Fuel Economy and Oil Dependency

rorr

"It all comes down to how you define level of dependency. If it's based on the percent of imports then what you're saying makes sense. If it's defined by the amount you need to import then it doesn't make sense."

Very true. And I realize that from YOUR perspective (overall reduction in the consumption of oil from ALL sources) then increasing the fuel tax makes all kinds of sense.

However, blufz1 seemed to be making his argument more on reducing dependency on FOREIGN oil, rather than oil in general. And (generally speaking) when folks refer to our dependency on foreign oil, they refer to the % of our oil consumption which is from overseas rather than the # of bbls.

After all, if we were to somehow magically cut our consumption of oil in 1/2, yet the % of foreign oil used to meet demand went from 60% to 80%, does this mean we are more or less 'dependent' on foreign oil? Most folks would look at the %'s and conclude that we had become MORE dependent on foreign oil.

sls002

http://governor.mt.gov/hottopics/faqsynthetic.asp

at the bottom of the above page:
Is synthetic fuel cost effective?
Yes. The cost of making a barrel of synthetic fuel is estimated to be around $35, including the sizeable infrastructure investments and the labor force necessary to operate the plant. At the current and projected price of oil, production should be a cost effective enterprise. Key economic incentives in the recently enacted federal Energy Bill, such as 80% loan guarantees for certain coal liquefaction projects, reduce the economic uncertainty of bringing this technology up to commercial scale.

blufz1

Disagree. If we reduce gross oil consumption we are reducing foreign oil 60/40. The bottom line is they have less $. If the reduced use reduces the price so much that US producers can't compete then we accomplished our goal. At that point we subsidize the U. S. producers. It's my experience that a lot of oil rich drunk US cowboys are a lot less dangerous than oil rich terrorists. America is a unique and ingenious country. We just need to start working the problem NOW!

ruking1

Respectfully, that is bas ackwards. While efforts are afoot to make domestic oil woefully economically less viable, the less you use, the greater PERCENTAGE will be imported.!!??

..."It's my experience that a lot of oil rich drunk US cowboys are a lot less dangerous than oil rich terrorists"...

I mean ya gotta love those cowgirls!

rorr

"Disagree. If we reduce gross oil consumption we are reducing foreign oil 60/40."

Okay, we disagree.

To clear the air, I'm NOT saying that we SHOULDN'T reduce consumption. I'm simply saying that HOWEVER much oil we consume we will STILL be 'dependent' on foreign oil simply because, from an economic standpoint it is cheaper to purchase compared to domestic production.

Would they have less $? Only if you assume that the remainder of the planet's thirst for oil is static; but if we consume less, and the price falls, who's to say that other countries aren't able to simply take our place at the cheap energy spigot to THEIR benefit?

In the end, those with a ready supply of cheap energy (in this case, oil) will get their $$$.

But let's take that wild leap of faith assumption that the entire planet reduces their thirst for oil and that the supply of revenue to the Mid-east dries up. Is this actually a good thing? Honestly, I don't know; but as dysfunctional as most of their economies already are, I'm not sure why yanking away their one steady stream of income is a good thing. They need Billions to keep their governments/societies going; terrorists certainly DON'T need billions to perform terrorist acts.

In other words, I think the whole line of thought of trying to address mid-east terrorism by not buying their oil is complete BS.

wale_bate1

Roach, it gets us out of their sandbox.

What I like, personally, is the thought of leading the tech beyond oil, and then being in a postion of selling it to China and a few others...

blufz1

Then why are you driving a vw diesel and a civic?

blufz1

The less $ they have, the more domestic problems they have, and the less likely they are to attack us.

tpe

What I like, personally, is the thought of leading the tech beyond oil, and then being in a postion of selling it to China

I agree. Hopefully it won't be the other way around where we're buying it from China. I know their government is aggresively supporting alternative energy. If, as some say, government involvement would be a deterrent to success than maybe we've got an advantage on them. Unfortunately I don't think that's the case.

ruking1

Don't forget a couple of Landcruisers.

blufz1

I would think you are too,well,fiscally conservative, to drive Land cruisers, are they older? Did you inherit them?

ruking1

They are 13/11 years old. Both have passed "smog only" tests with flying colors, at or below new status and WAY below even the averages. No they were not inherited.

Landcruisers are easily 15 year keepers. If you have anywhere near scheduled cleaning and maintenance, a min of 20 years. With a few R/R items, 30 years is not out of the question.

A Mercedes mechanic who still calls me once a quarter who bought another one from me, told me passeed his recent "smog only" test. He echoed what I have said in other threads to run this test is a total waste of time and money.

rorr

"Roach, it gets us out of their sandbox."

Well, that's debatable...

tpe

Several posters have mentioned that there is no real cause for concern because if oil ever gets above $80/barrel we'll just start producing it from coal. A couple even stated that this will result in $40/barrel oil. Here's an article that somewhat backs that up. That is until you read the last line. Which states that a plant capable of producing 10,000 barrels per day would cost $1 billion. Hmmm... Just tack on $10/barrel to the price and the facility will be paid for in 30 years.

This article also states that the government would kick in a $21/barrel tax credit to the producer of this synthetic oil. IMO, tax credits are just as manipulative as tax penalties and less effective. In fact any policy that artificially reduces the price is pro-consumption. Hardly the position we should be taking here.

http://money.cnn.com/2007/02/16/magazines/business2/fuel_synthetic.biz2/index.ht- m

rorr

"Which states that a plant capable of producing 10,000 barrels per day would cost $1 billion."

I wonder how much a deep-sea oil platform costs for an equivalent amount of production?

tpe

I wonder how much a deep-sea oil platform costs for an equivalent amount of production?

I imagine it depends a lot on how deep. In 2001 Brazil lost a rig that cost $350 million. It produced 80,000 barrels a day.

I do know that in general businesses don't like to make investments that they can't recoup in around 5 years. There's no way that would be the case here without some huge tax breaks.

When I advocate higher fuel taxes it is met with a lot of opposition on how the government shouldn't meddle in the free-market. Fine, then the government shouldn't be meddling here. If we accept that the government needs to get involved because this is an issue of national importance then the question becomes, what is the most efficient/effective way? A large tax hike on conventional oil would make synthetic just as attractive from a price perspective and would also serve to encourage conservation. It's also a lot easier to control. Once you implement a tax credit its hard to take away. A tax hike could be gradually reduced as the alternatives became capable of standing on their own. Yeah, I know, taxes never get reduced. The reality is that they do sometimes get reduced. There was a time in this country's history where the top income bracket paid 90% in taxes. I thinks its around 38% now. Long term capital gains taxes are also considerably lower than they used to be.

wale_bate1

"I do know that in general businesses don't like to make investments that they can't recoup in around 5 years. There's no way that would be the case here without some huge tax breaks..."

I'd think in a fair number of public or private corps, that number would be the upper end. The last three major retailers I worked for were looking at two years, tops. Two were public corps, one private.

Very, very few entities with seriously big money to invest in this country have the patience to wait for five years to see ROI. They will always be insisting on the break to make their projects pencil in the short term.

gagrice

What is the difference between the subsidy we are giving ADM and Verasun to produce ethanol or raising the taxes on oil? I think you feel that higher priced fuel will cut consumption. I just don't think that will happen. People are not going to move closer to work just because the price of gas goes up a buck a gallon. Some buy smaller cars to save a little. In CA I have not witnessed any slow down in the rate of traffic or the sales of big vehicles. As soon as the gas price went down below 3 bucks a gallon the new Tahoe and large SUV sales were going up.

Now to the cost of producing more oil. The last I was privy to, it cost about $1 million to drill a production well in the Arctic. The gas fed wells on the North Slope of Alaska produce from 1500 to 15000 barrels per day. Total cost per barrel for production and entry into the Alaska pipeline was about 84 cents per barrel. I do not know the cost of transportation from the port at Valdez to the West Coast refineries. You tack on to that over $6 per barrel in wellhead tax. Then every stinking government agency along the way wants a piece of the action. I think oil is over taxed currently. Nothing like the EU. Where they are enslaved to high taxes.

ruking1

Indeed Europe has very high fuel prices at 6.70 per gal of unleaded regular. In addition the over all import % and of course volume has gone up and is currently at 80/85% and GROWING. This is in addition to the fact that Europe uses nuclear power (non vehicle of course) So really for the folks that do not get out much, take a run over there and FEEL the EXTRA expense of getting around! Come on back and tell us how you like it.:)

kdhspyder

now has comparisons available on the 2007 models but using the new testing methodology.

Find it here: EPA website

Some examples: Old vs New

Corolla 4AT ...... 30/38/33 vs 26/35/29
Malibu 2.2L AT .. 24/34/28 vs 21/31/25
Prius ............... 60/51/55 vs 48/43/46
F150 5.4L AT 2WD..... 15/19/16 vs 13/17/15

qbrozen

wow. its actually just about spot on with my real-world experience in my accord and pacifica. i'm shocked.

kdhspyder

I mentioned in another thread that the EPA has just done something that possibly no other governmental agency has ever done.......

It's pleased everyone !!

Drivers can now say that they exceed the EPA values every day all day long.
Vehicle manufacturers don't have to hear angry buyers complaining about not getting EPA FE results.
The EPA doesn't have to be embarrassed by refering to 30 year old testing methods.

Wooohooo.

tpe

The relationship between price and demand, price elasticity, is pretty well established. Now I'll admit that gasoline has become a necessity for most of us so it will have some inelastic qualities. However price will effect the car buying decision and prompt you to be more efficient in regards to your discretionary driving. Subsidies like the ones you mentioned will have the opposite effect.

Iran is currently in an interesting situation. They are the 4th largest oil exporter yet their economy is in a shambles. The one thing that keeps them afloat is oil revenue. Here's the problem. Gasoline in Iran is very cheap and domestic consumption is skyrocketing, which eats into what they can export. If you were in charge how would you deal with this situation?

The cost of transporting oil from the Persian Gulf to the US is around $3/barrel. Large oil tankers are chartered for $140,000 per day and the round trip is 40 days. These oil tankers hold 2 million barrels.

gagrice

Iran is a mess and their oil as much as they have is not very high quality. It is very high sulfur content. What happens there next is anyones guess. If they are using more of their own they must be expanding their economy. That may be a good sign. Maybe not everyone there wants to pick a fight?

Your figure of $3 per barrel sounds right. I read that it costs the Saudi's about $4 per barrel to produce and deliver their oil to US. It is high quality and still in good supply. No wonder they are happy with it in the $50 range. I just do not see us making any great strides to eliminate oil as long as the supply is good. 50 years ago there was more planning for the future. Now it seems every business is only run for the bottom line and knee jerk managed. Makes it difficult to know where we are going. I am glad to be out of the workforce and retired.

tpe

The Saudis are secretive when it comes to their oil industry. By secretive I mean they will provide data but not allow for it to be verified. OPEC nations are assigned production quotas based upon their reserves. Who determines these reserves? The producing countries do. Seems like a flawed system: you want to produce more all you have to do is overstate your reserves, Iraq did this in the 80's. Saudis stated reserves never go down despite the fact they are pumping over 3 billion barrels per year. Are they discovering new reserves to replace what they are using? I've read no evidence of this. There is a lot of evidence that indicates the Saudis are presently drilling at a frenetic rate. At this point it becomes all speculative. My best guess is that the Saudis are feeling some desperation to maintain their current production level. If that's true things might get very interesting, very soon.

tpe

If they are using more of their own they must be expanding their economy

I have a problem with this rational that using more energy equates to an expanding economy. There is definitely a corellation, large economies use a lot of energy, but its mixing up cause and effect.

robertsmx

Looks like for most vehicles, the ratings came down by 10%. So, now I'm exceeding EPA rating in both cars (98 Accord gets me 26 mpg combined and 06 TL gets me 24 mpg combined, both 50% city).

jeffyscott

The new stickers will also give an expected range. Looks like they will use about 20% above and below the actual rating, based on the example they give:

http://www.fueleconomy.gov/feg/ratingsNewSticker.shtml

In the example the high end of "city" equals the low end of highway. So anything from 15 to 29 mpg could be within the expected EPA range for that example. So pretty much no matter what mpg you get, the mfr will be able to say "that is within the expected range".

explorerx4

i'm thinking those are a mix of actually tested vehicles and a formula applied to others.
i doubt if they went back and tested cars like my 1991 mustang!
kdh... thanks for the link.

jeffyscott

Yes, they even have a calculator on the website. So I think these are all just estimates to provide future comparability. Otherwise people would probably complain..."why does my new car get worse mileage than a 1991 mustang".

I wonder how they are calculating. It is not a straight percentage...eg. prius has a bigger percentage reduction than most. This shows up in both the place where you can look up estimated new mpg ratings by model and also if you use the calculator with the Prius mpg figures.

Link for pop-up calculator is at the bottom of this page:

http://www.fueleconomy.gov/feg/ratings2008.shtml

gagrice

Reserves are somewhat of a crap shoot. When Exxon discovered oil in Prudhoe Bay, AK the field was estimated at 9 billion barrels. Thirty years later they are still pumping oil out of that field. I think they have already gone double the original estimate. Most petroleum engineers believe that the ANWR field is double the Prudhoe field. So those guys have a long ways to go before the Arctic is abandoned. Plenty of work in all the oil fields of the world, for those willing to leave momma at home with the kids.

tpe

I agree that estimating the size of an oil reserve is probably very inexact. I was only pointing out that within OPEC's system there is an incentive to overstate your reserves.

gagrice

It seems the dictators in those oil rich countries are hell bent on using it all before they die. I do not see any sense of urgency that the oil reserves be doled out as needed for the smooth operation of their countries. The opulence in which they live is incredible. Makes our wealthy in this country seem poor by comparison.

tpe

The opulence in which they live is incredible

That is amazing. These guys aren't any richer than the Bill Gates and Warren Buffets in our society but for some reason they feel that they need to gold plate everything in their homes. I saw how some oil sheik has an Audi made out of silver. They are fundamentally different.

gagrice

They also need an army to protect their lifestyle. Warren Buffett still drives an old beater to work each day. It is true that our consumption has created these kingdoms and dictatorships. I still say we need people in Washington setting a good example as does Mr. Buffett. No place in this country is there anymore waste than in Washington DC. That includes gas guzzling vehicles and those that use them.

qbrozen

I was wondering the same thing. For instance, it seems Hondas don't suffer as much of a downgrade as some others. So I think they may have different calculations by manufacturer, number of cylinders, and transmission. Just a guess on my part, of course.

jeffyscott

I didn't notice Honda being any better than anyone else. Lose about 3 mpg in 4 cyl Accord, this is the same as I see for others. Mazda6 lost 3, Fusion 3 city and 2 hwy, Camry lost 3, Malibu lost 3, Legacy lost 3, etc.

qbrozen

maybe i was jumping the gun. i didn't look up alot, but I did look up my cars and our '05 Pac and '03 Pilot used to have the same ratings. Now the Pac dropped 2mpg both city and highway while the Pilot dropped 2mpg city but only 1mpg highway. Not a huge difference ... maybe there is some rounding off going on there that could explain it.

coldcranker

It makes no sense to go to a new test. The old test was fine to compare vehicles across the board. Its only a comparison tool, people. One can easily get ANY MPG you want by adjusting driving style, high MPG or low MPG. Going to a new test doesn't change any of that.

210delray

Sorry, the old test was totally out of date -- no a/c used, top speed of 60 mph on the highway test with an average speed of 48 mph, gentle acceleration, etc.

You can still compare vehicles across the board, as long as they are 2008s or later. Plus they have a conversion factor to compare old and new ratings.

nippononly

a good part of the "new formula" is merely a change in the multiplier they apply to their actual test results. It is good that they will run the A/C now though. I have a friend that never turns his A/C off - I have never quite understood it. Rain or shine, whether he wants hot air or cold, he just leaves the A/C on all the time. I shudder to think how much gas is wasted with this little "technique", not to mention how much extra wear he is putting on his engine each year.

PF_Flyer

You can see how the ratings for your vehicle will change here:

http://www.fueleconomy.gov/feg/calculatorSelectYear.jsp

Kewl... now I'm not just meeting the ratings onmy new Versa, I'm exceeding them! :P

210delray

Really, the EPA is still using a "multiplier?" I was hoping this new test would eliminate this mathematical "correction."

nippononly

It's all kind of silly - the poster who mentioned they are only for comparison, so why change it, had a good point IMO.

The new ratings on my '02 Echo are 29/37, 32 combined. Of course, in routine suburban and commute driving, I am averaging 40 mpg, so I guess for me the new EPA ratings will be as worthless as they currently are, apparently, to many others. In future, I will just take the highway figure and add 10% to estimate what my mileage will be.....

That would also work on my 4Runner, in which I average 19.5 mpg. Its new ratings would be 15/18, 16 combined, yet I average 19.5 mpg.

robertsmx

Yep. I was already averaging as much or better than previous EPA ratings in both cars. With the new ratings, I'm actually exceeding them. But, this makes the new EPA ratings a more feel good measure than anything else. So, fewer people will complain about it being misleading.

nippononly

Yeah, I suppose that's a good thing...

tpe

the poster who mentioned they are only for comparison, so why change it

I don't think that they were good for comparison when it came to hybrids. I'm not bashing hybrids here. It turns out that using these new ratings you'll actually show a greater gas savings in a hybrid although I think that might be lost on a lot of car buyers. Take two vehicles, one rated at 50 mpg and the other rated at 30 mpg and figure out how much gas they'll burn in 12,000. It comes out to 240 and 400 gallons respectively. Adjust these ratings down to 40 mpg and 25 and do the same. You now get 300 and 480. You've saved 20 more gallons a year even though the rated mpg difference has gone down by 5.

qbrozen

i agree. I could compare them, and that was that.

But the new tests will quell alot of the whining, so that's a good thing.

jeffyscott

But, this makes the new EPA ratings a more feel good measure than anything else. So, fewer people will complain about it being misleading.

Yes, only those who get less than the advertised mileage complain.

qbrozen

well... only those who get less than advertised and don't know any better ...

I get less than advertised, but I know better than to believe I'll get the advertised numbers with my driving habits, so no complaints from me.