Oil Prices on the Rise

  • Stephen Schork says the rising prices are based more on investor momentum than anything else, and that there’s plenty of oil on the market.(Photo courtesy of the Federal Highway Administration)

Oil and gasoline prices are going up this summer. Lester Graham reports, it appears the higher prices are not caused by lower supplies.

Transcript

The Energy Information Administration’s new short-term energy outlook says gasoline prices will average about $2.92 this summer– hitting $3.00 or more in some regions. That’s about 50-cents a gallon higher than last summer.

The outlook also predicts oil prices to average $82 a barrel this summer. But, oil already hit $86 a barrel this week.

Stephen Schork with The Schork Report says… the government projections were put together about a week ago… and didn’t really anticipate the investors driving prices up this week.

“So this rally that we are seeing and this upward buy is based more on investor momentum than it is on underlying fundamentals. There’s plenty of oil on the market right now.”

The government says prices should remain relatively stable but rising… although is notes uncertainty over crude oil price forecasts remains high.

For The Environment Report, I’m Lester Graham.

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Ethanol Goes to Court in Cali

  • California regulators want car fuels to come from sources that create fewer greenhouse gas emissions. That means corn-based ethanol will soon get a kind of penalty in California's fuel market. (Photo courtesy of the National Renewable Energy Laboratory)

The US government is steadily
increasing the amount of ethanol
used in our gasoline supply.
But Shawn Allee reports
that effort’s hit a roadblock
in the country’s largest gasoline
market:

Transcript

The US government is steadily
increasing the amount of ethanol
used in our gasoline supply.
But Shawn Allee reports
that effort’s hit a roadblock
in the country’s largest gasoline
market:

California regulators want car fuels to come from sources that create fewer greenhouse gas emissions. That means corn-based ethanol will soon get a kind of penalty in California’s fuel market.

Environmental groups like the Natural Resources Defense Council say ethanol should be at a disadvantage. The NRDC’s Roland Hwang says when we grow corn for fuel, farmers overseas plant more corn.

“Someone’s going to cut down a rain forest or convert pasture land or grass land to grow more food. Unfortunately, converting that land will lead to very dramatic increases in global warming pollution.”

Hwang wants the ethanol industry to stop using food crops for fuel.

Ethanol makers are not taking California’s rules sitting down, though; they’ve gone to court. They argue more lenient federal rules on ethanol should trump California’s.

For The Environment Report, I’m Shawn Allee.

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Study: Ethanol Sucking Up Water

  • It can take a lot of water to make ethanol. (Photo courtesy of the National Renewable Energy Laboratory)

The ethanol industry and the government
want more ethanol to be produced. They
say the homegrown biofuel is a good way
to move away from foreign oil. But a new
government report says many ethanol
refineries are putting a strain on another
natural resource – water. Mark Brush has
more:

Transcript

The ethanol industry and the government
want more ethanol to be produced. They
say the homegrown biofuel is a good way
to move away from foreign oil. But a new
government report says many ethanol
refineries are putting a strain on another
natural resource – water. Mark Brush has
more:

When you fuel up at the pump, chances are you’re putting ethanol into your car. Nearly half of the gasoline in the U.S. is blended with ethanol. And that’s likely to increase as they build more refineries.

But the Government Accountability Office says these ethanol refineries should consider local water resources before they build. It can take a lot of water to make ethanol.

Anu Mittel follows water resource issues for the Government Accountability Office:

“Many of them are being built in areas where they are relying on groundwater aquifers for their water supply and that could have a devastating effect on the local community that is also relying on that same water source for all of its other needs.”

Refineries built in those areas often rely on irrigated corn to make ethanol. So it means drawing millions of gallons of water just to make the ethanol at the refinery.

And millions of gallons more to grown the corn.

For The Environment Report, I’m Mark Brush.

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The Attractiveness of Ethanol

  • The government will soon decide whether to allow increasing the mix from the current 10% blend to as high as a 15% blend. (Photo courtesy of the National Renewable Energy Laboratory)

Cheap oil makes switching to alternative
fuels such as ethanol less attractive.
Lester Graham reports that could affect
an upcoming decision about using more
ethanol:

Transcript

Cheap oil makes switching to alternative
fuels such as ethanol less attractive.
Lester Graham reports that could affect
an upcoming decision about using more
ethanol:

Crude oil prices spiked a little because of Iran’s long-range missile testing and revelations of a secret nuclear facility.

But analysts think for the next several months we’ll actually see oil prices go down – maybe to around $30 a barrel, less than half of what it is now.

And that could hurt demand for fuels such as ethanol.

But the government has mandated the nation produce more ethanol.

Dan Flynn is an analyst with the trading firm, Alaron.

“Obviously the government definitely wants to push this through. However, the price of crude oil and gasoline, if that goes down, generally people look not to look for alternative sources of energy.”

One way to use more ethanol is to mix higher amounts with gasoline.

The government will soon decide whether to allow increasing the mix from the current 10% blend to as high as a 15% blend.

For The Environment Report, I’m Lester Graham.

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Sampling a New Crop: Sugar Corn

  • Todd Krone researches corn for Targeted Growth, a bio-energy company. Targeted Growth is tweaking corn genetics to produce 'Sugarcorn,' a variety with high amounts of sugar and biomass. The hope is the plants can be converted into ethanol cheaply. (Photo by Shawn Allee)

The federal government wants more
and more ethanol in our fuel supplies,
but it worries about how its made.
Most American ethanol is made from
corn kernels. That’s inefficient
and it makes the ethanol and food
industries compete for corn. The
government’s mandating we start making
ethanol out of things other than corn
kernels. Shawn Allee looks
at one effort to meet that mandate:

Transcript

The federal government wants more
and more ethanol in our fuel supplies,
but it worries about how its made.
Most American ethanol is made from
corn kernels. That’s inefficient
and it makes the ethanol and food
industries compete for corn. The
government’s mandating we start making
ethanol out of things other than corn
kernels. Shawn Allee looks
at one effort to meet that mandate:

I’m just outside an ethanol plant in central Indiana and its pretty much like most ethanol
plants. There’re a lot of semi-trucks going by and they’re loaded with yellow corn kernels.


Most ethanol plants grind corn kernels for starch, they let that starch turn into sugar, then
they brew the sugary juice into ethanol. Now, this whole process would be easier and
cheaper if we could make ethanol directly from sugary plants instead of starchy grain
kernels like corn.


Pretty quick here, I’m gonna meet a guy who’s trying to make corn a plant that’s easy to
grow in the Midwest but produces sweet juice – not starchy corn kernels.

“If you walk over here, these are our sugar corn hybrids.”

I’m with Todd Krone. He’s a researcher with a company called Targeted Growth. He walks me
through a test plot of a plant nicknamed ‘Sugarcorn.’ He pulls off a ear of corn and pulls back the
leaves.

(sound of leaves being pulled back)

The ear is almost bare.

Allee: “There’re just a few stray kernels developing, very few.”

Krone: “Yep. A few got through.”

Krone says this plant avoids making corn kernels. Instead, it puts energy and sugar into the
stalk. He can prove it with a taste test – right here in field.

He snips a piece of stalk.

(sound of snipping)

And pulls out a little press.

Krone: “You squeeze some of the juice to see how much sugar’s there. It’s up to you, if
you like, you could put on on your finger and taste. Is there sweetness?”

Allee: “Yeah, it’s definitely sweet. It’s definitely got a sweet tinge to it.”

Krone: “It might be a bit sweeter than pop might be.”

Krone says tests show Sugarcorn juice is as sweet as juice from sugar cane. He says this means
America could have a new plant that boosts ethanol production – but doesn’t compete with food,
and uses equipment farmers already have.

Krone: “For the farmer, not much changes until harvest when some logistics still need to
be worked out.”

Allee: “Obviously if you’re selling a lot of this corn, you’d be making a good deal of profit,
hopefully, what’s in it for the rest of us in terms of the success or failure of this, for drivers
and everybody else?”

Krone: “I would say, hopefully, it results in cheaper ethanol that can compete with cheap
oil. And then meeting that mandate to get more and more ethanol produced.”

Well, that’s the idea, but Targeted Growth would have to change more than just corn plants to
succeed. They’de have to change how at least some ethanol companies do business. And some
ethanol companies have some tough questions about it.

“How could you handle sugarcorn? How would you store it?”

This is Jeff Harts. He works at Central Indiana Ethanol. Harts says he likes the idea of using
sweet corn juice to make ethanol – it could be efficient. But he worries about getting enough to
run an expensive operation like his. He has no problem finding corn kernels.

“It’s a consistent flow of corn and we need that consistent flow to keep going. That’s why
we have storage, the farmers have storage. That’s why we have a local grain elevator
network to ship corn to us to keep that flow steady 12 months out of the year.”

Harts’ company might be a bit reluctant to change right away, but ethanol producers will have
find alternatives to the corn kernel. The government is capping how much ethanol can come
from corn starch.

As those requirements phase in, alternatives like Sugarcorn might look sweeter than they do
now.

For The Environment Report, I’m Shawn Allee.

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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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No Cars Left for Cash for Clunkers

  • Dealers across the country are running out of new cars to sell that qualify for the program. (Photo source: IFCAR at Wikimedia Commons)

Two billion dollars is being added to
the very popular Cash for Clunkers
program. The original one billion dollars
is almost gone. But, Lester Graham
reports, there’s a shortage of new cars
that qualify for the program:

Transcript

Two billion dollars is being added to
the very popular Cash for Clunkers
program. The original one billion dollars
is almost gone. But, Lester Graham
reports, there’s a shortage of new cars
that qualify for the program:

The National Automobile Dealers Association says they’ve been hearing from dealers across the country who’ve been running out of new cars that qualify for the program.

Steve Demers is the General Manager of Cueter Chrysler Jeep Dodge in Ypsilanti, Michigan, a state where Cash for clunkers has been especially popular.

“There’s virtually no vehicles available, so there are other areas in the country that may not be as – the program has not been as popular – so we’re able to pluck some of that inventory out of their states, but it’s a nation-wide problem. I mean, we’re out many, many states away, thousands of miles before we can find a vehicle that can be brought in for one of our custormers.”

Factories are shipping more cars to the dealers but can’t keep up with demand.

185,000 gas-guzzling clunkers have been turned in to be scrapped in exchange for the government incentives.

Car buyers get up to 4,500 dollars toward buying a new fuel-efficient model.

For The Environment Report, I’m Lester Graham.

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Interview: A Former CIA Director Talks Oil

  • James Woolsey was the Director of the CIA from 1993 to 1995 (Photo courtesy of James Woolsey)

The current recession has caused the price of oil to drop – most think temporarily. James Woolsey was the Director of the Central Intelligence Agency – the CIA – during the Clinton Administration. The Environment Report’s Lester Graham recently talked with him. Woolsey has been arguing that, no matter what the price, dependence on oil is a national security problem that we need to solve:

Transcript

The current recession has caused the price of oil to drop – most think temporarily. James Woolsey was the Director of the Central Intelligence Agency, the CIA, during the Clinton Administration. The Environment Report’s Lester Graham recently talked with him. Woolsey has been arguing that no matter what the price, dependence on oil is a national security problem that we need to solve:

James Woolsey: Well, I think moving away from oil dependence, period, is extremely important for our security, and it’s important because of climate change. We are funding both sides of the War on Terror. Oil, when it comes into a hierocracy or into a dictatorship, tends to enhance the power of the state. Tom Friedman summed that up very well in his chapter of his new book ‘Hot, Flat, and Crowded,’ the chapter is called ‘Fill’er Up With Dictators,’ and it’s a pretty accurate statement. We’ve also run the risk of oil cutoffs, of terrorist attacks in the Middle East, oil is just a very big national security problem for us, and it has a 97% monopoly on transportation. So, we’ve got to break that monopoly.

Lester Graham: It seems the only time you can get the general public’s attention on this issue is during periods of gas price spikes. What do you think it will take to get a sustained effort at the personal level to become more energy independent?

Woolsey: Most major automobile companies are coming out with plug-in hybrids here before long. Plug-in hybrids let you drive all electric for 30 or 40 or 50 miles before you then become just a regular hybrid using some liquid fuel. Three-quarters of the days, the average American car goes less than 40 miles. You’re driving on the functional equivalent of 50 to 75 cents a gallon when you’re driving on electricity. And that, I think, is going to get people’s attention and provide a real economic incentive to move toward plug-in hybrids – if the up-front cost of the battery is taken care of, by a tax credit, or by leasing the battery instead of buying it, or by some other financial arrangement. So people can then see they can drive on a lot less than the cost of driving on gasoline, whether it’s driving on $3 a gallon or $4 a gallon.


Graham: Now, you’ve stated your concern on climate change, global warming on several occasions, you consider yourself fairly conservative politically, I’m wondering what you make of the controversy and the debate that you recently heard in the House and what we’re likely to hear in the Senate.

Woolsey: Well, I’m kind of liberal on domestic things, and kind of conservative on defense and foreign policy things – which, to me, is a perfectly reasonable balance, but some people don’t see it that way. I think part, and possibly a very important part, of warming and climate change is likely to be being produced, most climatologists would say, by the fact that we’re pumping so much carbon dioxide into the atmosphere and trapping heat, that creates a problem. We still need to get the job done of stopping, as much as we can, something that could make the world a very, very unpleasant place – in terms of the height of sea levels and other things – for our grandchildren and great-grandchildren.

Graham: I read an article in The Futurist Magazine from the World Future Society which explained you’re doing a lot in your personal life to become more energy independent – what’s worked for you?

Woolsey: Well, we have photovoltaic cells on the roof of our farmhouse, and lead-acid gel batteries in the basement, and a plug-in hybrid. It’s a little expensive, but you can do a lot these days to make it possible to operate your home, at least the key functions of it, even if the electric grid goes down because of an accident or some kind of hacking attack or something. And you can be, at least, partially independent. It’s not ideal, it’s not perfect, it’s going to get better, it’s going to get cheaper, but you can get started now, if you want to.

Graham: James Woolsey is a former CIA Director, and is now a partner at Vantage Point, a venture capital firm. Thanks for your time.

Woolsey: Thank you.

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Bumpy Road Ahead for Hydrogen Cars

  • Sysco - a major food distributor - is part of a year-long government funded project. They're running seventeen of their forklifts using hydrogen powered fuel cells. (Photo by Mark Brush)

Six years ago, President Bush proposed to end our addiction to oil by building a hydrogen
economy. At the time, driving a hydrogen powered car didn’t seem that far off. But today, the
reality of mass produced hydrogen powered cars has hit some bumps in the road. Mark Brush
looks at the challenges ahead:

Transcript

Six years ago, President Bush proposed to end our addiction to oil by building a hydrogen
economy. At the time, driving a hydrogen powered car didn’t seem that far off. But today, the
reality of mass produced hydrogen powered cars has hit some bumps in the road. Mark Brush
looks at the challenges ahead:

It’s all about the fuel cell. The cell converts hydrogen gas into electricity that can power up a
motor. And when that’s done – the only thing that comes out of the tail pipe is crystal, clean
water.

So there’s a lot of enthusiasm to build hydrogen powered cars. If you live in Southern California,
you can drive a hydrogen powered car right now.

(sound of a hydrogen car commercial)

But you can’t buy this car. You can only lease it. And you have to have a pretty good map.
There are only 2 places where you can fill the car up with hydrogen.

And that highlights just one of the challenges facing the hydrogen car right now. There’s no
infrastructure – no network of gas stations – to support it.

Steven Chu heads up the Obama Administration’s Department of Energy.

“It’s an infrastructure that is as extensive as the infrastructure for gasoline and diesel. And that
doesn’t come overnight.”

Chu wants to eliminate all the research money for hydrogen powered cars and trucks. He says
there are too many big problems to solve. There’s the infrastructure problem. Fuel cells are
expensive. The cheapest way to make hydrogen right now releases pollution. And there are
problems with storing the gas.

In an interview with MIT’s Technology Review, Energy Secretary Chu referred to these problems
as the four miracles. And that didn’t go over too well with some people.

“A miracle? Really? How many miracles have you seen? I’m not sure I’ve seen a real miracle in
my life.”

Levi Thompson directs the Hydrogen Energy Technology Laboratory at the University of
Michigan.

He says talking about these problems as miracles sends the wrong message. He admits, there
are some big puzzles to solve. But he’s convinced scientists can solve them.

“If you believe this is the savior, that this is going to transform the way we do things, I think you
have a responsibility to invest – even though that you see that it’s far behind.”

Thompson says the ultimate goal for a hydrogen economy is to get the hydrogen from water
using electricity from renewable resources like wind, solar, and hydro-power. So you get the
clean burning gas you’re looking for.

It can be done today, but it’s expensive. Thompson thinks it’ll get cheaper as alternative sources
of electricity become more widespread.

The Energy Department doesn’t want to give up on hydrogen research altogether. Secretary Chu
says fuel cells do make sense on a small scale – like to power fork lifts in a warehouse.

(sound of a warehouse and forklift)

Here at this Sysco warehouse in Grand Rapids, Michigan, a mini hydrogen experiment is
underway.

Sysco is a major food distributor. This warehouse is part of a year-long government funded
project. They’re running seventeen of their forklifts using hydrogen powered fuel cells made by a
company called Plug Power.

Darin VanDuyn is with Sysco. He says, mostly, they’ve had a good experience with these fuel
cells.

“We’ve had about 80 hours of lost time due to repair – minor failures, things like that – but nothing
major has disrupted their operation.”

VanDuyn says the company hasn’t decided yet whether they’ll move forward with the fuel cell
program. But policy makers say real-world experiments like these move us closer to mass
produced hydrogen vehicles.

Even though the Obama Administration wants to cut funding for hydrogen powered cars and
trucks, Congress holds the purse – and has the final say. So far, it looks like Congress will
continue to fully fund the research.

Automakers say the ups and downs of federal funding don’t affect their plans. Several
companies say they’ll start selling hydrogen powered cars in 6 to 8 years – and they’ll let the
market decide the fate of the hydrogen economy.

For The Environment Report, I’m Mark Brush.

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Pitching Diesels as an Eco-Friendly Option

  • VW's Jetta TDI - a diesel that the EPA estimates at 40 miles per gallon (Photo by Julie Grant)

If you’re thinking about buying a cleaner, more fuel-efficient
car, you might think a hybrid is your best option. But some
automakers want people to look at an older technology when
they’re looking for green cars: the diesel engine. Julie Grant
reports:

Transcript

If you’re thinking about buying a cleaner, more fuel-efficient
car, you might think a hybrid is your best option. But some
automakers want people to look at an older technology when
they’re looking for green cars: the diesel engine. Julie Grant
reports:

Lots of automakers make diesel cars – BMW, Ford, General
Motors, Volkswagen. But they sell most of them in Europe,
not the U.S. Diesel engines have a bad rap here.

Just ask Jerry Doble; he used to drive a diesel truck.

“They’re noisy and they’re smelly and they’re hard to start in
the winter. And that’s about it, I guess.”

But Doble hasn’t seen the new diesel cars making their way
from Europe.

Mike Omotoso is an auto industry analyst with JD Power and
Associates.

He says diesel carmakers have lowered their tailpipe
emissions. They’ve put in extensive filtering systems. Plus,
the fuel, itself, is cleaner than it used to be.
Diesel used to have lots of stinky sulfur – up to 500 parts per
million – now it has only 15 parts per million.

But Omotoso says when most Americans think of clean cars,
diesels aren’t the first thing that come to mind.

“When people think of clean vehicles they think of the Prius
first, and then they think of Toyota and they think of Honda
as well. The manufacturers, especially the German
manufacturers, are having to do a job catching up to the
positive publicity of hybrids. So they have to persuade the
American public that diesels can be clean as well.”

That’s why you may have seen those Volkswagen
commercials on TV – where one neighbor has a Prius, and
the other a new Jetta TDI-diesel:

VW: “A TDI set a Guiness World Record – 58 miles per
gallon.”

Prius owner: “58 miles per gallon!”

VW: “But this baby hauls. It’s like errr…errr… What does
your Prius sound like?”

Prius owner: (sound of quietly exhaling)

VW: “Oh. That’s cool.”

There’s a couple of things going on in that commercial.
It’s pushing the diesel as a green car. It’s also trying to
dispel the image of diesels being slow and clunky. They’re
trying to push diesels as green, muscle cars.

At this Volkswagen dealership, salesman Aaron Heinlein
says these commercials are having some success.

He says the only people who used to buy diesels worked
with the railways, in construction, or on farms. But this
week, he sold a TDI Jetta to a dietician.

“She would be the customer that, if she came in four years
ago, I would have said, ‘wow, you want to look at a diesel?
Cool, I’ll show you one.’ Now it’s just, that’s the norm. It’s
the lawyer, it’s the dentist, it’s the traveling salesperson who
is in their car a lot and needs better fuel mileage that you
wouldn’t have seen four years ago.”

Diesels cars still makeup less than 1% of the market.

Americans want power and speed and that’s not how they
think about diesel engines. Things are different in Europe,
where gas is upwards of $8 per gallon and consumers are
focused on good gas mileage.

Auto industry analysts are expecting to see a jump in diesel
sales in the U.S. in the next few years.

But JD Power and Associates doesn’t expect all this
marketing to make a huge dent in American car sales.
They’re forecasting diesel car sales at 4% to 5% of the
market by 2016.

That’s when the new federal fuel standards take effect.

For The Environment Report, I’m Julie Grant.

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