Sunday, August 31, 2008

CNBC.com on the McCain VP pick.

Try watching this first.http://www.cnbc.com/id/15840232?video=836384597&play=1
Flipping channels on the kitchen TV I caught the interview less than 10 minutes into the hour. They filled in with more footage and background so it make for a full hour show with commercials. The CNBC "filler' seems useful so it made for a very good one hour show. This is a common, they don't trash the footage after the "first cut" of a shorter feature story.
CNBC repeats their one hour "special reports" frequently so it should be easy for catch. I haven't seem the 12 minute version yet but that should have the essence of it.
From the one hour TV CNBC special. She looks great on TV. She helps on the family Alaskan fishing boat (look like a line net rig) It's not quite "Deadliest Catch" but it is physically demanding work. I'm Sure Sarah Palin could actually "tune up" and engine or do other mechanical repairs. This is necessary on the fishing boats.
Next off, in interviews she seemed "sharp as a tack" and gave good answers in a second. She seemed an excellent public speaker who knows her subjects in depth.
For me, the important thing is that she seemed, in the CNBC interview to have an extremely good knowledge of energy, especially, the production side. Before this I felt that the major party political candidates were oblivious to the effects of higher energy costs. They mentioned them but they seemed small in the scale of their lives. Sarah Palen noted that in Alaska Gasoline and other fuels cost $5 in Urban centers and often $10 or more per gallon in more remote areas so Alaskans are way ahead on cost motivated conservation. Basicaly, she "feels our pain" on high energy costs.
This is important. As a personal example I now use under three gallons of gasoline per week so higher gas prices only cost me ten or twenty dollars a month. Obviously I can afford this (so what's the problem?) The problem is of course that many people drive a lot more starters and I constantly hear them say how it's "killing them". I must also heat http://searshouse.com this winter. It's pretty "tight" with and ultra high efficiency furnace but I figure my natural gas bills will be 50% higher. Also, prices for basics are up. My "must have" food is http://aldi.com oat bran bread. The one and price loaves are up 25%. Again at Aldi's I notice that canned tuna in oil is a dime more than canned tuna in water. Corn oil now costs more than Canola Oil even with Canola being a "poor persons Olive Oil" nutritionally. Let's not even mention meat costs!
I can afford it but I'm "street" enough to see how this is affecting people. Sarah Palin seems to comprehend this (IE the diesel for the family fishing boat is obviously getting far more costly in the last few years.)
Finally, a candidate who understand this and "feels our pain". (at the "pump"!) Sometimes instead of the "forest" you need to see the "trees".
I'll admit I knew little of Sarah Palin before this. I recall that beauty contest picture (which, for some reason reminds me of the TV show "Happy Days" though I can't find an internet reference). I was rooting for our Minnesota Governor Tim Palenty. I still think he would have made a fine choice. He is a known local who I have strong support for. (root for the home team!)
If John McCain anticipated the energy price situation when he started to considering Sarah Palen in February as the mainstream media now reports it was brilliant!
Cross posted to my http://excel08.com http://fourfiftygas.com and my http://fifthestate.net

Friday, August 29, 2008

Looks like my electric utility "wussed" out" and made money for the ambulance chaser lawers working the "global warming" beat.

Redrant: My pension fund which has resisted the "Ceres" pressures" has had a historic return of investment of 11% plus over 25 years. Taxpayers will bail out these "social activism" retirment funds if they under perform. 11% ofMNPERA is the benchmark.

The State of Minnesota had to recently bail out the Minneapolis Schools Pension which was very heavily into elimintating potential intestments for "divestment reasons" They got 2% return on the pension fund investment versus 11% for PERA. Do the math. This political activism will cost Minnesaota taxpayers a half a billion dollars or more that $1000 per resident. Other school districts are in the smae bind so the ultimate cost could be catastrophic.

Xcel to Disclose Global Warming Risks By NICHOLAS CONFESSOREALBANY — One of the country’s largest builders of coal-fired power plants will give investors detailed warnings about the risks that global warming poses to its business under a deal with New York’s attorney general.
The agreement Wednesday between the attorney general, Andrew M. Cuomo, and the company, Xcel Energy of Minneapolis, is the first of its kind in the country. It could open a broad new front in efforts by environmental groups to pressure the energy industry into reducing emissions of the greenhouse gases that contribute to global warming.
Until now, advocates have largely relied on shareholder resolutions as a way of pushing the companies to reduce their carbon dioxide output and invest more aggressively in renewable energy sources like wind or solar power.
That effort has picked up pace, according to Ceres, a coalition of investors and environmental groups, with dozens of shareholder resolutions filed during the 2008 financial reporting season.
“This really takes it another step, by making it a settlement agreement that should have an impact across the industry,” said Dan Bakal, the director of electric power programs at Ceres.
Mr. Cuomo subpoenaed Xcel and four other companies last September, seeking to determine whether their efforts to build new coal-fired power plants posed risks not disclosed to investors, like future lawsuits or higher costs to comply with possible regulations restricting carbon emissions.
The attorney general’s office is still negotiating with the four other companies — the AES Corporation, Dominion, Dynegy and Peabody Energy. But Mr. Cuomo hopes that the agreement will help persuade other companies to follow in the footsteps of Xcel, which supplies natural gas and electricity to customers in eight states. Among utilities, Xcel is one of the nation’s largest producers of greenhouse gases and a major provider of wind energy.
Many coal-fired power plants have been proposed or are under construction across the country and environmental advocates have made it a priority to reduce their impact.
“This landmark agreement sets a new industrywide precedent that will force companies to disclose the true financial risks that climate change poses to their investors,” Mr. Cuomo said in a statement. “Coal-fired power plants can significantly contribute to global warming, and investors have the right to know all the associated risks.”
The agreement represents another novel use by Mr. Cuomo of the Martin Act, a powerful tool that allows the attorney general to bring criminal as well as civil charges. Mr. Cuomo’s predecessor, Eliot Spitzer, used the law to vastly expand the office’s investigations of suspected Wall Street malfeasance.
Now Mr. Cuomo has turned it into a de facto form of environmental enforcement, too. For energy companies, including those based far from New York, he is able to claim jurisdiction because they issue securities on Wall Street.
The agreement with Xcel requires the company to analyze the likely effects on its business of current and future legislation or regulations in the states and countries where it operates and to disclose that information in its investor filings with the Securities and Exchange Commission.
Congress and many states are considering global warming legislation. Ten states stretching from Maryland to Maine, including New Jersey, New York and Connecticut, have struck a deal to cap emissions and allow trading of pollution allotments among producers.
Under the agreement with Mr. Cuomo, Xcel will disclose the financial risks of lawsuits and of federal or state court decisions that would affect its business. The company will also analyze and disclosed the “material financial risks” to itself associated with global warming, like drought — coal plants are prodigious users of water — or rising sea levels.In a statement, the chairman of Xcel, Richard C. Kelly, said the company had already voluntarily reduced carbon emissions and planned to continue to do so.
“We previously provided detailed information concerning the expected impact of climate change and greenhouse gas emissions regulations on our operations, and under this agreement we will make even more detailed disclosures,” Mr. Kelly said. “This agreement will enhance our already aggressive efforts to be responsible environmental stewards.”
Xcel officials said their reductions of greenhouse gases had totaled 18 million tons since 2003. They added that the company planned to build an additional 6,000 megawatts of renewable energy generation by the end of the next decade.
Justin McCann, an energy analyst at Standard & Poor’s, said that the company had included more detailed information on climate change risks in its most recent filing, since Mr. Cuomo’s investigation began. But the new agreement will require even more disclosure, he said, and probably encourage other companies to follow suit.
“Utility lobbies are very strong, but they have read the writing on the wall in terms of greenhouse gas reductions,” Mr. McCann said. “They know it is extremely popular with the public, and so they have wanted to get ahead of the curve, so they can have some input.”
But some of the companies that Mr. Cuomo scrutinized might be less amenable to adopting the new requirements than others. When Mr. Cuomo issued his subpoenas last year, Vic Svec, a spokesman for Peabody Energy, described the attorney general’s inquiry as “outrageous” and suggested that Mr. Cuomo’s use of the Martin Act was a form of legal harassment.
Reached Wednesday, Mr. Svec said: “We’re confident that our disclosures around CO2” — carbon dioxide — “have been and continue to be adequate.”

Tuesday, August 26, 2008

Quick propane/natural gas primer:

Quick propane/natural gas primer: Propane, the stuff in you gas grill tank is basically refinery "flare gas" from the oil refining process that is recovered and processed. It liquefies at minus 70 farenheight and stays liquid at around 200 PSI.
Natural gas is a "lighter" gas found during oil drilling and increasingly from very deep wells where pressure and heat have "cooked" the oil deposits into natural gas. If you get a new gas appliance you have to specify propane or natural gas. The regulators and burners are a bit different but not by a lot.
In North Dakota there is a plant that converts coal to "natural gas". We probably consume some of this here in Minnesota.
I heard a figure that in the US 3% of the natural gas is brought in by LNG tanker ships. Basically the LNG ships are giant cryogenic containers where natural gas is chilled to a liquid at around minus 300 degrees F. It is used primarily in coastal area, notably the US Northeast and Southern California. Obviously, the LNG tanker is far more complex and costly than a pipeline. The remainder of natural gas "imports" in the US come from Canada and Mexico via pipeline.
For a common application of propane look for propane tanks on forklifts with engines. Both fuels burn cleaner than gasoline.
I just saw a commercial for natural gas as a vehicle fuel. It was http://cleanskies.org The commercial claimed natural gas costs "half of other fuels" which I assume means gasoline or diesel. I haven't checked out the website yet.
I'll cross post this at my http://fourfiftygas.com

Monday, August 25, 2008

Drilling Boom Revives Hopes for Natural Gas

This could be important with heating bills this winter.

http://www.nytimes.com/2008/08/25/business/25gas.html?_r=1&hp=&adxnnlx=1219662757-jOejdAlB0K51cRO6CtOI0A&pagewanted=print

August 25, 2008
Drilling Boom Revives Hopes for Natural Gas
By CLIFFORD KRAUSS
HOUSTON — American natural gas production is rising at a clip not seen in half a century, pushing down prices of the fuel and reversing conventional wisdom that domestic gas fields were in irreversible decline.
The new drilling boom uses advanced technology to release gas trapped in huge shale beds found throughout North America — gas long believed to be out of reach. Natural gas is the cleanest fossil fuel, releasing less of the emissions that cause global warming than coal or oil.
Rising production of natural gas has significant long-range implications for American consumers and businesses. A sustained increase in gas supplies over the next decade could slow the rise of utility bills, obviate the need to import gas and make energy-intensive industries more competitive.
While the recent production increase is indisputable, not everyone is convinced the additional supplies can last for decades. “The jury is still out how big shale is going to be,” said Robert Ineson, a natural gas analyst at Cambridge Energy Research Associates, a consulting firm.
Still, many people in the natural-gas industry believe a new era is at hand, and a rising chorus of Wall Street analysts and Congressional lawmakers supports that notion. Competition among companies for rights to the new gas has set off a frenzy of leasing and drilling.
“It’s almost divine intervention,” said Aubrey K. McClendon, chairman and chief executive of the Chesapeake Energy Corporation, one of the nation’s largest natural gas producers. “Right at the time oil prices are skyrocketing, we’re struggling with the economy, we’re concerned about global warming, and national security threats remain intense, we wake up and we’ve got this abundance of natural gas around us.”
Senior Democrats in Congress are getting behind natural gas, portraying it as an alternative fuel for transportation that can serve as a stopgap until renewable sources of energy, like solar and wind power, become economical on a broad scale.
“You can have a transition with natural gas that is cheap, abundant and clean,” the House speaker, Nancy Pelosi of California, said Sunday on “Meet the Press” on NBC.
She also said that an investment she and her husband had made in a company that produces natural gas for use in automobiles, revealed last week by The Wall Street Journal, was not a conflict of interest because “I’m investing in something I believe in.”
Representative Rahm Emanuel of Illinois, the chairman of the House Democratic caucus, has introduced legislation to offer more tax credits to producers and consumers of natural gas and mandate the installation of natural gas pumps in some service stations.
Domestic gas production was up 8.8 percent in the first five months of this year compared with the period a year earlier, a rate of increase last seen in 1959, during the great drilling boom that followed World War II.
Most of the gain is coming from shale, particularly the Barnett Shale region around Fort Worth, which has been under development for several years. The increase in gas production stands in sharp contrast to the trend in domestic oil production, which has been declining steadily since 1970 and dropped 21 percent in the last decade alone.
The Barnett region proved that, using new technology, shale gas could be extracted on a large scale. But lately, companies have set their sights on shale formations that could produce far more gas than the Barnett.
Testing to determine the productivity of fields has been completed on just a tiny fraction of the potential acreage. According to a new report by Navigant Consulting, paid for by a foundation allied with the gas industry, there could be as much as 842 trillion cubic feet of retrievable gas in shales around the country, enough to supply about 40 years’ worth of natural gas, at today’s consumption rate. But thousands of wells need to be drilled before the exact reserves will be known.
Domestic natural gas prices have already plunged 42 percent since early July, an even faster drop in price than oil or most other commodities, in part because the rapid supply growth has begun to influence the market. Price spikes remain possible, of course, but throughout the industry the shale discoveries are causing a shift in thinking about the long-term outlook.
Black or brown shales are a type of sedimentary rock, high in organic matter, found beneath millions of acres in at least 23 states, including New York. The rock has been known for more than a century to contain gas, but it was considered virtually worthless until a decade ago because typical wells on such sites would produce gas briefly and then die.
Now, companies are drilling long, horizontal wells and pumping in water to fracture the rock, releasing vastly more gas than could the vertical wells of old.
The Barnett was the first shale field to undergo major development, and gas production has gone up tenfold since 2001, so that it now produces 7 percent of the nation’s supply of natural gas. At least two other shale formations, the Haynesville in Louisiana and Texas and the Marcellus in Appalachia, are believed to be even larger, though substantial production in those will take another two to five years.
Prospectors have identified at least two dozen shale beds in North America that could contain large amounts of gas.
“Production is clearly growing, and the growth is sustainable,” said Michael Zenker, a natural gas analyst at Barclays Capital.
A Deutsche Bank report, by the analyst Shannon Nome, recently estimated that production from the eight largest shale fields was likely to hit 6.6 billion cubic feet a day this year, or 11.8 percent of national gas production, and then rise to 14.5 billion cubic feet a day by 2011 — almost a quarter of domestic production.
“Shale is the most significant domestic natural gas find in 50 years,” said Chris Ruppel, an analyst at the institutional brokerage firm Execution, “which means the United States will become gas independent, and more industrially competitive versus Europe for gas-intensive industries such as chemicals, fertilizer, smelting iron and aluminum.”
Shale gas could ultimately be important beyond North America. The rest of the world has shale formations on an immense scale. Many of them are known to contain gas, but exploration and assessment of those fields with the new production techniques have barely started.
Several large shale fields are being explored in Canada. In the United States, real estate speculators are becoming overnight millionaires in Pennsylvania, Louisiana and Texas by buying up parcels of land and flipping them to companies that drill for natural gas. Wildcatters are ordering every rig they can get their hands on, and paying signing bonuses of $25,000 an acre to drill below houses, schools and churches. Pipeline companies are building as fast as they can to get the new gas to market.
As the frenzy unfolds, some energy experts urge caution in projecting how big the new supplies will be and whether they will alleviate the loss in productivity of conventional wells, particularly those in the Gulf of Mexico.
“It’s hard for me to believe we will have more domestic gas production in six years than we have now,” said Chip Johnson, president and chief executive of Carrizo Oil and Gas, a Houston company involved in several of the shale fields.
The Energy Department’s 2008 estimates for shale gas reserves that may one day be economically produced stand at 125 trillion cubic feet, about a seventh of the most optimistic industry estimates. Jeffrey Little, a department gas analyst, said the government estimate was based on 2006 data and could increase after further testing.
“The larger reserves could very well be out there, but their magnitude is uncertain,” he said.
Some industry experts warn that shortages of engineers and rigs, scarcity of pipelines near some shale fields and fights over land and water use could slow development in some states.
In the Marcellus field, drilling and pipeline work must be done over woody and hilly terrain, and enormous amounts of water are needed to fracture the shale. Drilling has been halted in places after local regulators caught companies drawing water from streams without permits.
“We see natural gas as potentially a very important transitional fuel, but we can’t use it at the expense of our natural resources,” said Kate Sinding, a senior lawyer for the Natural Resources Defense Council, who warned that water-intensive drilling in shale could threaten local water supplies and aquifers.
Domestic gas production was in decline from the early 1990s to 2005, before production from shale beds and some lesser unconventional fields led to increases beginning in 2006. In the meantime, consumption increased by more than 15 percent, satisfied largely by rising imports.
Prices in recent years soared from less than $2 per thousand cubic feet in 1999 to more than $13 as recently as last month, before a precipitous decline in recent weeks. Natural gas closed Friday on the New York Mercantile Exchange at $7.84 per thousand cubic feet, the lowest price since Feb. 1.
With the growth of power generation from natural gas, the Energy Department estimates that gas consumption will increase 3 percent this year and an additional 1.7 percent in 2009. But that is well below expected supply increases.
Such increases carry risks. Some in the gas industry fear that if prices fall too much, producers will pull back on their investments in drilling and development. “If prices drop much more,” said Mr. Johnson of Carrizo Oil and Gas, “producers will slow down or at least not be as aggressive.”

Sunday, August 10, 2008

US Shale oil reserves that the Democratic Congress will not allow to be utilised.

http://www.powerlineblog.com/archives2/2008/08/021214.php

August 10, 2008
Shale Oil To Be Developed, But Not Here
We've written about the fact that the United States has by far the largest known oil shale deposits in the world. In fact our Rocky Mountain oil shale is believed to amount to as much as two trillion barrels, far more than the entire world has consumed since oil was discovered in Pennsylvania in the 19th century. This chart, from the Institute for Energy Research, shows how our oil shale reserves dwarf the petroleum controlled by other countries:

Unfortunately, the Democrats have been able to place these vast reserves off-limits. Now, one country has announced plans to develop its shale oil resources, but it isn't the United States, it's Jordan:
Energy-poor Jordan said on Sunday it was in talks with Anglo-Dutch group Royal Dutch Shell on an agreement to extract oil from the desert kingdom's 40-billion-tonne oil shale reserves.
"Negotiations with Shell to sign a deal to process oil shale in Jordan are nearing an end," said Maher Hjazin, head of the state-run Natural Resources Authority. "If our plans succeed, it would be one of the country's largest projects to help the Jordan become energy self-sufficient, with a possibility to export oil in the future." ...
JEA president Wael Saqqa said exploiting the 40-billion-tonne oil shale reserves in 26 areas of Jordan "would provide the kingdom with oil for the coming 700 years."
Under the leadership of the Democratic Party, the United States continues to be the only country in the world that is deliberately devastating its own economy by refusing to develop its energy resources.

Keep in mind that fuel oil and diesel are made from the same refined oil stock so their price are closely connected.

http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20080806/NEWS/808060326/-1/NEWS01

Oil prices could cause crisis for Maine homeowners
By Amy Phalon
yorkweekly@seacoastonline.com
August 06, 2008 6:00 AM
How high will they go? It's the question everyone is asking these days as crude oil prices climb, the average price of heating oil in Maine being $4.42 a gallon as of Tuesday.
"We are headed for what might be a crisis situation this winter," Town Manager Rob Yandow said at a recent selectmen's meeting, during which he discussed the town's intention to develop a program to offer heating assistance to households in need.
According to University of Maine professor of economics Jonathan Rubin, "Eighty percent of Maine's homes are heated by oil."
A large percentage of others are heated by propane, natural gas or kerosene, which are also at record prices. The vast majority of Maine households are facing a very expensive winter.
"This is obviously a very difficult time for consumers," said John Peters, president of Downeast Energy and Building Supply, which serves households in York. "It is unprecedented; the speed with which it is increasing. It is draining a lot of cash out of the economy."
While there is no argument that fuel prices have increased rapidly, the reason prices are climbing and whether they will fall again is unclear.
"This is an unprecedented time where even experts don't know what's driving all the forces," Rubin said. "There is no consensus on whether or not the price is going to go up or come down."
This uncertainty is what has Rubin worried.
"It's going to be hardest on households on fixed and low incomes."

Friday, August 8, 2008

The future of diesel/fuel oil prices.

http://www.energytribune.com/articles.cfm?aid=959

Posted on Aug. 07, 2008
The Diesel Crunch: Why Diesel Prices Are Skyrocketing
Back in October 2005, I wrote an article for Salon.com predicting that U.S. diesel prices would hit $4 or $5 per gallon within 18 months. I’m not recalling that story to brag. I rarely predict energy prices. And my estimate for when prices would hit $4 was a little premature. (It took about 30 months to break that barrier.) But it’s worth noting the factors I cited in that column, written shortly after Hurricanes Katrina and Rita. I wrote:
The coming diesel disaster will be caused by several other things that have nothing to do with the weather. Those factors include stringent new federal regulations on sulfur content in motor fuel, a global shortage of refining capacity, and soaring demand for diesel, both in the United States and around the globe.

Today, those factors are not only still in play, they are even more acute. Add in two others – the growing refining imbalance in the European market and the U.S. ethanol mandates – and you have a recipe for sustained high diesel prices.
Given those conditions, I am going to make another prediction: for the next 5 to 8 years, diesel fuel will sell at a significant premium over gasoline. And by significant, I mean in the range of 15 to 30 percent. (In late July, according to the Energy Information Administration, diesel was selling for about 15 percent more than regular conventional gasoline.) Now that I’ve gone out on a limb, let me explain why diesel prices will remain high.
The first problem, not surprisingly, is due to government regulations. In 2006, U.S. refiners were required to meet the new federal standards for ultra-low sulfur diesel (U.L.S.D.). Designed to improve America’s air quality, these standards required fuel manufacturers to reduce their diesel’s sulfur to 15 parts per million, from 500 ppm. But in reality, to account for sulfur contamination that might occur during transport (by truck, tank, or pipeline) the refiners had to produce diesel with a sulfur content of 6 ppm at most. Going from 500 ppm down to 6 ppm is a reduction of about 99 percent. And that huge reduction requires refiners to do more hydro treating, which means they have to produce more hydrogen, which requires additional equipment, which raises costs and reduces output.
The U.L.S.D. mandates have added yet more complexity to the motor fuel supply chain, and that complexity increases costs. While refiners are producing U.L.S.D., they are also producing conventional diesel that meets the old 500 ppm standard. Thus, the U.L.S.D. must be segregated from the conventional diesel. Add in state-specific blends of diesel and the situation becomes even more complex. California, Minnesota, and Texas are all implementing regulations that will require specific diesel blends for their states. (For instance, Minnesota is requiring refineries to add 2 percent bio diesel to their product.) Segregating these boutique diesel blends, U.L.S.D., and high-sulfur blends means more tanks and pipes, which means more capital investment, which means higher costs.
In 2005, I mentioned the global shortage of refining capacity as a cause of higher diesel prices. This is still true. And while new refineries in Asia are helping to meet demand there, Europe continues to suffer from a lack of the complex refineries that can produce low-sulfur motor fuel as well as handle lower-quality crudes that, given the right upgrading equipment, could be turned into usable motor fuel. This shortage is due in part to the E.U.’s strict environmental regulations, which have slowed refiners’ upgrade efforts. That, in turn, will leave them more dependent on imports of U.L.S.D. According to the Mediterranean Energy Observatory, by 2010 the E.U. will need 100 million tons per year of U.L.S.D. and 40 million tons per year of ultra-low sulfur gasoline.
There is also a shortage of refining capacity in South America. And that has led to increasing exports of diesel from the U.S. For instance, in April, U.S. diesel fuel exports averaged 387,000 barrels per day. That’s an almost seven-fold increase from the 59,000 bbl/d exported in April 2007. (Overall, refined product exports have also increased. During the first four months of this year, refiners exported a record 1.6 million barrels per day, a 33 percent increase over the year-earlier levels. And February exports exceeded 1.8 MMbbl/d/.)
Those exports are indicative of a booming global diesel demand. On July 1, the International Energy Agency released its medium-term oil market report, which said that the “bulk of oil demand growth” worldwide “will be concentrated in transportation fuels.” It stated that while global gasoline demand is growing, “distillates (jet fuel, kerosene, diesel, and other gas oil) have become – and will remain – the main growth drivers of world oil demand.” The agency published a graphic that projects stunning demand growth for distillates. Between 2002 and 2013, the I.E.A. expects distillate demand to increase nearly five-fold.
At the report’s presentation in Madrid, Lawrence Eagles, its editor, told reporters, “It’s going to be very hard to keep pace with growth in middle distillate demand.” He went on to say, “At the moment it’s demand for diesel that is driving the increased consumption.” Furthermore, Eagles pointed to the lack of upgrading capacity in many refineries as a reason global demand for crude is rising, as some refiners are aiming to increase their diesel output. The result is that “you are consuming far more oil than you otherwise would.”
While all of those factors are important, perhaps the biggest reason gasoline can be expected to sell for substantially less than diesel over the next half decade or so is the refining imbalance in Europe. Simply put, European refineries are producing too much gasoline and not enough diesel. And they are doing so as European gasoline demand is declining and diesel demand is growing. This increasing demand is largely the result of the “dieselization” of the European auto market. About 30 percent of all vehicles on the road in Europe are now diesels. And by 2015, if current sales patterns continue, about 40 percent of the European motor fleet will be diesel powered.
The result of this shift toward diesel autos is easy to predict. European refiners will have to sell their excess gasoline to the closest market that has lots of gasoline-fueled cars and few diesels – and that means the U.S. But there’s a problem with that plan: gasoline demand in the U.S. isn’t growing. In fact, domestic gasoline consumption dropped by 1.7 percent during the first six months of this year. And analysts expect little growth in U.S. gasoline demand over the next decade or so. Indeed, according to the Mediterranean Energy Observatory, by 2015, Europe will likely be producing some 12 million tons of excess gasoline per year, but U.S. imports will only grow by about 2 million tons.
And if gasoline supplies exceed demand by such a wide margin, it can be assumed that gasoline prices will be depressed, particularly when compared to diesel’s.
This imbalance between gasoline and diesel is being exacerbated by a familiar boondoggle: the ethanol scam. At the same time that European and American refiners face an excess of gasoline, the ethanol mandates are adding more fuel into the U.S. gasoline pool. This year, U.S. corn distilleries will likely produce about 9 billion gallons of ethanol, and every gallon of that product makes gasoline more plentiful, while doing nothing to slow demand for the products that we need most, namely middle distillates like jet fuel and diesel.
All of these factors have led European analysts to expect that the disparity between gasoline and diesel will continue for several years to come. Jean-François LarivĂ©, a technical coordinator with the European Oil Company Organization for Environment, Health and Safety, participated in a 2007 study of the refining imbalance problem. In early July, he told me that the trend now underway “cannot reverse because all the new demand is coming from diesel.” As for the pricing disparity between gasoline and diesel, he said that it may even “get worse.”
In other words, the diesel crunch has just started. And the inflationary effects of the higher costs of diesel fuel are going to be felt throughout the U.S. economy (and the global economy) for years to come. .

Thursday, August 7, 2008

I filled up the Ranger Wednesday at $3.49.9 for unleaded.


My long foray into the suburbs Saturday was probably the most "highway" ever. I got 24 PG on this fill.This email from the lefty move-on.org seems to imply that the campaign to drill more domestically is catching on. http://www.americansolutions.com/media/4CDF1CEC-779C-4699-A123-A8992F4D9219/e42dc13c-170e-4a5b-84ce-26d77244a9be.pdf


Monday, August 4, 2008

Today crude oil briefly got below $120 and closed at $121. ++++

MinnPost.com had an article that I submitted a comment for. It is being held for review before posting but it should get posted soon. The link than my spiel will be at the end of this posting.

I did some checking at http://fueleconomy.gov/ and in 1985 the Ford Ranger was offered with a diesel which was supposed to be a "dog". I compared it the gas 4 sticks and the diesel go 23% better mileage. Diesel used to be cheaper but it's now 20% more than unleaded regular so financially that is pretty much a "wash", especially with diesels requiring more service and maintenance.

I expect the diesel/gas spread to grow in the future for several reasons. In Europe, diesel cost ten to fifteen percent less than gas because of tax policy but more than half the cars being sold there are now diesel. Also there will be more diesel pollution requirements for things like sulfur levels and this will cost. Also, a gallon of diesel has substantially more energy BTU's than gasoline. Refineries are getting far better catalytic crackers that can convert heavier residual oils into lighter fuels. They can squeeze out more gallons of gas than diesel with the new "crackers".

Also, the public doesn't like a gas tax hike but they are less "reactive" to high fuel oil and diesel prices. (the same base fuel) Only a small percentage of people use fuel oil and high diesel cost is basically an "indirect tax" to the general public in the US.

That's my "spiel" for today. Below is the promised story link and the comment I submitted. They tend to publish but a moderator reviews.

http://www.minnpost.com/stories/2008/08/04/2819/no_bold_steps_on_gas_prices_--_at_least_not_in_the_us


So Air America claims that reducing the speed limit to 55 would end US imports? Hello!! We import 70% of our oil!
Here is a link to a list of imports by country. http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html
Number eight is Iraq where we import a bit under half a million barrels a day out of total US consumption of 20 to 22 million barrels a day. Technically, an aggressively enforced 55 speed limit might reduce our usage equal to the amount we import from Iraq.
As for the claim in this article that vehicle "efficiency" was doubled after 1975 automotive efficiency "doubled" is misleading. The US production of vehicles before 1975 focused on the full sized large engine "boats". To give an example a modern day Crown Victoria police interceptor gets ten to twelve miles per gallon, not much better than the early 1970's "boat". The difference is mostly due to smaller vehicles.
Hybrids might save fuel but they have a relatively narrow "sweet spot" in use age. For example, I live and drive mostly in the city so I could benefit from a hybrid but I drive under 3000 miles a year and use under half a gallon of gas per day so the hybrid is not cost effective.
On a lark I checked the mileage of my 2005 Ford Ranger 4 cylinder "stick" (a poor persons hybrid) with the 1985 version. My fuel efficiency is well around 5% better. My 2.3 liter engine is far more powerful, with fuel injection, four valves per cylinder and double overhead cam but the MPG hasn't increased much in 20 years on the Ranger, which has used the same basic "platform" for around three decades. This makes it good for comparison.

Sunday, August 3, 2008

New York Times: The $4.49-a-Gallon Vacation

A typical "one tank of gas round trip" getaway story. Note the title making reference for $.449 gas. With the obligatory .9 at the end it rounds to $4.50. http://www.nytimes.com/2008/08/03/travel/03saugatuck.html?_r=1&oref=slogin&ref=travel&pagewanted=all

Saturday, August 2, 2008

My Saturday foray into the outer tier suburbs.

The gas stove that came with the house when I bought it was getting pretty ratty. I replaced a few years back with a very basic stove with pilot lights. that I got for helping carry a few things with the pickup and trailer. I have been watching for the right replacement. I tried appliance stores and they told me that it would cost at least $500 for the type I wanted with electronic ignition and a programmable oven shut off. Carigslist had what I wanted from a remodeling pull out. The new stove was color coordinated. The price was right. I wanted a solid stove with electronic ignition but this also had electronic ignition.

Several energy angles here. The electronic ignition eliminated three pilot lights. That's somewhat irrelevant in the winter when the heat, well, heats! With my low level of stove and oven usage the pilots probably burn more gas than the actual cooking. I do not have Central Air conditioning so in summer it's only wasted heat. (That would be more load for Central AC).

Once installed my only pilot light will be on the gas water heater. That is vented outside and to some degree it keeps the water warm. Demand water heaters don't seem to pay off yet but I put a double insulating blanket on my water heater. Also, it helps to drain a little water from the hot water spigot on a regular basis so sediment doesn't build up on the bottom. I try to do this once a week and have a hose permanently on the drain spigot. I like to run a bucket of water and check the bucket for sediment. There usually is a little sediment each time. http://www.waterheaterrescue.com/pages/WHRpages/English/Longevity/sediment-in-hot-water-heaters.html

If the water tank has sediments (several inches is not uncommon on scrapped tanks) this greatly reduces efficiency and tank life. With the stove I bought my house will have no "indoor enviorment" pilot lights. On the Internet there are some nasty claims about these but I haven't noticed it. Instead of central AC I run one or two very high efficiency (under 10 watt draw) exhaust fans in high piano windows I installed scrap pipes in the high piano windows (I'll try to get pictures.) The pipes are further "tricked" to make them burglary proof. I have other windows "burglar proofed" so there is an extremely efficient air circulation. I live in a low crime area but I used to work night shifts before I retired so I wanted the house to be secure but cooled. This might be a subject of a future post. Doing a bit of "mental math" my summer fan cooling system adds fifteen to thirty cents per week to my electric bill and it keeps the house a lot cooler. A dollar a month more in summer electricity? Yeah I can afford that!

As for the trip to the outer burbs I tried to consolidate trips but the best laid plans oft go astray. Google maps said 25.3 miles but I of course got lost and drove almost 90 miles total so nearly 40 of it was lost. We somehow got cell phone numbers mixed up so I couldn't call. That burned up much of my $3.44 gas I topped off with a couple of days ago.

I try to treat everything as a learning/reporting experience. On the main roads of my "misroutes" I noticed that you had around one fifth of the density of city. On the main routes a lot of it seemed to be business and institutional room for expansion. The house lots are large of course. Economically, the area seemed healthy. I didn't see many vacant businesses and saw no distressed residential housing. A lot of miles driving there and that does not favor the so-called "alternative" energy vehicles. My standard transmission would probably match a hybrid there. If gas goes way up we have serious problems here because of the sheer distances.

The Craigslist seller seemed a nice guy. He bought the house from a relative. Ironically he works here in town with the base maybe three miles from me. I would guess his commute at 23 miles each way but I didn't ask. To round to 25 and figuring five day a week work I figure he is now spending at least $50 per week just on gas to commute. I didn't ask him but just getting around there seems to add a lot more. He seems to favor fuel efficient vehicles, he said he has owned several Ford Rangers. Added to that with the longer distances in the outer ring burbs the gas costs can be high.

The irony is that the guy works here in the city. He said he used to live in a higher crime area of the city. That's another subject for a future posting. Crime rates vary dramatically in the cities. Again, seems like a nice guy.

Friday, August 1, 2008

Top US oil import sources.

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html
Out of the top10 total petroleum importers, to the US, only 2 are “Arab States” and both are our allies. If you go to the top15, 3 are “Arab States.” Of the 3 that are, all 3 are our allies and 2 are relatively minor in quantity.
Total Imports of Petroleum (Top 15 Countries)(Thousand Barrels per Day)Country YTD 2007
1 - CANADA 2,426
2 - MEXICO 1,533
3 - S ARABIA 1,489
4 - VENEZUELA 1,362
5 - NIGERIA 1,132
6 - ALGERIA 670
7 - ANGOLA 507
8 - IRAQ 485
9 - RUSSIA 413
10 - VIRGIN ISLANDS 346
11 - U KINGDOM 278
12 - ECUADOR 203
13 - BRAZIL 202
14 - KUWAIT 183
15 - NETHERLANDS 127