News Cut Category Archive: Energy

It's not that I don't love my job; I do. But I always marvel at the folks who undertake great expeditions without a care, apparently, for having to make a living at it. The various journeys to Antarctica and the North Pole from Minnesota explorers are a couple of examples.

Now there's a third. Two guys are going to spend time riding a scooter from Minnesota to New York City-- and back again. Why? To demonstrate the power of the scooter in the era of high-priced gasoline.

Says the 'expedition's' Web site:

2007, Dustin Saunders moved to Minnesota to seek new opportunities. Once he settled in, the love for his scooter he left in Utah was too much to bear. Dustin then traveled with his friends to Utah to pick it up, and drive the scooter back to Minnesota.

Scooter Quest was originally meant for family and friends to check to see how progress was going as the crew made it back from Utah, to Minnesota. Now, in 2008, Sean, Dustin, and Michael will take their scooters and venture across parts of the United States on an epic adventure of traveling, exploration and fun. The adventure begins on August 23rd, 2008 from Minneapolis, MN ending in New York, NY with checkpoints in Chicago, Indianapolis, and Philadelphia along the way.

Check out their Web site and their plans to stay connected during their journey. They leave in a couple of days.

(h/t: Laura Yuen)

Republican congresswoman Michele Bachmann maintained earlier this summer that just by talking about more drilling for oil, the price of a barrel would come down. Now that oil has come down in price, the political debate is whether that's due to factors including Bachmann's assertion, or whether it's the natural order of the marketplace.

But maybe something else is involved, according to a story on the BBC Web site this morning.

People in the DC area have been gathering around the pumps ... to pray.

This week the group returned to the site of their first prayer meeting to celebrate. Singing "We shall overcome," they changed the words of the well-known hymn to "We'll have lower gas prices".

Mr Twyman is sceptical that market forces might be responsible for the lower prices. But he and his prayer warriors have changed their motoring habits.

"We believe not just in prayer - because we believe that faith without works is dead. So we've encouraged people to car-pool more and organise their days more, because it's a combination of faith with these other factors."

The prayer meetings started in April and, as you can read in the story, the advocates think the price has come down because of their prayer. Maybe, but when they started praying, the price of a gallon of gas was $3.299, according to the Department of Energy. On August 11, it was $3.764.

One's antenna always should go up when a special interest group releases a poll that shows a result favorable to the special interest group. But a poll is a poll and today's comes from the American Petroleum Institute which reports its poll finds 58% of Minnesotans support "increased access" to oil and gas reserves (i.e. ANWR and coastal drilling). Twenty-percent of those people only somewhat support the idea.

Ninety-four percent of those surveyed are "concerned" about the price of gas. Five percent "aren't concerned at all."

The results are pretty much the same as a survey Quinnipiac took in Minnesota last month. In that survey, 59 percent of those surveyed said they support drilling for oil off the coasts. Half of those who said they supported drilling, said they have always held that view; that's a sign of the shifting political sand on the issue.

But in that same survey, 61 percent of those surveyed said they'd rather have politicians focus on alternative forms of energy, than drilling for oil.

Sorry Texas, the EPA is just messin' with you. The Environmental Protection Agency today denied the state's request for a waiver on the requirement that oil companies add about 9 billion gallons of ethanol to their fuel this year.

It's the issue that's pitting farmer against farmer. Sure, ethanol is making money for farmers who raise corn, but it's taking some money away from cattle producers who are seeing the price of corn increase their cost of feed.

It's been an emotional issue at FarmFest this week, the Bemidji Pioneer reported today (registration required)

While not opposed to ethanol -- something he uses as a farmer -- (Edgerton Minn., farmer Randy) Spronk said livestock producers are at a disadvantage because federal and state laws now favor using corn for fuel compared to livestock feed. Federal policy "has distorted the corn market," he said.

"Will we have enough corn to produce food and how will these consumers spend their limited food dollars?" he asked.

No one on either of two panels at FarmFest could guarantee that the corn will be available for livestock.

Sitting next to Spronk in one panel discussion was Hector, Minn., farmer Steve Kramer, secretary of the Minnesota Corn Growers Association. He said ethanol use is a relatively small factor in price increases.

"The marketplace will balance out," Kramer predicted. "There is no shortage of food caused by the diversion of corn."

Others object to the environmental fallout from the production of ethanol. And a report cited by the Guardian says ethanol is at the heart of the world food crisis.

Sen. John McCain had called for an end to the ethanol mandate. Sen. Barack Obama is for it.

The administration's pumping up ethanol is good news for agri-giant Archer Daniels Midland, according to the financial Web site Motley Fool.

Speaking of ethanol, management made a few interesting comments on its conference call regarding the market for the much-debated fuel additive. For what it's worth, ADM management stated their optimism that Texas' request for a waiver on the federal ethanol mandate would not be granted... Archer still foresees strong demand. The blending economics are just that attractive, with ethanol providing cheap octane for gasoline. Archer actually cited blending in excess of the mandate.

Even without the mandate, however, some analysts figure ethanol is here to stay because there's too much money to be made producing it, according to the Minnesota-based agriculture newspaper Feedstuffs.

Jerry Gidel, analyst for North American Risk Management Services, said he does not anticipate EPA will change the RFS levels after the recent sell off in corn prices and the nearly 10 billion gallons in current biorefinery capacity. Gidel added the extra renewable identification numbers (RIN) in the marketplace will factor into not changing the RFS, particularly since the current 75-78 cent discount of ethanol will override anything the EPA does, he said. "The economic incentive to blend and make money is too strong for the energy distributors not to use as much ethanol as their updated facilities will handle. The lack of splash & dash facilities is the only reason for any slowdown in what the ethanol industry might be able to produce at current corn prices," Gidel said.

Today's article in the New York Times on the changing face of Nebraska has us engaging in wind-energy trivia today. The paper points out that Nebraska has made a promotional brochure out of the fact it ranks sixth in the nation in wind energy.

Sixth? Where does Minnesota rank? Third, according to the American Wind Energy Association. It's potential for wind energy places it at #9, however. Minnesota has about 800 wind turbines.

Texas is number one (the state is home to more than 3,000 turbines), and generates about 3-percent of its electricity via wind, according to a February 2008 New York Times story.

In Minnesota, farmers are figuring out how to make money with wind, according to the Litchfield Independent Review newspaper. A series of nine farmer-owned energy companies has kept the money generated by the turbines in the community, rather than shipping it off to a far-away power company.

The most striking change in the industry may not be so much the change to the scenic vistas of the Minnesota prairie and bluff country, but the willingness of communities to construct turbines. This week, for example, Winona County is planning to overhaul its wind and zoning laws.

It's rare these days to hear any real passion coming from the news bosses at the Star Tribune. This is one of those days, however.

MinnPost writer David Brauer took the Star Tribune to task today for not acknowledging in an editorial supporting offshore drilling, that the paper's owners have a financial interest in it.

Worried about spills? "Though some environmental advocates dispute this, drilling technology has advanced over the past quarter century. Oil companies can drill more efficiently in deeper water with significantly less risk to the environment."

But there was one unnoted fact: The company that bought the Strib last year is heavily invested in that technology.

That brought a volley from Jill Burcum of the Strib''s editorial board. Once you get past the invectives, her message in Brauer's comment section was:

The editorial's point remains a strong one - that it's worth having a discussion about offshore drilling in light of $4 gallon gas and advances in drilling technology. This is something that many on all sides of the political spectrum are saying. I'm not going to apologize for advocating for families suffering from high gas prices. Or, asking for a debate over opening up new domestic oil supplies, something our experts agreed would help drive prices down and get speculators out of the markets. If that makes us "breathy," so be it. We're in pretty good company.

As far as disclosure goes, David, heal thyself. By your own standards, your columns require a lot more of them than the meaningless Gray Plant disclosures you put in. Today's reality, which you should know as a critic, is that most media companies have owners with vast investment interests. Do these newspapers, TV stations and other outlets disclose this every single time they write about these topics? Has MinnPost ever disclosed its founders' and funders' vast investment interests when it writes about various topics? No.

So many interesting issues here, it's hard to pick which one is better: the question of the value of oil drilling off the coast, or the question of when journalists should disclose the business interests of an increasingly diverse ownership?

What exactly do we want when it comes to an energy policy? A recent poll shows the public would rather seek new energy sources than significantly cut back on their usage. Are the polls correct?

That's the question on the second hour (10 a.m.) of Midmorning today.

Carroll Doherty: associate director of the Pew Research Center for the People & the Press; Matt Wald, a reporter for the New York Times; and Frank Newport:, editor in chief of The Gallup Poll join Kerri Miller.

News Cut is live-blogging and providing your assessment. You can listen to the program and provide your commentary in the comments section below.

10:05 a.m. - We're ready to go. You never know how these things are going to go. This topic should be interesting. Hopefully it'll involve a minimum of self-righteousness.

10:09 a.m. - Here's the Pew survey.

10:13 a.m. - Is $4 the "new normal?" Doherty asks. If so, how will this affect the spike in America's attitudes toward drilling and exploration?

10:15 Caller "David," who teaches science, says he's disturbed by lack of framing question with "conversion" fossil fuels to alternative sources. Carroll Doherty says "that's true, we just want to get a sense of where the public's attitudes are." Would've liked to do a fuller exploration of the public's views, and says it's notable that measures aimed at reducing consumption get overwhelming support. 90% say they favor higher CAFE standards and increased funding for mass transit. He says more and more Americans say expanded exploration have to be part of that mix.

Interesting -- to me -- is the comment of Todd below. He's not buying that there isn't some conspiracy behind all of this, what with the phony rolling blackouts in California and Enron's shenanigans in the past.

10:22 a.m. - Matt Wald of the New York Times joins us and reacts to the point here on News Cut about trust. "I want to go back a step. I don't think it matters whether you trust the oil companies or not." Sigh. He says the supposition in the Pew poll is that the answer is going to affect the price. He doesn't think it will because if you add supply, demand is still rising faster than supply. "We could find oil and we could find that the price went up anyway."

10:26 a.m. - Interesting comment from Neil (which I may read on the air) in the comments section. If I read it correctly, we're shoveling the living standards sand against the rising cost of energy tide.

10:29 a.m. - Beth calls to say the situation is a failure of environmental education, noting that the oceans and ANWR are under stress. The question I have, though, is whether people care to the degree, perhaps, they once did?

Matt Wald says the problem with polls is events move on. If you asked right after Katrina what's our biggest problem, people would've said "global warming." Now they've moved on to $4 gasoline. Polls don't get oil wells dug. It's companies deciding whether they can make money at it.

10:34 a.m. - During the news break, Kerri and I are chatting about the generation differences. Coincidentally, Jonna has jjust posted a comment say the young people have a sense of entitlement. "They don't look at their consumption, they just want more."

10:37 a.m. - We're joined by Frank Newport of the Gallup Poll who says the issue has not surpassed Iraq as the chief concern in the country right now. He says people answering polls now are much more likely to respond to anything that "sounds like it might lower the price of gasoline."

10:40 a.m. - The environmental aspect is still "the great divide" politically speaking, Newport says. He adds that it makes it more difficult for both McCain and Obama to move "toward the center" on the issue.

10:42 a.m. - Queried by Wald, Newport says Al Gore would be disappointed to learn that his climate change movie hasn't changed peoples' attitudes. Wald says the high price of natural gas may motivate more exploration.

10:47 a.m. - Just read Jonna's comment on the air. Matt Wald responds, if the belief is we have a right to cheaper energy, we have a problem. If it's that we can find alternative sources, then there's hope. He says younger people are more likely to have the latter view than the former.

10:50 a.m. - Wald says he 'runs for the exit' when he hears the term energy independence. It's not possible, he says.

10:51 a.m. -- According to the poll above 93% of those surveyed favor conservation. According to the 93% of those passing me at 75 mph while I'm driving 55, there might be a high "you conserve, I'll talk about you conserving" factor here.

10:53 a.m. - Wald says the next crisis may be electricity. Power lines aren't being built, natural gas (which powers electric plants) are at a high price. "We're going to feel it," he says. Might want to go turn down the air conditioning.

10:54 a.m. - Wald responds to caller -- and commenter -- about the oil companies not drilling on land they already own. "The oil companies don't seem convinced that $140 a barrel oil is here to stay."

10:56 a.m. - Kerri says even if people are passing me at 75 mph, they might be conserving "in other ways." Is that you. Let's keep talking during the afternoon. I'll meet you down in the comments section.

Do you think you'll ever see $2 a gallon gasoline again? Rep. Michelle Bachmann of Minnesota's 6th District thinks you will, if the U.S. "sends a signal" that more oil will be pumped out of the ground.

She held a news conference in Woodbury today (interestingly, it was at the gas station which usually has the lowest prices in town) to push her "No More Excuses Energy Act," which opens up more land for drilling

Bachmann says it would take about four years to get prices down to $2 a gallon.

Last week Bachmann told Politico that gas prices are now the #1 issue for her constituents:

As a matter of fact, in the parade we were at last weekend, people were shouting from the sidelines: "Drill in ANWR! Drill in ANWR!" One woman was sitting in one of those lawn chairs, and she had a piece of cardboard, and she had written on it, "Down with global warming freaks." I mean, these people are just ready to find someone to shake and say, "Help me with my gas prices."

Back when the price of a barrel of crude was $37 (it's around $140 today) in 2004, the U.S. Energy Department said opening up sections of Alaska to drilling would lower the price of a barrel of oil by 50 cents.

In May the energy department issued another report on ANWR, calculating an peak of 780,000 barrels a day. The report, which is being used by Republicans to justify opening ANWR to drilling, nonetheless contains this sentence:

Consequently, ANWR oil production is not projected to have a large impact on world oil prices.

One has to be careful in predicting the price of gasoline. Just ask Nathan Schaffer, a manager of the group that tracks gasoline refining and marketing for PFC Energy, a consulting firm in Washington. About 18 months ago he figured if a barrel dropped below $50 a barrel, gas prices would drop to below $2. That prediction didn't work out so well.

In today's news conference, Bachmann presented Diane and Gary Baran, two Woodbury residents who described their concern about gas prices.

Who are the Barans? He was a 2006 delegate to the Republican State Convention and an early Bachmann supporter in her bid for Congress. Both are longtime Republican activists in the 6th District.

It's not unusual to display political supporters at a news conference. On the other hand, they'res not exactly the average man-on-the-street.

"How do convenience stores decide when to change the price of gasoline?" a passenger in the NewsCutMobile asked this afternoon.

Easy enough. When the price of crude rises, the employees run out to change the sign. When the price of crude drops, they walk.

There was a lot of running going on today. Crude oil prices skyrocketed in the last couple of days, to near $139 a barrel, after dropping to about $122 earlier this week. The average price of gasoline in these parts dropped to near $3.72 (How do you like that feeling when you see $3.72 posted and figure, "Wow, at these prices I should fill up!"?)

The only thing that was preventing prices from increasing at the gas station where our friend pictured above works, was the wind. She kept trying to put the numbers up for the higher price, but the wind kept blowing them off her price-raising tool, momentarily frustrating her but -- also momentarily -- becoming the motorist's best friend.

Ingenuity won out, as it usually does, and within a few minutes she had successfully raised the price of a gallon of gasoline from $3.72 to $3.89.

A barrel of crude, by the way, is now projected to hit $189 within a year. You know, at these prices ...

The MPR newsroom has put together a comprehensive gas prices section. Midday is doing a show at 11 which, if it's something more than playing the already-available MPR reporter pieces, I'll live blog it in search of tips.

Of great interest -- to me -- is a series of online calculators that you can use to confirm -- or overturn -- the wisdom of your various ways to save money. For example, I found on a fill-up, I'm saving a total of 8 cents, by driving the extra distance to the gas station that sells gasoline at 4 cents a gallon less than the closer station. At that rate of savings, and at the current rate of gasoline inflation, I will "earn" a free gallon of gasoline... in August 2009.

The Star Tribune today, meanwhile, carried a troubling story about people basically resigning themselves to whatever the cost of gasoline is, without intending to change any habits to alleviate the pain. Our ancestors, who once did without nylon stockings and tin, and won a world war that way, are rolling over, no doubt.

MPR's Marty Moylan has a terrific story today on how gas prices are spurring the sales of smaller cars... maybe.

He notes, however, that last year eight of the top 10 best-selling vehicles in Minnesota were trucks, vans, SUVs or mid-size sedans.

But hybrids are in and they're always a good deal in times of rising gas prices, right? Not always, and certainly not right away.

Jesse Toprak, director or industry analysis for Edmunds.com, says buying new fuel-efficient cars doesn't always save consumers money.

"You have to really look at the entire cost associated with the ownership of a new car and compare it, as best as you can, to the old car you have," Jesse Toprak of Edmunds.com told Marty. "And if you get a new car with a new monthly payment and higher insurance at the end your net result may end up being negative."

"Savings calculators" on some of the car company Web sites, not surprisingly, are notoriously misleading.

Take the Honda Civic Hybrid Web site, for example. If I were to trade in my 28 mpg car for a 45 mile per gallon hybrid, I would save $2,954.76 a year. Except, that I won't.

First, the current car is paid for so one would have to take on the cost of a new car loan. Using the car calculator at Cars.com, figuring on a $24,000 for the new car, anticipating $1,000 trade-in, a four year loan, current interest rates, and the Minnesota sales tax, it would cost $5,180 just to finance the purchase. You can buy a lot of gas for $5,180 (Note: If you're reading this a few years into the future, the price of gas was $4 a gallon when this was written, not the $5,180.9 a gallon it is now).

The first registration costs twice the amount of a renewal. That's another $99. The monthly insurance is going to be much higher (especially since the Civic is one of the most-often-stolen cars) and pretty soon the period to recoup the investment through reduced fuel usage (and maybe a tax break) is fairly high. That doesn't make it a bad idea, of course, it just makes it not as great an idea as we might've been led to believe.

Business Week's blog had an item last week on the anticipated 2009 Prius hybrid models, and lamented the lack of a plug-in version. It also suggested the payback period for some hybrids can be as short as 18 months. (Unfortunately, some of the links in the post don't work).

There's another potential downside of the hybrid (or more accurately: of us). Given higher mileage: the driver is more likely to drive more often, negating the impact of the purchase, according to the Asbury Park Press.

And that brings us back, again, to the key to fighting the rising cost of energy: the willingness to focus on fighting it.

$20 Challenge update: I've been trying to limit my gas purchases to $20 a week, and adjust my driving to whatever the fuel gauge tells me. How am I doing? On the ride home last night, the "check gauges" light came on. I've got enough to get to work today, but perhaps I should bring a blanket and pillow.... or tin and nylons.

It's time to compare notes.

On the way home yesterday, I tried to calculate whether my plan of spending only $20 a week on gasoline is going to work. I think I can make it to Friday if I don't make any unnecessary trips, I get a tailwind, and I only drive downhill. We'll see.

When I got home, I fired up Quicken to find out whether all of my fretting about the price of gasoline has been a worthy endeavor. Has it -- at least as measured by the cost of gasoline I'm putting in my car -- been warranted?

Surprisingly, no!

Using Quicken's reports feature, I called up how much I spent in gasoline in 2007 from January 1 to May 22. $363.61. Then I ran the same report, but changed the dates to 2008. The result? $364.20. That's a 51-cents increase. And I haven't even started the whole bike-to-work-one-day-a-week thing yet.

How'd that happen? I've been focusing on increasing my miles per gallon (I drive 55, I brake and accelerate over a greater distance), and not really considering the effect of combining trips etc.

I know a lot of you use Quicken, too, to track your finances. Run the same report, please, and report back here on the net result of your changed -- or not -- driving habits.

Also, list some of the ways you've changed. One tip free: Don't fill up. Fill the tank only half full. Otherwise, you're wasting gasoline lugging around the weight of additional fuel you don't need unless you're on a long trip.

An 18-cents-a-gallon increase in the price of gasoline in the Twin Cities today has -- at least momentarily -- created a situation we haven't seen in months... possibly years -- gasoline prices higher than the national average. The big players are all charging around $3.85 to $3.89 a gallon this afternoon.

According to the Associated Press:

At the pump, meanwhile, the average national price of a gallon of regular gas rose 0.7 cent overnight to a record $3.807 a gallon, according to a survey of stations by AAA and the Oil Price Information Service.

Up until today, Upper Midwest per-gallon gasoline prices have been well below the national average, largely on the strength of the use of an ethanol blend.

Many retailers haven't caught up with the new price reality. In many cases, retailers cap pay-at-the-pump sales to a maximum of $50. That wasn't a big deal as recently as 6 months ago, but now it's becoming more common to have to run your credit card twice to fill up your tank.

And the major credit card companies don't allow gasoline sales of more than $75 at a time.

The Minnesota Corn Growers Association is out with a survey of 800 people that generally gives high marks to corn growers and ethanol. A spokesperson says the survey was not undertaken to be released to the media, but it subsequently was.

Since we've talked about the cost of ethanol-blended gasoline vs. the cost of straight gasoline on News Cut several times in the last month, it's worth pointing out that 55% of the people surveyed don't think it is less expensive and support its production for other reasons.

By the way, 70 percent of those surveyed believe global warming is a fact.

The cost of jet fuel is bankrupting airlines. Maybe there's a cure coming.

Biomass Magazine reports on Solena Group Technology's intention to build a biobased jet fuel facility in Gilroy, California. It will produce jet fuel from "municipal, agricultural and forestry waste."

The plan involves the use of "plasma gasification," which Matternetwork describesas " super-heating biomass with plasma torches (aka, death rays), rapidly breaking down the material into their component compounds, resulting in synthetic gas, or syngas."

Perhaps the biggest key in the idea is the fact that Gilroy wants the plant in their community.

There are two current "shows that never end" on News Cut. One is the "WCCO fires Paul Douglas" entry. The other is the "ethanol tax" entry with my unscientific "study" that revealed how much more per gallon I have to spend for ethanol-blended gasoline than your basic "let's toast the Saudis" blend.

The Wall Street Journal blog picks up the theme of the latter -- without crediting, or probably reading, the genius of my 'study' -- by pointing out that at least one Web site is actively tracking this gap between the blends.

AAA, it says, has been posting the "adjusted E-85 price" as part of its daily gas price survey. Here's how the adjusted price is calculated:

The BTU-adjusted price ... is not an actual retail average price paid by consumers. According to the Energy Information Administration E-85 delivers approximately 25 percent fewer BTUs by volume than conventional gasoline. Because "flexible fuel" vehicles can operate on conventional fuel and E-85,the BTU-adjusted price of E-85 is essential to understanding the cost implications of each fuel choice for consumers.

I had calculated -- very conservatively -- a 2 or 3 cents per gallon "ethanol tax." The Journal blog says it's closer to 8%:

If that spread persists as E85 gains widespread use in America's cars, rather than the niche of vehicles now equipped for the fuel, the hidden costs for drivers would be akin to upgrading in the current gasoline-oriented world from regular to mid-grade. When was the last time you did that?

Wondering if this is the water-cooler talk at the Ethanol and Biodiesel University convention this weekend in Las Vegas?

3:19 p.m. - Dan McCullough E85prices.com posted a long commentary in the original "ethanol tax" topic (see link above). For straight price comparison, his site is pretty fascinating.

I wrote a post earlier this week about my experience with ethanol vs. non-ethanol blended-gasoline and it spawned a lengthy debate about the issue. Tonight (Thursday) MPR's Kerri Miller is hosting a discussion in the UBS Forum at MPR with Anne Korin, co-director of the Institute for the Analysis of Global Security and chair of the Set America Free Coalition, and Ed Garvey, director of the Minnesota Office of Energy Security. Matthew Wald, who covers energy issues for the New York Times, was supposed to be here but he's been dispatched to Louisiana to cover the American Airlines maintenance woes (or so I'm told).

It's not about ethanol per se but it's close enough to warrant sticking around for a little live-blogging. You can listen here and if you'd like to add your comments during the event, so much the better.

7:05 - We're underway. Here's the theme. How does our reliance on foreign oil change influence our foreign policy? How real are the claims that the U.S. can be truly 'independent' of foreign oil and what will the next president's energy policy look like, given the way oil prices are headed. Four years ago, a barrel of oil hit $50 and drivers were grumbling as a gallon passed $2. Oil closed today at almost $115. At a gas station in Blaine gasoline is going for $3.52 tonight.

7:11 - Korin: "We paying for both sides of the war. Every time we go to the gas station, some of the money goes to Saudi Arabia, which funds terrorist groups around the world."

(Continued below the fold)