Gas prices are heading down in the Twin Cities after last week's record high, but this chart shows a pattern we've heard about before. They don't seem to be going down as fast as they went up.
What's going on here? Slate looked at this question some years ago and found that the problem is you: When prices start to fall, you don't shop around much as when they're increasing.
A busy gas retailer will take delivery on a daily basis, so there's some pressure to pass along price hikes without too much delay. The stations can't raise prices too much, though, because consumers tend to be extra-vigilant about shopping for bargains when oil prices are on the rise. When the newspapers start reporting upwardly mobile barrel prices, drivers tend to comparison shop down to the penny. This keeps gas prices from rocketing even further.
The asymmetry that economists cite comes into play as soon as oil prices start to deflate. Freed from the constant reminders about rising fuel costs, drivers become less invested in looking for a bargain--and retailers don't have to worry as much about the competition. As a result, station owners can keep drivers happy by knocking just a few cents off the "old" price.
The theory came from Matt Lewis, an economist at Ohio State University.
A key element of his theory is something economists call a "reference price." Your local car salesman might know it as "framing." Once consumers get a number in their head -- $10,000 for that car, $3.70 for that gallon of gas -- all subsequent choices are impacted by a new price's relation to that reference price. When the car dealer says, "OK, $9,500," you think you have a good deal. When the nearest gas station drops the price to $3.63, the average consumer impulsively stops searching.
"If prices are falling, you pull into a station and think 'I have a good deal,'" Lewis said.
Daily Finance adds, however, that there's another factor: There's money to be made if you run a gas station. (h/t: Ken Paulman)
Here's a simplified version of what happens (excluding taxes and the cost of environmental regulations that also affect gas prices): Say you're a gas station owner who buys 10,000 gallons of regular unleaded gasoline -- a month's worth -- at Wednesday's wholesale price of $2.85 per gallon. Your bill comes to $28,500.
Imagine that you sell 9,000 gallons over the next three weeks, but then the price of oil drops, bringing the wholesale price for gas down 10 cents to $2.75 per gallon. You'll be able to buy your next 10,000 gallons at the lower price and cut your pump price by 10 cents per gallon as a result, but if you reduce your prices right away, you wouldn't cover the cost of the remaining 1,000 gallons of gasoline that you already bought at the higher price. Most likely, you'd wait until you'd sold those 1,000 gallons before cutting your price.
There was another big jump in gasoline prices overnight in Minnesota when gas stations raised the price of gasoline by another 20 cents a gallon, to $4.39 at most major outlets. That's on top of the 50 cents-a-gallon increase over the last week and a half.
Since January's low, gasoline prices have jumped 55 percent in the Twin Cities.
How does this compare to the big price shock of 1973 when the Arab oil embargo hit the United States and many stations ran out of gasoline?
The average price of a gallon of gasoline in May 1973 was 38.5 cents a gallons ($1.96 in 2012 dollars). By June 1974, it had risen to 55 cents or $2.53 a gallon in '12 dollars.
In 1974, that was a 42-percent increase, far less than the current increase and that's for a situation in which there was no gas to sell. The current run-up is being blamed on just two refineries in Illinois that were closed for maintenance.
WCCO's Jason DeRusha pointed out this week that part of the reason for the increase is the gasoline refined in Minnesota was sent to Chicago to compensate for the closed refineries. As of today, the average price of gasoline in Chicago is falling.
(Photo: Associated Press)(15 Comments)
When I made this haphazard video four years ago this week, the price of gasoline had shot up and I had every intention of spending the summer riding to the World Headquarters from Casa NewsCut.
Sadly, the notion joined a long list of good intentions unfilled.
So there's really no reason to pay any attention to my intentions now, other than the fact I come from yankee stock and the the numbers 4 -1- 9 can make us do miraculous things. Also, at MPR, there's a lot of peer pressure to stay trendy and I may be one of the last employees not riding a bike to work and I'm already shut out of all conversations that includes the phrase "when I was traveling Europe by rail." Granted, "when I was biking through Pig's Eye" doesn't get you much admiration, either.
Most of us have these intentions to do something about energy prices, under the proven economic theory that "the solution to high gas prices is high gas prices." Some of us slow down, some of us buy cheaper cars, some of us move closer to work, some of us hop on the bike.
So, I stopped at the bike shop on the way home from work last night and bought $157 of additional gear -- bike rack, saddlebags etc -- in order to carry the laptop and clothes and lunch. And the bike experts on Twitter did a marvelous job guiding me through the installation mistakes.
The money invested would fill up the car four times. That's about 1,300 miles. To break even, I'd have to ride the bike to work (and back) 54 times.
My 12-mile ride probably saves me less than a half gallon of gas -- an amount saved that ends up in the pockets of Big Gatorade. The parking space I rent still has to be paid for in case it rains.
These are the questions and calculations one can ponder on a lengthy bike ride. Also, why don't bicyclists riding in the other direction ever say "hello" in return? Am I violating the unspoken rule of trendy?
The ride took about an hour; not bad for an old man. I could've done it faster, but I stopped to watch a deer.
Sorry, big oil. This might stick.
The price of a gallon of gasoline hit a shocking level overnight. In the Twin Cities, several chain gas stations -- mostly in the outer ring -- raised their prices to between $4.09 and $4.19 a gallon. That's about 20 cents more overnight, 60 cents in the last two weeks, and $1.20 since January. At many stations, prices rose into the $4 range yesterday afternoon, then fell overnight into the $3.90 area.
What's going on here?
"As we head into Memorial Day, drivers are experiencing the lowest gasoline prices since 2008," CNBC says today, while noting that demand is relatively low and supplies are abundant.
Meanwhile, the Labor Department issued its wholesale price for April, pointing to low energy prices.
The Labor Department said that the bulk of the decline was driven by energy prices, which fell 2.5% on the month. These prices have been falling around the world among as the result of weakening demand and of indications that fast- rising U.S. oil production will greatly boost global supply in the coming years.
The decline in energy prices, in turn, was led by gasoline prices, which fell 6% in April. The U.S. Energy Information Administration has forecast demand for gasoline in the spring-summer driving season will fall to a 12-year low as the result of high unemployment, changes in driving habits and improvements in vehicle fuel efficiency.
The EIA, the government oil monitor, also proclaims good news:
Falling crude oil prices contributed to a decline in the U.S. regular gasoline retail price from a year-to-date high of $3.78 per gallon on February 25 to $3.52 per gallon on April 29. EIA expects the regular gasoline price will average $3.53 per gallon over the summer (April through September), down $0.10 per gallon from last month's STEO. The annual average regular gasoline retail price is projected to decline from $3.63 per gallon in 2012 to $3.50 per gallon in 2013 and to $3.39 per gallon in 2014. Energy price forecasts are highly uncertain, and the current values of futures and options contracts suggest that prices could differ significantly from the projected levels.
Usually, there is a relationship between the price of oil in the U.S., and the price of a gallon of gasoline. In the last few weeks, that has not been the case.
|Minnesota Historical Gas Price Charts Provided by GasBuddy.com|
The Associated Press says "clean energy" is doing a number on eagles:
The AP story suggests lobbyists for green energy have taken a page out of traditional energy lobbying and succeeded in getting public officials to look the other way.(9 Comments)
Ontario, our friendly neighbor to the north, will soon phase out all of its coal-burning power plants. The last two generators, up the North Shore in Thunder Bay, are set to close next year.
The province faced the same challenges that should sound familiar to us here: communities worrying about job losses and industries worrying about having enough power. So how did they do it?
Yale's Environment 360 reports:
The transition away from coal also was helped by political and economic circumstances. Unlike the U.S., where miners, producers, truckers, railroads, and utilities form strong regional coal alliances, coal-fired power in Ontario had no other influential political constituencies.
OK, so there's the politics of it in a nut shell. Here's the economics of it:
Most of the coal-fired generators were also closed as the U.S. economic meltdown engulfed Ontario's auto manufacturing sector, North America's largest producer of vehicles and parts, and one of Ontario's biggest power consumers. The demand for electricity fell in Ontario, a market that was producing over 35,000 megawatts of generating capacity.
Nuclear has largely taken the place of coal in the province — it now makes up 56 percent of Ontario's electrical power. Hydropower is responsible for another 22 percent. The region's air quality has improved as a result.
Overall, mean particulate concentrations in the province's air fell from 8.1 micrograms per cubic meter in 2003 to 4.8 micrograms per cubic meter in 2010, a 40 percent decline.
How are we doing in Minnesota? A dozen coal plants are being retired or are switching to natural gas by 2016, but the Star Tribune reported in February that the plants are small and account for just 3 percent of the state's emissions of carbon dioxide:
When the smaller coal plants from Hoyt Lakes to Burnsville to Rochester are gone, Minnesota electric customers still will be getting a major share of their power from a fleet of larger, newer coal plants that utilities plan to keep operating.
Still though, while coal in Minnesota isn't going away anytime soon, utilities here are diversifying with wind, solar and natural gas, the newspaper reported.(2 Comments)
"It appears we had an equipment failure of some sort." -- Oil company spokesman
With the oil business comes the occasional violation of the environment. North Dakota has found that yesterday (if it didn't already know) when an active oil well east of New Town blew out and spewed oil near Lake Sakakawea.
KXNet in in Minot provided this video on its Facebook page.
The comments of the station's audience on the Facebook page indicated that people consider it an acceptable alternative to walking.6 Comments)
Twin Cities gas prices increased another 10 cents a gallon today -- that's a 30-cent run-up in a week. But that's not the story; this is the story.
The price of a gallon of diesel fuel is now equal to -- or, in many cases, less than -- the price of a gallon of regular unleaded.
Since September of 2004, diesel has been higher than gasoline, mostly because of worldwide demand for diesel, tight refining capacity, the transition to ultra-low sulfur fuel and a federal excise tax that's 6 cents higher than for gasoline.
This week the Energy Information Agency lowered its projections for the cost of both diesel and gasoline, citing a weakening economy.
But that doesn't explain why one fuel is dropping and the other is going up. Apparently, it's not just us. In Ohio, gasoline dealers say they're frustrated because the prices are going up while the price of crude is going down. They contend wholesalers and oil companies are trying to make up for the money they lost earlier in the year.
A look at the Minnesota gas prices vs. crude price gives that view some credibility.
|Minnesota Historical Gas Price Charts Provided by GasBuddy.com|
Economists had hoped lower gasoline prices -- other than California, Minnesota has some of the highest gas prices in the country -- would get people to spend more.
At $3.79, the price of gasoline is only 4 cents away from the highest average price in Minnesota in more than a year.
Meanwhile, for truckers -- especially independent truckers -- the lower prices go right to the bottom line. I wrote this article about one such trucker in 2008. Four years ago, he was paying 20 cents more a gallon than he is today.(7 Comments)
Oil prices have hit the lowest level in the last six months, the Associated Press is reporting today.
Just one question: What's taking you so long to get in step, gasoline prices?
The price of gasoline is not directly and immediately tied to the price of crude -- there are plenty of variables in what makes up the cost of a gallon of gasoline -- but it's relatively unusual to have a steep drop in oil in the last few weeks and have gasoline prices still trending in a fairly narrow range.
|Twin Cities Historical Gas Price Charts Provided by GasBuddy.com|
So much for the $5 gasoline panic, writes Phil Flynn on Inside Futures:
Flynn takes the gamblers' reversal of fortune as, "more proof that whenever somebody blames the speculators for the prices [of energy], they really don't know what they're talking about." Assuming the speculators aren't about to get credit for any decline in crude prices, Flynn says the fundamentals are to blame for the recent sharp decline. Newly Socialist France and the lunacy in Greece are creating uncertainty that weakens demand. In combination with the glut of oil, stockpiled when a military stand-off with Iran seemed inevitable, the price of crude and other forms of energy are dropping due to the laws of economics. Unless Europe is "solved," which is unlikely if not impossible, or a hot war breaks out in the Middle East, Flynn says "sell the rallies" is the dominant strategy. To him the only real question is whether or not a trader should go so far as to short crude or natural gas. With the fast drop below $100 a barrel in WTI crude, Flynn says its new price range is likely to be somewhere between $90 and $95 a barrel, causing him to "be a little careful" going short. For every buyer there's a seller, meaning someone is most likely making money off the drop in energy prices. Whether it's a new breed of speculators driving it lower or the obviously bearish fundamentals is beside the point for a trade. Until further notice, the best way to play crude has gone from "buy the dips" to "sell the rips."
As recently as last Friday I told Tracy Burns and Ashley Webster on the Fox Business Network that oil had not bottomed and was probably on its way to 90. We are already close!(3 Comments)
If ever there was a presidential moment designed strictly for a campaign ad later in the year, this was it.
"Today I'm directing my administration to cut through the red tape, break through the bureaucratic hurdles, and make this project a priority," President Obama said, underscoring the seriousness of the southern route of the Keystone XL pipeline by not wearing a tie.
How much difference will today's declaration make? Probably none. The Army Corp of Engineers, which has responsibility for some of that red tape, hasn't seen an application from the company yet, the Associated Press reports.
And the delay in the pipeline from Alberta's oil sands isn't just red tape. Nebraska, a state that knows how to vote red, for example, doesn't want the pipeline to disrupt the Sandhills.
, home of the cranes which draw people to the area every year.
This week, the Nebraska Legislature considered a new route for the project.
Canadian proponents of the pipeline urged Obama to approve the northern segment of the pipeline, though they didn't say why nor how Nebraska should give up its concerns.
If you can be carless in Duluth, you can be carless anywhere.
(h/t: Nate Minor)
At $3.69 a gallon yesterday, I finally filled up the official car of NewsCut after two weeks, thus ending an experiment in patience and safe driving.
I wanted to find out how much more mileage I could coax out of the beast. To be fair, I'm not one of those people who guns it when the light turns green so that he can get to the next red light faster. But I was more mindful of all the lessons I was taught as a kid driver when the Arab oil embargo was underway: Drive like there's an egg between your foot and the gas pedal.
I coasted when I could. Tried to adjust my speed between lights to avoid stopping altogether. I accelerated slowly and I drove no faster than 55 mph, all of which probably bothered the SUV drivers who were racing past me at 70 mph or so. I was sure I'd have the last laugh.
Of late, the car -- a 2004 Chevy Cavalier -- has been getting about 27 miles per gallon. The previous fillup in February yielded 27.92 mpg. I figured if I could get two more miles per gallon, I would effectively roll the price of gasoline back to an astonishing level.
How'd it turn out? Because I drove farther once the "fill" light came on (I figured a "lighter" car would stretch the mileage), I bought 12.58 gallons and got 29.49 miles per gallon, an increase of 1.57 mpg, or about 19 "free" miles over previous driving habits. That saved me $2.36 or 18 cents a gallon, making the effective price of the gasoline $3.51, which is also the price of gasoline at several stations in the Twin Cities today.
In other words: big deal. There was some benefit to driving differently, but the only real way to save money is not driving the car. Coincidentally, the American Public Transportation Association reported today that as gasoline prices increased, light rail ridership in the country was up about 5 percent in 2011.
There's a bit of a disconnect between national gas prices and what's going on in the upper Midwest.
AAA's press release on gas prices today says the national average for gasoline is up 2.6 cents since Friday The price has risen for 27 straight days, to $3.77 a gallon, it says.
Not close to the situation in Minnesota. Late last week, the price jumped 15 cents a gallon -- to $3.69, then dropped to $3.59 and over the weekend the price dropped a couple of pennies at some stations.
It's true, the price is trending higher over the last month, but while the U.S. average has seen a steady increase, the gasoline prices in the metro have jumped, fallen back a bit, then jumped more.
Things could be worse. You could be in Wisconsin (the green line).
Check out this chart from TwinCitiesGasPrices.com (click image for more readable version).4 Comments)
U.S. Rep. Allen West is lambasting the Obama administration today because it cost him $70 to fill up the tank on his car.
"Here is the bottom line," he writes on his Facebook page. "Last night it took 70 dollars to fill the tank of my 2008 H3 Hummer, what is it costing you? What does it cost the President to fill his gas tank?"
A Hummer? Who could have foreseen this problem? Just about everyone but Rep. West apparently.
Check out the spec sheet on the Hummer H3 (2008) from the Department of Energy:
If Rep. West bought his Hummer when it was new -- 2008 -- the average price in his district for gasoline was about $3.90. It would have cost him about $90 to fill up his car then.
Even at the lowest price (in his district) since his car was new ($1.62 in December 2008), it would have cost West about $35 to fill up his vehicle (assuming he did so with a gallon left in the tank).
Incidentally in his personal financial disclosure statement, Rep. West doesn't list owning a Hummer. He lists having a car loan on a Mercedes, a model which gets slightly better gas mileage.
If you had to make a choice, which would you choose: Iran with nuclear weapons and us with lower gasoline prices or higher gasoline prices and a disarmed Iran?
The U.S. and other nations have chosen an economic sanctions route in their effort to convince Iran to dismantle its nuclear program. And overnight, Iran responded by cutting off oil shipments to some Western countries.
Overnight in the Twin Cities, gasoline prices jumped about 20 cents a gallon -- to $3.55 -- and it's not because of Iran's action. It's an increase that's been in the pipeline since the price of a barrel of oil began rising several weeks ago, partly because oil investors are worried about the flow of oil from Iran drying up.
But Britain and France aren't big buyers of oil from Iran, and the U.S. doesn't import any Iranian oil so why does Iran's threats mean we pay higher gasoline prices?
Marketplace tackled that question this morning:
The news is pushing up prices partly because the market is concerned that what could follow next would be a further cutoff of supplies elsewhere in the region, including to major European buyers like Italy and Spain and so on. But also fears that as Saudi Arabia increases production to meet the shortfall in demand, that global spare capacity of oil production is starting to fall. And so, in the event of any unforeseen disruption to oil supplies elsewhere, the world may not have enough spare capacity to meet the incremental demand.
Already today, the price of a barrel of oil is up $1.70 -- to $105.30.
What does that mean for the driver? Almost a year ago we tracked the relationship between the price of a barrel of oil vs. the price of gasoline. It's a completely unscientific survey but a year ago the price of a barrel of oil was -- wait for it -- $105 a barrel -- what it is today. And the price of a gallon of gasoline was... $3.55 -- exactly what it is today.
Of course, the price of gasoline trails the price of oil. But it's clear that when a barrel gets to be about $119-$120 a gallon, we'll be paying about $4 for gasoline.
There's one proven method for reversing that trend: Use less oil.(7 Comments)
Gasoline prices, you may have noticed, are rising again. Can you have a recovering economy and lower gas prices? Perhaps it depends on how much war talk is going on.
Many of the experts say the price of a gallon could soon hit $4, and they're probably right. The question is how much higher than that they'll go.
Forbes suggests today that gasoline could hit $7 or $8 a gallon if strike in Saudi Arabia spreads:
"This is another one of those possible flash points in the region," says Georgetown political scientist Paul Sullivan, "that could become a much bigger fire if it is not contained early on."
Sullivan is referring to an internal rebellion in Saudi Arabia.
According to Bloomberg, fighting is getting worse in the east of the country, with police and armed Shia protesters. The protesters killed 11 police in October. Since then, police have killed seven Shia, according to human rights observers.
Here's what makes the situation so volatile: The east is where the Saudi oil is. It also has a majority population of Shia Muslims -- in a nation ruled by Sunni Muslims for the last 80 years. We have been talking about it a lot, but the fact is you don't need an Israeli or U.S. attack on Iran to drive gas prices up dramatically.
Generally, the price of gasoline is pegged to the demand for it, so naturally a warming economy pushes energy prices higher. But Bloomberg says the price has been going up while demand has continued to drop. What gives?
Strangely, the current run-up in prices comes despite sinking demand in the U.S. "Petrol demand is as low as it's been since April 1997," says Tom Kloza, chief oil analyst for the Oil Price Information Service. "People are properly puzzled by the fact that we're using less gas than we have in years, yet we're paying more."
Kloza believes much of the increase is due to speculative money that's flowed into gasoline futures contracts since the beginning of the year, mostly from hedge funds and large money managers. "We've seen about $11 billion of speculative money come in on the long side of gas futures," he says. "Each of the last three weeks we've seen a record net long position being taken."
Refineries have also been getting squeezed by higher crude prices over the past several months, forcing some of them to shut down rather than operate at a loss, says Stevens. "The price that refineries have been paying for crude was roughly flat, while the price they were getting for gasoline was lower than what they needed to make their crack spread," he says. A crack spread refers to oil refineries' profit margins and is roughly the difference between what they pay for crude oil, and what they make by "cracking" crude into petroleum products such as refined gasoline. As the U.S. refining capacity has decreased, prices have begun to rise.
How bad is the current price? When adjusted for inflation, not that bad. Around the Twin Cities, for example, some chains are selling gas for $3.39 a gallon. That's nearly the same price we paid in 1981, when today's $3.39 was equal to yesterday's $1.37 (the 1981 price).(13 Comments)
An announcement from the Environmental Protection Agency could mortally wound the drilling practice known as 'fracking."
The EPA says it has proven that groundwater in Wyoming was polluted with chemicals injected into the ground to release oil and gas.
The draft report counters the claims by the mining industry that fracking does not pollute groundwater, the CBC reported today:
As part of the investigation, the EPA drilled two deep monitoring wells in the local aquifer and found synthetic chemicals, like glycols and alcohols consistent with gas production and hydraulic fracturing fluids. It also found benzene concentrations well above Safe Drinking Water Act standards and high methane levels in the deep wells.
The EPA also sampled drinking water from area wells and found chemicals consistent with migrations from areas of gas production in the drinking water, but stll below established health and safety levels. Nevertheless, health officials advised residents not to drink their water or use it for cooking.
"Given the area's complex geology and the proximity of drinking water wells to ground water contamination, EPA is concerned about the movement of contaminants within the aquifer and the safety of drinking water wells over time," said the draft report on the investigation released on Thursday.
This, of course, will not surprise groups in North Dakota (and elsewhere), who have battled frac operations...
In Texas, some well owners e don't need the EPA to tell them what they already know. They say when a frac mining operation split into a gas deposit, their water became flammable.
But the process also has increased domestic oil production and provided thousands of jobs, especially in North Dakota. In Duluth last week, a local newspaper heralded the process as a boost to the shipping industry.
And there's the battle. In one corner: damage to water and the environment. In the other corner: jobs.(11 Comments)
For all the billions of dollars the U.S. and other nations have poured into the International Space Station, NASA certainly is spending a lot of time issuing "isn't this cool?" videos. And, the space agency is right; this is cool.
But a few weeks ago I went looking for images from space of the Bakken oil field in North Dakota, to see what it looks like from space, given the boomtown nature of things there and the concerns about how much planetary scarring is going on there.
Good luck trying to find images. NASA doesn't have any sort of decent system for reviewing relevant imagery from the space station, even though it passes over us on a regular basis.
But Ken Paulman at Midwest Energy News was on the ball by taking a long look at the "cool" video that NASA put out...
The image Paulman pulled from the video certainly presents a compelling view of how big the oil fields are and, given that some of that light may be caused by the burning of natural gas, what sort of impact the entire operation is having on terra firma.
Here's what a few of those dots of light are...
It's an area under siege. Today, for example, Forum Communications reports that the demand for health care services is beyond what the area can handle.
"We just were not equipped for the influx of young people and families," Matt Grimshaw, chief executive of Mercy Medical Center, told the news organization.
Trauma cases run the gamut: burns, falls, explosions, chemical inhalations, crushing injuries, traffic accidents. It's not uncommon for Trinity's helicopter air ambulance to make three or four runs a day, Sather said.
Also, three of every four burn transfers from North Dakota to Minneapolis are transports from Trinity, Sather said.
Williston's Mercy Medical Center illustrates the dilemmas of growth that have become common among health providers in the Oil Patch.
Only three years ago, the health center's hospital downsized to a 25-bed critical access facility to address what administrators then predicted would be a dwindling and aging population.
Now construction is under way for a 40,000 square-foot expansion to handle outpatient services, including same-day surgery, as well as a new birthing center and two new surgery suites.
Combined, urgent care and emergency room visits have doubled in the past three years, Grimshaw said.
That's something you can't see from space.(7 Comments)
Gasoline prices have been falling lately -- almost 50-cents a gallon -- so it was a surprise today when the Energy Department announced its tapping the strategic petroleum supply in an effort to push the price of gasoline down.
Energy analysts expect the move will mean lower gasoline prices for consumers this summer. That would give Americans more discretionary spending power, helping businesses ranging from grocery stores to ice cream parlors. It will also give manufacturers and truckers a break, because the price of diesel fuel is expected to drop as well.
What will it mean? It means the price of gasoline will drop, then it will go back up again.
Some data earlier this week helps to explain why.
MasterCard reported that the demand for gasoline rose .4 percent from a year ago because the price has fallen...
"As prices continue to fall, gasoline demand seems to have climbed into barely positive territory in year-over-year terms, after the 1 percent to 2 percent declines recorded throughout most of April and May," John Gamel, director of economic analysis for SpendingPulse, said in the report.
It's an intriguing cycle. As prices rise, mostly because of demand, consumption falls, which creates more of a supply with less of a demand, causing prices to fall.
There's no question, of course, that the high price of energy threatens the global economy and the weak recovery from the economic collapse. The blog, The Oil Drum today said that should be enough for governments "to wake up and introduce serious energy policies to deal with the clear and present dangers posed by peak oil."
Christopher Helman at Forbes.com says Americans weren't going to feel the effect of the Libyan oil cut until later this summer, and today's move -- coordinated with OPEC -- indicates a longer term view of what's coming than merely the price of gasoline today.
Markets move based on today's fundamentals and expectations of future supply and demand. The coming months, as we head into the driving season, would likely see the impact of the Libyan crisis felt most keenly; this is why the IEA is acting now. Some producer countries have announced their intentions to raise production, but it takes time for these incremental barrels to be produced and shipped to consuming markets. The use of IEA strategic stocks now will help bridge the gap until these new supplies are available. The IEA will continue to monitor the situation. If supply remains disrupted and markets remain tight in the future, the IEA does not exclude another decision to make additional supplies available to the market.
There's another angle to all of this, of course. Politics. Jay Hancock's economic blog at the Baltimore Sun smells something that's not oil.
This isn't what many people believe the petroleum reserve is for. It's widely thought of as being there for true emergencies such as war and severe supply shocks. This isn't as nakedly political as if reserves had bene tapped in summer 2012. Nevertheless, the political overtones could hurt Obama
If you know the price of a gallon of gasoline at a pump is wrong -- it's too low -- do you pump and run or do you tell the clerk that it's wrong?
If it sounds familiar, you've probably been reading News Cut since we started it in 2007 because one of the first posts was about a gas station near Rhinelander, Wisconsin where the pump price was set at $.33, instead of $3.29. Let's just say that a lot of Wisconsinites did not distinguish themselves.
It's happened again, this time in California. A gas station operator incorrectly inputted the price into the computer, and the pump defaulted to $1.10 a gallon. People lined up quickly at the Los Angeles gas station and the operator lost $21,000.
The owner says he hopes people will come back and pay him the real price.
What would you do?
There's nothing pretty about utility poles and lines snaking around urban neighborhoods. Can a solar panel really make it worse?
Apparently so, at least in New Jersey, the second-most-solar state in the country. The utility company is putting small solar panels on utility poles and people in Bergen County aren't happy about it.
"I hate them," Eric Olsen of Oradell told the New York Times. "It's just an eyesore."
I looked up Mr. Olsen's address and loaded it into GoogleMaps. It's easy to see why he'd think ill of the devices. He's got a lovely neighborhood. Just wait until they have to start cutting the trees to allow the sun to hit the panels....
But the general complaint about the panels is common when it comes to alternative energy. It's different and thus constitutes "an eyesore."
The people of one upscale neighborhood in Woodbury successfully fought a wind turbine that would've provided much of the power needed at a new high school a few years ago. None of the homes were within four or five city blocks. It would be an eyesore, they said. The city agreed.
But this runs through the same property and nobody seems to notice...
We generally don't like people "moving the furniture." Things that take some getting used to aren't what we're used to.
Have you traveled along I-94 in the Monticello-St.Cloud area recently? More than 150 huge transmission towers are going up as part of the CapX 2020 project. The next phase will add towers all the way from St. Cloud to Fargo. They're 140-170 feet tall and are spaced every 1,000 feet. They're an eyesore, perhaps as much as when I-94 first bulldozed its way across the state.
Ten years from now, we probably won't notice they're there. Until someone sticks solar panels on them.
(Utility pole photo from sameold2010 via Flickr)(10 Comments)
Not that I could tell from the number of people racing by me as I drove at 55 mph into work today, but Minnesotans are up in arms over the price of gas and it's crippling their finances. A gallon of gas is going for an average of $3.95 today (it's $4.08 at one station in Burnsville, according to twincitiesgasprices.com.
This week the major oil companies are scheduled to report their first quarter income and it's expected to reveal high profits, which should spawn another round of complaints from politicians.
What goes into the price of a gallon of gasoline? Here's an interesting graphic from PBS' NewsHour.
Let's see if these numbers work.
A barrel of oil today is going for $111.42 a barrel, which is 42 gallons. That's $2.65 a gallon.
At today's price, 14% for refining is 55 cents. (Total so far: $ 3.20)
Eight percent for distribution and marketing is about 32 cents. (Total: $3.54)
And 13% for taxes is 51 cents, for a total of $4.05, or 10 cents more than we're actually paying (Minnesota's gas tax is about 27 cents, and 15 cents is credited to a wholesaler to encourage ethanol manufacturing. The federal tax is about 18 cents a gallon).
What can be done? As the famous maxim goes, "the cure for the high price of oil is the high price of oil." Use less. Slow down.(12 Comments)
Twin Cities gasoline prices got a real jolt today went the price of a gallon of gasoline jumped by more than 20 cents a gallon, to $3.80.
The last time we were in this territory was August 2008.
It's not terribly hard to figure out what's up: Higher oil prices for one.
|Minnesota Historical Gas Price Charts Provided by GasBuddy.com|
Experts says the commodity jumped on reports the war in Libya could last for months, possibly years. Libya is responsible for about 2 percent of the world's oil supply. But refiners are also switching to their "summer blends," for the summer driving season.
This is a good time to resurrect our gas price calculators. Some of these are outdated but one of my favorites is still the one that calculates whether it's worth driving a little farther to save a few pennies a gallon.(5 Comments)
The terrible situation with Japan's nuclear installations affords old-timers the opportunity to remember when it was a U.S. nuclear plant that was melting down.
It was 1979, when the Three Mile Island plant, on the Susquehanna River south of Harrisburg Pennsylvania, melted down partially. The U.S. wasn't really sure how to react; we'd never heard of a nuke plant melting down before.
But it was a movie -- The China Syndrome -- that helped push us in an anti-nuke direction. It was released 12 days before TMI melted down:
In the middle of the film, a reference is made to the size of the area that would be affected if the fictional plant in the film melted down. "It would be the size of Pennsylvania," it said. Whoops.
The movie -- and TMI -- helped kill the notion of new nuclear power plants in the U.S., even though the actual damage was relatively small.
History, it appears, is repeating itself. Germany today shut down all of its pre-1980 nuke plants while it reconsiders its nuclear strategy.
The design of Japan's Fukushima Dachaii plant is the same one used by 16 power plants in the U.S., including the plant in Monticello, Minnesota.
Is the fear overblown? It doesn't matter, a UK professor tells the BBC. "In a crisis the emotional takes hold and no matter how logical and compelling the rational arguments are, the emotional wins out," he said.(3 Comments)
Like the rest of the world, we're watching the situation with the Japanese nuclear power plant, which exploded overnight. It does not appear at this point that it was a nuclear reaction.
The English-language Russia Today had its cameras trained on the plant when the explosion happened:
Late last night, there were claims that it was possible the nuclear core would melt. The BBC explains:
You can think of the core of a Boiling Water Reactor (BWR), such as the ones at Fukushima Daiichi, as a massive version of the electrical element you may have in your kettle.
It sits there, immersed in water, getting very hot.
The water cools it, and also carries the heat away - usually as steam - so it can be used to turn turbines and generate electricity.
If the water stops flowing, there is a problem. The core overheats and more of the water turns to steam.
The steam generates huge pressures inside the reactor vessel - a big, sealed container - and if the largely metal core gets too hot, it will just melt, with some components perhaps catching fire.
In the worst-case scenario, the core melts through the bottom of the reactor vessel and falls onto the floor of the containment vessel - an outer sealed unit.
In the absense of a Chernobyl-type disaster in decades, nuclear power has been making a comeback. In Minnesota. One of the first bills pushed by the new majority at the Minnesota Legislature was the repeal of the state's ban on new nuclear power plants.
A House-Senate conference committee has been meeting in recent days to work out an agreement on the bill, which -- if one is reached -- would then go to the governor.
Now the question is whether what's happening in Japan rejiggers the debate.
Oil prices can be moved by geopolitics, the value of the dollar or Chinese demand. Gas prices can be moved by oil prices, refinery problems or even weather that might keep drivers at home. For example, gas prices are expected to rise in the next few weeks as refiners switch from cheaper winter blends to more expensive summer ones because the warm air makes gas evaporate faster.
|Date||Price of a barrel of oil||Retail price of gasoline|
With uprisings continuing to sweep across the Middle East, there wasn't much in today's first hour of MPR's Midday to make us think someone at the Pentagon isn't dusting off plans to take over Saudi Arabia's oil fields. You know, just in case.
Michael Barnett, author of "Dialogues in Arab Politics," seemed to stun even host Gary Eichten -- and, presumably, much of the listening audience -- today when he matter-of-factly described a scenario for any uprising in Saudi Arabia by forces not friendly to the United States.
"What defense strategists have planned," Barnett said, "is if we were to see a rebellion ... If the Saudi government were to topple, it would not necessarily break in a way that the Americans would favor. The contingency plans would be to try to go in and... not take over the government, but try to protect the oil fields. So the expectation then is that American troops would be dispatched to protect those oil fields and control them and basically claim jurisdiction over them until you can begin to have a stable government that is moderately pro-U.S. or at the very least is willing to sell Americans oil."
Those have been the plans since the 1973 Arab oil embargo, according to Barnett. "That's not a new strategy," he said. No, but it's one that seems more possible these days.
The good news, according to an NPR report today, is that Saudi Arabia is a different beast than other nations in the region:
Thomas Lippman, an analyst at the Council on Foreign Relations who has written extensively on Saudi Arabia, says he strongly doubts that there will be unrest in the kingdom "because no one questions the legitimacy of the regime, and the king is personally popular." Yes, Saudi Arabia has problems, Lippman says, "but the place is not stagnant as Egypt was. Everyone knows there is going to be change in the next few years" as the older members of the royal family die off.
There have been a few, very limited signs of unrest in Saudi Arabia -- isolated reports of Saudis demonstrating for better pay, some criticism of the royal family on the Internet, heated political discussions among the country's large Shiite minority. These incidents, and the general sense of uncertainty hanging over the entire Middle East, are already driving the price of oil upward.
Barnett's segment on Midday is well worth listening in its entirety, if only to begin to understand the complexities facing the United States and the realities it faces in the region. For example, one caller -- Hassan -- called to say Libya presents a "great opportunity" for the United States to show the Arab world that it cares about people by intervening militarily in the strife (mighty generous with other people's kids, there, Hassan).
"If you intervene in Libya, then why aren't you intervening in Bahrain? Or are you simply giving encouragement to the green revolution in Iran, and encourage protesters in Iran to believe there might be an American intervention and embolden them when in fact the United States might have no interest in intervening militarily to protect protesters in Iran," Barnett said.
"I'm all for the U.S. being a force for good," another caller said, "I wonder about the extent to which the U.S. is viewed in the world, if we were to plop down 20,000 soldiers in Libya, I think it would be widely perceived as a power grab for Libya's oil."
"If the Americans were to go charging in, they'd be stigmatized," Barnett acknowledged. He said the U.S. would have to take a backseat to the Europeans, who don't like taking "a command position."(1 Comments)
Democracy comes at a price. Today it's about $3.29. That's the average price of a gallon of gasoline in the Twin Cities today, a 16 cent jump in the last 48 hours and it's going to go higher.
Today, oil prices raced past the $100 a barrel, the highest price for oil in two years. At the heart of it is fear that the democratic wave spreading throughout the Middle East will increasingly affect oil supplies. In other words, everyone's quietly wondering if Saudi Arabia is next.
Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, told CBS that he expects a peak of between $3.25 and $3.75 per gallon of gasoline, a prediction that already seems outdated.
There's a lot more than the price of oil that goes into the price of a gallon of gasoline, but when one goes up, the other seems to go up immediately, too. The last time crude oil went over $100 was September 2008. People here in the Midwest were paying $3.94 a gallon for gasoline then.
In either case, we're back to the days of figuring out how to scrimp our way to another fill-up, What's your pain threshold?(13 Comments)
A divided Minnesota Supreme Court ruled today that two Wabasha County farmers can seek money from an electric utility, whose stray voltage, they say, has caused their cows to give out less milk (see opinion). The stray voltage is also believed to have killed 80 dairy cows.
In upholding a lower court's ruling, the Supreme Court said Greg and Harlan Siewert of Zumbro Falls are free to seek damages from Northern States Power Company, the parent of Xcel Energy. When the two moved to their new farm in 1989, they noticed the milk production decreased from their 150-200 cows. Experts said it was because electrical current returned to the ground through the cows.
"It's a slow, painful tortuous death, is what it is for them," Greg Siewert told the Star Tribune in 2008. "It's like watching someone die of AIDS."
The court rejected the utility's claim that any damages would impact electricity rates in violation of state law, especially if it had to redesign its electrical distribution system.
In her dissent, Chief Justice Lori Gildea wrote, "the judiciary is not in the position to order NSP to adopt one electrical distribution system over another without potentially undermining the nuanced balancing and determinations made by the Minnesota Public Utilities Commission..."
She acknowledged, however, that "NSP did not deliver electricity in the safest or most prudent way."
The effect of stray voltage on cows has been a controversy in Minnesota since farmers started raising the issue in the 1990s. About a half-dozen farmers have filed suit over the years against utility companies.
In any boom, it takes some time for small towns to adjust. This week, a five-part documentary on cable examines the effect of the North Dakota oil boom on tiny Parshall, North Dakota, the Fargo Forum reports today.
"When you hear the story on the surface, you think it's just all good fortune and very easy, and I think it was much more complicated than just that," the documentary's executive producer says.
MPR's Dan Gunderson staked out another town in the region last fall, and found that as the revenues rise, so do the rents. Anytime you have winners, you probably also have losers. Some people have found work, but not an affordable place to live. Others have left town.
And because of infrastructure improvements, many towns are taking on long-term debt to expand now.
A fight may be brewing over light bulbs.
The incandescent is likely to be replaced between 2012 and 2014 by new energy standards for light bulbs, under a bill signed by President George W. Bush in 2007. It's led to claims the incandescent was to be banned in the U.S. It's not. There are provisions in place for the production of them for such things as oven and refrigerator lights. And if the incandescent can meet the energy standard, there's no reason they can't be sold.
Today, a group of Republican lawmakers at the Minnesota Capitol introduced legislation that would authorize the use and sale of incandescent light bulbs, if they're manufactured in Minnesota.
It's a Constitutional argument:
Subdivision 1. Legislative findings. The legislature finds that:
(a) The Tenth Amendment to the Constitution of the United States guarantees to the states and their citizens all powers not granted to the federal government elsewhere in the Constitution and reserves to this state and the citizens of this state certain powers as they were understood at the time this state was admitted to statehood.
(b)The Ninth Amendment to the Constitution of the United States guarantees to the people rights not enumerated in the Constitution, including rights as they were understood at the time this state was admitted to statehood.
(c) The guaranty of those powers and rights is a matter of contract between this state, the citizens of this state, and the United States as of the time that the compact with the United States was agreed to and adopted by this state and the United States.
(d) The regulation of intrastate commerce is vested in the states under article 1, section 8, Constitution of the United States, and the Ninth and Tenth Amendments to the Constitution of the United States.
It's not clear if any light bulbs are currently made in Minnesota, but that's not the point of the legislation. Besides, there's an effort to improve the efficiency of incandescents so they meet the new standards.(8 Comments)
It may be, perhaps, symbolic that one of the first bills at the Legislature this year to get consideration in committee was the bill to lift the state's moratorium on new nuclear power plants. A similar bill failed last session.
The moratorium has been in effect since a highly emotional debate in the early '90s over Xcel Energy's (then Northern States Power) request to increase the amount of nuclear waste that it's allowed to store at the Prairie Island nuclear plant near Red Wing.
Few citizens testified on the bill today, however.
"Utilities don't have a need for additional base power plants," Bill Grant of the Izaak Walton League told a House committee. "No new jobs will be created. However, lifting the ban will create real risks. Utilities will assess ratepayers for plants that may never be completed."
Victoria Winfrey, of the Prairie Island Community, said "no other community in Minnesota should have to live in the fear of a nuclear plant the way our community does... Until a permanent national solution for dealing with nuclear waste is found, we oppose lifting the moratorium on new nuclear plants."
But a representative of the Red Wing City Council countered her. "The fact is nuclear moratoria are not the reason nuclear power is stalled and will continue to remain so," Dan Bender said. "The problem is the federal government has not fulfilled its decade-long promise to remove the waste." He called on the Legislature to direct the state's attorney general to sue the federal government.
"The city believes in removing the moratorium, you should take the opportunity to engage in the debate about nuclear power," he said.
William Heaney of the International Brother of Electrical Workers, said the bill won't have "much practical effect" either way but he said he considers it symbolic to "get it off the books."
Bill sponsor Rep. Joyce Peppin, R-Rogers, "I have young kids and I'm concerned about their energy needs in the future... U.S. nuclear capacity will fall off and be non-existent by mid-century. Our energy needs are increasing by 25 percent. That need has to be met somehow. Where are we going to get that baseload power? We have a moratorium on coal in Minnesota as well. So now we have a moratorium on coal and nuclear power... My constituents want to be able to turn on lights and have warm houses."
Peppin said lifting the moratorium doesn't mean "we start constructing a new plant tomorrow."
Rep. Jean Wagenius said Peppin is promoting the most expensive form of energy.
The bill was passed and moved to the Commerce Committee. One DFLer crossed over to vote with Republicans. Find the roll call vote here.(24 Comments)
All of these policies raise gas prices at the pump by either: 1) decreasing the availability of domestic energy supplies, or 2) increasing regulatory costs on gasoline production.There's certainly an argument to be made that energy policy has an impact on energy prices, but this one seems particularly aimed at those who aren't interested in a more intellectual look at the complicated world of commodities.
President George Bush was no saint when it came to free market energy policies either. He mandated the use of ethanol, put off opening up the Outer Continental Shelf till the end of his second term, supported the expansion of renewable energy tax credits, tried to subsidize the nuclear power industry, and caved into environmental pressure by allowing the EPA to begin the global warming regulation process.
|Dates of recession||Price at beginning||Price at end||Difference|
|12/07 - 6/09||$3.06||$2.34||- 24%|
|3/01 - 11/01||$1.38||$1.12||-19%|
|7/90 - 3/91||$1.23||$1.05||-15%|
|President||Price at beginning of term||Price at end of term||Difference|
|Bush - 2nd term||$1.83||$2.70||+48%|
|Bush - 1st term||$1.45||$1.83||+26%|
|Clinton - 2nd term||$1.23||$1.45||+18%|
|Clinton - 1st term||$1.05||$1.23||+17%|
|Obama - 1st term*||$2.70||$3.03||+12%|
General Motors picked a great day to roll its first Chevy Volt off the assembly line. The price of gasoline in the Twin Cities jumped overnight to near $3 a gallon. This is the highest price we've seen since the economy collapsed in 2008.
|Twin Cities Historical Gas Price Charts Provided by GasBuddy.com|
Is the Volt the answer to higher gas prices? Maybe. But when it came off the assembly line today -- it'll be in showrooms in a few weeks -- it came with a price tag of about $41,000.
It also came with broken promises. The EPA says the car will get about 60 miles per gallon when it's using its electrical and gas systems. But after about 50 miles or so, it's a pretty ordinary car, according to PC World:
According to the EPA, Volt drivers will only be able to get around 35 total miles of operation before the car's battery goes kaput and the gas engine takes over. After that, you'll be able to continue on for around 344 miles gas-only, but the car's fuel economy drops to around 37 miles per gallon sans electrical assistance.
That's a substantial drop in performance from the promises GM made about the Volt. Early predictions were it would get more than 200 miles per gallon. And it still might if you drive only short trips and are able to tool around town on battery-only.
But don't expect to negotiate much with the dealer. GM will only make about $1,000 on each car.
Gas mileage hasn't been a big concern for a few years now, but from the indications on the signpost today, that's about to change.
Yesterday, the head of British Petroleum (BP) charged that the media and politicians overplayed the oil spill in the Gulf of Mexico. It might have been a pre-emptive attack.
"I watched graphic projections of oil swirling around the gulf, around Florida, across and around Bermuda to England - these appeared authoritative and inevitable. The public fear was everywhere," Bob Dudley said.
The pushback may have something to do with a documentary airing on PBS tonight. Frontline and ProPublica have been looking at the environmental record of BP. Here's an excerpt from The Spill.
Pro Publica has just posted its investigative story, documenting the failures of BP and comparing it to other oil companies who do business in the U.S.
The investigation found that as BP transformed itself into the world's third largest private oil company it methodically emphasized a culture of austerity in pursuit of corporate efficiency, lean budgets and shareholder profits. It acquired large companies that it could not integrate smoothly. Current and former workers and executives said the company repeatedly cut corners, let alarm and safety systems languish and skipped essential maintenance that could have prevented a number of explosions and spills. Internal BP documents support these claims.
The Pro Publica investigation also turned up an EPA lawyer, who weighed whether BP should be barred from doing business with the federal government. Though the U.S. gets 19 percent of its military fuel supply from BP, she pressed for "disbarment."
"I have to conclude that BP has a corrupt culture, and had I arrived at that conclusion while I was handling the case I would have immediately debarred them," she said last week. "I would have just let the chips fall where they may."
The EPA lawyer, however, fell in an elevator and has since retired. No action has been taken on the BP case since.
So you planted a tree or two in a fit of "green"? Now you went and did it. You might be messing up the potential of wind energy, some scientists say.
Robert Vautard at the Laboratory of Climate and Environmental Sciences in Gif-sur-Yvette, France, analyzed surface wind speed data from around the world over the last 30 years and they've found surface wind speeds have declined by 5 to 15 per cent. They're blaming vegetation.
A manufacturer of wind turbines says, however, that he sees no correlation between wind speeds near the ground and those at the height of the turbines.
By the way, here's the wind speed data for Minnesota in 2006 at 250 feet off the ground:
If a farm state is turning its back on E-85 gasoline, what is its future?
South Dakota has stopped using E-85 in its state fleet after determining that it costs 13-percent more than the regular gas. Instead, it's going to try E-30.
What's the problem? E-85 doesn't provide particularly good mileage.
Says the Daily Republic:
E-85, a blend of approximately 85 percent ethanol and about 15 percent gasoline, typically is much cheaper in price per gallon in South Dakota than conventional E-10 blend or regular unleaded gasoline.
However, the bureau's study found that the price difference wasn't enough to overcome the substantially lower fuel mileage using E-85.
South Dakota isn't the only corn state to reconsider E-85. In Iowa, E-85 sales are falling, even though the number of vehicles that can use E-85 is increasing.
(h/t: Midwest Energy News)(6 Comments)
Just one question: Where's the oil?
News organizations are gleefully reporting today that most of the oil that we saw gushing out of that broken well for nearly three months has "disappeared." It's petroleum magic.
The rosy assessment comes from a science report issued today by the Department of the Interior. It said:
In summary, it is estimated that burning, skimming and direct recovery from the wellhead removed one quarter (25%) of the oil released from the wellhead. One quarter (25%) of the total oil naturally evaporated or dissolved, and just less than one quarter (24%) was dispersed (either naturally or as a result of operations) as microscopic droplets into Gulf waters. The residual amount -- just over one quarter (26%) -- is either on or just below the surface as light sheen and weathered tar balls, has washed ashore or been collected from the shore, or is buried in sand and sediments. Oil in the residual and dispersed categories is in the process of being degraded. The report below describes each of these categories and calculations. These estimates will continue to be refined as additional information becomes available.
NOAA Administrator Jane Lubchenco says there's no oil on the sea floor, either.
Rice University Chemical Engineering Professor Dr. George Hirasaki said, "It doesn't surprise me because I understand the effect of aging on crude oil." He told KTRK TV in Houston that the Gulf is prime habitat for oil-eating creatures. "It's relatively light oil and the Gulf of Mexico is much warmer than Alaskan regions, so you get a lot of biodegradation," he said.
So after three months of hand-wringing over the environmental disaster now and in the future, we're being told "never mind"?
Still, if you use the government's calculations, 51.5 million gallons of oil is still below the surface. It hasn't disappeared. It hasn't disperesed. And it hasn't been eaten up by tiny oil-loving creatures. That's still nearly five times the oil spilled in the Exxon Valdez disaster in Alaska, the previous record-holder for oil disasters in the U.S.
It'll be interesting to hear Science Friday on MPR on Friday to find out why so many predictions and assessments for the spill's effects were so wrong.(1 Comments)
The Freedom Foundation of Minnesota sent out a press release today noting that two Minnesota communities -- Woodbury and Eagan -- were singled out in a report "Summertime Blues, 100 stimulus projects that give taxpayers the blues." It was put together by Sen. John McCain and Sen. Tom Coburn.
Both communities installed geothermal heating systems in ice rinks.
In Woodbury's case, the system was built at the sprawling Bielenberg athletic complex.
Says the report:
When it comes to keeping the local ice rink up to date, Woodbury, Minnesota does not plan to just skate by. Woodbury has allocated more than $2.3 million to upgrade its heating systems at a local ice rink, using $503,900 in stimulus funding. Funding was provided by the Department of Energy through the energy efficiency block grant program to help install a geothermal heating and cooling system that would, among other things, "prevent heat from the roof from warming the ice surface," and "provide heat for the west rink spectators."
The phrase "among other things" invites the obvious question: What other things?
In Woodbury's case, the other things was the main thing: Saving taxpayers' money. According to a January article in the Woodbury Bulletin, the project will save more in energy use alone than the investment.
Bob Klatt, city parks and recreation director, said Woodbury expects $3.9 million in energy savings over 20 years. That should be achieved by eliminating the use of natural gas, reducing electricity use and cutting back operational costs because the new system is automated.
Whether a $3.9 million return on a $2.3 million investment (most of which was bonding money, by the way) is a good deal is worthy of scholarly debate, but it was more than just spending stimulus money for the benefit of a few tushes.
Shouldn't the critical elements of the discussion be pointed out in any evaluation of the investment?(5 Comments)
Tom Bodett would not be happy with Brainerd, Minn.
The City Council there voted to keep about a quarter of the city's 1,600 street lights dark, despite complaints from many residents.
The city would save $74,100 a year by keeping the lights off, according to a city official.
According to the Brainerd Dispatch:
Council members who toured the city on June 29 and June 30 with [Brainerd Public Utilities] officials said they found several areas where lights can be turned back on.
"Most of the areas were OK," said council member Lucy Nesheim. "Some were definitely, what some people would call ... spooky."
In 2009 Northfield, Minn. looked at adding a streetlight utility fee (pdf) to help address smaller amounts of local government aid from the state.
Other cities across the country have also flipped off the switch on their street ights, according to USA Today.
"Streetlights are more expensive than people realize," Northfield Mayor Mary Rossing says. Her city spends about $230,000 a year on street lights.
Would you mind if your city turned off your street lights to save money?
Brainerd and Northfield are not the only Minnesota city looking for ways to trim expenses.
The Royalton City Council voted to reduce the number of its meetings to once a month (having met twice a month for more than 30 years). That would save about $5,600 a year, according to council members.
But so far, nothing I've found has topped Edina's cost-saving effort of ending its free doggie-bag program -- which cost about $12,000 a year.
What has your city done to save money recently?
A study finds 75 percent of desktop computer electricity use occurs when no one is actually using their computer.
As it usually does, the Boston Globe's Big Picture blog does a masterful job of organizing the finest images from the Gulf of Mexico oil spill.
One might feel somewhat guilty noting the beauty in the disaster.(2 Comments)
The giant oil spill from the BP-leased oil rig in the Gulf of Mexico is apparently having no effect at BP's convenience stores.
The Associated Press reports a check of BP stations around the country shows no drop in gasoline sales or any indication that the brand has become "toxic."
BP spokesman David Nicholas said the company hasn't told gas stations to cut prices. He said he doesn't know if BP-branded stations had done so on their own. "But I'd find that highly surprising," he said.
No kidding. The per-gallon price of gas at BP stations in Minnesota ranges from $2.79 at one station (Le Suer) to $2.95 a gallon in the Twin Cities, according to minnesotagasprices.com.
The average statewide price of all gas stations is $2.93.
The ethanol industry is fighting back against attempts to curtail billions of dollars in tax credits for ethanol companies that expire at the end of the year. The industry this week unveiled a series of ads aimed chiefly at big oil.
But ethanol has bigger opponents than oil these days. Brazil, for example, is lobbying Congress to reduce tariffs on ethanol made with sugar cane, which it says is more environmentally friendly than ethanol made with corn (as it is in Minnesota).
The Environmental Working Group notes that trees are cut down in Brazil to make way for sugar cane. And, it claims, the ethanol industry here takes credit for creating jobs that already existed:
The most egregious example comes in studies sponsored by another ethanol lobby group, the Renewable Fuel Association (RFA).2 The RFA consultant allows corn-ethanol to take credit for all the economic activity generated by growing corn, which was happening in commercial bulk long before the advent of ethanol. Over half (53%) of the jobs credited by the RFA consultant as being created by the corn-ethanol industry are in fact jobs that already existed for growing the corn that was already being produced for food and feed. Independent analysts rightfully criticize the RFA for dramatically over-estimating the employment impacts of their industry.
Other jobs that the industry did create in Minnesota are disappearing. An ethanol plant in Buffalo shut down just last week.
And Minnesota is cutting its subsidies to ethanol producers. Producer payments were cut by $4.4 million in order to help plug the large budget deficit in the state.
It's a big fall for the industry, which brought big profits to farmers in the early part of the decade and had as much political clout as any industry in the country.(2 Comments)
A person who seemed perturbed that I made fun (on The Current) of Minnesota's computer servers (some of which crashed under the weight of the Cash for Appliances program) nonetheless gave me some valuable information this afternoon which might help analyze whether this program makes any sense for anyone other than those who are getting money to buy appliances.
Just a note to let you know that I got on the state's crashing website (www.mnappliancerebate.org) this afternoon about 3:30 p.m. (after being unsuccessful earlier in the day, through either the website or the phone number) and I was successful in reserving my $150 dishwasher rebate. About 43% of the rebate money had been committed at that time, so they must have been somewhat successful in processing requests for the rebates.
Hand me a pen and that napkin!
Forty-three percent of the money committed would be $2.15 million handed out today. Let's -- somewhat generously -- assume that most of the appliances being purchased are dishwashers or washers... things that use a fair amount of electricity.
Let's also assume that the average rebate is between $50 and $200 -- $125. That means that our friend is one of 17,200 people who got rebates today.
How much electricity does a new appliance save over an old appliance? According to the federal government:
Energy savings will depend on the specific appliance and model being replaced, but new ENERGY STAR appliances save significantly more energy than those manufactured years ago. For example, replacing a clothes washer made before 2000 with a new ENERGY STAR model can save up to $135 per year. Replacing a refrigerator made before 1993 with a new ENERGY STAR model can save up to $65 per year.
These numbers are somewhat different than what's provided by the National Resources Defense Council, which says $100 savings for refrigerators, $110 for clothes washers, and $25 for dishwashers. The average works out to about $78 there. $70 with the fed's numbers. Fine, let's go with $75 annual savings.
So 17,200 people in Minnesota will save $1.29 million. The energy savings costs will offset the taxpayer contribution effort in a little under two years. The offset to the customer's cost would be at least twice that.
The energy-efficient appliances use about 25 percent less electricity and the utility companies say saving energy keeps them from having to build power plants.
A dishwasher (I've chosen the appliance between the energy-hogging water heater and the pretty-efficient refrigerator) uses 112 kilowatt hours per month if it's used every day and if you choose to heat the water (a third of that if you don't).
17,200 people, then would use 481,600 fewer kilowatt hours per month than they are without the new appliances..
A typical 500 megawatt coal plant produces 3.5 billion kilowatt-hours per year, according to the Union of Concerned Scientists. That's 399,543 per hour. So the new appliances purchased with today's rebates will save about about an hour and 12 minutes of generating time a year at the local power plant.
Your mileage may vary.
Here's today's news conversation with The Current's Mary Lucia that got us onto the topic.5 Comments)
Quietly, the price of gas is heading toward painful levels, and the law of supply and demand is being tested.
In our last big oil price run-up, we heard the problem was the rapidly expanding economies of China and India are requiring more oil. The U.S. Energy Information Bureau notes demand for gasoline is actually dropping in the U.S., and yet the price is going up.
The price jumped almost 10 cents a gallon -- to $2.75 at the big stores -- on Tuesday, according to TwinCitiesGasPrices.com., about $1 a gallon higher than a year ago. Unlike the previous run-up, the Twin Cities exceeds the national average price of gasoline.
Today the government announced the amount of gasoline put into storage was triple what most analysts had forecast. It's too cold for many people to drive, some analysts said.
"Between the API and the EIA numbers, this is not adding up to much of an argument for crude above $82 a barrel," said Addison Armstrong at Tradition Energy in Connecticut.
Remember this? It's the coal ash spill in Kingston, Tenn., in December 2008. When an earthen dam gave way, more than 1 billion gallons of gray, toxic sludge inundated hundreds of acres.
It prompted the Environmental Protection Agency to find out how many sites out there are holding the toxic leftovers -- coal ash -- from the nation's power plants.
Now, the results are in. The EPA says there are 600 of them spread around 35 states. Four of the sites are in Minnesota.
Black Dog Generating Plant, Burnsville
Has four holding ponds, but only one has small amounts of coal ash, according to Xcel Energy. The company says it could find no evidence the dikes at the ponds were built with the help of a professional engineer. There has been no federal or state inspections.
Riverside Generating Plant, Minneapolis
It's in the process of being converted from coal to a gas-fired facility. A pond on the site will be eliminated this year or next. It contains a small amount of ash particles, the company said.
Sherburne County Generating Plant, Becker
The plant uses three ponds for coal ash from three plants. One is being closed and capped and the water is being pumped out. They were designed by a professional engineer, and the Department of Natural Resources inspected the operation in June 2008. The company says it has found no evidence of spills to water in the last 10 years, and two released to land over that time.
All of these are owned by Xcel. Here's the documentation submitted to the EPA.
Minnesota Valley Generating Plant, Granite Falls
Xcel reported the plant is not operating and hasn't generated "significant" amounts of coal ash for more than 10 years. When it does, four ponds are used. It says it could not locate records of a professional engineer being used, nor records of the ponds being inspected. It says it knows of no known spills but says the ponds were flooded in the Minnesota River floods of 1997 and 2001 and coal ash could have been carried away.
Here's the documentation on this plant.
There is no regulation of the residue produced by coal-burning power plants.
In a 2007 article, Scientific American said the the waste produced by coal plants "is actually more radioactive than that generated by their nuclear counterparts. In fact, the fly ash emitted by a power plant--a by-product from burning coal for electricity--carries into the surrounding environment 100 times more radiation than a nuclear power plant producing the same amount of energy."(2 Comments)
If you want to see the future, look toward Europe.
On Tuesday, the ban on incandescent light bulbs begins in the EU, the New York Times reports. It's part of an attempt to limit greenhouse gases but the debate continues over whether the cure is just as bad.
Any substantive conversation about the U.S. ban disappeared when Rep. Michele Bachmann filed a bill to delay implementation, not so much because there aren't some legitimate concerns about the replacement, but -- let's face it -- because it was Michele Bachmann.
But there are some concerns about the CFL bulb, even beyond the mercury content. Stick one in your garage door opener bulb socket sometime. It doesn't last very long. I tried. Several times. What about the little light bulb in your fridge? Or your oven? Or work lights (Don't talk to me about those LED work lights; I tested one of those -- for $35 -- this year and next to the day I got married and the day my children were born, the day I tossed that junk in the trash was the happiest day of my life)? CFL bulbs have improved, but not by a lot. LEDs may be the answer in some applications -- autos, traffic signals, Christmas lights -- but not a lot of everyday ones.
There maybe be a solution on the way. NPR has the story this evening about a firm that is making a hybrid incandescent bulb that uses less electricity than the the CFL. Expensive? You bet.
But back to the UK for a minute. The government has asked people to keep an eye on shopkeepers who still sell incandescents. Some are said to be importing the "illegal" bulbs from China. And that brings up another likely problem when it disappears from the U.S. scene -- the underground bootlegged incandescents. Incandescent speakeasies. Mysterious men in overcoats who whisper, "Psst, buddy. Want to buy a light bulb?"
Which is why I'm stocking up. It could be the answer to my 403B woes.
(Light bulb photo above:
Just when Minnesota raised its gas tax for the first time in more than 20 years, the gas tax may be heading for the ash dump of history.
That's probably overstating the future a bit but momentum is increasing to charge people based on the number of miles they drive. The University of Iowa has been given a federal grant to determine whether billing people for the miles they drive makes more sense.
The problem with the gas tax is cars are getting better mileage and people are driving less because of high prices.
There's money to be made here. The project is looking for people to participants in the 10-month study. Small computers will be attached to their cars and they'll be sent mock invoices. They'll also make up to $895, the Chicago Sun Times reports today. Unfortunately, Twin Cities or Minnesota drivers aren't part of the study.
The study is also another example of the left hand not knowing what the right hand is doing. The federal government has given the university the money to study the idea. President Obama has already said he won't pursue it.
But the idea could become the new census. The primary opposition to it comes from privacy interests. "There is a real concern on the part of many in the public that this is the ultimate of Big Brother watching and knowing where you are," says Kansas Transportation Secretary Deb Miller.(13 Comments)
My MPR colleague, Bill Catlin, has forwarded what appears at first glance to be a stunner story from Dow Jones. The U.S. Chamber of Commerce is calling for an increase in the gas tax. Business and tax increases are not long-time allies.
"Just damn do it," Chamber President Thomas Donohue said Wednesday at a news briefing. According to a press release from the pro-business group, "he called on Congress not to delay action on a new highway bill as the Obama administration has proposed. Wednesday, the Senate Energy and Public Works Committee backed a plan to put off debate on new highway funding for 18 months, extending current funding levels until then."
The federal tax hasn't been increased since 1993. Washington lawmakers are worried about the political backlash of a gas tax increase. To recap: Politicians don't want to raise taxes; a business group does.
But it may not be that unusual for the Chamber and the gas tax to be friends. When the Minnesota gas tax was raised by the Legislature in 2008, it only gained traction after the Minnesota Chamber of Commerce endorsed the idea. It took cutting the size of a proposed increase in the metro sales tax in the transportation bill, though, to get the chamber on board, however.
Gas prices rose 20 cents in the Twin Cities area on Tuesday, a day after dropping 6 cents. The top price in these parts is $2.59 a gallon, a 31-percent jump from a month ago, and well ahead of the nationwide 19-percent increase.
The price of a barrel of oil has jumped almost 79% so far this year. It comes as analysts say the demand for gasoline is still dropping.
What's going on?
According to a report from McClatchy, big investment houses are bidding up the price, in anticipation of the economy turning around.
Big Wall Street banks such as Goldman Sachs Group Inc., Morgan Stanley, and others are able to sidestep the regulations that limit investments in commodities such as oil, and they are investing on behalf of pension funds, endowments, hedge funds, and other big institutional investors, in part as a hedge against inflation.
A year ago, Minnesota -- what with its blend of ethanol and all -- had the lowest prices in the nation. This year, however, the Upper Midwest is among the higher-priced regions.
Jim Ritterbusch of Ritterbusch and Associates said gasoline prices could be back down to nearly $2 a gallon by the end of summer.
(Photo: Tom Weber)(8 Comments)
Despite what the weather might suggest, there must be a summer coming. Gas prices are heading up in a hurry.
In the Twin Cities today, the price of a gallon jumped about 20-cents-a-gallon, to about $2.39 in some locations, still lower than the $3.61 of a year ago, but we might get back there soon enough.
It was July 2005, when we visited these levels for the first time. The state had shut down over a budget dispute between Gov. Tim Pawlenty and the Legislature.
The major retail gasoline outlets -- SuperAmerica, BP, and Holiday -- raised the price of gasoline to $2.19 today. That's still way below what it was a year ago, of course, but it's still a 16-percent increase in the last week.
Apparently, it's the "optimism thing."
"With the outlook for risky and pro-growth assets continuing to improve (particularly as U.S. equity markets turn positive for the year), we are growing more constructive on energy markets," technical analysts at Barclays Capital told the Dow Jones Newswire. Translation: It's a good time to raise prices and make some dough.
The Associated Press also reported that easing fears about the flu also have contributed to higher prices.
Was last week the last time we'll see gasoline for under $2?(1 Comments)
Time to hit the wayback machine again.
"Corn and ethanol production and the resulting high prices will impact the world in a much more acute negative way than greenhouse gas emissions and climate change ever will," Valero Energy Corp Chief Executive Bill Klesse told an oil group last March in San Diego. "All of these programs are just a huge transfer of wealth from our industry to the Midwest farms."3 Comments)
The vanishing signs of spring.
When I was growing up, the New England Flower Show was the unofficial declaration of hope during that part of the winter -- the tail end -- when one more helping of snow would often be enough to send people over the edge.
Now, the New York Times reports today, flower shows across the country are the latest victims of the bad economy. They have wilted in the face of reality.
Last week, my wife went in search of bulbs to force. All she could find was "paper whites," the smell of which instinctively makes us look for an electrical fire in the house. She had no luck finding regular old bulbs.
Need more? For baseball fans,
pouring poring over the small agate type box scores of spring training games from exotic places like Port St. Lucie and Winter Haven, has always been the "hope" to hang onto. The Star Tribune, and many other places, this year have eliminated out-of-market spring training linescores. Getting them via the Web is not the same.
This weekend it's supposed to snow again.
Hope is getting harder to find.(3 Comments)
President Barack Obama presented quite the "to do" list when he released his budget last week. This one may be among the most challenging: Finding a place to put all the nuclear junk the nation's nuclear power plants are creating.
Obama's budget has scaled back funding for the proposed Yucca Mountain nuclear waste repository. It doesn't say how much it's scaled back, only that the feds will spend money on the Nevada mountain project "to those costs necessary to answer enquiries from the Nuclear Regulatory Commission, while the Administration devises a new strategy toward nuclear waste disposal."
Nuclear proponents have hoped for years that Yucca Mountain would be the answer to the #1 problem plaguing the nuclear industry.
The waste is piling up, of course. In Minnesota, the Prairie Island nuclear plant's waste has been stored in dry casks for years. Over the years the Legislature has approved additional storage there, over the objections of the Prairie Island Mdewankanton Dakota Reservation. The current capacity will run out between 2013 and 2014.
Xcel Energy built a three-acre facility at its Monticello plant, to store spent fuel in steel containers inside concrete vaults.
Both locations are going to be around for awhile, judging by a May 2007 letter to the Las Vegas Review-Journal that might be the solution for the foreseeable future. " I believe a better short-term solution is to store nuclear waste on-site at the reactors where it is produced, or at a designated facility in the state where it is produced, until we find a safe, long-term disposal solution that is based on sound science."
The contractor that was developing Yucca Mountain saw the end coming. Last month it laid off half of the 1,100 employees at the site.
It was supposed to open in 1998.
The Nuclear Regulatory Commission currently has 17 applications for 26 new nuclear reactors in the U.S.(3 Comments)
The blogs and bulletin boards are sure to be buzzing today with details of the University of Minnesota study on ethanol. It was billed in the Star Tribune as a study that showed corn ethanol no better than gasoline. That's true, but the substance of the study showed that cellulosic ethanol is.
According to a news release from the U, "the authors found that depending on the materials and technology used in production, cellulosic ethanol's environmental and health costs are less than half the costs of gasoline, while corn-based ethanol's costs range from roughly equal to about double that of gasoline." The full study won't be available online until next week.
Cellulosic ethanol is made from plant and tree fiber.
Two years ago, the same U of M researchers determined that ethanol "delivers 25 percent more energy than is used (mostly fossil fuel) in producing it, though much of that 25 percent energy dividend comes from the production of an ethanol byproduct, animal feed."
A company in Minnesota is testing cellulosic ethanol production and has been meeting with farmers to figure out a method of collecting the material that could be used. But the process may not be able to compete with grain-based ethanol in five to eight years, according to Minnesota Public Radio's Mark Steil.(7 Comments)
The Brits are further ahead of us in the development of the next generation of light bulbs. They've banned the sale of incandescent light bulbs, and they're already -- reportedly -- moving past the newfangled CFL bulbs.
The next step is LEDs. I bought one of those LED worklights a year or so ago and it's heading for the trash. The light, while cheaper to produce and relatively bright, is too narrowly targeted as a work light and certainly as a replacement for home light bulbs.
So I was interested today when the BBC reported that a professor has developed an LED light bulb that will last for 60 years and be appropriate for home use. Alas, it was a most disappointing presentation.
It's easier to develop an eco-friendly light bulb than it is to develop an eco-friendly light-bulb that works well.(6 Comments)
The axe is falling on more media personalities.
Nat Hentoff was let go yesterday by the Village Voice, so everyone pretty much knew firings were coming at City Pages, which is owned by the same company.
James Norton and Assistant A-List editor Ben Palosaari have been let go, according to media analyst David Brauer at Minnpost. He also notes that WCCO-AM has dismised overnight talk host Al Malmberg and his fill-in, Brad Walton.
One of the questions for 2009? Is there any local media that will escape the budget-cutting axe?(10 Comments)
"They" said we'd never see it again, but while we were otherwise preoccupied this week, the price of a gallon of gas in Minnesota fell below $2. It's below $1.90 in some locations today, according to twincitiesgasprices.com.
If you changed your driving habits when it shot up to near $4, are you changing your habits back now?(8 Comments)
Gas price perspective:
Nearly a third of Americans are cutting back on vacation and travel plans for later in the year, and 27 percent are cutting back on eating out because of record-high gas prices, a retail survey found Tuesday.
-- CNN, 5/19/04 when gasoline hit $2 a gallon .
It is worth repeating that based on price moves that have already happened, the average household is going to reduce its spending on fuel, including transportation fuel, by $4,800 per year. Include the savings to the consumer from price decreases of other raw materials and the average household will spend $12,000 less in the next 12 months. This $12,000 increase in the family budget will not be taxable income, it is more like found money.
-- Seeking Alpha. 10/28/2008 "Relief is on the Way."
The average price of gasoline in Minnesota today is $2.20, but there are plenty of stations selling it for as low as $2.04, according to MinnesotaGasPrices.com.(5 Comments)
Anyone who was in the middle of sipping a cup of coffee last June when Rep. Michele Bachmann said just signaling an intention to drill for oil could bring back the days of $2 a gallon gasoline, probably spit most of the java out. It was that crazy a prediction at a time when the average price for gasoline was over $4 a gallon and, apparently, heading higher.
This morning, one energy analyst predicted the rapidly falling price of crude oil would yield a further drop of 60 cents a gallon at the gas pump. With the low end of gas prices in Minnesota today around $2.57, you don't have to be Paul Krugman to do the math correctly.
Voila! Two-dollar-a-gallon gasoline.
In politics, it doesn't matter whether you're right by accident or by design, you get to still say you were right. Politicians did nothing more than talk about drilling, and the price of gasoline is headed for $2 a gallon.
Of course, gas prices are falling because of a worldwide recession that's put enough people out of work, shuttered enough factories, and cut the demand for oil. The law of supply and demand still works. The cure for high oil prices, as the saying went, is high oil prices. Never mind the consequences or the collateral damage.
The situation illustrates a different truism: Economic predictions are almost as worthless as a TV weather forecast.(9 Comments)
It's funny how time changes the context of things. I passed a gas station last night and the price of a gallon of gas was $2.96. After $4 a gallon, it was like seeing a sign for free kittens. Funny, it wasn't that way the last time gas was this "cheap."
According to minnesotagasprices.com, the average price in the state for a gallon of gas is $3.019, and there are plenty of stations listed where gasoline is selling in the $2.85 range.
The last time the average price for gasoline in the Midwest dropped below $3 a gallon was February 2008, according to the Department of Energy. A year ago it was $2.74.
The recession is one reason for the drop. We also changed our driving habits because of the high prices. Will we change them back now that the price has dropped?(9 Comments)
According to Twin Cities Gas Prices, the average price of a gallon of regular gas this afternoon is $3.36. Does it feel like a bargain to you compared to what it was a few weeks ago?
How about $3.12? Would it make you start whistling Happy Days Are Here Again?
3.12, for the record, was the price of a gallon of gasoline when the first installment of the increased Minnesota state gas tax went into effect last spring. Minnesotans responded by pumping fewer gallons in April than they did in March.
Tomorrow, the other shoe drops when the gas tax goes up another 3 cents. Last week, at a transportation forum in Worthington, Margaret Donahoe, executive director of The Transportation Alliance, said the financial impact of a two-car family will be about $100 a year
And, the Worthington Daily Globe, the "us against them" atmosphere that has surrounded transportation funding debates in the state for years, hasn't melted...
... commented Rep. Doug Magnus, rural Minnesotans are paying more than those in the metro area. He cited numbers indicating that southwest Minnesotans will pay an estimated $216 per capita in gasoline and special fuel taxes by 2011, while the Twin Cities metropolitan area faces $147 per capita for the same year.
A seven-member panel of politicians and candidates said they were grateful to be taking the first steps in the form of Chapter 152, but emphasized the importance of finding more funding for the state's infrastructure.
"When my family moved here in 1957 all the roads in Iowa were narrow and the roads in Minnesota were wide," said Al Kruse, a candidate for the U.S. House of Representatives in District 21A, "In the last 50 years everyone else has moved ahead and Minnesota has remained stagnant. Our infrastructure is falling farther and farther behind. (Fixing infrastructure is) important for our economic survival. That's just to survive. To thrive we need four-lanes. You see what happens around a four-lane highway -- there's economic development there."
Republicans thought the gas tax issue would anger people enough to carry over at the polls. But that was before overnight swings of 30 to 40 cents a gallon made 2 or 3 cent jumps seem like small potatoes.
With the increasing price of energy, the gas tax funding mechanism faces the same pressures the state's tobacco tax -- or fee -- presents. On the one hand, market forces or the state itself are encouraging people not to smoke -- or drive -- and on the other hand, the state's financial health depends on them doing both.
At least where the price of gasoline is concerned, Minnesotans will have plenty of incentive to cut back. T. Boone Pickens predicted this morning that a barrel of gasoline will be back close to $150 within a year.
And 3 cents a gallon will seem like small potatoes again.(4 Comments)
The price of gasoline jumped by 40 cents a gallon over the weekend because of a hurricane that didn't even make the leaves rustle in these parts. Why? Because 30 percent of the U.S. oil refining capability is offline.
Hurricane Ike forced the refineries along the Gulf Coast to shut down. The lack of refinining capability coupled with an already short supply of fuel has caused the price run-up according to the Web site, The Oil Drum, which sees the 10-day shutdown causing price hikes and shortages at least into October.
I have said that it is likely to take a week or two to get refinery production up to pre-Ike levels. Suppose it takes 10 days. Adding 10 days to the date of the hurricane (September 12) brings us to September 22. If it takes an average of 18.5 days to get product from Texas to New Jersey by pipeline, it will take until approximately October 10 before supplies are back to normal. It could be a little shorter than this, or quite a bit longer.
Of the 15 top-producing oil refineries in the United States, only four are located in hurricane-safe areas. One of them is the Flint Hills refinery along the Mississippi River in Minnesota. That refinery is ranked #12 in the country.
Some politicians have argued for an easing of regulations to allow more refineries to be built. But Ralph Nader's Public Citizen says it's not environmental regulations preventing new refineries.
From 1975 to 2000, the U.S. Environmental Protection Agency (EPA) received only one permit request for a new refinery. And in March, EPA approved Arizona Clean Fuels' application for an air permit for a proposed refinery in Arizona. In addition, oil companies are regularly applying for - and receiving - permits to modify and expand their existing refineries.
And even the oil industry admits that just because a new refinery hasn't been built in over 30 years, doesn't mean refining capacity hasn't increased. Says a Political Fact Check on the St. Petersburg Times Web site...
The industry has found it costs less money and takes less time to expand existing facilities, he said. Over the past 15 years, the U.S. refining industry has added the equivalent of one new, state-of-the-art refinery a year, each with a capacity to refine 150,000 to 300,000 barrels per day.
A new significant oil refinery hasn't been built in the U.S. since 1976, but smaller ones have been. And South Dakota may be the next lab rat to see how easily a major refinery can be constructed. In June, voters -- thanks mostly to the votes of those in populated areas -- approved rezoning some rural county land for a new refinery.
Last week, a South Dakota agency approved a draft air quality permit for the project.
According to Hyperion's application, the center each year would emit nearly 2,000 tons of carbon monoxide, 773 tons of nitrogen oxides, more than 1,000 tons of particulate matter, 863 tons of sulfur dioxide and 473 tons of volatile organic compounds.
But that's not what has many opponents working -- against long political odds -- to prevent the refinery. They say the oil to be refined is what will cause the most environmental damage.
Largely overlooked in the discussion has been the source and type of crude oil -- Canadian tar sands -- to be refined at the Hyperion facility. Canadian tar sands are probably the dirtiest source of oil on earth, and mining tar sands has created what might be the most polluted area in North America. Tar sands development in northeast Alberta has devastated 180 square miles of boreal forest. The process uses prodigious amounts of fresh water, and much of the water ends up so toxic it kills any wildlife that touches it. Millions of gallons of this poisoned water are now impounded in hundreds of toxic lakes and ponds.
But at least there's no hurricanes in South Dakota.
Hurricane Ike has come ashore in Texas and done its thing. Now, the rest of the country waits for answers for two questions: (1) Is everybody OK? and (2) Will the price of gasoline go up?
The largest oil refinery on the continent is in Galveston and it's shut down. Later today, inspectors will take a look at it to see how soon it can be restarted.
The Oil Drum Web site has been trying to estimate the effect at the pump based on the shutdown and damage. It has a Flash map which shows Ike's path, and what was in its way. The red area below shows area of damage.
All of the icons are some facet of the oil infrastructure. The area produces 6 percent of the world supply.
The Twin Cities' gas prices are already heading up, according to twincitiesgasprices.com -- about 3.5 cents locally since Friday and about 8 cents nationally.
Update It appears the major gas stations have increased prices 30-40 cents a gallon today.
It's worse in other parts of the country where drivers rushed to fill up their cars, figuring there'd be a gasoline shortage.
Some gas stations in the southeast raised their prices by more than $1 a gallon, although much of that was because of the panic more so than the law of supply and demand.
Until the wind and the fear subsides, we won't know for sure how much Ike is going to hurt.4 Comments)
A commentary in the Sioux Falls Argus Leader this week makes an interesting point on the infrastructure required for wind energy:
Wind power has, among other faults, two major drawbacks: Most wind power will be generated in the middle of the country although most of the power is needed in the more densely populated areas near the coasts. This requires long transmission lines. Engineers tell us that normal transmission lines of 138 kilovolts or 345 kV lose 10 to 15 percent of their wattage over 1,000 miles. Therefore, a completely new and very expensive system of 765 kV transmission lines that will not lose power over long distances will be needed.
There's that. And then there's this: Wind energy is a spectacular blight on America's landscape. I noticed this most recently while flying into Denver a few weeks ago. Colorado has a lot of windmills.
So does Minnesota and, as the blog, Perfect Duluth Day found recently, so does Iowa.
A short distance over the state line, we saw windmills in the distance. They were far away but could be seen clearly. You could tell they were enormous. Scary big.
I kept saying things like, "They're freaking me out!" and "Those are so scary!" Of course, I said, too, "Those make a lot more sense than digging up coal to burn it," but mostly, I was freaked out.
Perhaps we headed down this road with our reliance on cellphones. There are few scenic vistas left that don't include a tower. And, let's face it, we city slickers don't much care about what's out on the prairie until we actually go there. But is there any way to utilize wind and still have an America that's beautiful?(15 Comments)
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)(6 Comments)
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.(6 Comments)
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."
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.
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?(6 Comments)
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.(57 Comments)
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.(82 Comments)
"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 ...(5 Comments)
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.(16 Comments)
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?
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.(2 Comments)
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.(1 Comments)
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.(4 Comments)
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.(2 Comments)
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.(10 Comments)
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)
For all the talk about the ruin to be caused by the gas tax increase in Minnesota, comparatively little is said in the state these days about the "ethanol tax," which has had a significant impact in the cost of operating a vehicle and may, according to some people, have a role in rapidly increasing food prices.
For the last few months, I've been conducting an unscientific experiment: filling up my car with regular gasoline and comparing the performance with the ethanol blends I'm required to use in Minnesota.
Although Wisconsin drivers get a choice, lawmakers are considering an ethanol mandate, which would require 10 percent of gasoline to be a blend of ethanol, rising to 25 percent by 2025. Here's a copy of the legislation. Minnesota, on the other hand, requires all gasoline sold to be at least 10 percent ethanol.
I snuck across the border several times to fill up the 2004 Chevy Cavalier (the official car of News Cut) with ethanol-free gasoline. The result? My car got about 32.6 miles per gallon. The Minnesota blend gave me almost 29 miles per gallon, a 12% drop in performance.
Calculating current prices (the average price of gasoline in Minnesota now is $3.235. In Wisconsin it's $3.40), driving 1000 miles on Minnesota gas costs $111.55 (11.2 cents per mile). On Wisconsin gas, 1,000 miles costs $104.29 (10.4 cents a mile), a $7.26 savings, even though the difference in the price of a gallon is almost 17 cents. The "ethanol tax" works out to 2.3 cents a gallon.
My little experiment showed me that I spend an additional $80 or so a year at the pump because of ethanol. It's not a huge deal, although some of the rhetoric surrounding similar numbers in the gas tax debate suggested it's the difference between me keeping and losing my home.
But the "tax" is about to go higher. In 2005, there was no bigger supporter of a 20-percent mandate than Gov. Pawlenty. He signed a bill raising the requirement for ethanol in a gallon of gasoline to 20-percent by 2013.
Six Republicans in the House this year ran into trouble for supporting an increase in the gas tax. In 2005, however, 48 Republicans voted for what's turned out to be "the ethanol tax."
The concerns about the ethanol mandate, of course, are years old. An MPR story in 2002 documented the steamrolling of politicians by the ethanol lobby.
As MPR's Cara Hetland reported last fall, the ethanol mandate is an economic development program for farmers. And Cargill today reported an 86-percent jump in profits. Good for them. Consumers? Not so much.
But there is plenty of dispute about the effect of ethanol on food prices and, hence, its role -- if any -- in inflation. Last week, Texas A&M released a report that suggests that corn prices -- corn is used to make ethanol -- would have risen substantially anyway as petroleum-based costs -- fertilizer, for example -- went up. The report said higher corn prices "do have a small effect on some food items."
Update Mon. 10:14 p.m. - An article in Tuesday's New York Times doesn't let ehtanol/biofuels quite so easily, and invokes the U of M's C. Ford Runge:
C. Ford Runge, an economist at the University of Minnesota, said it is "extremely difficult to disentangle" the impact of biofuels on food costs. Nevertheless, he said there was little that could be done to mitigate the impact of droughts and growing appetites in developing countries.
"Ethanol is the one thing we can do something about," he said. "It's about the only lever we have to pull, but none of the politicians have the courage to pull the lever."(57 Comments)