Arctic Leaf

What does Shakespeare have to do with California gas prices?

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William Shakespeare once said that there are “occasions and causes why and wherefore in all things” (Henry V). I would edit the Bard of Avon and add, except when trying to readily understand recent oil price increases in California.

Put two analysts in a room and ask about the cost of oil and you likely will get three or more answers. Many parents send their kids to college to study the hard economic sciences only to find out that their hopes and dreams are often dashed by ideology or weak methodology — sometimes both. Conservative economists argue it’s the fault of unnecessary environmental regulations and taxes. Liberals respond that high prices result from oil speculators and price management by oil companies. Non-ideologues merely respond with, “I don’t know,” and then give a lecture on probable causes, most times, without empirical data related to correlation or causation to back up their statements.

We now have lots of conflicting facts and observations without any real strategic comprehension of what both mean. For example, gasoline prices in California have increased relatively fast and by a large amount, while the cost of oil per barrel has stabilized or even decreased. Daily oil prices per barrel fluctuate, but the variations have been relatively small, and oil costs remain quite low.

The per-gallon price of gasoline in the state has surpassed $5 per gallon in a few stations and is well over $4 per gallon at many other stations. Consumers are dazed, depressed and angered by the severity and quickness of price increases. (Manic depression has likely set in, in light of recent exposure to the previously lower prices at the pump. The New York blackout generated more babies, and the gas crisis of 2015 will probably lead to more visits to psychiatrists.)

Guesstimates of the why and wherefore of price increases reflect more the skills of a carnival barker than that of a skilled economist. Step right up and name your selection of one or more factors leading to the significant and comparatively high gas price increase in California, compared with other states. California has earned the right to claim the title of most expensive regular gas in the nation. Maybe, like in the early ’60s, the Golden State can install an electronic sign celebrating its achievement on the Bay Bridge, in the “left my heart” city of San Francisco, as it did when its population surpassed New York’s. Of course, I am just kidding. It’s not a feat the state is proud about.

Forget the ideologues for a minute! What are respected observers saying about the whys and wherefores of the severe spike in prices in California?

Many journalists writing for newspapers (happily, we still have print!), in and out of California, grant causal status to increases in the state and federal gas taxes, now adding nearly 70 cents to the price of a gallon of gas. Approximately, 10 cents of the total in most stations reflects a new carbon tax on wholesalers.

Others suggest that frequent breakdowns and poor conditions of refineries, as well as recent fires at refineries in California, add up to production and inventory limits. These assertions make some sense, given the marginal room in existing refineries to build more capacity and production.

Some political leaders point to the fact that there are only a relatively small number of refineries in the state. Added to this fact, some say, is the almost oligopolistic control of refineries by two major oil companies. Did you know that Chevron and Tesoro together control nearly 60 percent of California’s refinery capacity? Some oil analysts say the percentage is much, much higher than that — up to 80-90 percent.

Clearly, there is a negative impact on prices generated by a lack of real competition. Significantly, many observers from in and out of the state have warned about the possibility of managed prices in light of the structure of the industry (and its secrecy). In a similar vein, investor speculation on oil has been raised as a variable leading to higher costs at the pump by Sen. Diane Feinstein and others. A few years ago, Sen. Feinstein sought hearings on possible skullduggery. Interestingly, despite assumed inventory shortages, refineries exported nearly 3.5 million gallons a day just before recent major gas-price increases. Gasoline is traded on a global market governed by profits and price disparities — not social welfare.

Coming around third and heading home! Both the costs associated with the state’s requirements to shift from one blend of fuel used in the winter to another in summer, combined with the apparent costs of California’s baseline environmental-blend requirements, are seen by some experts as factors generating higher gas costs and negligible imports from other states.

Blend and seasonal shift mandates normally do increase the costs of gasoline. They probably create extra costs, particularly when the inventory is short, as it is now.

California exports ideas, fashion and lots of other things. But generally, when shortages occur — real or not — the state must import gasoline. It is isolated from refineries in the U.S. and foreign refineries. California must rely on ships, trains and trucks to secure imported oil. No pipelines exist that move gas beyond the boundaries of the state or into the state. No swimmers are strong enough to carry oil on their backs. Pre-spike low prices and blend requirements appear to have muted the incentive to send gasoline to California among would-be exporters.

Surprisingly, there is no consensus-based factor analysis determining the various causes and their relative impact on the upward spike of gas prices. If I had to place a bet on the major causes, I would bet on the likelihood of managed prices and investor speculation, current limited statewide refining and pipeline capacity, and absence of storage capacity.

Are there antidotes to California’s problems? Maybe, but not one that can or will be available tomorrow! But they could be available relatively soon, with political courage and changes in consumer behavior and perceptions. Increased competition at the pump from alternative fuels, including ethanol, electric vehicles, natural gas and, perhaps in the near future, fuel-cell technology and a range of biofuels, would generate more stability and lower prices in the gas market. Public support for applied research into alternative fuels, particularly options that currently aren’t ready for prime market time, is also necessary. Congressional willingness to pass open-fuels legislation, converting gas stations to, in effect, fuel stations, would help.

The EPA’s willingness to lessen the expenses and speed up the process associated with certification of kits able to convert internal combustion engines to run on E85, and to test and increase the number and classes of potentially convertible flex-fuel vehicles, would create demand and supply. Detroit’s willingness to increase production of new flex-fuel vehicles would provide a real “fuel additive.”

William Shakespeare’s whys and wherefores could become a happening? If so, California Dreaming (The Mamas & the Papas) about lower fuel costs and environmentally friendly fuel could become a reality. Oh, and I just paid $4.33 for regular gas at my friendly gas station!

Landon Hall

Some drivers are blending their own ‘premium fuel’

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This week I wrote about the sudden, inexplicable rise in gasoline prices in Southern California, and how much lower prices for E85 ethanol blend is.

E85 is meant to be used in flex-fuel vehicles (FFVs), or vehicles that have been converted from gasoline-only to run on higher ethanol blends. But we’ve been hearing from drivers around the country who use E85 even if they don’t have an FFV. Although E85 isn’t approved for these vehicles, some consumers, enticed by the many benefits of E85 — the price point, the fact that it’s cleaner and made in America — are happily using it anyway.

Older cars might not be able to use higher ethanol blends (what we call regular gas is E10, meaning it has up to 10 percent ethanol) and run efficiently. There’s a potential for damage to engine parts of some older cars. But some pro-ethanol drivers, especially those who own newer vehicles with sophisticated on-board diagnostics (OBD) computers, have reported no problems.

“Both of my gasoline vehicles use E85 and perform flawlessly,” Jeffrey Matthews of Murfreesboro, Tennessee, wrote in a comment to a lively FFF Facebook post this week. “And both pass the annual emissions test with flying colors.”

Cheryl Near, who with her husband Phil co-owns two fueling stations in Wichita, Kansas, that sell both E10 and E85, says some customers fill up with E85, regardless of their make and model.

“We had a lady that had an older model car, before 2001,” Near, who also appears with Phil in our documentary film PUMP, wrote on Facebook. “I went out to ask her if she knew that she was filling with E85. She told me that she did and that she loves it. Her son logged her mileage for her and they found that her car got BETTER gas mileage on E85. Our pumps are clearly marked so if I see somebody filling with E85 in a non FFV, I will go talk to them. They all know and choose to fill with E85.”

Of course, not everyone has easy access to a station that sells E85. (There are 2,639 such stations in the U.S., according to the Alternative Fuels Data Center’s locator, which you can access through our Fuels 101 section.) There needs to be more stations, that’s one of our goals as a foundation.

Even among those who can find the fuel, what if you wanted to use more ethanol than just puny E10, but weren’t prepared to go full bore with E85?

Some drivers “splash blend” E10 with E85; the sensors in the OBD can determine the properties of the fuel in the tank and adjust the oxygen intake accordingly.

“I use 30-50% E85 no problem,” Jason Fritsche wrote on Facebook.

John Brackett, an automotive engineer who also appears in PUMP, wrote in an e-mail: “Since most E85 actually tests as E70-75, and all other gasoline is E10, the blend is usually about E35-E40. This is a great way to make your own ‘premium fuel.’ ”

E85 is technically any concentration between 51 percent and 83 percent ethanol, depending on the season and the part of the country where it’s sold. Because ethanol has less energy content than pure gasoline, drivers might see anywhere from a 15 to 35 percent dropoff in mpg using E85 compared with E10. Which means you’d have to fill up an extra time every couple weeks.

To achieve a certain target level of ethanol blend, you can use one of several smartphone apps to perform the calculations: E85 Mix Calculator is available on both iTunes and the Google Play store for Android. Another is E85 Calculator on Google.

Arctic Leaf

Maritime industry turns to alternative fuels

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One giant cargo ship emits nearly as much pollution as 50 million cars. That was the jaw-dropping nugget in a Guardian story way back in 2009. For years, there has been a movement to introduce alternative fuels to the world’s maritime industry.

Almost all ocean-borne shipping now runs on heavy oil or diesel fuel and has done so since the conversion from coal in the early part of the 20th century. Both these fuels have high carbon content, however, and have also been targeted for emission of nitrous oxide and sulfur dioxide. Both international agencies and the Environmental Protection Agency are starting to crack down, which has spurred interest in the substitution of alternative fuels.

Maritime shipping now absorbs about 5 percent of our oil output, including oil imports. There’s no particular imperative to cut back on this consumption, but the effort to reduce our oil dependence may be able to piggy-back on the larger effort to cut down on pollution and emissions. All the alternative fuels being mentioned are based on electricity or natural gas.

What is particularly intriguing is the possibility of methanol as an alternative fuel. Methanol as a substitute auto fuel has been stymied by the EPA’s refusal to endorse it for transportation, even though it does not differ significantly from ethanol or regular gasoline. But this restriction does not apply to methanol use in ferries and ocean-going cargo ships. The introduction of methanol in maritime traffic could pave the way for its use in our automobiles as well.

The International Maritime Organization (IMO) and the EPA have both introduced restrictions on NOx gases emanating from cargo ships in port areas, known as Emissions Control Areas (ECAs). These have been met by the manufacturers introducing internal engine modifications. But sulfur regulations will be different. Both the IMO and the EPA introduced sulfur standards for port areas in 2010 and lowered them to maximum 0.1 percent sulfur this year. The regulations will be extended globally in 2020 or 2025.

Meeting these standards has meant a) switching to low-sulfur fuel, or b) introducing on-board sulfur scrubbers. Both of these options are very expensive. This has prompted a search for alternative fuels that do not contain sulfur. Both natural gas and methanol qualify.

Liquid natural gas (LNG) was first utilized by LNG carriers in the 1960s. Because these ships were already carrying the fuel, conversion was easy. The first LNG-powered ferry was built in Norway in 2000. In the ensuing decade, 20 more LNG-powered ships were built, many of them operating in Norwegian waters. Since 2010, the growth of LNG-powered ships has accelerated, resulting in 59 ships in operation today and another 80 under construction and planned for delivery by 2018. The size of the ships has increased as experience has been gained. Most of the newly built vessels will operate in northern Europe and North America, but some will be put afloat as far away as South America and China.

There are some disadvantages: LNG tanks are roughly 3-4 times the size of oil tanks and can increase the cost of a new vessel by up to 30 percent. Methane leakage can also be a problem that cancels any advantage gained in carbon emissions. But technological improvements could minimize these problems.

Biofuels are another possible substitute, and among these is methanol. In “The Fuel Trilemma: Next Generation of Marine Biofuels,” a study published in April, DNV GL Strategic Research & Innovation says methanol can be made from coal or natural gas but also suggests black liquor, the by-product of the pulp and paper industry. “Interest in methanol as a shipping fuel increased after Stena Line’s decision to retrofit one of its vessels for using methanol, as a solution to low sulfur fuel requirements,” the report says. Methanol has several advantages over LNG. “[T]he cost of retrofitting for methanol is much lower than the cost of retrofitting for LNG, due to the properties of the fuel.” The same holds true for automobiles, of course, where LNG requires an entirely new engine and on-board storage tank while methanol can simple be fitted into our current infrastructure.

DNV maintains that the many ways of producing methanol all promise a low carbon footprint. “Another interesting possibility for producing methanol with a low carbon footprint is directly from hydrogen by electrolysis run on geothermal electricity and CO2 from the same geothermal source. This is currently being tested in Iceland.”

Finally, DNV considers the possibility of running boats – mostly localized ferries – on electricity. “The first fully electric ferry will enter service in Norway’s Sognefjord during 2015, in a cooperate effort between Siemens and the Norwegian shipyard Fjellstrand. It has a capacity of 360 passengers and 120 cars, and produces no direct emissions as the power is generated from the shore-based grid.”

Powering ships undertaking longer voyages than short ferry runs, of course, will require power packs on the scale of Tesla’s home storage devices. But a great deal of the world outside the United States runs on ferries, and the possibilities for reducing oil consumption here are widespread.

So world maritime travel offers many opportunities for reducing our dependence on oil. And the most interesting possibility is the introduction of methanol – either from natural gas or biological substrates – as an easy substitute for oil-based fuels.

(Photo: Maritime-Connector.com)

Fuel Freedom Staff

7 ways our oil addiction is hurting the economy

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We spend billions of dollars every year on oil that could be spent on cleaner, cheaper, American-made fuels. The impact of this addiction can be seen throughout our economy in a cycle of job and money loss:

  1. AMERICAN JOBS: When oil prices fluctuate, all levels of the economy are affected. When businesses have to pay more to ship their products because of a spike in fuel prices, they have to cut those costs elsewhere, leading to job loss.
  2. RECESSIONS: Of the 11 recessions in the U.S. since World War II, 10 were preceded by an oil-price spike. By breaking our oil addiction and investing in fuel choice, we can break this cycle.
  3. RELIANCE ON IMPORTS: The U.S. imports about 40 percent of its oil, sending money abroad that could have helped our economy at home. Building up the domestic infrastructure of alternative fuels would spur economic activity, instead of siphoning away billions that flow overseas.
  4. HOUSING: High gas prices hit close to home. As gas prices rise, the value of homes farther away from big cities, according to economist Joe Cortright, begin to devalue as the cost of commuting rises.
  5. WALL STREET: In July 2008, the price of oil hit $147 a barrel, and two months later Wall Street followed suit. In one day, the DOW Jones Industrial Average fell 777 points, ushering in the financial crisis.
  6. FLUCTUATING PRICES:  When gas and oil costs go up, the cost of other products follows. Suddenly, consumers have to pay more for everyday goods that require gasoline or diesel to be shipped. And when we’re spending more on our everyday necessities, we’re spending less on other things we need — delaying big purchases.
  7. LIMITED CHOICES: With no other options (unless you’re driving a flex-fuel or an electric car), the fluctuation of gas prices leaves the average consumer a sitting duck — unable to pay the price, but unable to purchase any other fuel. That’s why bringing fuel choice to the pump is so important.

The U.S. is at the mercy of oil companies as prices fluctuate, impacting our economy, including day-to-day prices for consumers and the overall job market. It’s time to break this cycle of dependence by bringing fuel choice to the pump.

Join the movement: http://www.fuelfreedom.org/take-action/

Arctic Leaf

United hopes third try with biofuels is the charm

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United Airlines took a giant step toward cutting its reliance on foreign fuels last week when it made $30 million investment in Fulcrum BioEnergy, one of the leading manufacturers of aviation biofuels made from municipal waste.

The move is being touted as a step toward reducing carbon emissions, although there are some doubts about its impact in that respect. But reducing consumption of jet fuel certainly will have a significant effect in reducing our dependence on foreign oil.

Last year, United’s fleet of aircraft consumed 3.9 billion gallons of jet fuel, at a cost of $11.6 billion. Fuel costs represent 40 percent of any airline’s total expenses, and any move that cuts into that expense would be huge. Jet fuel currently sells for $2.11 a gallon, whereas Fulcrum says it can provide biofuel for less than $1 per gallon. More than 12 percent of our oil goes to making jet fuel.

Fulcrum has developed and certified a technology that can turn municipal waste, like household trash, into a sustainable aviation fuel that can be blended with existing jet fuel. The company is currently building a refinery called the Sierra BioFuels Plant near Reno that is scheduled to begin operation during the third quarter of 2017. The company also has plans for five more refineries around the country.

Biofuels are having some difficulty penetrating the automobile market, for a variety of reasons. But they’re perfectly suited for airlines. For one, they are a “drop-in” fuel that can be substituted for jet fuel without any changes. It will not require a whole new national infrastructure.

Second, airlines do most of their fueling at centralized locations. This eliminates a lot of difficulty in transporting and distributing the fuel. United, for instance, can fuel a very high percentage of its flights from its hub in Los Angeles.

Third, with jet biofuel there’s no risk of hitting the “blend wall” that supposedly limits ethanol to 10 percent of the gasoline mix. United says it will begin using Fulcrum’s fuel in 30 percent of its fuel mix for the first two weeks of flights between Los Angeles and San Francisco this summer. After that, the biofuels will be mixed in with its entire fuel stock.

United’s deal with Fulcrum is just one of several recent efforts by airlines to get into the biofuels business. Alaska Airlines aims to use biofuels at one of its airports by 2020. Southwest Airlines announced last year it would purchase 3 million gallons of jet fuel made from wood residues and produced by Red Rock Biofuels. And last year British Airways joined with Solena Fuels to build a biofuel refinery near London’s Heathrow Airport for completion by 2017.

United is on its third venture into the field. In 2009 the company made an unsuccessful attempt to introduce jet fuel manufactured from algae. Then in 2013 it agreed to buy 15 million gallons over three years from California-based AltAir Fuels, which makes biofuels out of inedible natural oils and agricultural waste. United is expecting the first 5 million gallons of Fulcrum fuel to be delivered to its LAX hub this summer.

The decision comes at a good time for the airlines, because the Environmental Protection Agency is starting to make noise about regulating the emissions of jet planes. Jet planes account for only 3 percent of our carbon emissions, but the number is growing rapidly. The Obama administration is proposing to set limits for airliner emissions. The International Civil Aviation Organization, a United Nations agency, is also expected to complete its own deliberations on setting standards to limit airline emissions by next February.

Fulcrum claims its technology will reduce the airlines’ carbon emissions by 80 percent, but this is based on dubious math that says carbon emissions count for zero if they do not come from fossil fuels. This premise has been challenged by a growing number of scientists who say that the whole logic of biofuels is flawed. Professor Timothy Searchinger of Princeton University has become a gadfly to the industry, arguing that if a forest is cut for biofuels consumption, it will be 90 years before this carbon can be replaced by new growth. A group of 78 scientists recently sent a letter to EPA Administrator Gina McCarthy warning against the new EPA policy of encouraging the substitution of wood for coal. They said there would be no savings in carbon emissions.

The same logic applies, to some degree, to the use of municipal waste for biofuels. If the waste remained in landfills, it would be stored and not feeding its carbon content to the atmosphere. Therefore, it doesn’t make much difference if they are substituted for fossil fuels – the carbon output is the same. There is some benefit to using it, however, since some carbon from municipal waste ends up escaping from landfills as methane, and many facilities are required to capture it.

As far as gaining an advantage in cutting the level of foreign fuel imports, however, there is no question that biofuels can substitute for jet fuel on a 1-to-1 basis. Airlines are at a disadvantage in that they cannot be powered by electrification or natural gas, as is starting to occur in the automotive sector. Therefore, the amount of municipal waste-based fuel that can be substituted for oil-based jet fuel will be significant. And after all, the nation is certainly not going to run out of household trash.

(Photo from Hub.United.com)

Fuel Freedom Staff

Four reasons why fuel choice is good for the environment

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There’s a lot to love about fuel choice — lower gas prices, reduced dependence on foreign oil, and of course helping the environment. That’s right: Bringing competition to the pump isn’t just good for your wallet, it’s good for your planet.  When you support fuel choice you’re helping make a cleaner world. Here’s how:

  1. AIR POLLUTION: It’s the most important thing we do every day, and we do it thousands of times a day without even thinking about it. Breathing. Yet for 44 percent of the nation, according to the American Lung Association, breathing isn’t simple. These 44 percent live in areas where the air quality is dangerous. Where every breath brings toxins like hydrocarbons, nitrogen oxides, carbon monoxide and particulate matter. Where do those toxins come from? Mostly, from dirty transportation fuels like gasoline and diesel.
  2. DANGEROUS TRANSPORTATION: The increased oil production in the United States in recent years has put more pressure on the U.S. rail system to move around all that oil, and that has led to a string of derailments and spills that have polluted groundwater and threatened wildlife. Between 1975 and 2012, 800,000 gallons of crude oil was spilled in accidents in the U.S. In 2013, 1.15 million gallons were spilled. In 2014, another 57,000 gallons were spilled from a record 141 “unintentional releases,” which also caused $5 million in damage. By displacing some oil and using more ethanol, the risk would come down considerably, since the fuel is less volatile than petroleum and dissipates quickly in water.
  3. CLIMATE CHANGE: The average American car releases about 6 tons of carbon dioxide into the environment every year, and oil is responsible for 43 percent of the fuel-related CO2 emissions in the United States. These emissions inflict great harm on the climate. Imagine how much cleaner our environment could be if we added more fuels like ethanol and methanol into the market. Embracing fuel choice will allow consumers to have access to cleaner fuels, while decreasing our carbon footprint.
  4. OIL SPILLS: Our oil addiction has hurt more than our wallets – it’s hurt our environment. Oil spills, like the Deepwater Horizon disaster in the Gulf of Mexico in 2010 and the Santa Barbara pipeline spill in May, devastate wildlife and ruin livelihoods. Breaking our oil addiction and ushering in an era of fuel choice will reduce demand for oil, and the potential threat of leaks and spills.

There are many ways to clean up the planet, but opening the market to cleaner types of fuel is too important to ignore. Want to help us make fuel choice happen? Together, we can move toward fuel choice and a cleaner environment: Join the movement today by visiting: Fuelfreedom.org/take-action.

Landon Hall

Former Shell Oil chief: U.S. must become more oil independent

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Just in time for the Fourth of July weekend: Our very own John Hofmeister speaking words of wisdom about the need for the United States to wean itself off oil as its dominant transportation fuel.

“It’s incumbent upon the United States of America to become more oil independent,” Hofmeister said at a security conference in Israel in June. “Because it still relies on nearly 7 million barrels a day of imports, and in a nation that uses 18 and a half to 19 million barrels of oil per day, the loss or the risk of 7 million barrels a day of imports puts that nation at about two-thirds of independence, and that’s not enough for the world’s largest economy.

“So there remains an interdependence, until the U.S. can find independence, and it has every right and every responsibility to pursue independence. As does every other nation.”

Watch Hofmeister’s full talk at the Herzliya Conference in Tel Aviv:

Hofmeister knows of what he speaks: He was the president of Shell Oil Co., the American subsidiary of oil giant Royal Dutch Shell, from 2005 to 2008. The author of “Why We Hate the Oil Companies” now travels the world talking about the need for alternatives to oil. He’s not only on the board of directors and advisors at Fuel Freedom, he founded a nonprofit called Citizens for Affordable Energy.

U.S. crude prices closed at $56.96 a barrel Wednesday, down $2.51 or 4 percent, the biggest one-day drop since April 8. Compare that to last summer, when the price was above $100. But the market remains volatile, and Hofmeister said having oil at an affordable price long-term is necessary for national security.

“If you’re not taking care of yourself, no one else will,” Hofmeister said.  “And so nations should look to their security — not just to their defense forces, but to their energy supplies — which in the United States, is why I’m almost entirely focused now on transitioning natural gas to transportation fuels, as well as biofuels, as well as electricity for transportation. Because the future of oil is simply limited. We’re not running out. It won’t disappear. But it simply won’t be available at this price for an indefinite future.”

Hofmeister expanded on another of his major themes: that natural gas, which is cheap and plentiful in the United States, could help the U.S. and other nations reduce oil consumption. Natural gas is used as a fuel in its gaseous, compressed form — as CNG and LNG — and it can also be processed into liquid alcohol fuel, ethanol or methanol.

“Over the next decade, nations like the United States, or like Israel, or like much of Europe if not the whole of Europe, that are not transitioning at least a third of their oil demand away from oil and toward natural gas will only look back in regret.”

(Photo credit: Poet Biorefining plant in Macon, Missouri. From FarmProgress.com)

Arctic Leaf

Tesla continues to walk the tightrope

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One simple slide in a PowerPoint presentation by a Tesla official at an auto convention in Washington this month did almost as much damage as Elon Musk’s rocket blowing up soon after liftoff.

JB Straubel, chief technological officer and co-founder of Tesla Motors, put up a slide on June 15 indicating that Tesla’s Model 3 would not “begin production until 2018.” This apparent delay set the new vehicle back from the previously announced deadline of 2017 and almost knocked the company for a loop. The website Inside EVs broke the story, as it were, and word of the PPT slide was repeated in countless news stories. The interpretation was clear: Once again, Tesla had been forced to postpone key product rollout.

Within hours, Tesla had assured investors and analysts that it was not changing its schedule. The $35,000 Model 3 will be available in 2017, as previously planned. “Contrary to speculative blogger reports, we still plan to show Model 3 in 2016 and begin production in 2017,” Ricardo Reyes, vice president of communications, tweeted. The statement about production in 2018 was said to refer to “full production,” an attempt at back-filling that many analysts viewed with a grain of salt.

Whether the reference to 2018 was just a typographical error or an inadvertent peek under the kimono, the controversy showed how delicately balanced Tesla’s position is, both in terms of meeting customer expectations and in raising money to continue its projects.

Missing deadlines would certainly be nothing new for Tesla. In February 2012 the company said its crossover Model X would be available by the end of 2013. In February 2013, it said it would be late 2014. In November 2013 the company announced that a small number would be available by the end of 2014, but actual deliveries would not begin until the third quarter of 2015. Everyone is waiting to see if this deadline will be kept. Meanwhile, speculation has increased that any delay in the debut of the Model 3 may be due to the resources that have been spent trying to get the Model X out the door.

The Model 3 is Tesla’s bid for the big time. The car is projected to have a range of 500 miles and would be priced at the aforementioned $35K, less than half of the $79,570 MSRP of the 2015 Tesla Model S. The Model 3 is intended to be a mass-market sedan that’s well within the reach of the average car buyer. Musk, Tesla’s flamboyant co-founder and CEO, hopes to sell 500,000 versions of the Model 3 by 2020, a feat that could put Tesla on a firm financial footing.

But there are pending obstacles. One is the Chevrolet Bolt, a plug-in all-electric that is the successor to the Volt, a plug-in hybrid. GM demonstrated the Bolt in a sample model this month and will also be priced in the $35,000 range. GM promised to have the Bolt on the market by early 2017, which would beat Tesla’s Model 3 out of the gate.

Whether electric-car buyers will be attracted to the Bolt – or whether they will wait for what will almost certainly be a superior product from Tesla – is a hotly debated question. “GM is ramping up to make 20,000 Bolts. Tesla is ramping up to make 500,000,” said one commenter to a Wall Street Journal story. “When a company names its new car the ‘Bolt,’ Tesla has little to worry about,” said another. But other readers cited GM’s superior service network, and the company’s long history of making money, while Tesla has only lost money.

One thing is certain: Tesla is building brand loyalty. A survey of 145 Tesla owners by automotive analyst Dan Dolev of Jeffries found that 85 percent said their next car would also be a Tesla, and 25 percent wouldn’t even consider another brand. Eighty-three percent said they would recommend Tesla to their friends, and a remarkable 89 percent said they would still buy a Tesla without the $7,500 federal government tax break. The owners also turned out to be not nearly as rich as expected. Almost 70 percent had previously owned cars that cost less than $60,000, including ones as modest as a $15,000 Toyota Highlander. They paid an average premium of 80 percent over their previous car when they bought a Tesla. As a result of the survey, Jeffries raised its target price for Tesla stock to $350 from its current $265.

The battery-producing Gigafactory outside Reno is moving ahead on schedule, with the first phase of the structure near completion and machinery is about to be moved in. The current phase represents only 14 percent of the planned layout. Once completed, the Gigafactory will be the largest building in the world, with a footprint of 5.8 million square feet and two stories of manufacturing totaling 10 million square feet. Panasonic, Tesla’s battery partner, is expected to send hundreds of workers to the site this fall to prepare for full-scale production. The factory will also employ hundreds of local workers.

Wall Street Journal columnist Charley Grant threw a wrench into the works recently when he wrote that Tesla is still burning through cash and probably will run out of money if the Model X does not sell as expected. He says the company should sell another issue of stock while the price is still high. He suggested that a price of $200, 25 percent below the current market rate, could raise $750 million and carry the company over to the introduction of the Model 3.

Whether the company will dilute ownership or take a chance that Model X sales will reverse its cash flow is just one of the many decisions Musk will be facing in the near future. One thing is certain: He will be balancing atop that high wire for several years to come.

Landon Hall

Declare your independence from oil with Fuels 101

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Fuel Freedom has something new this Fourth of July to help Americans declare their independence from oil and its monopoly on the U.S. transportation fuels market.

This week we launched Fuels 101, a set of tools you can use to learn about alternative fuels. The pages include:

  • Check Your Car. An interactive feature that allows you to determine whether your car, truck or SUV is a flex-fuel vehicle, and thus can run on any combination of gasoline and ethanol, up to E85 (85 percent ethanol, 15 percent gasoline).
  • Fuel Types. A guide to the different transportation fuels, including ethanol and methanol. All facts, no myths.
  • Find a Fueling Station. We’re using the Alternative Fuels Data Center’s cool interactive map, which helps you find not only E85 stations, but CNG and others.

Consider Fuels 101 an introductory course in all the alternatives to fuel. Although they come from different sources (ethanol, for instance, can be made from a variety of starchy plants, not just corn) and are made in different ways, their commonality is that they burn cleaner than petroleum-based fuels, reducing toxic pollutants that befoul our air and water. Domestically produced fuels also create American jobs and strengthen our national security.

Give Fuels 101 a spin. Don’t worry, none of it will be on the final.

Fuels 101 is the kickstart to what we’re calling Fuel Freedom Month. Our goal is to raise awareness coast to coast about ways we can all help create a genuinely competitive fuels market for the first time in America.

To learn more about how you can help, visit our Take Action page. And while you’ve got some down time between barbecues and fireworks displays this weekend, watch our all-American documentary film, PUMP the Movie, starring Jason Bateman.

You can also get regular updates on social media by following Fuel Freedom’s Facebook page and Twitter feed. PUMP has cool content as well (it has an independent streak of its own), so check it out on Facebook and Twitter as well.

Happy Independence Day, America!

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Time to declare independence from expensive oil
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