Gas Prices Across the Country
December 22, 2007
The new legislation to input ethanol comes from environmental standards
that have been in place in some parts of the country for several years.
In some areas, gasoline was required to meet higher environmental
standards in order to reduce the amount of smog created by burning
gasoline. Producing this cleaner-burning gasoline caused problems in
refining, distribution and storage, which increases the cost of gas.
“The result of this targeted approach to air quality has been to create
gasoline market islands,” John Cook, director of the petroleum
division of the DOE’s Energy Information Administration, said before
the U.S. House of Representatives Committee on Energy and Commerce on
May 15, 2001.
Cook pointed at California and the Chicago and Milwaukee areas as primary examples of gasoline-market islands.
The clean-burning requirements in each of these areas are unique to
that individual area, and only a few refineries can produce the
specialized products. High demand, a supply problem at a refinery or a
problem with a pipeline can cause pricing in these areas to surge.
In California, the state government has set its own
reformulated gasoline rules that are stricter than the federally
mandated clean-gas laws. This is why Californians pay a higher price
for cleaner fuels — this, plus a local sales-and-use tax of 20
percent, an 18.4-cent-per-gallon federal excise tax and an
18-cent-per-gallon state excise tax. California’s distance from the
refineries located near the Gulf of Mexico can also add to the cost of
gasoline if it chooses to obtain gas supplies from those refineries.
|
Photo courtesy Phillips Petroleum Company |
The other area where prices can far exceed the U.S. national average is the Midwest.
In 1999, the Midwest region became subject to new reformulated gasoline
rules. The Midwest uses a special gasoline that is produced using
ethanol instead of methyl tertiary butyl ether (MTBE). Ethanol
is used in the Midwest because of the region’s abundance of corn, which
is the main raw material used to make ethanol. Few refineries outside
the region produce this type of reformulated gasoline, which means
there may often be a limited supply of the product. This is the same
problem resulting from the nationwide call for ethanol brought in the
spring of 2007.
Crude oil inventories have the single biggest effect on gas
prices, and the United States depends heavily on foreign oil supplies.
In January 2006, the United States imported over 9.1 million barrels
per day [Source: EIA].
We’ll look at exactly where that crude oil comes from next.
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Have we reached the energy tipping point?
December 22, 2007
By Manav Tanneeru CNN
(CNN) — In late June, the U.S. Senate passed an energy bill that would raise gas mileage standards for the first time in 20 years and fund research on alternative energy sources.
High gas prices and low mileage are among the factors behind an apparent shift in the nation’s energy debate.
The bill’s proponents call it a breakthrough in the nation’s energy debate, saying the focus is shifting from reliance on fossil fuels and foreign oil toward renewable fuels and green technology.
The measure comes amid another summer of high gas prices, state and local conservation efforts and a presidential campaign where voters and candidates say the issue is key.
So is a critical mass building among Americans and legislators for changes in U.S. energy policy? Or are these efforts simply blips on the radar as Americans continue to drive SUVs and Hummers?
A recent analysis by the Gallup Poll showed energy as Americans’ fourth most-important priority for Washington, below Iraq, terrorism and national security, and the economy.
The analysis also showed Americans prefer energy conservation over more production, and that a large majority also favors tightening emissions standards and developing alternative sources of energy.
When asked to rate the importance of issues in voting for a presidential candidate next year, 43 percent of Americans said gas prices would be “extremely important,” according to a May poll by Opinion Research Corporation. The percentage was tied with health care and below Iraq, terrorism and education.
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Democratic and Republican presidential contenders seem to have taken note of voters’ discontent.
“It’s a national security issue. It’s a health care issue,” Connecticut Sen. Chris Dodd, a Democrat, said during a CNN presidential debate in New Hampshire in June. He touted a plan that would require a standard of 50 miles per gallon for automobiles by 2017.
New Mexico Gov. Bill Richardson, a Democrat, touted an “Apollo program” — referring to the 1960s effort that put men on the moon — that would reduce dependence on foreign oil by more than half and reduce greenhouse gas emissions by 80 percent.
During the Republican presidential debate in New Hampshire two days later, many candidates said much the same thing.
Former New York City Mayor Rudy Giuliani, a Republican, also called for an “Apollo program” and said reducing foreign dependence on oil was intrinsically tied to national security.
“It’s frustrating and really dangerous for us to see money going to our enemies because we have to buy oil from certain countries,” he said. “We should be supporting all the alternatives.”
Former Massachusetts Gov. Mitt Romney, a Republican, said oil companies ought to play a part in rebuilding old infrastructure, which would increase efficiency and possibly reduce costs.
“Big oil is making a lot of money right now, and I’d like to see them using that money to invest in refineries,” Romney said. “Don’t forget that when companies earn profit, that money’s supposed to be reinvested in growth and our refineries are old.”
President Bush, in his State of the Union address this year, announced an initiative to cut U.S. gasoline consumption by 20 percent over the next 10 years through a combination of alternative fuels and more efficient automobiles.
Several months later, during a speech at an Alabama nuclear energy plant, he also spoke of the promises of nuclear energy, coal, ethanol and cars that could run on rechargeable batteries.
Meanwhile, on the state and local level, several developments signal a possible shift among mayors, governors and state legislatures toward energy policies that focus more on renewable fuels and conservation measures.
Minnesota Gov. Tim Pawlenty, a Republican, announced the “25 by 25″ program last year, with a goal that 25 percent of the energy produced and used in the state come from renewable sources by 2025.
The Nevada legislature has voted to increase the percentage of renewable resources in how the state produces electricity in four out of the last five sessions, according to the National Governors Association.
Massachusetts Gov. Deval Patrick, a Democrat, announced a plan in late June to reduce high energy costs in the state within the next three years through conservation measures.
And New York City Mayor Michael Bloomberg unveiled PlaNYC this summer, which includes 127 proposals to reduce greenhouse emissions by 30 percent by 2030 and a congestion charge for driving through certain parts of Manhattan.
When asked by CNN.com if efforts such as these were evidence of momentum toward a shift in energy policy, many readers said they were skeptical about the rhetoric of lawmakers and their political will.
“I can guarantee that whatever is ‘done’ will take place only to serve the benefits of those corporations directly affected by these issues,” wrote Ryan Bate of Portland, Oregon.
“Change in U.S. policy? You must be joking,” wrote Dean Cassano of Lakeland, Florida. “Washington is sold out to the environmentalists and tourists. The 1973 oil crisis did nothing to wake us up. We should have been drilling in [Alaska] and the Gulf ever since.”
Ilene Lopez of Vero Beach, Florida, questioned whether American society actually wanted change. “The critical mass for change is still not a reality since so many people are still buying into the bigger is better motto of America,” she wrote.
Cristian Crespo of Valley Village, California, said he found it ridiculous that automakers hadn’t yet come up with a way to combine fuel efficiency with luxury provided by a SUV.
“It’s not that Americans don’t want to be environmentally friendly, it’s just that we don’t have much of a choice,” he wrote. “As an SUV driver, telling me that my only alternative is a Toyota Prius or a Honda Civic is like telling me to eat beef jerky when I’m used to filet mignon.”
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Breakdown of Gas Prices
December 21, 2007
When you pump $20 dollars into your tank, that money is broken up into little pieces that get distributed among several entities. Gas is just like any other consumer product: There’s a supply chain and several groups who are responsible for setting the price of the product. The media can sometimes lead you to believe that the price of gas is based solely on the price of crude oil, but there are actually many factors that determine what you pay at the pump. No matter how expensive gas becomes, all of these entities have to get their slice of the pie.
 |
Let’s look at where your money goes when you pay for gas: Crude oil - The biggest portion of the cost of gas — as of April 2007, that’s about 50 percent — goes to the crude-oil suppliers. This is determined by the world’s oil-exporting nations, particularly the Organization of the Petroleum Exporting Countries (OPEC), which you will learn more about in the next section. The amount of crude oil these countries produce determines the price of a barrel of oil. Crude-oil prices averaged around $37 per barrel (1 barrel = 42 gallons or 159.6 L) in 2004 (Source: U.S. DOE). And, after Hurricane Katrina, some prices were almost double that. In May 2007, crude-oil prices averaged around $60 per barrel (1 barrel = 45 gallons or 159.6 L). Sometimes, gas prices go up even though there is plenty of crude oil on the market. It depends on what kind of oil it is. Oil can be classified as heavy or light, and as sweet or sour (no one actually tastes the oil, that’s just what they call it). Light, sweet crude is easier and cheaper to refine, but supplies have been running low. There’s plenty of heavy, sour crude available in the world, but refineries, particularly those in the U.S., have to undergo costly retooling to handle it.
- Refining costs - The refining of crude oil makes up about 28 percent of the price of gasoline.
To learn more about oil refining, read How Oil Refining Works.
- Distribution and marketing - Crude oil is
transported to refineries, and gasoline is shipped from the refineries
to distribution points and then to gas stations.
The price of transportation is passed along to the consumer.
- Marketing the brand of the oil company is also added into the cost of the gasoline you buy.
Together, these two factors account for about 8 percent of the price of gasoline.
- Taxes - Taxes, including federal and local, account for about 14 percent
of the total price of gas in the United States. Federal excise taxes
are 18.4 cents per gallon, and state excise taxes average 18.2 cents
per gallon. There may also be some additional taxes, such as applicable
state sales taxes, gross receipts taxes, oil inspection fees,
underground storage tank fees and other miscellaneous environmental
fees. Add that to the state excise taxes, and it can average 27.4
cents. It could be worse. In Europe, gas prices are far higher than in
America because taxes on gas are much higher. For example, gas prices
in England have risen as high as $6.65 per gallon, with 78 percent of
that going to taxes.
- Station markup - While it isn’t represented in the
diagram above, of course some of the actual money you spend at the pump
does go to the service station. Service stations add on a few cents per
gallon. There’s no set standard for how much gas stations add on to the
price. Some may add just a couple of cents, while others may add as
much as a dime or more. However, some states have markup laws
prohibiting stations from charging less than a certain percentage over
invoice from the wholesaler. These laws are designed to protect small,
individually-owned gas stations from being driven out of business by
large chains who can afford to slash prices at select locations.
Gas prices also vary from state to state for several reasons.
Taxes are probably the biggest factor in the different prices around the country.
Additionally, competition among local gas stations can drive prices down.
Distance from the oil refineries can also affect prices — stations closer to
the Gulf of Mexico, where many oil refineries are located, have lower
gas prices due to lower transportation costs. There are also some
regional factors that can affect prices.
World events, wars and weather can also raise prices. Anything
that affects any part of the process, from the moment the oil is
drilled, through refining and distribution to your car will result in a
change in price. Military conflicts in parts of the world with lots of
oil supplies can make it difficult for oil companies to drill and ship
crude oil. Hurricanes have damaged offshore drilling platforms, coastal
refineries and shipping ports that receive oil tankers. If a tanker
itself is lost or damaged, or leaks its oil into the ocean, that will
put a dent in the market as well.
· · · · ·
The most recent surge in gas prices is due to several factors,
including all of those listed above. However, a new reason emerged
during the spring of 2007: legislation out of Washington to incorporate
more ethanol into transportation fuels. There has been a call for
enough increase in ethanol production to reduce daily oil imports by
1.5 million barrels by 2017. As the ethanol production increased
refineries couldn’t keep up the demand and had to import more oil. This
added to the increase in price.
Unfortunately, the rise in prices may not be over. Several
things could happen to keep driving up the price of gasoline:
continuing tensions over Iran’s nuclear talks, worse conditions in
Nigeria or another active and devastating hurricane season [Source: The Washington Times].
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Introduction to How Gas Prices Work
December 13, 2007
 |
Gasoline is the bloodline that keeps America moving. Our personal vehicles alone guzzle 140 billion gallons of gasoline and diesel fuel each year, up 3.2 percent from a year ago.
Tracking gas prices can feel like a roller coaster ride. They’re down a little one month, up the next, before shooting up more than 50 percent in a year. Plus, they’re different depending on where you look. Other countries, and even other states and cities, can have very different gas prices from your local Gas-N-Go. To the average person, it probably seems as though there’s little rhyme or reason to how gas prices are determined. In this article, we will look at the forces that impact the price of gas at the pump, and we’ll find out where your gas money actually goes.
Americans have an insatiable thirst for gasoline, and with sport-utility vehicles (SUVs) continually growing in popularity we are only getting thirstier. Just look at the roads and highways and you’ll see that a severe gas shortage would practically cripple the country. Americans drive more than 2.5 trillion miles per year in automobiles, light trucks and SUVs, according to a MEMA report. That’s equal to 14,000 round trips to the sun. Today, we drive almost twice as much as we did in 1980 (1.5 trillion miles).
 Photo courtesy Phillips Petroleum CompanyA gas station in Colorado Springs, CO |
(Adjusted for inflation) |
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1950 |
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1960 |
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1965 |
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1975 |
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1985 |
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2002 |
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2003 |
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2005 |
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2006 |
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2007 (so far) |
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| Source: U.S. DOE | ||
The United States consumes an average of 20 million barrels of oil per day (bbl/d, according to the Department of Energy. Of that, about 45 percent is used for motor gasoline. The rest is used for distillate fuel oil, jet fuel, residual fuel and other oils. Each barrel of oil contains 42 gallons (159 L), which yields 19 to 20 gallons (75 L) of gasoline. So, in the United States, something like 178 million gallons of gasoline is consumed every day.
Typically, the demand for gas spikes during the summer, when lots of people go on vacation. Holidays like Memorial Day and the Fourth of July create logjams of tourist traffic during the summer. This high demand usually translates into higher gasoline prices, although that’s not always the case. For instance, while gas prices soared 31 cents in April and early May of 2001, reaching $1.71 per gallon (which now seems inexpensive compared to today’s prices), prices actually declined during the 2001 summer.
In 2004, prices continued to rise past the end of the summer travel season for a variety of reasons, including several hurricanes and an increase in the price of crude oil. And in 2005, Hurricane Katrina (along with a sizeable increase in crude oil prices) pushed prices to $3.07 per gallon on September 5, 2005. Prices settled down somewhat in November and December of 2005. But now the numbers are climbing again, with an average price for regular unleaded gas at $3.26 right now (May 21, 2007), an all-time high.
Price increases generally occur when the world crude-oil market tightens and lowers inventories. We will discuss who controls the crude-oil market later. Also, growing demand can sometimes outpace refinery capacity. In the spring, refineries perform maintenance, which can place a pinch on the gasoline market. By the end of May, refineries are usually back to full capacity.
In the next section, we’ll look at where the money goes when you pay for gas.
Breakdown of Gas Prices
When you pump $20 dollars into your tank, that money is broken up into little pieces that get distributed among several entities. Gas is just like any other consumer product: There’s a supply chain and several groups who are responsible for setting the price of the product. The media can sometimes lead you to believe that the price of gas is based solely on the price of crude oil, but there are actually many factors that determine what you pay at the pump. No matter how expensive gas becomes, all of these entities have to get their slice of the pie.
 |
Let’s look at where your money goes when you pay for gas:
- Crude oil - The biggest portion of the cost of gas — as of April 2007, that’s about 50 percent — goes to the crude-oil suppliers. This is determined by the world’s oil-exporting nations, particularly the Organization of the Petroleum Exporting Countries (OPEC), which you will learn more about in the next section. The amount of crude oil these countries produce determines the price of a barrel of oil. Crude-oil prices averaged around $37 per barrel (1 barrel = 42 gallons or 159.6 L) in 2004 (Source: U.S. DOE). And, after Hurricane Katrina, some prices were almost double that. In May 2007, crude-oil prices averaged around $60 per barrel (1 barrel = 45 gallons or 159.6 L).Sometimes, gas prices go up even though there is plenty of crude oil on the market. It depends on what kind of oil it is. Oil can be classified as heavy or light, and as sweet or sour (no one actually tastes the oil, that’s just what they call it). Light, sweet crude is easier and cheaper to refine, but supplies have been running low. There’s plenty of heavy, sour crude available in the world, but refineries, particularly those in the U.S., have to undergo costly retooling to handle it.
- Refining costs - The refining of crude oil makes up about 28 percent of the price of gasoline. To learn more about oil refining, read How Oil Refining Works.
- Distribution and marketing - Crude oil is transported to refineries, and gasoline is shipped from the refineries to distribution points and then to gas stations. The price of transportation is passed along to the consumer. Marketing the brand of the oil company is also added into the cost of the gasoline you buy. Together, these two factors account for about 8 percent of the price of gasoline.
- Taxes - Taxes, including federal and local, account for about 14 percent of the total price of gas in the United States. Federal excise taxes are 18.4 cents per gallon, and state excise taxes average 18.2 cents per gallon. There may also be some additional taxes, such as applicable state sales taxes, gross receipts taxes, oil inspection fees, underground storage tank fees and other miscellaneous environmental fees. Add that to the state excise taxes, and it can average 27.4 cents. It could be worse. In Europe, gas prices are far higher than in America because taxes on gas are much higher. For example, gas prices in England have risen as high as $6.65 per gallon, with 78 percent of that going to taxes.
- Station markup - While it isn’t represented in the diagram above, of course some of the actual money you spend at the pump does go to the service station. Service stations add on a few cents per gallon. There’s no set standard for how much gas stations add on to the price. Some may add just a couple of cents, while others may add as much as a dime or more. However, some states have markup laws prohibiting stations from charging less than a certain percentage over invoice from the wholesaler. These laws are designed to protect small, individually-owned gas stations from being driven out of business by large chains who can afford to slash prices at select locations.
Gas prices also vary from state to state for several reasons. Taxes are probably the biggest factor in the different prices around the country. Additionally, competition among local gas stations can drive prices down. Distance from the oil refineries can also affect prices — stations closer to the Gulf of Mexico, where many oil refineries are located, have lower gas prices due to lower transportation costs. There are also some regional factors that can affect prices.
World events, wars and weather can also raise prices. Anything that affects any part of the process, from the moment the oil is drilled, through refining and distribution to your car will result in a change in price. Military conflicts in parts of the world with lots of oil supplies can make it difficult for oil companies to drill and ship crude oil. Hurricanes have damaged offshore drilling platforms, coastal refineries and shipping ports that receive oil tankers. If a tanker itself is lost or damaged, or leaks its oil into the ocean, that will put a dent in the market as well.
The most recent surge in gas prices is due to several factors, including all of those listed above. However, a new reason emerged during the spring of 2007: legislation out of Washington to incorporate more ethanol into transportation fuels. There has been a call for enough increase in ethanol production to reduce daily oil imports by 1.5 million barrels by 2017. As the ethanol production increased refineries couldn’t keep up the demand and had to import more oil. This added to the increase in price.
Unfortunately, the rise in prices may not be over. Several things could happen to keep driving up the price of gasoline: continuing tensions over Iran’s nuclear talks, worse conditions in Nigeria or another active and devastating hurricane season [Source: The Washington Times].
Gas Prices Across the Country
The new legislation to input ethanol comes from environmental standards that have been in place in some parts of the country for several years. In some areas, gasoline was required to meet higher environmental standards in order to reduce the amount of smog created by burning gasoline. Producing this cleaner-burning gasoline caused problems in refining, distribution and storage, which increases the cost of gas. “The result of this targeted approach to air quality has been to create gasoline market islands,” John Cook, director of the petroleum division of the DOE’s Energy Information Administration, said before the U.S. House of Representatives Committee on Energy and Commerce on May 15, 2001.
Cook pointed at California and the Chicago and Milwaukee areas as primary examples of gasoline-market islands. The clean-burning requirements in each of these areas are unique to that individual area, and only a few refineries can produce the specialized products. High demand, a supply problem at a refinery or a problem with a pipeline can cause pricing in these areas to surge.
In California, the state government has set its own reformulated gasoline rules that are stricter than the federally mandated clean-gas laws. This is why Californians pay a higher price for cleaner fuels — this, plus a local sales-and-use tax of 20 percent, an 18.4-cent-per-gallon federal excise tax and an 18-cent-per-gallon state excise tax. California’s distance from the refineries located near the Gulf of Mexico can also add to the cost of gasoline if it chooses to obtain gas supplies from those refineries.
 Photo courtesy Phillips Petroleum CompanyMost of the American crude-oil supply is imported using tankers similar to this one. |
The other area where prices can far exceed the U.S. national average is the Midwest. In 1999, the Midwest region became subject to new reformulated gasoline rules. The Midwest uses a special gasoline that is produced using ethanol instead of methyl tertiary butyl ether (MTBE). Ethanol is used in the Midwest because of the region’s abundance of corn, which is the main raw material used to make ethanol. Few refineries outside the region produce this type of reformulated gasoline, which means there may often be a limited supply of the product. This is the same problem resulting from the nationwide call for ethanol brought in the spring of 2007.
Crude oil inventories have the single biggest effect on gas prices, and the United States depends heavily on foreign oil supplies. In January 2006, the United States imported over 9.1 million barrels per day [Source: EIA].
We’ll look at exactly where that crude oil comes from next.
OPEC and Gas Prices Around the World
(1 gallon=3.8 L) Most expensive per gallon: London, UK: $6.65 Paris, France: $6.62 Copenhagen, Denmark: $6.51 Oslo, Norway: $6.48 Berlin, Germany: $6.42Least expensive per gallon: Caracas, Venezuela: $0.17 Tehran, Iran: $0.33 Riyadh, Saudi Arabia: $0.45 Kuwait City: $0.79 Cairo, Egypt: $0.86 *Prices as of May 2007 |
The single largest entity impacting the world’s oil supplies is the Organization of the Petroleum Exporting Countries (OPEC), a consortium of 12 countries: Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
Together, these 12 nations are responsible for 40 percent of the world’s oil production and hold two-thirds of the world’s oil reserves, according to the Energy Information Administration (EIA). When OPEC wants to raise the price of crude oil, it simply reduces production. This causes gasoline prices to jump because of the short supply, but also because of the possibility of future reductions. When oil production dips, gas companies get nervous. The mere threat of oil reductions can raise gas prices.
In April 2001, OPEC decided to reduce its collective production by one million barrels per day. This was at the same time that American consumers saw gas prices rise, hitting an average high of $1.71 per gallon on May 14, 2001.
OPEC last increased its production in June 2005, when it raised to 28 million barrels per day with an increase of 500,000 barrels per day “should oil prices remain at current levels or continue to rise further.” In September 2005, it made all of its member countries’ “spare output” available, an estimated 2 million barrels per day. However, in November 2006, OPEC again reduced its rate of production by 1.7 million barrels per day to keep the price from falling below $50 per barrel [Source: Joint Economic Committee ].
Beyond OPEC, there are several other countries that contribute to the world’s crude-oil supplies, including the United States, Mexico, Canada, Equatorial Guinea, Russia and China. In March 2007, the United States imported from Canada approximately 2.297 million barrels of crude oil per day [Energy Information Administration]. OPEC tracks the oil production of these nations and then adjusts its own production to maintain its desired barrel price.
Cause and Effect
Numerous forces can influence the price of gas at the pump, but fuel costs are only one part in the vast web of global economics. Gas prices have an impact on other parts of the economy as well. You’re already aware of the immediate effects of rising prices - that feeling of stunned disbelief as the numbers climb and climb while you fill your tank. There are secondary effects as well. You might decide against a long road trip because the gas would cost too much. When it comes time to buy a car, you might decide against a gas-guzzling SUV and find something with better mileage instead.
Let’s look at the big picture. Does a hike in gas prices lead to inflation in the overall economy? It could, as long as the increase is a steady, long-term rise in prices. Expensive gas means it’s expensive to ship products by truck, expensive to drive long distances and expensive to fly in airplanes. All those costs mean the cost of virtually any product you can think of will go up if gas prices stay high.
However, economists don’t look at gas prices as a leading indicator of inflation. The price of oil, along with food costs, are far too volatile — that is, they are easily influenced by things like weather, labor strikes and wars. The costs swing up and down, depending on world events. To watch for inflation, economists keep their eyes on the core Consumer Price Index, which is a measure of the cost of certain goods, like DVD players, hotel rooms or college textbooks, which stay more stable in the short term.
Domestic Supplies
After seeing how much oil the United States imports, it may be surprising to know that the United States is the world’s third largest producer of crude oil. The biggest production region is around the Gulf of Mexico, and the largest producing state is Texas. The Gulf Coast region is home to two important producing areas: the Permian Basin, located in west-central Texas and eastern New Mexico, and the federal offshore portion of the Gulf. Other big oil-producing states include Alaska, Louisiana, California, Oklahoma and Arizona.
Even with the United States producing so much oil, it is still heavily dependent on foreign sources. It’s that dependence that crippled the country during the oil embargo of 1973 and 1974. To make sure that this situation never happens again, the federal government formed the Strategic Petroleum Reserve (SPR). While most domestic oil is sent directly to refineries and then to the consumer market, some of it is held back and sent to the SPR.
As of May 24, 2007, the SPR stores about 690 million barrels of oil in underground salt caverns along the Gulf of Mexico [Source: Department of Energy]. Given that the United States imports about half of its oil, the Strategic Petroleum Reserve holds about a 60-day supply of oil if all imports were suddenly and totally cut off. See What is the Strategic Petroleum Reserve? for more information about how the storage sites work.
 Photo courtesy U.S. Department of Energy An aerial view of the Bryan Mound storage site of the Strategic Petroleum Reserve |
On September 22, 2000, President Clinton directed the U.S. Department of Energy to tap into the SPR to bolster oil supplies. When oil supplies shrink, the SPR can be used to help make sure that people have enough affordable oil to heat their homes. President Clinton authorized the Department of Energy to release up to 30 million barrels of oil in a swap with oil companies. The companies took the oil in fall 2000 and were required to return it by fall 2001.
The SPR is the largest emergency petroleum supply in the world. It was first used during the Persian Gulf War in 1991 to keep oil plentiful and prices stable. It currently has the capacity to hold 727 million barrels of oil. In 2005, the Energy Policy Act directed the Secretary of Energy to fill the SPR to its authorized 1 billion barrel capacity. The Department of Energy issued in February of 2007 that it will expand two existing sites: Big Hill, Texas and Bayou Choctaw, Louisiana to comply with the Act.
Arctic National Wildlife Refuge
In March 2006, the U.S. Senate passed its 2007 Budget Resolution, which included a provision for lease sales of the right to drill for oil in region of the Arctic National Wildlife Refuge (ANWR) in Alaska.. The Congressional Budget Office estimates that income from lease sales could top $4.2 billion in the next five years [Source: ANWR].
The Arctic National Wildlife Range was established in 1960 to protect the “unique wildlife, wilderness and recreational values” of the area. In 1980, Congress passed the Alaska Lands Act, which renamed the area and more than doubled its size. Today, the ANWR encompasses nearly 20 million acres, which is about the size of South Carolina. The same act authorized the study of the oil and gas potential of the northern part of the Refuge, called the 1002 Area. This region is still being looked at as a possible oil-development site, but environmental groups say that any oil production would upset the natural ecosystem within the ANWR.
It’s still uncertain just how much oil exists under the ground of the ANWR. A 1998 analysis conducted by the United States Geological Survey (USGS) estimates that there are about 7 billion barrels of profitable oil in the 1002 Area alone, but the price of crude-oil determines how profitable that oil is. If the price of crude oil dips below $16, the cost of producing the oil would offset any profit. Prices topped $72 per barrel on the world market in April 2006 [Source: MSNBC].
The issue of gasoline prices is often a volatile one. As long as cars and other vehicles run on gasoline, the price of gas will continue to affect every part of our economy. While other fuel sources exist, none of them could be quickly integrated into our economy, which leaves Americans dependent upon gasoline for the time being.
This gas dependency makes everyone from the daily commuter to the shipping company executive very aware of price fluctuations. These fluctuations may vary from week to week or month to month, but over time are relatively stable. Still, limited resources, as well as environmental concerns related to oil use and production, encourage scientists to look at new technologies, such as fuel cells, to reduce our dependence on oil and gas.
For more information on gas prices and related topics, check out the links on the next page.
If gas prices are influenced by the world supply of oil, what will happen when we run out of oil? The surprising answer is, we probably won’t. That doesn’t mean that the rampant use of fossil fuels isn’t a concern — they are very harmful to the environment, and dwindling supplies will still cause massive changes in our economy — but oil will get too expensive to use long before we run out. The world oil supply acts like an asymptotic value, which is just a mathematical term for a value that gets closer and closer to another value, but never actually gets there. In this case, the “other value” is zero, or no oil left anywhere. Why would we never get there? Oil companies start out with the easiest (and cheapest) oil to find and bring to the surface. Once that runs out, they have to find more oil, which might be harder to harvest. As time goes on and the oil supply dwindles, it will get harder and harder (and more and more expensive) to find what’s left. Eventually, it will get so expensive to find and harvest the remaining oil that no one will be able to afford it. The rising costs will force us to develop other energy sources. |
Technorati labels: How gas prices work, barrels, cost, countries, crude, depends energy, gallon, gas, gasoline, oil per prices, production, refineries, supply, taxes
Kevin Bonsor, Ed Grabianowski. “How Gas Prices Work”. June 05, 2001 http://auto.howstuffworks.com/gas-price.htm (December 12, 2007)
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Correct use For the MPG CAP
December 10, 2007
Hi Guys,the Correct use of the mpg cap is important..Please tell all your clients and distributors that this is the new formula..
MPG-CAPSTM
Use as directed on the chart below.
Do Not Exceed
the
Recommended
DosesCurrent Half Gram Caplet One Gram Caplet Conditioning
Dose
FIRST TANK
ONLYRegular
Dose
Every Tank
After First TankConditioning
Dose
FIRST TANK
ONLYRegular
Dose
Every Tank
After First Tank6-10 US Gallons,
23-40 Liters1 Caplet ½ Caplet ½ Caplet ¼ Caplet 11-15 US Gallons,
41-59 Liters1½ Caplet 1 Caplet ¾ Caplet ½ Caplet 16-22 US Gallons,
60-85 Liters2 Caplet 1½ Caplet 1 Caplet ¾ Caplet 23-28 US Gallons,
86-108 Liters2½ Caplet 2 Caplet 1¼ Caplet 1 Caplet 29-34 US Gallons,
109-130 Liters3 Caplet 2½ Caplet 1½ Caplet 1¼ Caplet 35-42 US Gallons,
131-159 Liters3½ Caplet 3 Caplet 1¾ Caplet 1½ Caplet
Technorati labels: fuel, mpg caps, fuel freedom
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Fuel Freedom International is coming to Singapore by end of 2007 !
December 10, 2007
Fuel Freedom International is coming to Singapore by end of this years 2007,who interested to build this great business before the official launch in Singapore Contact me
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Fuel Freedom International in the St Petersburg Times
December 8, 2007
Source: St. Petersburg Times
The pitch: Pop a pill in the fuel tank and save money.With gas prices creeping back up and everyone is trying to find an agreement, thousands are searching for answers to all the woes of fuel in a pill.
They ‘re called Miles Per Gallon Caplets or MPG Caps, produced by the company Altamonte Springs Fuel Freedom International, which has just completed its annual conference Sunday in Orlando. The caplet supposedly increases of a vehicle ‘energy efficiency while reducing emissions.
Florida Attorney General Bill McCollum survey on the freedom of fuel in response to dozens of complaints his office has received around the state, the nation and the world.”
Randy Ray, president of Fuel Freedom, said in a statement: “FFI has been working with the Florida Attorney General to ensure they have all the information they need. We applaud the AG’s desire to protect consumers and are confident that they, like our hundreds of thousands of satisfied customers around the world, will see the value of using MPG-CAPS to lower emissions and save fuel.”
Through public relations firm Levic Communications, a Washington, D.C., company that specializes in managing crises in the media, Fuel Freedom says all Better Business Bureau complaints have been resolved. The company promises a 100 percent guarantee of its product or it will refund the consumer’s money. In addition, the company says tests of the product have proved its claims…
Go to our reports section to read reports made by major companies from all over the world
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Important "Fone Freedom" Updates!
December 5, 2007
We are pleased to announce that after months of extensive testing, making adjustments, and fine tuning, we have successfully completed the Beta test phase of the Fone Freedom service. As a result we are ready to move ahead with the full service offering.
As of December 1, 2007 we will be enabling all of the features that come with each package. This includes the much anticipated Voice Mail service feature. With turning on this feature it will now change how you make an international phone call. Effective December 1, when you make a call to any country outside of the USA, you will need to dial 011 and then the country code in order to complete the call.
Some of the great features that are being turned on are as follows: (For a full list, please refer to the Fone Freedom website.)
X-Lite
o Voice Mail: This feature automatically answers a call, plays a greeting, and records a message.
o Audio Conferencing: Also known as “3-way calling.” This feature allows you to speak to 2 people at the same time.
o Voice Call Recording: This feature allows to record phone conversations for later reviewing.
o Call Forwarding: This feature allows you to forward incoming calls to another telephone.
o Instant Messaging: This feature that allows you to send “instant text messages” (or “chat”) with other users that are also online.
EyeBeam Video Phone
o Enhanced Voice Mail: This feature is an expanded version of the basic voice mail application.
o Multi-Party Audio Conferencing: This feature allows you to conference up to 6 people at once.
o Call Forwarding: This feature allows you to forward incoming calls to another telephone.
o Instant Messaging: This feature that allows you to send “instant text messages” (or “chat”) with other users that are also online.
Over the next several weeks you will find new training tutorials in the Back Office. Please watch for these under the Opportunity Tab on your Fone Freedom website.
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Belgian report Intertek
December 5, 2007
Belgian report proving again the effectiveness of MPG-CAPS.
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New Report From Bosch
December 5, 2007
Download the Bosch report proving that the MPG-caps are very effective against emissions.Share This Listed under Tags: FFI|MPG
[drain file show]
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FFi a one in 1,000 opportunity.
December 5, 2007
“Oil prices are breaking records every week. Gas is on its way to all time highs with no ceiling in sight.”
The world responds to MLM when the economy is on a down turn and with oil prices nearing $100 U.S. a barrel, a ripple effect though the economy is going to make everything more expensive and people will be looking for ways to add to their income like never before.
People are landing HUGE commercial sales. Gail Boone in Canada just signed a contract with a company for $450,000 worth of MPG Boost A MONTH!!!!!!! That is $30,000 a month to her and she has five more sales in the works.
FFi is a one in 1,000 opportunity!!
While no Network Marketing Company is perfect, the odds of a company less than two years old making it five years is 1 in 1,000 statistically and historically. Why would you want to hurt your reputation and friendships on a 1 in 1,000 chance?
FFi is poised for yet another run. Not just because of fuel costs, but also because of some of the key things they are putting into place at a corporate level. New tools, new incentives, new packages, new products increased infrastructure and more.
Share This Listed under Tags: FFI|fuel|gas|MLM|MPGStay tuned to this site, so we can keep you updated on our next growth spurt, which is proof of what is about to come. Don’t miss it.
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FFi’s Global Vision Convention
December 5, 2007
All roads lead to London, United Kingdom
10th November, 2007
If you had to miss the Global Vision Convention in Orlando, Florida, now you have another great chance to experience some of the excitement and receive the important FFi updates and information such as the new Diamond Rank , new BMW Car Bonus and New Products in special presentations from John Doughty and Jessup Taylor!
Come learn from the Top Leaders in Europe,
Cliff Walker, Paul Harrison and Stuart Billington
as they give invaluable training on
how to successfully build your FFi Business!
Location:
Holiday Inn Heathrow
Sipson Way, Bath Road
West Drayton, Middlesex
London UB7 0DP, United Kingdom
Tel: 020 8990 0000
Click Here for more hotel information and map directions.
Time:
11:00 to 15:00
Distributor Cost:
FREE ENTRANCE and GIFT
for EVERYONE in attendance!
For more information please contact: Cliff Walker ~ cliff@cliffwalker.co.uk
To register for this event please visit: www.ffievents.co.uk
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Daily Summary
December 5, 2007
Well today i got a lot of work done..
I talked about FFI to atleast 3 people who seemed to like what i had to say.. They are all going to visit http://www.besecure.myffi.biz
and watch the FFI FLASH VIDEO!!
Also i am proud to announce that i have successfully opened a FFIFORUM
http://ffiforum.mlmhost.eu
You Can download a handy TOOLBAR here
OHH i almost forgot, ive had a new signup today, just by using the internet, meaning it is not somebody i have met before..
My sites seem to be working 
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How Fuel Freedom International MPG Cap Works Part 3 and 4
December 5, 2007
Check out This video to understand how it works!!
Jack Cracklauer, chemical engineer, presents how the Fuel Freedom International MPG Cap and MPG Boost work in gasoline and diesel engines … alle » to increase miles per gallon. Jack has spent over 37 years analyzing, researching, and testing the ingredients that make up the MPG Cap product. He explains in detail what these products are and exactly how they work. Gas Savings Product, Diesel Savings Product, Gas Pill, Fuel Savings
Video is on read more
Part 3
Part 4
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How Fuel Freedom International MPG Cap Works Part 2 of 4
December 5, 2007
Part 2
Jack Cracklauer, chemical engineer, presents how the Fuel Freedom International MPG Cap and MPG Boost work in gasoline and diesel engines … alle » to increase miles per gallon. Jack has spent over 37 years analyzing, researching, and testing the ingredients that make up the MPG Cap product. He explains in detail what these products are and exactly how they work. Gas Savings Product, Diesel Savings Product, Gas Pill, Fuel Savings
Video is on read more
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