U.S. oil prices recorded their eighth consecutive week of falls, the longest losing streak since 1986, after a sharp drop in Chinese manufacturing increased worries over the health of the world’s biggest energy consumer.
Oil prices have fallen this month to their lowest point in years, but fuel costs haven’t fallen nearly as quickly.
American drivers could soon be partying like it’s 1999.
With West Texas Intermediate crude now below $42 a barrel, the edifice of America’s oil and gas boom is finally crumbling.
Without much fanfare, the number of fueling stations offering an alternative to gasoline has passed the 20,000 mark, according to the federal government’s Clean Cities program. The number of gasoline fueling stations, according to the American Petroleum Institute, is 153,000.
The figure shows that alternative infrastructure is gaining ground even as the number of alternative vehicles sold in the U.S. has slowed of late, an obvious result of falling oil prices. On the other hand, the sale of alternative vehicles has actually accelerated in Europe. China is also giving indications of a big push that will attempt to make it the leading market of alternative vehicles in the world.
Clean Cities is a 1993 initiative of the Department of Energy that has picked up steam in recent years. Its efforts to reduce gasoline consumption include 1) replacing petroleum with alternative and renewable fuels; 2) reducing petroleum consumption through smarter driving practices and fuel economy improvements; and 3) eliminating petroleum use through idle reduction and other fuel-saving technologies and practices. The goal is to reduce gasoline consumption by 2.5 billion gallons every year through 2020. The program claims to have already reduced consumption by 6 billion gallons since its inaugural.
In order to carry out its mission, Clean Cities has formed coalitions with nearly 100 major cities covering 82 percent of the population of the United States. Coalitions are comprised of local businesses, fuel providers, vehicle fleets, state and local government agencies, and community organizations. These stakeholders come together to share information and resources, educate the public, help craft public policy, and collaborate on projects that reduce petroleum use. There are networking opportunities with fleets and industry partners, technical training workshops and webinars, plus information on alternative fuels, advanced vehicles, idle reduction, and other technologies that reduce petroleum use. There are also funding opportunities from the Department of Energy.
Probably Clean Cities’ biggest initiative, however, has been a map of alternative fueling stations across the country. The Station Locator has now grown to a list of 20,000. These include: 12,334 electric recharging stations, 3292 propane stations, 2,956 gas stations that offer E85 (up to 85 percent ethanol), 1,549 compressed natural gas (CNG) outlets, 729 biodiesel pumps, 115 liquid natural gas (LNG) outlets and 41 hydrogen stations.
Dennis Smith, director of the Clean Cities program, says that both plug-in electrics and propane vehicles are becoming increasingly popular. “Plug-in electric vehicle sales for consumers have passed more than 300,000 since they were introduced in 2010, and an increasing number of fleets are using propane,” he told AgriMarketing.com. The growth of these stations is most likely in response to a need from these drivers. In addition, both propane and EV stations are less expensive to purchase and install than those for many other fuels.” Smith also said that the number of CNG and LNG stations understates their impact, since they tend to service heavy-duty trucks along interstate highway routes.
While the sale of alternative vehicles may have leveled off of late in the United States, they are burgeoning in Europe, despite the drop in world oil prices. Alternative fuel vehicle registrations rose 17.4 percent across Europe in the second quarter of 2015, and 24.6 percent over the first half of the year. There are now nearly 300,000 registered vehicles, according to the European Automobile Manufacturers’ Association. The United Kingdom led the pack in major markets with an increase of 62.4 percent registrations in the second quarter. Norway led the entire continent, however, with 77 percent of all 11,614 newly registered vehicles being electrically powered. The country has offered huge incentives to alternative fuel owners as its oil production from the North Sea begins to taper off.
Meanwhile, in China, the Beijing city government is considering investing tens of billions in a plan to make the Middle Kingdom the world’s largest manufacturer of alternative vehicles. China now has 18,000 EVs on the road, 10,133 public passenger vehicles and 8,360 owned by individuals and organizations.
To cut down on traffic, Beijing has a unique system in which cars with certain license plate numbers are forbidden from being within the city’s fifth-ring road from 7 a.m. to 8 p.m. from Monday through Friday. And it’s not automatic that a new car can receive a license plate. But electric vehicles are much easier to register and will be allowed to drive within the city at any hour, giving them a distinct advantage. BAIC, the principal maker of EVs, has become China’s largest automobile manufacturer, controlling 22.5 percent of the market.
So the initiative to cut down on imported oil is universal. In Europe, it comes from heavy-handed government subsidies and regulations. In China, it comes from government favoritism and outright prohibition. In the U.S., however, volunteer organizations, led by government initiative, seem to be achieving similar results.
The Corn Belt might be where most ethanol gets produced, but the bulk of potential consumers are on the urban coasts. Protec in the East and Propel in California are learning what it takes to drive E85 sales.
A breakdown at a BP refinery outside Chicago is sending jolts across the energy markets of the Midwest and Canada, pushing up gasoline prices even as oil prices over all reached a six-year low
The lowest crude prices in six years might not be enough to put the brakes on the U.S. energy renaissance.
The more you look at the contemporary scene with gasoline and imported oil, the more you have to wonder why we’re not switching some of our fuel needs to methanol.
Look at what’s happening: Oil has become so plentiful that we’re reverting to the old situation of the 1950s, when the big concern among oil people was that some new discovery was going to be made in some far corner of the world and there would be a new “glut” that would cause the bottom to fall out of the market. It was during this era that we placed a 20 percent cap on our oil imports. The concern was that there was so much cheap oil in the world that the American oil industry would be decimated.
All that changed in 1970 when American production finally leveled off — right about the time geoscientist M. King Hubbert had predicted “Hubbert’s Peak” would occur. The import ban proved easy to circumvent, and before we knew, it we were importing 36 percent of our oil, most of it from the Persian Gulf. OPEC, first convened in Baghdad by Saddam Hussein in 1960, suddenly became more than a debating society and realized it had real market leverage. Instead of begging the oil companies for higher royalties, the OPEC nations suddenly realized they could raise their price and even withhold supplies. The era of the Energy Crisis had begun.
Congress did all the wrong things in responding. It extended President Nixon’s price controls on one commodity, oil, creating a domestic shortage — too much consumption, not enough production. We made up for this by importing more oil, in which the price controls didn’t apply. While President Carter mandated a “moral equivalent of war” and wore cardigan sweaters, the price controls had the exact opposite effect: Our imports swelled from 36 percent to 50 percent in 1980, and we were sitting ducks when the outbreak of the Iran-Iraq War suddenly cut short supplies. The result was the Second Gas Shortage.
President Reagan put an end to all this by striking down the oil-price controls his first week in office. Drillers went wild in Texas, and the Saudis flooded the market in trying to maintain market share. Soon prices had collapsed back to 1972 levels, and the “oil shortage” was pretty much forgotten.
Meanwhile, similar developments were taking place in natural gas. This commodity had been subject to federal price controls since the 1930s. Basically, it was an attempt by the Northern consuming states to rob Texas and Louisiana of their natural resources. In 1977 we actually experienced a “natural gas shortage” that caused factories and schools all over the North to close down in mid-winter, while Texas and Louisiana were burning natural gas for electricity — then considered horribly wasteful — because the price controls did not apply intrastate. This “crisis” was solved more slowly as natural-gas price controls were not phased out until 1988. Once again, supplies gushed forth. (We did learn a lesson. Nobody has talked about price controls on oil and natural gas since.)
Even with the market freely operating, however, the natural supplies of both oil and natural gas seemed to be diminishing, so that by 2005 we were running short of gas and back to importing more than half our oil. Then George Mitchell’s fracking revolution began. Suddenly, America was the world’s leading producer and oil and gas were once again in abundance.
Yet as far as freeing ourselves from further dependence on foreign oil, the results have been disappointing. Even though we are again producing 10 million barrels of oil a day, we are still dependent on imports for 30 percent of our oil, about one-quarter of this from the Persian Gulf. Low prices have stimulated consumption. People are going back to buying bigger cars and our gasoline use is hitting new records. Sales of electric cars and other alternative vehicles have nearly collapsed. Whatever impulse there is toward conservation is highly dependent on price.
Anything that requires a new infrastructure — electric cars, hydrogen vehicles, compressed natural gas and propane — will have trouble getting beyond a niche market. It’s simply too troublesome and expensive to get people to convert. But corn ethanol and methanol both slot easily into our current system of gas pumps and can compete.
The trouble with corn ethanol is that we are rapidly exhausting the potential supplies. We now use 40 percent of the corn crop to replace 3 percent of our gasoline. Cellulosic ethanol may expand supplies, but it is still basically experimental.
That leaves one fuel that could potentially replace vast amounts of our imported oil — methanol made from natural gas. We have enough natural gas supplies from fracking to make this a game-changer.
The great irony is that China sees this opportunity and is already seizing it. The Chinese are busy constructing two huge methanol conversion plants in Texas and Louisiana in order to take advantage of the abundant supplies coming out of the region. The Chinese have a million methanol cars on the road and will be carrying these supplies back to China to power their growing transport sector.
Yet the EPA continues to refuse to allow methanol to be used in car engines, mainly because of the reputation earned as a poisonous “wood alcohol” during Prohibition.
As Anne Korin of the Institute for the Analysis of Global Security once said: “I think methanol fares poorly in Washington precisely because it doesn’t need any subsidies or government assistance in making it economical. For that reason you have no big constituency behind it and no member of Congress crusading on its behalf.” The entire farm belt is working to support ethanol, but there is no “methanol state” or corresponding congressman working in its favor. For that reason it languishes.
For almost 50 years the Indianapolis 500 cars have run on methanol. Yet it is still forbidden in our commercial transport sector. Isn’t it time that somebody considered the general good and started crusading on behalf of methanol?
(Photo by Vivid Racing, posted to Flickr)
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We did some quick math here at Fuel Freedom Foundation, and we can say, without hesitation, that there are thousands of flex-fuel vehicles on the road in Sacramento and its environs.
Attention soccer moms in your GMC Yukons, and dads in your Chevy Silverados and Ford F-150s! This is a deal you can’t afford to miss.
Tomorrow, Wednesday, Aug. 12, five gas stations in the Sacramento area will sell E85 ethanol fuel for 85 cents a gallon, from 8 a.m. to 5 p.m. See what they did there? E85 all over the place!
Here are the five participating stations:
Our friends at San Diego-based Pearson Fuels are sponsoring the promo. The five stations are the newest outlets for E85 in a network that spans California. (We wrote about Pearson and its business model a couple months back.) Check out Pearson’s release for more information.
There are some 1 million flex-fuel vehicles in California, built to run on E85, a cheaper, cleaner-burning fuel than gasoline that also emits fewer toxic pollutants that foul the air and fewer greenhouse-gas emissions that warm the planet. Since there are about 2.1 million people living in the Sacramento metro area, 5.4 percent of the state’s population, we can extrapolate that there are roughly 54,000 FFVs in the area.
So get thee to the pump, and tell your FFV-driving friends!
Even after Wednesday, when E85 resets to its usual price, consumers will still see a benefit. It’s usually 25 to 30 percent cheaper than regular 87 octane.
Even if you don’t own an FFV, you can enter our contest to raise awareness about the benefits of E85. You could win a $50 Amazon gift card!
