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.
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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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Carbon Calculator
December 6, 2007
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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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