Price Breakdown of Gasoline (LA Times, May 6, James Flanigan)

• As of May 1, for a gallon of gas at $1.87.
• Refining Costs:  75 cents, including 5 to 8 cents for oxygenate clean air additive.
• Crude Oil Cost:  61 cents.
• Federal Excise Tax: 18  cents.
• State Excise Tax;  18 cents.
• State/local taxes:  14 cents
• Gas station profit:  1 cent.

Gasoline Problems

• There is almost no spare refining capacity.
• The U.S. imports 6% of its refined gasoline.
• But due to clean-air requirements, only Corpus Christi, Texas and Finland can import refined gas to California.
• Removing MTBE additive by the end of 2002 will decline refinery output by 10%.
• MTBE was added for clean air but is now polluting water.
• The clean air act requires an oxygenate in smoggy regions (70% of the gas in California) to burn it more cleanly.
• Federal regulations which please the farm states require ethanol additive, and it is the only oxygenate available right now.
• This will increase the cost of gas 8 to 11 cents, and could cost as much as $12 billion to U.S. refineries.
• There may also be shortages of ethanol, leading to further price increases.
• The solution could be to remove the ethanol requirement and raise federal fuel economy requirements.
• The state has requested an ethanol waiver, and the EPA is favorable, but Pres. Bush has to approve.
• The summer also requires a different blend, and refineries a low on stocking up for this blend.
• Some are advising to exempt oil refineries from electricity blackouts, since they take several days to restarts, and this would lead to increased prices for gasoline.
• Gasoline inventories have been rising, so the price rise may be nearing its peak.  Also, European imports are rising.
• It is well to remember that Europeans have be paying about $4/gallon for many years.
• In the year 2001, the new car fleet averages 28.7 mpg, while the light trucks group which includes vans, pickups, and SUVs, averages 20.9 mpg.  The overall average is 24.5 mpg.  This ties 1999 for the lowest mark since 1980.
• The light truck category accounts for nearly half of the passenger vehicles sold in the US.
• Corporate Average Fuel Economy (CAFE) standards require cars to average 27.5 mpg, and light trucks to average 20.7 mpg.
• Closing the loophole of the SUVs and minivans which were not conceived in the 1975 legislation, would save 1 million barrels a day.  However, Congress has prevented the Dept. of Transportation from studying the issue for the last six years, and the Administration will not "negatively impact" the auto industry.
• There are 21 million SUVs in the U.S., and 1.2 million in Southern California.
• Despite President Bush's call for $4 billion in tax credits of $1,000 to $2,000 for hybrid vehicles, Toyota and Honda will only have 16,000 hybrids this year, and 26,000 next year, out of 17 million passenger cars and trucks built.  US automakers will not have them until 2003.  The Honda Insights get 50 to 60 mpg.  Fuel cell vehicles are also covered, but none will be available until after the credits expire in 2007.  The vehicles' gasoline motors produce energy, and then stores some electric energy during steady speeds and stopping, which is then used to provide extra acceleration without a large gasoline engine.  The requirements of sophisticated battery packs, complex computer controls and specially designed vehicles will slow their introduction.  A much simpler solution is buy the smaller, lighter, more gas efficient SUVs and cars.
• The Bush Administration has denied the request for a waiver for California on the ethanol additive standards.  This could cost Californians 6 cents a gallon or $450 million per year for the 580 million gallons of ethanol needed to replace the MTBE additive.

Data

• The 11 OPEC countries supply 40% of the world's oil.
• OPEC controls 78% of the world's proven crude oil reserves.
• There are 571 million barrels of oil in the Strategic Petroleum Reserve.
• US proven reserves in 1995 by USGS were 110 billion barrels.
• At 18.9 million barrels a day usage in 1998, we use 6.9 billion barrels a year.
• If we truly became 100% oil self providing, our oil would be used up in 16 years!
• Clearly, or best strategy is to use up cheap foreign oil as much as possible.
• Currently we import 55% of our oil (10.8 million barrels/day) and use domestic 45% (8.7 million barrels/day).
• The US uses 26% of the world's oil consumption.
• Hence the world is consuming about 27 billion barrels of oil a year.
• The other top oil reserves are:  Saudia Arabia, 261 billion barrels; Iraq, 113 billion barrels; Kuwait, 94 billion barrels (hence the Gulf War); Abu Dhabi, 92 million barrels; and Iran, 90 billion barrels.  These five Middle East countries hold 650 billion barrels of oil.
• The OECD countries are some of the non-OPEC countries, including the US.
• Total proven world oil reserves as of 1999 was 1034 billion barrels, of which 802.5 or 78% was in OPEC countries.
• This total along with the current 27 billion barrels a day leads to the figure of supply length of  38 years.
• However, the data is somewhere between inexact and unreliable.  Several OPEC countries raised their estimates to get a larger share of production.  Also, the former Soviet Union includes some "probable" in their "proven" reserves. A more conservative estimate gives 746 billion barrels, leading to 27 years of supply from proven reserves.
• Furthermore, undiscovered oil may total 600 billion barrels.
• Finally, non-conventional sources such as oil shale have been conservatively estimated at 3,000 billion barrels.
• The yearly oil use is also expected to grow to 35 billion barrels a year by 2020.
• The  World Oil Balance supply breakdown is in million barrels per day average for 2000:  US 9.08, other OECD, 10.74, for total OECD of 19.83; OPEC 30.87, former USSR 8.13, other non-OECD 18.06, for total non-OECD of 57.06.  Total world supply is 76.88 million barrels per day.
• The demand breakdown in million barrels per day average for 2000:  US 19.48, other OECD 23.20, for total OECD of 42.67; non-OECD includes China 4.55, former USSR 3.70, other non-OECD 24.34, for a total of non-OECD of 32.74.  The total world demand is 75.41 million barrels/day.
•  Greenpeace Article on Oil Reserves (long)

ANWR (Arctic National Wildlife Refuge)

• The USGS estimates 10 billion barrels of oil might be available there. (LA Times, May 18), but estimates run from 3 billion barrels to 16 billion barrels.
• President Bush in his introduction to the energy report quotes ANWR as being capable of 600,000 barrels a day for 40 years.
• Multiplying this by 365 days for 40 years gives 8.76 billion barrels consistent with the USGS estimate.
• Out of our present daily consumption of 18.9 billion barrels, this would be 3.2%.
• Out of total world daily supply, it would be 0.8%.
• The 10 billion barrels may only be 1% of the world "proven" reserves of 1034 billion barrels.
• Quotes for this LA Times article by an energy economist say that is it cheaper to explore and step up production at foreign sources or in the sites already set up in Alaska.
• While the President pointed out that the ANWR would supply the same amount that we now buy from Sadam Hussein, he left a non-sequiter.  (1) Presumably we could buy oil now elsewhere than from Iraq if we wanted to. (2) Even exploiting ANWR starting in 10 years, he did not state that it would be our policy in 10 years not to buy from Iraq.  (3)  We do not expect Sadam to rule Iraq for that entire period of 10 to 50 years from now.
• On June 4, Iraq suspended its export of 2 million barrels a day.  Saudia Arabia announced it would not make up the difference, but see if the price rose first.
• From this editor's view, if the woodshed is full, why burn your fine furniture first?
• Oil revenue pays for most of the Alaska state budget and provided each resident a $2,000 dividend check last year.
• Alaska is planning a $10 billion natural gas pipeline to the lower 48 states.
• There may be as much oil in new smaller Alaska projects as in ANWR.
• New Senate Majority Leader Tom Daschle (D-S.D.) has declared ANWR drilling dead on arrival on Capitol Hill. Congress banned drilling in ANWR in 1980 without specific congressional authorization.

Ways to Save on Gasoline

• Drive your lower gas usage vehicle when possible, rather than your higher usage vehicle.
• Drive 65 instead of 75 or 70 if you have a high gas usage vehicle.
• Shop around, even if for a few cents lower.  This will apply consumer market pressure.
• Use a cheaper grade of gas, if allowed by your owner's manual.
• Group shopping and entertainment trips.
• Settle for buying groceries at only one market.
• Call ahead to stores to find out whether products are in stock, and what their prices are, to save trips.
• Shop on the internet.
• Take hills at a slower speed than the speed limit.
• And of course the most effective, car pool.  This will also get you there faster using the car pool lanes.
• If you have a six cylinder engine, put bricks in two of the cylinders (just kidding).
•  Fuel Economy Guide
•  Vehicle Travel
•  Southern California Rideshare