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Arctic Leaf

4 Non Blondes, The King and I and alternative fuels

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4-non-blondes-650-430“Twenty-five years [lots more years for me] and my life is still
Trying to get up that great big hill of hope
For a destination”

Combine the lyrics from 4 Non Blondes with the personal frustration suggested by the “it’s a puzzlement” comment from the King of Siam in “The King and I,” expressed when he was perplexed by a changing world, and you will understand why many are confused by three relatively recent actions that limit or impede the growth of alternative fuels.

Most advocates of consumer choice at the pump and the end of Big Oil’s near-monopoly concerning transportation fuel praised the president’s State of the Union address a couple of years ago. He proposed that the nation wean itself off of oil. Wow, some fuel choice advocates were thrilled, almost orgiastic. Just think, in a couple of years customers might search for fuel stations selling a range of lower-cost alternative fuels, instead of only gasoline. Environmentalists welcomed the president’s comments. Less pollution and fewer GHG emissions! Most economists were pleased. They saw more jobs and further GNP growth. Servicemen were happy. They would be asked to fight fewer wars for oil.

In this context, there was hope that the cheaper cost of oil, and its derivative, gasoline — both of which are now rising in cost — juxtaposed with the regulations resulting from the BP Deepwater Horizon oil spill, Shell’s failure to use its original drilling permit to drill successfully and the availability of less expensive competitive fuels, would end the prospect of drilling in the pristine Arctic Circle off of Alaska’s coast. It would be just too costly. Good news! We can dream, can’t we!?

Similarly, some of my colleagues and friends who support fuel choice and a better shake for consumers than gasoline (concerning costs and GHG emissions), were hoping that improved technology, lower prices, and inventions like Elon Musk’s just-announced solar storage unit, could soon generate an increased ability for solar energy to power many coal-fired utilities, homes and even vehicles. In the aggregate, the U.S. would produce significantly fewer emissions and pollutants. What a welcome, possible, short-term happening! Musk for president!

The increased popularity of battery electric vehicles (BEVs) from Tesla (among those who can afford them) and the emergence of cheaper battery-powered vehicles from Detroit have also lent hope to those who are fuel agnostic or favor a long-term, robust renewable fuel market and more consumer choices at the pump. While electric cars offer a vision of the future, their broad acceptance by the public depends on design and technology improvements to both end the fear of running out of battery power while on the road, and provide more internal space — both at costs most Americans can afford. Both problems seem to be on the way to resolution, based on the pronouncements from Tesla and Detroit. We can only hope!

But despite the optimism gene internal to most Americans, the great “big hill of hope” has recently become even bigger to climb. While alternative fuel advocates remain relatively quiet and often unable to speak with one effective voice, federal and state policies and regulations have been changed to limit the ability of alternative fuels to secure significant market penetration. Despite large subsidies to the oil industry, neither the administration nor Congress has been willing to seriously try to weaken the ability of Big Oil to restrict alternative fuel sales at local gas stations. Indeed, several attempts to enact open fuels legislation have failed to even get out of Congressional committees.

Although the country seems awash in oil, just this week, the president gave conditional approval to Shell to drill in the Chukchi Sea off of Alaska, despite the company’s mismanagement of earlier attempts to do the same, and despite the objections of many environmental groups and Alaskan natives. Both industry and critics of the permits note that drilling will be risky, given very high waves, icy seas, strong winds, bitter cold weather and the need to protect the routes of migration and feeding areas for marine mammals. As The New York Times indicated this week, the permit is a “major victory for the petroleum industry and a devastating blow to environmentalists,” and for consumers, I would add. Estimates of the oil in the Chukchi Sea range all over the place. However, if oil companies are able to overcome high drilling costs and secure a significant flow of oil, even for a relatively short time, they will increase their ability to limit sales of alternative fuels among their franchises and through differential pricing, the sales of alternative fuels by independent retailers.

It doesn’t get any better. Just as opportunities to secure and store solar power — power that could be used to power homes, autos and utilities — seem almost ready for prime time, many of America’s utility companies — another great supporter of competition (excuse the cynicism) — have begun to seek legislative relief to impede solar’s growth. Their argument deserves discussion. If solar power grows, it could well be at the expense of improvements in the grid. But the use of their political power with state legislatures to seek ad-hoc remedies, different in each state, is not in the public interest. Legislative efforts to lower the price solar users secure from utilities when they put excess power on the grid may or may not be good policy or practice. Shouldn’t we know before such policies are enacted by states? Similarly, putting up regulatory impediments impeding the sale of solar units, including storage units, would likely really hurt what is now a risky start-up industry. The net result of poorly conceived state-by-state initiatives to protect the utility industry would be to limit the capacity of solar energy to substitute for coal in powering utilities and to reduce options to produce cleaner electric cars with almost zero GHG emissions. Similarly, restricting the storage of solar energy would end up slowing down the development of another alternative fuel — one based on solar-derived power.

Finally, the continuing efforts by several states to change Tesla’s business model have and will reduce competition for fuels and the use of electricity as a fuel. Why? Several state legislatures, under political pressure from auto dealers, have banned its direct-sales approach. If Tesla wants to sell its electric-powered cars in Texas, for example, it must sell through an auto dealer. Remember, some Texans recently wanted to secede from the union in order to free the state from “federal dictatorship” and, ostensibly, extend personal freedom and its corollary market competition! (I thought of signing the petition that was floating around to let Texas go.) Passing laws to protect one kind of business from another is un-American…almost like sending the Texas National Guard to monitor the training of U.S. soldiers to be sure they are not digging tunnels under Walmart and engaging in other nefarious activities contrary to the interest of the good citizens of Texas. Davy Crockett would be offended. The bottom line is that Texas and other states with similar regulations are limiting fuel choice by placing a Berlin Wall around their boundaries and not letting Tesla and its electric vehicles in. Ah. Freedom!

So, supporters have some big hills to climb and sometimes it may be a puzzlement to the climbers. But, as the singer Billy Ocean once vocalized, “When the going gets tough, the tough get going.” Building a coalition among the willing supporters of alternative fuels should not be difficult. They share goals concerning the need for increased consumer choices and the value of open fuel markets. If they reach out to include, rather than define boundaries to exclude; if they acknowledge that absolute wisdom concerning strategies does not exist; if they are willing to work toward consensus and bring their respective constituencies along with them; and if they recognize that time is of the essence concerning achievement of key public interest and quality of American life objectives, following Robert Frost, they will travel the road less traveled, and will likely soon begin to see light at the end of their travails and travels.

 

Photo Credit: Getty Images

Arctic Leaf

Bryce (NY Times) and ethanol: The whole truth and nothing but the truth

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E85 pumpWhat’s up with the Manhattan Institute for Policy Research? While I often don’t agree with the scholars who write for it, I find its articles and books thoughtful and provocative.

My question concerning the Institute derives from a desire to build a now absent civil dialogue concerning policy issues affecting the U.S. The Institute, when a reasonably informed national dialogue on policy existed, was an important participant. Now, that it has been lost, the Institute’s agenda and body of work offers hope that it can be resurrected someday soon. In this context Robert Bryce’s article in today’s New York Times, “End the Ethanol Rip-Off” concerns me. His article is filled with factual and interpretative errors that skew his conclusions concerning the Renewable Fuel Standard (RFS).

Bryce asserts that corn ethanol is responsible for significant environmental problems particularly related to land use, harvesting and processing fuel. He also states that it generates higher food costs, and that it damages small engines. Finally, according to the author, ethanol’s price has been and is generally higher, much higher, than gasoline. The only thing he left out is that ethanol is the cause of global warming, the Israeli-Palestinian conflict, unemployment, the trial and tribulations of Miss America contests and bouffant hairstyles in Texas.

No fuel used now in America is perfect. Certainly, the DNA of gasoline, which Bryce seems to champion, is much more harmful to the environment, and the nation’s need to reduce GHG emissions. Gasoline use also reflects significantly more public health problems and continues the nation’s dependence on imported fuels.

Let me try to summarize some of the facts that Bryce overlooks or does not seem to know:

  1. Although a cleaner burning fuel, E10 (10 percent ethanol) blended with gasoline does result in a small energy content gap that requires a purchase of additional E10 gasoline to secure mileage equivalency. But, up until recently, the lower price of E10, compared to gasoline, has more than made up for mileage differentials and slowed down the upward trend of the price of gasoline and put downward pressure on prices.
  2. E85, which the author does not mention, has been approved by the EPA for certain vehicle classes. Like E10, its use does result in lower mileage per gallon when compared to gasoline and also results in more mileage per BTU. The mileage gap is lower than the gap that Bryce indicates in his article. Again, before the decline of gas prices , the gap was more than made up by the lower costs of ethanol and its’ increased efficiency.
  3. There is no real consensus on the food vs. fuel debate. The World Bank has changed its position on this globally over the years and the Congressional Budget Office (CBO) has suggested that if there is a negative effect on food, it is very minor. Indeed, while the food vs. fuel argument has not yet been settled, most experts agree that increased oil prices contribute to increased food prices. The food vs. fuel argument has reflected an “on the one hand, on the other hand” dialogue. Perhaps more relevant, particularly with respect to corn, there are land use and processing techniques now being introduced that would mitigate possible problems. Certainly, corn is not in short supply and the price of corn to the consumer has not spiraled up significantly.
  4. The author also neglects the fact that natural gas- and cellulosic-based ethanol (as well as other feedstocks) maybe on the horizon. Investors have delayed involvement, primarily because of uncertainty concerning the market and gasoline prices. Its advent will likely lessen food vs. fuel issues and help lesson environmental concerns.
  5. Bryce suggests that ethanol, (again, he refers to E10 in his article), has a negative effect on engines. Most of the independent analysis of the impact of ethanol on engines, E10 as well as E15 and E85, suggest differently. The EPA has approved the sale of each blend with certain vehicular limitations with respect to E 15 and E 85.

Bryce spends much time talking about the cost to the consumer of ethanol and the so-called ethanol tax. Curiously, given his location in the Manhattan Institute, he neglects to mention the significant cost to the consumer of the failure of oil companies to open up the gasoline market to alternative fuels like ethanol. Try going to a “gas” station to buy E85 or to charge your electric vehicle. Good luck finding one near your home or easily on a long trip. Through tough franchise agreements, oil companies eliminate competition around the nation. I suspect the imputed tax caused by the oil companies’ monopoly or almost-monopoly position is quite higher, much higher, than the tax that Bryce suggests results from ethanol use. The Institute should pay for a copy of Adam Smith and give it to the author.

Bryce’s article does not really contribute to a needed transparent debate over Renewable Fuel Standards or the wisdom of alternative fuels. It mixes up concepts and facts concerning energy content, car performance and efficiency. It sweeps over serious issues with respect to food vs. fuel and the environment with a broken brush or broom. Its conclusion concerning ethanol and implicitly other alternative fuels is inconsistent with his assumed anti-regulatory position and belief in the market place. We need such a debate, one that reflects a comparison between alternative fuels such as ethanol and gasoline as well as one that accommodates a needed transitional strategy between alternate and renewable fuels.

 

Photo Credit: East TN Clean Fuels Coalition

Arctic Leaf

Porgy and Bess, Marxian dialectic, oil and alternative fuels

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Porgy and Bess poster“We got plenty of oil and big oil’s got plenty for me” (sung to the tune of “I Got Plenty of Nutting” from Porgy and Bess). “I got me a car…got cheap(er) gas. I got no misery.”

This is the embedded promise for most Americans in the recent article by David Gross, “Oil is Cratering. American Oil Production Isn’t.” His optimism concerning at least the near future of oil — while a bit stretched at times, and economically and environmentally as well as socially somewhat misplaced — serves at least as a temporary antidote to individuals and firms with strong links to the oil industry and some in the media who have played chicken with oil (or is it oy little?). But in a Marxian sense (bad economist, but useful quotes), Gross does not provide a worthy synthesis of what is now happening in the oil market place. Indeed, his was a thesis in search of an antithesis rather than synthesis. Finding a synthesis now is like Diogenes searching for truth in light of almost daily changes in data, analyses and predictions concerning the decline in oil and gas prices by so-called experts.

Gross’s gist is that “Signs of the oil bust abound….The price of West Texas Intermediate crude has fallen in half in the past six months. The search for oil, which fueled a gold-rush mentality in North Dakota and Texas, is abating.” Rigs have closed down, employment is down and oil drilling areas face economic uncertainty, but, despite signs of malaise, “a funny thing has happened during the bust. Oil production in America has been rising…In November, the U.S. produced 9.02 million barrels of oil per day, up by 14.5 percent from November 2013… Production in January 2015 rose to 9.2 million barrels per day. And even with WTI crude settling at a forecasted price of about $55 per barrel for the year, production for all of 2015 should come in at 9.3 million barrels per day — up 7.8 percent from 8.63 million barrels per day in 2014…The U.S., which accounts for just 10 percent of global production, is expected to supply 670,000 new barrels — 82 percent of the globe’s total growth.”

Somewhat contrary to his facts about rigs closing down, Gross indicates that America’s oil largesse results from “American exceptionalism.” Shout out loud! Amen! American oil companies are able to produce larger amounts, even when oil numbers suggest a market glut, because they play by new rules. They are nimble, they are quick, they jump easily over the oil candlestick. They rely on new technology (e.g., fracking), innovation and experimentation. They don’t have to worry about environmental or social costs. The result? They bring down the cost of production and operations, renegotiate contracts and lay off workers. “The efforts at continuous improvement combined with evasive action mean a lot more profitable activity can take place at these prices than previously thought.” The industry appears like a virtual manufacturing and distribution version of Walmart. It, according to Gross, apparently can turn a positive cash flow even if the price per barrel stays around where it has been….from close to $50 to $70 a barrel. Holy Rockefeller, Palin and Obama! Drill, baby, drill! Just, according to the President, be circumspect about where and how.

Not so fast, according to both Euan Mearns, writing for the Oil Drum, and A. Gary Shilling, writing for Bloomberg Oil, both on the same day as Gross.

Mearns’ and Shilling’s perspectives are darker, indeed, gloomy as to the short term future of the oil market. The titles of their pieces suggest the antithesis to Gross article: Oil Price Crash Update (Mearns) and Get Ready for $10 Oil (Shilling). “The collapse in U.S. shale oil drilling, that looks set to continue, must lead to U.S. oil production decline in the months ahead…It looks as though the U.S. shale oil industry is falling on its face. This will inevitably lead to a fall in U.S. production” Mearns evidently places much less value on the industry’s capacity to literally and strategically turn on the present oil market dime.

Shilling asks us to wait for his next article in Bloomberg for his synthesis of what’s likely to happen- sort of like the trailers in Fifty Shades of Grey, except his data is not enticing. His voice through words is just short of Paul Revere’s: price declines are coming! The economy is at risk! Men and women to the battlefields! “At about $50 a barrel, crude oil prices are down by more than half from their June 2014 peak at $107. They may fall more, perhaps even as low as $10 to $20.” Slow growth in the U.S., China and the euro zone, and negative growth in Japan, combined with conservation and an increase in vehicle gas mileage, places a limit on an increase in global demand. Simultaneously, output is climbing, thanks mostly to U.S. production and the Saudis’ refusal to lower production. Shilling’s scenario factors in the prediction from Daniel Yergin, a premier and expensive oil consultant, that the average cost of 80% of new U.S. shale oil production will be $50 to $69 a barrel. He notes, interestingly, that out of 2,222 oil fields surveyed worldwide, only 1.6% would have a negative cash flow at $40 per barrel. Further, and perhaps more significant, the “marginal cost of efficient U.S. shale oil producers is about $10 to $20 dollars a barrel in the Permian Basin in Texas and about the same for oil produced in the Persian Gulf. Like Gross, Shilling pays heed to American efficiency but suggests its part of a conundrum. “Sure, the drilling rig count is falling, but it’s the inefficient rigs that are being idled, not the [more efficient], horizontal rigs that are the backbone of the fracking industry.” Oil production will continue to go up, but at a slower rate. This fact, juxtaposed with continuing, relatively weak growth of global and U.S. demand, will continue to generate downward pressures on oil prices and gasoline.

Even a Marxist, who is a respected dialectician, would find it tough to make sense out of the current data, analyses and predictions. More important, if you wait just a bit, the numbers and analyses will change. Those whose intellectual courage fails them and who generally put their “expert” analyses out well after facts are created by the behavior of the stock market, oil companies, consumers and investors deserve short shrift. They are more recorders of events than honest analysts of possible futures — even though they get big bucks for often posturing and/or shouting on cable.
So what is the synthesis of the confused, if there is one? Oil could go down but it could also stabilize in price and start going up in fits and starts. Production is likely to continue growing but at a slower rate. Demand sufficient to move oil prices depends upon renewed and more vigorous GDP growth in Asia, the U.S. and Europe. Realize that very few analysts are willing to bet their paychecks on definitive economic predictions.

Saudi reserves will likely provide sufficient budget revenues to support its decision to avoid slowing down production and raising prices at least for a year or so (notice the “or so”). Market share has supplanted revenue as (at least today’s) Saudi and OPEC objectives. But how long Saudi beneficence lasts is anyone’s guess and, indeed, everyone is guessing. Deadbeat nations like Venezuela and Russia are in trouble. Their break-even point on costs of oil is high, given their reliance on oil revenues to balance domestic budgets and their use more often than not of aging technology and drilling equipment.

As the baffled King from “Anna and the King of Siam” said, concerning some very human policy-like issues, “It’s a puzzlement.” There are lots of theses and some antitheses, but no ready consensus synthesis. Many Talmudic what ifs? What is clear is that the dialectic is not really controlled or even very strongly influenced by the consumer. Put another way, the absence of alternative fuels at your friendly “gas” station grants participation in the dialectic primarily to monopolistic acting oil and their oil related industry and government colleagues. Try to get E85 or your battery charged at most gas stations. Answers to most of the “what ifs” around oil pricing and production, particularly for transportation, would be shaped more by you and I — consumers — if we could break the oil monopoly at the pump and select fuels of personal choice including an array of alternates now available. Liberty, equality and fraternity! Oh, those French.

Arctic Leaf

The laws of gravity, gasoline and alternative replacement fuels

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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

Texas town bans fracking, but lawsuit already filed

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Denton, Texas, became the first city in the United States to ban hydraulic fracturing. The measure in the north Texas town was approved by 58.64 percent of voters Tuesday, at last count. But the measure already is being challenged: As The Dallas Morning News reported, the Texas Oil and Gas Association filed for an injunction in state court in Denton on Wednesday, seeking to block the ban from going into effect.

“TXOGA believes that the courts of this State should give a prompt and authoritative answer on whether Denton voters had the authority under state law to enact a total ban on hydraulic fracturing within the city limits,” attorney Thomas R. Phillips, former Chief Justice of the Supreme Court of Texas said in a statement. “A ban on hydraulic fracturing is inconsistent with state law and therefore violates the Texas Constitution.”

As the Texas Tribune noted, some state lawmakers in Texas also have vowed to fight to overturn the ban at the Legislature.

A city of 123,000 with more than 270 gas wells scattered among its neighborhoods, Denton is one of several cities that have tried to ban fracking, including communities in New York and Colorado. But the prospect of such a ban in Texas — a state built on oil and gas — put Denton in a bright spotlight, rankling industry leaders and the state’s Republican leadership.

That Colorado ban was put in place by voters in the city of Longmont in 2012, but a judge overturned it earlier this July, saying it conflicted with the state’s interests. In overturning the ban, Boulder County District Court Judge D.D. Mallard said:

“While the court appreciates the Longmont citizens’ sincerely held beliefs about risks to their health and safety, the court does not find this is sufficient to completely devalue the state’s interest,” Mallard wrote.

(Photo: An oil well in central Colorado. Credit: Shutterstock)

Arctic Leaf

Budweiser trades Clydesdales for natural gas

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The famous Clydesdales that have hauled Budweiser’s barrels of beer since the 19th century are finally being replaced by 21st century compressed natural gas-driven vehicles.

Well, it isn’t quite that simple. There’s been an 80-year interval between the 19th and 21st centuries, when Budweiser’s trucks ran on gasoline and diesel fuel. But for 66 trucks at Budweiser’s Houston brewery, the 53-foot trailers loaded with 50,000 pounds are now going to be hauled by trailers running on compressed natural gas.

Anheuser-Busch actually has plans to convert its entire fleet to natural gas, according to James Sembrot, senior transportation director. “It’s significant that A-B feels comfortable swapping for an entire fleet that runs on CNG,” Christopher Helman wrote in Forbes. According to Sembrot, “the intention of shifting to natgas…is to reduce carbon emissions and fuel costs, while doing something green(ish).”

“The Houston brewery is among the biggest of the 14 that A-B operates nationwide. The closest breweries to this one are in Fort Collins, Colo., and St. Louis. Each truck rolls virtually around the clock — traveling in an average of 140,000 miles in a single year hauling beer to wholesalers. They move 17 million barrels of beer each year.” That’s a lot of beer running on natural gas.

Actually, it’s not Anheuser-Busch that is taking the initiative on Budweiser. The natural gas vehicles are being made available through Ryder, the nation’s largest trucking company since merging with Budget Truck Rental in 2002. Budget now has 2,800 businesses and 132,000 trucks around the country. Although only a small percentage run on natural gas, the company is dedicated to converting its fleet with all due dispatch, and the savings may prove to be extraordinary. According to Helman, “Sembrot tells me that the old trucks were getting 6.2 miles per gallon of diesel and running 140,000 miles per year. That equates to 1.45 million gallons of diesel to go 9.2 million miles. At about $3.80 per gallon, that’s roughly $5.5 million in total diesel costs per year. If they save about 30 percent per ‘gallon equivalent’ when buying CNG, that’s a savings of about $1.65 million per year.” That’s a lot of money save for switching to natural gas.

But it’s not just Budweiser and Ryder and a few forward-looking companies that are pushing ahead with natural-gas vehicles. The whole state of Texas seems to have gotten the bug. The Lone Star State now has 106 CNG filling stations, the most in the country. Forty are them are open to the public, while the others are fleet vehicles where vehicles from Anheuser-Busch and Ryder can fill up. Actually, far ahead of these innovators are FedEx and UPS, which have not converted their fleets for many years. And hovering in the background is T. Boone Pickens and his “hydrogen highway,” which is installing huge natural gas depots at key truck stops along the Interstate system. Much of this is aimed at Texas and the first complete link has joined San Diego to Austin in a seamless string of stations that will allow tractor-trailers to make the whole trip on natural gas.

All this has done wonders for Texas tax collections. At the start of the year, the Texas Controller’ Office was anticipating revenues less than $ million from excise taxes. Yet by July 31, 2014, collections were 220 times of that anticipated, and the Texas Controller’s office had collected $2,178,199. “These collections are more than double the estimated amount,” said David Porter, Texas Railroad Commissioner. “At 15 cents per gallon equivalent, $2 of motor fuels tax equals sales of 14,521,326 gallon equivalents of natural gas.”

Texas may be famous for fracking and producing more oil than Iraq, but they do not hesitate to look for new uses for gas and oil as well.

 

Photo by by Paul Keleher from Mass, US.

Arctic Leaf

Paul Revere: The Teslas are coming, the Teslas are coming!

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When he died, the patriot Paul Revere was embalmed in V8 juice, tanning lotion and several energy drinks. Surprisingly, he reappeared at a relatively recent conference of the Massachusetts Association of Automobile Dealers, looking fit and ready for another ride. The dealers had prayed for his second coming. They hoped that even though his previous ride was only one horsepower, he would consent to try a low-horsepower vehicle and ride the state, warning their brave residents that Tesla is online and in-store sales of electric cars coming. The dealers’ marketing folks felt that a reincarnated Revere would do wonders for their shaky image as wheeler dealers (excuse the pun). His deep, holier-than-thou, Fred Thomas-type voice (you know, the actor-turned-politician-turned-actor who now sells most anything on TV for money) would convince all but his former peer group (dead people) that Tesla was anti-American.

“What did Tesla do wrong,” asked Revere? Oh, it’s trying to sell its non-horse, torque-engine vehicles directly to modern-day patriots. Can you imagine euthanizing horsepower? Tears came to Revere’s eyes. But there’s more, paraphrasing a former automaker and cabinet officer Charles Wilson, one of the dealers indicates that what’s good for automobile dealers was and will always be good for America. What Elon Musk, the head of Tesla Motors, wants to do is eliminate dealerships. If the present case before the courts in Massachusetts is won by Tesla and Teslas are sold online, from a storefront, or shopping mall, surely Ford, Chrysler and General Motors will not be far behind. Forget capitalism, forget free markets, forget competition, even forget, Paul, your membership in the old Tea Party in Boston (you know, the taxation-without-representation crowd). Forget everything you fought for. By eliminating dealerships, Tesla will cost jobs. Dealers soon will have to close their doors. Bypassing dealers to sell cars will also first limit and then end our community philanthropy — you know, Little League teams, Fourth of July concerts, community picnics, jerseys for kids etc. Tesla’s headquarters is in California, and it’s a crazy state with Hollywood and all that. Californians act like foreigners. Tesla’s founder believes in global warming, he isn’t satisfied with life in America and he is developing a spaceship where the elite can, someday soon, travel to a second home and ruin our local economy. Losing dealers will make every community less American. Sure, vehicle costs may come down and emissions may improve, but what American is unwilling to pay extra to save his or her friendly auto dealer?

Revere was puzzled. He was a merchant way back then and he believed that competition and the free market were part of the American Dream. (To be honest, he also feared riding and did not understand how he could ride a multiple-horse powered vehicle. He had only mounted one horse.)

But he understood what the dealership folks were trying to tell and sell him. While in his heart, he was a bit ambivalent, he finally said he would do the famous ride again, and this time, because mileage capacity had increased and population of Massachusetts had grown, he agreed to try to go farther west than in his famous, poet-legitimized and sanctified ride.

But just as he gave them the okay, the dealerships received an email from a colleague in Boston that Tesla had won in the Massachusetts court. One dealer started crying. Several others criticized “those activist judges.”

Revere asked to read the email. It indicated that the Massachusetts Supreme Judicial Court unanimously determined that the Mass. State Automobile Dealers “lacked standing to block direct Tesla sales under a state law designated to protect franchises owners from abuses by car manufacturers” (Reuters, Sept. 15, 2014). Succinctly, the law was tied to the franchise relationship rather than unaffiliated manufacturers like Tesla.

The court’s finding should make it easier for Tesla to secure positive rulings in many other states. Earlier this spring, senior officials from the Federal Trade Commission strongly indicated that laws outlawing direct sales harmed consumers. Revere, after looking at the email, felt guilty that he had all but agreed to replicate his famous ride. But he was consoled by the fact that freedom and competition won out, at least in the Tesla case in Massachusetts, and that at least consumer democracy was alive and well in the state. He couldn’t help but muse on the fact that Texas, a state supposedly committed to minimal regulation and almost zero interference by government concerning businesses and citizens’ lives, turned its back on Tesla because of lobbying by dealers. Tesla cannot sell directly in Texas. But, as Ralph Waldo Emerson suggested, “foolish consistency is the hobgoblin of little minds.” After driving a Tesla (with no horsepower), Revere went back to the halo- lit neter lands happy. We haven’t heard from him since. But on faith alone, his experience with reincarnation likely would have made him a fan of Tesla’s electric cars and other alternative fuels.