know gasoline prices are volatile, and that there’s no guarantee that this vacation from expensive gas will last.

According to a phone survey by Rasmussen Reports:

Ninety percent (90%) of American Adults say they are paying less for a gallon of gas than six months ago, but 69% think it’s at least somewhat likely those prices will go up again over the next six months … Just 19% believe they are unlikely to be paying more in six months’ time. These findings include 40% who say it’s Very Likely a gallon of gas will cost more and only three percent (3%) who say it’s Not At All Likely.

Better start pocketing all that money you’ve been saving with every fill-up.

But how can we make low gas prices sustainable for the long term? If only there were a high-quality documentary that lays this all out in a tidy 127 minutes.

Landon Hall

Want to keep gas prices low? Watch PUMP

/in , , /by

We’re all watchers of the gas-station “flip sign” now.

They call it that — the flip sign — because it has replaceable plastic numbers, or electronic ones, that “flip” as the price fluctuates. For months the national average for a price of regular unleaded has been flipping in a downward direction, from $3.68 a gallon in June to $2.11 on Tuesday.

We keep track of such details because (relatively) cheap gas means more money stays in our pockets. Depending on where you live, how far you drive, and whether your chariot sips gas or guzzles it, you’re saving $50, $75, $100 a month that can be used for other purposes.

Low fuel prices are great for consumers, but we shouldn’t expect the windfall to last. American drivers deserve the cost certainty of permanently low prices, and the best way to achieve that is through fuel choice, so gasoline isn’t the only alternative when we fill up.

How do we get there? The documentary film PUMP has the answers. And it’s available on iTunes, starting today, to buy or rent.

PUMP, narrated by Jason Bateman, played in theaters in more than 40 cities last fall, receiving favorable reviews from critics and high marks from audiences. Check out PUMPtheMovie.com to watch the trailer, view a photo gallery and read bios of the stars, including Elon Musk.

PUMP traces the century-long history of how gasoline, refined from crude oil, came to monopolize transportation in the United States. It shows how dependent we’ve always been on oil, to the detriment of the country’s economic well-being, national security, health and environment.

The solution is to diversify the U.S. fuels market by allowing other types of fuel to compete on an even footing with gasoline. Technological innovation has brought us cars that can run on multiple types of fuel, including ethanol and methanol (made from a variety of “feedstocks,” including plants, natural gas and landfill waste). Other vehicles are powered by compressed or liquefied natural gas, hydrogen fuel cells, and of course, lithium ion batteries.

The choices are practically endless, and yet the vast majority of drivers are stuck with only one choice: gasoline.

Creating the market conditions that will lead to a diversified fuels market will produce a variety of benefits, but for the moment let’s get back to the economic benefit. No one saw the oil-price drop coming, and experts have been consistently wrong every step of the way. But reasonable people have predicted that prices, inevitably, will rise again. We know this because it’s happened again and again in recent American history.

Fuel choice will ensure that you lock in your monthly savings for the long term, instead of enjoying only short-term relief.

If permanently cheap gas sounds like attractive, watch PUMP. The solutions are in there.