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.
Michigan Gonvenor Jennifer Granholm and T. Boone Pickens, founder and chairman, BP Capital Management, shaire their alternative energy solutions at the Detroit Regional Chamber 2009 Mackinac Policy Conference (Photo courtesy of the Mackinac Policy Conference)
A Texas oil tycoon is trying to get America off of foreign oil. T. Boone Pickens has spent the last year and nearly 60-million dollars promoting his plan to use only US sources of energy. Rebecca Williams reports:
Transcript
A Texas oil tycoon is trying to get America off of foreign oil. T. Boone Pickens has spent the last year and nearly 60-million dollars promoting his plan to use only US sources of energy. Rebecca Williams reports:
T. Boone Pickens says he’s all for domestic oil drilling, solar, nuclear, coal – especially wind and natural gas. But anything, as long as it comes from the USA.
“I’m for anything that’s American. Anything that’s American. (applause) But we have to get off oil from the enemy.”
And he said he used to be an outspoken critic of ethanol. But not anymore.
“It is American. Is it a good fuel? It’s an ugly baby is what it is. But it’s our ugly baby.” (laughter)
He says Members of Congress tell him, whether it’s a good fuel or not, farm states want it.
He readily admits his plan would help him make some money. But he says he also wants the U.S. to get away from foreign imports for the sake of national security and the health of the economy.
More bio-fuels, like ethanol from corn, will be blended into petroleum (Photo by Scott Bauer, courtesy of the USDA)
The Obama administration wants us all to use more bio-fuels in our vehicles. Lester Graham reports on a proposed rule released by the White House:
Transcript
The Obama administration wants us all to use more bio-fuels in our vehicles. Lester Graham reports on a proposed rule released by the White House:
The Administrator of the Environmental Protection Agency, Lisa Jackson, says this will mean blending more bio-fuels into petroleum.
“Under the proposed rule, the total volume of renewable fuel ramps up to a maximum of 36-billion gallons by 2022.”
But, for the first time, renewable fuels also will have to reduce greenhouse gas emissions.
Bob Dinneen heads up the ethanol trade-group, the Renewable Fuels Association.
He says the carbon footprint of ethanol is 61% smaller than petroleum. But the government wants to include indirect effects – such as reduced corn exports leading other countries to slash and burn rain forest to grow corn.
“We believe when that is better understood, ethanol is going to continue to demonstrate significant carbon benefits.”
The government will hear about their concerns and others during a 60-day comment period.
Today almost everything that goes into your car's gas tank started as oil (Photo by Shawn Allee)
How you fuel your car could change pretty quickly. California air regulators are requiring gasoline producers to reduce greenhouse gases by 10% by 2020. That could force big oil companies to invest in alternative fuels. Tamara Keith reports when it comes to environmental regulations, what happens in California usually spreads from there:
Transcript
How you fuel your car could change pretty quickly. California air regulators are requiring gasoline producers to reduce greenhouse gases by 10% by 2020. That could force big oil companies to invest in alternative fuels. Tamara Keith reports when it comes to environmental regulations, what happens in California usually spreads from there:
Today almost everything that goes into your car’s gas tank started as oil. But in the future it could be very different.
“The fuels that we will be moving towards are electricity, biofuels and hydrogen mostly.”
Daniel Sperling is a member of the California Air Resources Board which voted in the new rule.
Sperling says the goal is to reduce the overall greenhouse gas emissions from vehicle fuels. That could mean oil companies might even have to buy credits from power companies for electric cars.
“You start transforming the oil industry, getting off of oil. I mean that’s what we talk about and this is a policy that will actually do it.”
The California rule even looks at how much greenhouse gas pollution goes into making corn ethanol.
Oil companies say fuel prices will definitely go up in California.
These Suzukis at Ken Butman's dealership, which were in high demand last year, are now sitting unsold (Photo by Samara Freemark)
Chances are, you haven’t bought a new car this year. Auto sales are down across the board – including in the small car and electric-gas hybrid markets. Now some dealers and automakers are proposing a way to move some of those cars: increase the gas tax. Samara Freemark explains why the same people who sell cars might want to make driving them more expensive:
Transcript
Chances are, you haven’t bought a new car this year. Auto sales are down across the board – including in the small car and electric-gas hybrid markets. Now some dealers and automakers are proposing a way to move some of those cars: increase the gas tax. Samara Freemark explains why the same people who sell cars might want to make driving them more expensive:
It was almost exactly this time last year that Ford dealer Ken Butman
traded in his pickup for a Suzuki hatchback.
His Ann Arbor, Michigan
dealership had been selling Suzukis for a couple of years. But they got
really popular last spring when gas prices jumped. Butman ordered a big
shipment to keep up with the demand.
“These are the Suzukis. These little cars get good gas mileage. And
they’re so cute. Look at them. Look at this one here. It’s got a little
rack for your skis. Look at
that.”
But those cars – the ones Butman ordered a year ago – most of them are
still here. They’re still sitting on his lot. Not moving.
“It was strange because they were so hot. For awhile there you couldn’t
give a big car away. And everybody was rushing to the small cars. And then
just as quickly, about when the price of gas came down again, we saw a
complete reversal. Like a light switch. That’s how fast it cut off.”
It’s been like that all over the country. Dealers who last year had
waiting lists for hybrids and small cars suddenly have a lot of extra
inventory. Sales of hybrids are way down from last April, mostly because
gas costs about half what it did last year.
Brett Smith is an auto analyst with the Center for Automotive Research. He
says consumers only really care about fuel economy when gas prices are
high. When gas hits about 4 dollars a gallon, consumers switch to fuel
efficient cars. When prices drop again, so do sales of efficient cars.
“Look at what’s happened every time we’ve had an energy crisis. We’ve
gone to smaller cars for a couple of years, and then the consumer has gone
back to larger cars. Why? Because at that fuel price they can get away with
it, they can justify it.”
It’s a real problem for dealers. It also worries auto manufacturers who
have poured money into developing hybrids and have a lot of new models due
to come out this year.
And that’s why some people who sell cars have begun to push for
increasing the gas tax.
Dealers and auto executives might not seem like the first bunch to line up
behind a tax hike. Traditionally they’ve lobbied hard against anything
that makes driving more expensive.
But a high tax – and therefore, higher gas prices – could get all those extra
hybrids moving again.
Michael Jackson is the CEO at AutoNation. That’s the
nation’s largest chain of dealership.
Jackson wants to see gas at four
dollars a gallon – the figure at which many analysts say consumer behavior
changes. And he thinks the government can keep prices at that magic number
with a floating tax.
Auto makers have been a little more cautious. But some top executives at
American companies have called Jackson’s ideas ‘smart’ and ‘worth
looking into’.
Smith says they believe that higher gas taxes could
stabilize the market for fuel efficient cars – making investment in new
technologies a safer bet.
“The car companies will rarely come out and loudly say, things like, ‘we
think there needs to be a gas tax.’ But almost all of them will say on the
side, if you want people to drive more fuel efficient cars, the best way to
do it is a gas tax.”
For now, though, it might not take a big tax to bring gas prices back up.
Oil trader Anthony Grisanti is the president of GRZ Energy. He says an
economic recovery would do pretty much the same thing.
“Shouldn’t be any doubt about it, once the economy picks up, say,
beginning of next year or year after that, you’re going to start to see oil
prices go higher.”
And that means prices at the pump would go up too.
Proposing higher gas taxes – especially of a couple of dollars a gallon – can
mean career suicide for politicians. So a big hike in the gas tax seems
iffy. But if gas prices rise as the economy recovers, dealers might see
those fuel efficient cars move off the lot again.
Some think that a gas tax is the only way to get consumers to buy fuel efficient cars (Photo courtesy of the US Department of State)
Some in the auto industry are proposing a hike in the gasoline tax. The idea is this: if you want people to buy small cars, make gasoline more expensive. Lester Graham reports:
Transcript
Some in the auto industry are proposing a hike in the gasoline tax. The idea is this: if you want people to buy small cars, make gasoline more expensive. Lester Graham reports:
Car dealers and manufacturers say a higher gas price is the only thing that gets people buying more fuel efficient cars. So, a tax hike makes sense.
But, a guy who has a lot of sway on the idea of a gas tax hike is not going there.
Congressman Ed Markey chairs a House subcommittee on Energy and the Environment.
At a forum at MIT he said the plan is to stick with CAFÉ — the Corporate Average Fuel Economy standards – to get better mileage cars.
“That’s the route that we’re taking rather and an increase in the gasoline tax. We’re moving towards a mandate and 35 miles per gallon is the minimum that we intend on reaching by 2020.”
And under the stimulus package, new tax credits amounting to thousands of dollars get kicked-back to anyone buying a fuel efficient car.
San Francisco expects to process 10,000 gallons of the grease every day (Photo by Rainer Zenz, source: Wikimedia Commons)
One city’s new program is taking the mucky sink-clogging grease from restaurants and converting it into fuel for its fleet of vehicles. As David Gorn reports, it’s the first effort of its kind in the nation:
Transcript
One city’s new program is taking the mucky sink-clogging grease from restaurants and converting it into fuel for its fleet of vehicles. As David Gorn reports, it’s the first effort of its kind in the nation:
It’s 6 in the morning, and a San Francisco sewage treatment plant is already in full gear.
(sound of a truck motor)
Workers are unloading a tankful of used cooking oil from local restaurants.
(sound of a man shouting)
But soon they’ll also be picking up something a little nastier from restaurants.
“Brown grease is culled out, pumped out by grease haulers and taken out of the city, often to landfills.”
That’s Karri Ving, biofuels coordinator for the San Francisco Public Utilities Commission. She says, instead of carting that grease off to a garbage dump, it will now be converted into biofuel.
“That material, that food material, is what we’re going to condense into a putty that gets converted into road-worthy biodiesel.”
Ving says San Francisco expects to process about 10,000 gallons of the
stuff every day.
Right now, cars get an average 27 and a half miles per gallon. By
2011, they'll have to get 30.2 (Photo by Ben VonWaggoner)
The U.S. Environmental Protection Agency issued new vehicle fuel economy standards for cars and trucks. As Tracy Samilton reports, it’s the first change since 1985:
Transcript
The U.S. Environmental Protection Agency issued new vehicle fuel economy standards for cars and trucks. As Tracy Samilton reports, it’s the first change since 1985:
Right now, cars get an average 27 and a half miles per gallon. By
2011, they’ll have to get 30.2. Light trucks, including SUVs, will
have to get 24.1 miles per gallon, up a mile per gallon.
Eli Hopson
is with the Union of Concerned Scientists. He says the change is not
dramatic but it’s still an important milestone.
“The car standards haven’t
changed. They’ve been at 27.5 for over twenty years. It is a big deal. It’s
been a long time in coming.”
Carmakers are prepared for the new standard and say they’ll meet it.
Future standards will be tougher.
Auto companies usually complain
when mileage standards are raised. But times have changed, especially
for Chrysler and GM. They might not be as vocal since accepting
billions in federal loans.
A corn ethanol refinery- The ethanol industry is asking the EPA to raise the legal limit of ethanol that can be added to regular gasoline from 10 to 15%. (Photo by Grant Hellman, Courtesy of US Department of Agriculture)
In the 1970s, the government limited the amount of ethanol that can be blended with gasoline at 10 percent. Now, a trade group called Growth Energy has asked the U-S EPA to raise the limit to 15 percent:
Transcript
In the 1970s, the government limited the amount of ethanol that can be blended with gasoline at 10 percent.
Now, a trade group called Growth Energy has asked the U-S EPA to raise the limit to 15 percent.
Agriculture Secretary Tom Vilsack has already said that 12 or 13 percent ethanol is possible soon.
But, an environmental groups says, “slow down.”
Jeremy Martin is with the Union of Concerned Scientists. He says, first, the government should make sure that a higher-ethanol blend doesn’t damage pollution controls on vehicle engines.
“We don’t want to quickly make a change and then find out that we’ve caused a lot of damage to lots of vehicles on the road or caused a lot of air quality impacts.”
Supporters of the increased ethanol blend say it would help US corn farmers and reduce the demand for foreign oil. But opponents say ethanol made from corn does more harm to the environment than good.
Both studies agree that we need more efficient cars (Photo by Karen Kelly)
Recently two reports on the future of automobiles came out. They looked at cars and trucks from very different perspectives, but came to some similar conclusions. Lester Graham reports:
Transcript
Recently two reports on the future of automobiles came out. They looked at cars and trucks from very different perspectives, but came to some similar conclusions. Lester Graham reports:
The first report was published in the journal, Environmental Science and Technology. It looked at what it would take to get U.S. automobiles to reduce the greenhouse gas, carbon dioxide, enough to lower it to 1990 levels.
Why cars? Because cars and trucks produce a third of U.S. CO2 emissions.
Greg Keoleian is one of the authors at the University of Michigan. He says there are three things that need work.
We need to drive less, burn cleaner fuels, and, within about 40 years, increase the average fuel mileage way beyond the 20-miles per gallon we’re getting now.
“That would need to increase to 136 miles per gallon to meet the carbon targets. Alternatively, if we just focused on fuels, basically we’d need about 80% cellulosic ethanol by 2050. And the third scenario is a reduction in driving. It would mean we’d have to cut our driving in half by 2050.”
It’s unlikely we can accomplish any one of them, and the study’s authors suggest it’ll probably be a combination of more efficient cars, better fuels, and driving less if we’re to reduce greenhouse gases enough to make a difference.
The second report entitled ‘Envisioning an Uncertain Future’ comes from the Boston Consulting Group. It looks at the future of the automobile from a business perspective.
One of the authors, Xavier Mosquet, says the study assumes rising oil prices will force some changes.
“And that the pressure from the consumer on the governments will be so high that the governments will have to take energy actions to develop green products and green cars.”
But the report notes green cars will cost more – as much as 15,000 dollars more for hybrids or plug-in hybrids compared to standard cars.
“The consumer will look at these cars and say, ‘well, these are more expensive than I can pay.’ And therefore they’re not going to buy them. So, what I think the government has to do if they want to go that way is to look at the cost of putting those technologies on the market and either subsidizing the car’s manufacturers and suppliers or helping the consumer with much more tax incentives. Otherwise it will not happen.”
So, from a business perspective, the Boston Consulting Group report suggests without government help, manufacturers won’t build more efficient cars at a price we can afford. But we’ll need them because of high fuel prices.
The University of Michigan report on cars and climate change agrees the government will have a major role.
Author Greg Keoleian says if we take climate change seriously and are committed to doing something about it, we’ll have to change driving habits, encourage innovative manufacturers and invest government money.
“We are capable of doing this and the cost of climate change to society is tremendous. And each sector needs to play a major role in addressing the needs to reduce.”
The studies look at the future of the automobile from very different perspectives, but both agree we need more efficient cars and that won’t happen without the government pushing a little and helping a lot.
