Oil and Prices at the Pump

  • Right now, we’re paying anywhere from 70 cents to a dollar more per gallon than this time a year ago. (Photo courtesy of the National Renewable Energy Laboratory)

Energy analysts say a glut of
oil means gas prices probably
won’t spike too much this year.
Rebecca Williams has more:

Transcript

Energy analysts say a glut of
oil means gas prices probably
won’t spike too much this year.
Rebecca Williams has more:

We’re paying anywhere from 70 cents to a dollar more per gallon than this time a year ago. The good news is, we’re not likely to see four dollar-a-gallon gas anytime soon.

“We’re not in a world with runaway oil prices.”

That’s Ruchir Kadakia. He’s a global oil market expert with IHS Cambridge Energy Research Associates. He says weak global demand is keeping oil prices in check for now. At the same time, supply is relatively high. He predicts oil won’t average much higher than 80 dollars a barrel for the next year or so.

“And so what that really means for the gasoline point is through probably 2011, we shouldn’t expect to see gasoline prices much above three dollars unless it’s for a short period of time maybe in the summertime for a few months.”


Kadakia says oil speculators can drive prices higher or lower in the short term. But he doesn’t think we’ll see any major price spikes over the long term.

For The Environment Report, I’m Rebecca Williams.

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Rolling Out a New Tire Program

  • This is a mock-up of what the proposed label would look like (Photo courtesy of the National Highway Traffic Safety Administration)

Back in 2007, Congress told the
National Highway Traffic Safety
Administration to come up with
new fuel efficiency labels on tires.
Mark Brush reports on when we might
see those labels in tire shops:

Transcript

Back in 2007, Congress told the
National Highway Traffic Safety
Administration to come up with
new fuel efficiency labels on tires.
Mark Brush reports on when we might
see those labels in tire shops:

It’s been 2 years, and the government is still working out how to get this labeling program going.

Right now, if you walk into a tire shop, it’s hard to compare tires on how fuel efficient they are. There’s no official standard yet.

But that should change soon. The new tire labeling program is expected to roll it out in the next few months.

Dan Zielinski is a spokesman for the Rubber Manufacturers Association. He says they support a labeling law because it’ll help competition.

It could give tire makers something to brag about.

“’It will be an incentive to say ‘my tire is better because,’ or, ‘my range of tires here are better because.’ It offers the consumers better performance on certain criteria. And I think that will drive the market even before the consumer demand does.”

A more fuel efficient tire will only get you a couple of miles per gallon more. But, put those tires on the 200 million cars and trucks driving the roads these days, and that could add up.

For The Environment Report, I’m Mark Brush.

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Speculators Cause Spike in Oil Prices

The price of a barrel of oil has jumped
up from $45 to nearly $70 in just
three months. And gas prices have been
creeping up too. Rebecca Williams reports
these prices are out of sync with the usual
rules of supply and demand:

Transcript

The price of a barrel of oil has jumped
up from $45 to nearly $70 in just
three months. And gas prices have been
creeping up too. Rebecca Williams reports
these prices are out of sync with the usual
rules of supply and demand:

Right now there’s a huge glut of supply of oil – and at the same time, weak global demand for it.

Ruchir Kadakia is a global oil market expert. He’s with Cambridge Energy Research Associates.

He says speculators are driving oil prices up.

“People believe that with positive economic growth in the future there will be greater demand for oil. So they start to buy up oil in anticipation of that demand recovery.”

So these speculators are making money while most of the economy is in a slump.

But Kadakia thinks the realities of supply and demand will eventually catch up and drag oil prices back down.

“The pain we’re feeling at the pump today is probably going to be the worst we feel all this summer.”

He thinks gas prices might actually get back below two dollars a gallon.

For The Environment Report, I’m Rebecca Williams.

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E-85: The Loneliest Pump

  • This E85 pump is one of two publicly available in the city of Chicago - a city of nearly three million people and dozens of dealerships that sell E-85 compatible cars. The federal government provided incentives to manufacture E85- compatible vehicles, but the fuel infrastructure hasn't kept up. (Photo by Shawn Allee)

If you’ve kicked the tires around
a new car lot recently, your dealer may
have told you about “flex fuel” cars. These
Flex Fuel Vehicles run on gas or they can
burn “E85” – a mix of ethanol and gasoline.
Congress promoted Flex Fuel Vehicles to cut
oil imports, but Shawn Allee reports
on why it really hasn’t helped:

Transcript

If you’ve kicked the tires around
a new car lot recently, your dealer may
have told you about “flex fuel” cars. These
Flex Fuel Vehicles run on gas or they can
burn “E85” – a mix of ethanol and gasoline.
Congress promoted Flex Fuel Vehicles to cut
oil imports, but Shawn Allee reports
on why it really hasn’t helped:

I’m in my car across the street from a gas station. It’s raining right now. Keeping my
distance.

I’ve been watching a pump that dispenses that E85 blend – it’s the stuff with 85% ethanol.

Anyway, this is a very lonely gas pump. I’ve been here for something like an hour and
half and no one’s filled up on E85.

So, I’m gonna head in and talk to a manager to see whether this is normal.

(sound of bell)

Allee: “What’s your name sir?”

McLemen: “Greg McLemen.”

Allee: “How often do you see people fill up on E85?”

McLemen: “It depends on the location. Mostly people just don’t know what it is. They
see a little pump over there that says E85. A lot of vehicles take it, and they don’t even
know it.”

McLemen pulls out a flier that shows which vehicles can use E85.

He says lots of these models pull in, but often pass up his E85 pump.

(sound of crinkling)

McLemen: “You can see most of them are General Motors.”

Allee: “A lot of General Motors – Tahoe, Avalanche, Uplanders.”

McLemen: “We always recommend they go online or check the owner’s manual.”

But there’s something most Flex-Fuel owners manuals don’t tell you.

Nationwide, only about 1% of stations have an E85 pump.

E85 is supposed to cut gasoline use.

So it begs the questions: If there’s not much E85 around, why can so many Flex Fuel cars
use it?

“Currently, auto companies receive a fuel economy credit for producing a flex-fuel
vehicle.”

Environmentalist Roland Hwang tracks car policy for the Natural Resources Defense
Council.

He says the Flex Fuel incentives infuriate him – because they’ve made us waste gasoline,
not save it.

“Just very roughly speaking, like a twenty per mile gallon car might be treated like a
forty mile per gallon, almost like a hybrid-level of efficiency, under these fuel economy
credits. Thereby allowing the auto companies actually to build a less-efficient vehicle
fleet than they would have had to build.”

You don’t have to take Hwang’s word for it – energy analysts in the government agree the
incentives have wasted gasoline.

But some of these analysts say there is a bright side to the Flex Fuel vehicle incentives.

One is Paul Leiby of the Oak Ridge National Laboratory.

Leiby: “The important side of effect Flexible Fuel incentives is that we actually can begin
to achieve energy security with the enhanced capability to use alternative fuels even if
we’re not yet using them.”

Allee: “You mean the flex fuel vehicle program wastes some gas, but having flex fuel
vehicles around is like an insurance policy, for an oil shock or something?”

Leiby: “That’s exactly right. If we have to do something very fast, within one to three
years, we already have some vehicles on the road, that can quickly switch to ethanol.”

Leiby says Congress really believed this “insurance policy” idea, so it let Flex Fuel
vehicle incentives for automakers go on for more than a decade – even while we were
just spinning our wheels when it came to actually saving gas.

But now, the game could be changing.

Congress is phasing out Flex Fuel credits for the car makers.

And, there’s talk about making all cars flex fuel.

It’s a move Detroit doesn’t want to make. Because then they’ll have to actually have to
meet the government’s requirements of a more fuel efficient fleet.

For The Environment Report, I’m Shawn Allee.

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Small Car Trend to Stay?

  • Since gas prices have dropped, some buyers are showing more interest in big vehicles. (Photo courtesy of the US Department of State)

When gas prices went up, car
companies cut their production plans for
making big vehicles, and made new plans
for more fuel efficient cars. The question
now is, with gas prices falling, will those
plans change again? As Dustin Dwyer
reports, the experts say probably not:

Transcript

When gas prices went up, car
companies cut their production plans for
making big vehicles, and made new plans
for more fuel efficient cars. The question
now is, with gas prices falling, will those
plans change again? As Dustin Dwyer
reports, the experts say probably not:

It’s not as easy to make money on a small car as it is on an SUV.

Small cars are cheaper, and they have lower profit margins. But as gas prices went up earlier this year, auto
executives insisted they’d find a way to make money on small vehicles.

Since gas prices have dropped though, some buyers are showing more interest in big vehicles.

Michael Robinet tracks the auto industry for the firm CSM Worldwide. He says the long term trend still
points to smaller vehicles.

“There may be a ratcheting down by some consumers in terms of the size of vehicles that they’re looking
for, irrespective of where fuel prices go in the future.”

Robinet says the bad economy is forcing many people to downsize. And the federal government has new
rules that mandate cleaner cars, so Robinet says getting smaller will be the big trend for years to come.

For The Environment Report, I’m Dustin Dwyer.

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Tire Pressure and Gas Mileage

  • Tire experts say that your tire pressure does, in fact, effect your gas mileage (Photo by Karen Kelly)

Earlier this year John McCain
and Barack Obama traded jabs over how
important tire pressure was in saving
gas. Lester Graham reports the experts
say it does make a difference:

Transcript

Earlier this year John McCain
and Barack Obama traded jabs over how
important tire pressure was in saving
gas. Lester Graham reports the experts
say it does make a difference:

Tim Bent is the Environmental Affairs Director at Firestone Tires. He says you ought to
check your tire pressure.

“Many people don’t maintain their tires well enough. They don’t check their tire
pressure frequently enough. And that does result, not only in lower gas mileage, but
premature tire wear which could be a safety issue as well.”

Bent says you should check tire pressure once a month. How much of a difference can
it make?

“A couple p.s.i could result in a few percentage points in fuel mileage.”

And at today’s prices, that can add up at the pump.

For The Environment Report, I’m Lester Graham.

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States Slow to Pump Up Ethanol

  • As the price of gasoline rises, many states are looking for alternatives. One of those alternatives is the ethanol blend, E-85. But, some states (like Ohio) are not keeping up with the trend. (Photo by Lester Graham)

The federal government is focusing new attention on research and development of ethanol. Some states – especially those in the corn belt – are getting into the act too. The GLRCs Karen Kasler reports:

Transcript

The federal government is focusing new attention on research and
development of ethanol. Some states – especially those in the corn belt –
are getting into the act too. The GLRC’s Karen Kasler reports:


Now that gasoline is near or above three dollars a gallon, ethanol seems
to be everywhere. The Renewable Fuels Association says more than a
third of the gasoline in the U.S is blended with ethanol, an alcohol based
fuel made with the sugar found in corn and other grains. A 10 percent
ethanol/gasoline blend can be used in every vehicle on the road, but
many politicians and consumers are very interested in the 85 percent
ethanol blend – E-85 – as an alternative fuel for cars and trucks. But
getting E-85 to drivers who have cars which can use it isn’t that easy.


Tadd Nicholson with the Ohio Corn Growers Association, says part of
the problem is the big oil companies have banned E-85 pumps under the
canopies at branded stations.


“Oil companies don’t own ethanol production. They own oil refining,
and so that’s their profit center and that’s where they get their fuel and so
they have a lot of control over that. They don’t own ethanol. I don’t
know why. They should, but they aren’t in the ethanol ownership
business yet. I say ‘yet’.”


The governors of Wisconsin and Minnesota have asked the big oil
companies to change their E-85 policy, and some states have been
encouraging independent gasoline dealers to put in E-85 pumps for a few
years.


But others, such as Ohio, have been lagging behind in the trend. Only
recently has Ohio launched a new energy action plan that sounds
ambitious, when it comes to providing access to ethanol to drivers.


LeeAnn Mizer is with the Ohio Department of Agriculture.


“The goal is to triple the amount of E-85 pumps available to Ohio
consumers by the end of 2006.”


That sounds like a lot – but it’s not, says Dwayne Seikman heads up the
Ohio Corn Growers Association.


“Tripling’s a nice start. There’s six… that would go to 18. But with over
150,000 vehicles in the state of Ohio, that’s not enough to cover the
effort.”


Since corn is Ohio’s top crop… it would seem to make sense. But unlike
other states in the corn belt, there are no ethanol plants in operation in
Ohio, though there are at least three under construction, and ethanol
supporters say the state is way behind its neighbors when it comes to
getting ethanol pumps at service stations.


Sam Spofforth is executive director of Clean Fuels Ohio.


“I’ll be honest, we’d like to see a lot more and we think a lot more is
certainly very possible. Indiana, they’re up to about 25 to 30 stations.
Illinois has over a hundred. Minnesota has almost 200 at this point.
Even places like Arizona are putting in E-85. They don’t make any corn
in Arizona. We think Ohio can do a lot more.”


Some critical studies have found that ethanol has a high energy cost with
low benefits – ethanol supporters say that’s been debunked. Whether
ethanol makes economic or ecological sense or not is still not certain.
But one thing is certain – cars using ethanol blends need to fill up more
than those using regular unleaded gasoline.


Robert White with the National Ethanol Vehicle Coalition says that’s
offset because typically ethanol-blended fuels cost less than regular
unleaded gas.


“Well, no doubt the fuel economy is the only negative with E-85, and we
tell folks that is where the price differential hopefully is there to make
E-85 use a wash.”


Part of the reason the price is lower is because the ethanol industry is
heavily subsidized by the government. Those lower costs would quickly
disappear if the subsidies were removed. Because ethanol is cleaner
burning, many support further development and use of the renewable
fuel.


General Motors is increasing the number of vehicles it produces that can
burn ethanol. Ford already produces E-85 burning cars and trucks.
However, many believe for ethanol production to be truly efficient,
farmers will have to start growing crops such as switch grass for ethanol
because corn requires too much fossil fuel based fertilizer and other
inputs to make it a permanent solution.


For GLRC, I’m Karen Kasler.

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Cleaner Air, Higher Gas Prices?

  • The EPA is getting ready for smog season. (photo courtesy of USEPA)

The federal government’s tougher regulations on pollution might have consequences on prices at the gasoline pump. To meet the Clean Air Act, some areas might be required to use cleaner-burning fuels. That could make it tougher to get gasoline supplies where they need to be. And that could mean higher prices. The Great Lakes Radio Consortium’s Lester Graham reports:

Transcript

The federal government’s tougher regulations on pollution might have consequences on prices at
the gasoline pump. To meet the Clean Air Act some areas might be required to use cleaner-
burning fuels. That could make it tougher to get gasoline supplies where they need to be. And
that could mean higher prices. The Great Lakes Radio Consortium’s Lester Graham reports:


The Environmental Protection Agency says 31 states are not complying with the Clean Air Act.
The EPA indicates tougher standards for ground-level ozone make many areas that didn’t know
they had a problem in violation of air pollution laws.


John Mooney is an environmental specialist with the EPA. He says the government used to
check for ozone pollution for short periods… but started monitoring for longer periods and found
more instances of high levels of ozone.


“The other issue is that we’re changing the number of the standard from 120 down to 80 parts-
per-billion. So, it’s a lower level that we’re looking at. And we think that’s more reflective of
the health effects that are being caused by this pollutant.”


Ground-level ozone aggravates asthma. People with lung diseases can find it hard to breathe.
And those who work outdoors are affected by the unhealthy air.


Ozone is created when factories and cars emit volatile organic compounds. That chemical stew is
affected by sunlight and ozone can form. Cities that have had high ozone levels have worked to
reduce emissions from businesses, encouraged car-pooling, made announcements asking people
not to use gas-powered mowers on high ozone days.


And… for some cities… part of the solution has been reformulated gasoline. It’s gas that’s
cleaner burning. Different formulations are used in different areas. And… gas formulas change
from winter to summer. Refineries and gasoline suppliers have to empty their tanks and pipelines
before switching. That makes gas supplies tight for a while and that drives the price up. We
asked the EPA’s John Mooney about that.


LG: We’ve got several cities with reformulated gasoline right now and that’s put a strain on the
distribution system nation-wide. If more cities have to start using reformulated gasoline and each
city has to have a different formulation, that’s going to further strain the distribution problem at a
time when gasoline prices are at an all time high.


JM: “We’re extremely sensitive to the infrastructure issue and the energy issue and are trying to
promote clean-burning fuels that have environmental impacts without significant economic
disruptions. Having fuel shortages and price spikes and things of that nature don’t contribute to
the success of our mission to improve public health. And so, we’re going to be tied into the fuel
distribution issues and we’re going to be working with the oil refiners to make sure that the fuels
programs that are ultimately decided upon operate without significant disruptions.”


Significant disruptions that could cause gasoline shortages and high prices.


Bob Slaughter is the President of NPRA, the National Petrochemical & Refiners Association. He
says the government needs to work closely with gasoline suppliers to make sure that efforts to
make the air easier to breathe don’t make problems for the economy of an area.


“You know, you have to be very careful that you don’t have so many fuels in certain areas that it
becomes difficult to re-supply if there are problems, say, with a refinery or a pipeline in a
particular area.”


For instance, in recent years a fire at a refinery at a bad time meant shortages and higher prices.


But… even with lots of cooperation between government and the gasoline suppliers, the added
burden of different types of reformulated gasoline to the fuel distribution system might mean
spikes in gas prices.


(road sound, gas station)


We asked some people buying gas if they were willing to pay more if it meant cleaner air…


VOXPOP (voice 1) “Well, the gas prices are high enough. Uh, am I willing? I suppose so if it’s
better for the environment.” (voice 2) “Well, I think the federal government regulates everything
way too much right now. I think they do have a lot of safeguards in place right now to lower the
emissions in a lot of vehicles. Why do we have to make further regulation to control that?”
(voice 3) “I mean, I hate to – I hate to pay more gas prices. I really do. But, I guess for cleaner
air, it might be worth it.” (voice 4) “I haven’t thought about it too much. I pay what they make
me pay. I don’t care.”


The EPA is giving states and cities three years to get their ground-level ozone pollution problems
below the government’s new standards.


For the Great Lakes Radio Consortium, this is Lester Graham.

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