Monday, July 08, 2013

Help Your Congressperson to Lower Your Gasoline Prices -Tell Them to Repeal "Renewable Fuel Standard" Mandates

From the Oil and Gas Journall, a little truth in why adding more ethanol to gasoline is a bad idea on a number of fronts:

. . . Congress set mandates for fuel ethanol far in excess of what the market safely and economically can use.

It did so under political pressure from agricultural interests. The ethanol mandate has been great for growers and distillers of corn.

For anyone else who buys fuel or food, it costs too much. And it will get worse.

The statutory requirement for ethanol from grain soon will exceed the gasoline market's capacity to use it at normal blending levels. Refiners and other blenders must buy credits to make up the difference. Prices of the credits are rising.

Meanwhile, a requirement for ethanol from cellulose is phasing in, although that material remains scarce. Blenders unable to meet sales mandates must pay fines.

Producers of gasoline thus face rapidly rising costs and have a growing incentive to export product rather than sell it domestically. Rising costs and diminished supply promise increasing prices at the pump.
The program is a disaster—and not because ethanol is bad stuff. It's a disaster because Congress, in order to make those grain growers and distillers happy —meaning rich— tried to outwit the market.

This never works. And it's inevitably corrupt.

A bipartisan bill to repeal the Renewable Fuel Standard, as this fiasco is known, was introduced in the House in April. Now a group of Democrats and Republicans has introduced similar legislation in the Senate.

With consumers in jeopardy, the end of the RFS can't happen soon enough.

It won't remove ethanol from gasoline. It will, however, bring the amount of food burned in US vehicle engines back to rational and affordable proportions.
We have lots of natural gas, which burns cleaner than gasoline and doesn't "burn food." Perhaps this idiotic "Renewable Fuel Standards" effort is a backhanded way to encourage the market to expand NG availability for cars and truck and to help vehicle owners make the switch. Probably not,though, considering the source of the legislation.

According to an Exxon report, vehicles powered by natural gas have a 25% higher initial cost and is less "energy dense" so it may require more frequent fill-ups and other issues. However, these seem to be technological issues and I suspect that higher levels of production of NG vehicles would drive the price down and the availability of refill stations to expand. In addition, NG carries a lower price than gasoline so it is possible to recover the extra costs in a lifetime (unlike,say, with a hybrid car) . . . see here:
With so much supply that energy companies are pulling rigs out of the ground to cut back on production, natural gas is starting to look more appealing as a cheaper and cleaner alternative to gasoline and diesel.
As much as I hate to agree with Boone Pickens NG may be the way to go. And it may help remove one more seed of corruption in Washington.

1 comment:

  1. Anonymous5:03 PM

    I knew one fellow who had converted his F-150 pick-up to LNG and really liked it. He had one of those 100gal rural tanks in the bed and only had to fill up about every other week. He was a reservoir engineer for Exxon and put a lot of miles on the truck every week.

    I have noticed a real reduced power in ethanol mix gasoline, plus it pings like a xylophone above 2000 feet. If Congress really wants to provide a subsidy to corn farmers, they should just put it in the farm bill as such (like DeKalb and Berkshire Hathaway really need it, anyway). The only reason this works in Brazil is that they are using waste sugar cane left over from the sugar and rum industries, so it's not competing with food production.