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Saturday, February 25, 2012

"The American People Aren't Stupid" -- "So, Let Me Tell You Why Gasoline Is So Expensive" -- President Obama

The Wall Street Journal link is here.

1. US monetary policy.
Oil staged its last price surge along with other commodity prices when the Fed revved up its second burst of "quantitative easing" in 2010-2011. Prices stabilized when QE2 ended. But in recent months the Fed has again signaled its commitment to near-zero interest rates first through 2013, and recently through 2014. Commodity prices, including oil, have since begun another surge, and hedge funds have begun to bet on commodity plays again. John Paulson says he's betting on gold, the ultimate hedge against a falling dollar.
2.  Slow-rolling the oil industry in the Gulf of Mexico
  • Normally, under President Bush: 7 deep-water permits over three months
  • Under President Obama: 3 deep-water permits over most recent three months

  • Normally: 15 shallow-water permits over most recent three months
  • Under President Obama: 5 shallow-water permits over most recent three months
3. Slow-rolling the oil industry in the Gulf of Mexico
  • Normally, under President Bush: 60 days to get an off-shore permit approved
  • Currently, under President Obama: 90 days

  • Approval average, normally, under President Bush: 75%
  • Currently, nder President Obama: 25%
4. The Keystone XL: killed (no direct effect on current prices, but EMBLEMATIC of the administration's policies regarding the oil industry)

5. The future: "now is the time to raise taxes on oil and gas companies" -- POTUS
He must not believe the economic truism that when you tax something you get less of it, including fewer of the new jobs they've created.
If you don't believe that, look at what has happened to Great Britain's North Sea drilling.

Hofmeister said despite high oil prices/high gasoline prices, it's "business as usual." No, it's not. Current administration is slow-rolling the oil and gas industry and slow-rolling the American public. 

Obama's Green-Car Plan -- Bloomberg -- The US Government Bought One (1) Prius Last Year

In 2010, the most-recent data available, 
the U.S. government’s gasoline use rose to a 25-year high
During a recession.
The US government bought one Prius last year.
"The government must lead by example."

A 25-year high. During a recession. Sounds like the government is not affected by the downturn in the economy. Total US demand for gasoline dropped 6 percent last year, but US government use surged (at least in 2010). 

This is really quite an incredible story.
President Barack Obama’s administration is buying fewer hybrid and electric cars and more vehicles that can consume both ethanol and gasoline to meet 2015 environmental goals, favoring older technology over new.

Obama gave speeches across the U.S. last year touting his twin goals of buying only alternative-fuel vehicles for the U.S. fleet by 2015 and getting 1 million electric vehicles on the country’s roads by that year.

That’s looking more difficult as the federal government learns the same lesson that U.S. car consumers have already figured out: it is tough being green. Rather than leading the way, the government has discovered that the high cost of hybrids and electric cars and their lack of availability often mean it makes more sense to buy cars with fuel-efficient conventional engines. 
Okay, so these are the data points:
First, the government is buying a lot of so-called "green vehicles" because they are able to use E85 fuel -- gasoline with 15% ethanol. The problem is this: E85 refueling stations are hard to find, and so the government drivers simply fill up with regular gasoline. So much for "green vehicles."

Second, the government, for whatever reason started buying more E85 vehicles at the expense of true hybrids and electric vehicles. The government purchase of "true" green vehicles fell 60 percent (some numbers rounded at this blog) so that the government could buy "so-called green vehicles" instead.
And thus:
The problem is that buying and driving ethanol fueled cars solves very little. The GSA, which owns about a third of the federal fleet, said last year that 88 percent of its alternative-fuel vehicles are capable of using ethanol. Still, ethanol fuel pumps are not very common and car owners, including the federal government, often have to use gasoline instead.
The data points:
  • 162,000 refueling stations across the US that sell gasoline.
  • There are only 2,512 ethanol pumps across the entire US -- the article doesn't separate E90 and E85; I don't believe I have ever seen an E85 pump.
  • There are only 6,033 electric recharging stations, which, of course, would only be used in an emergency; most people would re-charge at home.
  • 55% of government drivers were given waivers to use gasoline when ethanol was not available
Government purchases:
  • The US government bought 55,000 vehicles last year
  • It bought 2,600 hybrid, EVs, and fuel-cell vehicles (less than 5% of total purchases)
  • It bought no -- repeat, no -- algae-fuel vehicles
Go to the link to see a break-down of the alternative vehicles the government bought. It is of interest that the government bought one Prius.

I can't make this stuff up.

I assume the GSA couldn't justify the expense of buying the Prius and thus bought one. Hmmmm. It would be interesting to know who bought that Prius. The government did buy 145 Volts, but then, of course, the government owns the company that makes the Volt. Or at least a significant share of the company that builds the coal-burning car.

Superficial Story on the Price of Gasoline -- ABC

A reader sent me this link early today: from ABC, disparity of gasoline prices across the US.

They say the disparity is "abnormal." That's an unusual word to describe the disparity. Although the demise of the Keystone XL has nothing to do with the current price of gasoline, one can make a demagogic jump that the "abnormal" disparity is due to the fact that Obama killed the Canadian pipeline. There's always a disparity in the price of gasoline across the US, but ABC suggests it is "abnormal" this time. I think Obama's killing of the Keystone XL will be the 800-lb gorilla in the liberal news rooms every time they want to do a story on high gasoline prices. Again, the Keystone has nothing to do with current gasoline prices, but invariably a reporter will ask if gasoline prices are so high, and oil costs so much, why did we kill the Keystone. The answer that more time was needed to study the proposal is preposterous when one notes that the Keystone has been studied for a longer period of time than it took for the US to decide to enter WWII, engage, and win that global war, both in the European theater and the Pacific theater.

The report linked above, as with all network reports, is incredibly superficial. I assume the real reason for the higher prices in California has to do with regulations requiring unique blends that are expensive to manufacture. It is also possible state taxes vary significant across the country.

If the price of gasoline continues to trend higher, I think it will become more and more difficult not to report on it, and it will become more and more difficult not to talk about Obama killing the Keystone.

The Keystone, of course, as noted, has nothing to do with the current price of oil/gasoline, but it is emblematic of the president's national energy policy which is to kill coal, slow roll the oil industry, and funnel money to his friends and former staffers on the payroll of solar companies. It is interesting that there appears to be more Obama interest in solar than in wind, when, in fact, solar has even less potential than wind, as a real source of energy for large urban areas.


Folks say that the Obama administration has no national energy policy. That is completely wrong. There is a strategic vision. Whereas some would argue that the GOP strategy is a three-point plan (drill, drill, drill), one can as easily argue that the Obama plan is also a three-point plan (kill the coal industry; slow-roll the oil industry; and, funnel money to friends in solar energy). The fracking success that led to a surfeit of natural gas and unthinkably low prices has thrown the strategy off and the administration is now caught in a difficult place to ban fracking which under "normal" circumstances would be part of "slow-rolling the oil industry" but now is problematic due to high oil and gasoline prices. Folks are able to offset their gasoline expenses with low heating bills (due to low cost natural gas, and due to a very warm winter) but that won't hold true a month from now when heating bills are no longer a budgetary issue for most Americans.