Why are gas prices so different even in states next to each other?

[P562045]

Another day another congressional committee that doesn't do a darn thing to reduce the price of a barrel of oil.

Oh no Congress is much more concerned about where prices will be well into the future.

And even next year.

A bank analyst said that a barrel of oil will drop to about 105$ a barrel. But of course that is not good enough for Washington especially during an election year. And it won't drop until after November 4th of this year at least.

A barrel of oil is about 135 right now. If it drops to 105 per barrel that is about a 22% drop in the price of a gallon of gas. Because right now their is almost a direct correlation between how much a barrel of oil is and how much a gallon of gas is.

So putting on my math hat. A 22% drop on a gallon of gas that is four dollars a gallon is decrease of 88 cents per gallon of gas. So let's see a ten gallon gas tank would save a driver about $8.80 a week times 52 weeks in a year which is $43.20 a year. Well that is not very much savings over a whole year so let's just keep it a $4 a gallon just for the heck of it. And another great reason to keep a gallon of gas at $4 is that people will drive less right if it at that price for a long period of time right?

Washington just makes me want to scream sometimes.

Story Here

And please don't ask Congressmen Markey the tough question of how long it would take for enough people to be driving a hybrid car to make much difference in our situation in the first place?

And when was the last time Washington was even remotely close to a projection that is decades out?

[P562045]

CNN shows very well that fossil fuels are clearly not the answer.

So the question becomes what is the answer.

Ethanol does put less co2 into the atmosphere but at higher costs to build places to just produce and distribute ethanol. Which I will go out on a limb will not happen in the next 5-10 years which is about the amount of time to start increasing our fossil fuel capacity. And what is the main ingredient to produce ethanol so far. It is mostly corn which we use for other things as well. Now other things could be eventually used but that is some time in the future as well.

So ethanol will clearly solve all of our problems but it will take some time as well.

So I guess just another case of Washington not seeing the big picture and not having their act together yet again.

How about a combination of the two? I don't know how that would work but then both sides can pat themselves on the back and say what a wonderful job they did all by themselves.

Story Here

And one last thing that need to be said again. This is a very complex thing we are talking about because of the many products that are made using petroleum. So it would be nice if we could just use petroleum for gas and make these other products out of something else. But that is far down the road as well.

Typical Washington that idea clearly won't work so it should not even be considered but another precious thing that puts very low co2 into the atmosphere is clearly the only way to go. And when are the people going to start ask Washington what are you doing on my behalf?

[StockTrader]

Speaking of Ethanol, I have heard that switchgrass makes a great alternate as a source.

GUYMON, Okla. - Work has started on the planting of a 1,000-acre switchgrass field in the Oklahoma Panhandle that researchers plan to use in the production of cellulosic ethanol.

The field is being touted as the world's largest for switchgrass, a drought-resistant perennial plant that grows even on marginal lands. Scientists at the Noble Foundation in Ardmore are overseeing the project and hope that switchgrass proves to be a viable substitute for corn in ethanol production.

Full article

Nick

[P562045]

Yes other sources of ethanol have the potential.I would much prefer it was not something we put in our mouths but how far away are we from actually being able to use these types of other energy sources to produce ethanol?

That is the 4$ plus question.

It sure is nice to see Washington looking out for the people. I can't imagine them not seeing something like this coming with the increased demand for oil in China and India. And they sit by until after November 4, 2008 and all of a sudden it will be a national crisis to the congress. And the real reason this is partly happening is so that the party in power in the congress can't be blamed for this oh no we must blame the minority in the congress and the president as well.

Don't worry though democrats will be fixing this in about five or six months from now.

This coming from the very same congress that makes it almost impossible to even explore for oil on the Outer Continental because of barriers that were put up and these barriers do involve large amounts of money as well. OCS is short for Outer Continental Shelf. I am sure people will be hearing more about this in the coming months partly because that is where much of the oil is that is just off our own shores.

I would be in favor of ethanol if we do it the right way and that is to phase in ethanol production with one other requirement that what is used to produce ethanol is not something we put in our mouths.

The flooding in the Midwest just shows that we could have a real short supply of ethanol if corn is the only way to produce the ethanol. And yes I am fully aware that other things are being tried to produce ethanol but how successful have those attempts been so far? And one last question when will these other attempts to produce other kinds of ethanol be successful next year, five years from now, or a decade from now?

[SayOw]

Mainstream media fed 'oil' discussion going on here...

Here's the facts that you guys are overlooking and need to consider when 'debating' the gas price/oil picture of the United States...

Ethanol is not the solution nor is it even viable. The only reason ethanol is even talked about is because it is all driven on government subsidies. It takes more fuel to produce ethanol then the ethanol that is produced to lower fuel costs - the last figure I saw was that it took 1.75 gallons of fuel to produce 1 gallon of ethanol and that hasn't even factor in a lot of transportation costs. The only reason ethanol based fuels are cheaper is because you have already paid for the difference in taxes. Heavy agricultural states, such as the one I live in, love to hear talk about ethanol because it means the price of their farm products has just increased in value for no other reason then that it will be consumed at a faster rate. And switchgrass...a farmer in these parts would love that... "You mean I let these weeds grow and then mow them up and that's my investment and you will pay me how much? HEE HAW! Maw we're getting another Caddie!" Ethanol plants are all subsidized by the government so the companies going into the ethanol business do so more for the write-offs of the money-losing ethanol plant for a tax-shelter. Sell ethanol based fuels without subsidies and the price per gallon is easily 150% more then regular unleaded.

Next is the idea that if we allowed more off-shore drilling and open up the Alaskan oil fields that America will soon be literally flooded with oil and thus, cheap gas will return. All I can do is laugh at this foolhardy notion. These oil companies that are posting unbelievable multi-billion yearly profits are to be given the rights to drill for oil in areas that they were prevented from in the past. These companies - as the theory goes- are then going to be able to produce more oil domestically and thus sell Americans cheap gas, yeah, that's what they will do....OR we can look at what will actually happen...these companies are going to do exactly what they have been doing all along... sell gas at the price they can make the most money from regardless of who buys it. It makes no sense for these companies to sell gasoline any cheaper then what the market is willing to pay for it and these oil companies are going to do 'business' as usual and sell it to the highest bidder. Just because these companies now have access to more oil doesn't mean they are going to sell it any cheaper...the company will likely just make more money off if it...

The Bakken Formation in the upper midwest is one of the world's largest oil fields with an estimated 3-4 billion barrels of oil...most of the land has been open for drilling for decades but because cost to drill for oil in America has always been expensive, it was never viable. The past 18 months have spurred a second 'oil rush' in the western part of this state that hasn't been seen since the late-70's. Oil production just in this state will have increased by an estimated 5 million barrels just this year with the increase to continue...yet gas prices continue to rise. Kind of a side note but just to illustrate our short-sighted view and total lack of concern for conserving some resources, an article in a local paper recently had stories of oil drillers out in the Bakken, they said that the urgency to tap the oil has them just releasing the natural gas from the wells directly into the air (rather then set up a capturing device). One well had so much natural gas released that it was estimated that it could have heated a town of 20,000 residents for a full year on the amount of natural gas that was eventually released...and that was just one well...

The theory of letting companies obtain more oil doesn't instantly correlate into lower prices for America... so I would think again about letting oil companies just have free reign as to where they can drill...

The price of gasoline in America will continue to rise regardless of what actions are taken. Until demand for gas decreases the price will never...no matter what. I think the issue is moot... there is nothing the government can do to lower gasoline prices because the oil companies are in business for profit and even if they could sell cheap gasoline to America - or anywhere for that matter - they won't.

[-mmm-]

Interesting you bring up the Bakkan formation, as I was just reading about that elsewhere.

Im more in line with what P and SayOw were thinking. If anyone thinks drilling for more oil will magically bring back $2 oil, than I've got some bridges to sell. Oil companies now know people will put up with $3-4 gas, why lower that? It's like people think oil companies will do something to NOT make money, when making money is their obsession to the point that its pathological.

Bush said yesterday he wants to open up coastal drilling off Florida. And oil companies openly admit it would take 10-15 years before they can get everything in place to get to that oil. Thats alot of time for all the NIMBYs with multimillion dollar beach front homes to raise a big stink about that (just look at what they did for offshore wind turbines off the coast of Massachusetts). And isnt the Florida coast prone to hurricanes? Didnt hurricanes like Katrina wreak alot of havoc with the offshore oil derricks that caused prices to go up back then? But thats just me asking questions off the top of my head that the media will never get around to answering.

[StockTrader]

Here's a good read about profits by oil companies.

Highlights
Oil companies make around $0.05/gallon
'Record' profits are due to increased demand
CEO retirement benefits are indeed, ridiculous

Nick

[StockTrader]

Originally Posted by SayOw

Mainstream media fed 'oil' discussion going on here...

Here's the facts that you guys are overlooking and need to consider when 'debating' the gas price/oil picture of the United States...

Ethanol is not the solution nor is it even viable. The only reason ethanol is even talked about is because it is all driven on government subsidies. It takes more fuel to produce ethanol then the ethanol that is produced to lower fuel costs - the last figure I saw was that it took 1.75 gallons of fuel to produce 1 gallon of ethanol and that hasn't even factor in a lot of transportation costs. The only reason ethanol based fuels are cheaper is because you have already paid for the difference in taxes. Heavy agricultural states, such as the one I live in, love to hear talk about ethanol because it means the price of their farm products has just increased in value for no other reason then that it will be consumed at a faster rate. And switchgrass...a farmer in these parts would love that... "You mean I let these weeds grow and then mow them up and that's my investment and you will pay me how much? HEE HAW! Maw we're getting another Caddie!" Ethanol plants are all subsidized by the government so the companies going into the ethanol business do so more for the write-offs of the money-losing ethanol plant for a tax-shelter. Sell ethanol based fuels without subsidies and the price per gallon is easily 150% more then regular unleaded.

While you have some validity when referring to corn-based ethanol, it 'fumes' me to know that you did not research when making such a brazen statement.

The current excitement over ethanol derives from research that has cut the cost of converting nonfood plant matter like grasses and wood chips into alcohol. Mr. Khosla says he believes that such ethanol, called cellulosic ethanol, will eventually be cheaper to produce than both gasoline and corn-derived ethanol.

"Ethanol is cheaper to produce, unsubsidized, than gasoline today," he said. "As these technologies ramp up, they will be cheaper — unsubsidized — than gasoline even if petroleum drops to $35 a barrel."

Brazil has proved that ethanol can be made competitively from sugar, said Daniel M. Kammen, a professor in the energy and resources group at the University of California, Berkeley. He estimates the cost of producing ethanol from sugar — including raw materials and processing — at $6 to $7 per gigajoule (a unit of energy) versus $14 a gigajoule for gasoline.

FOR that to happen, automakers would need to build more flex-fuel cars. The cost of adding this capability to new cars has been estimated at roughly $100 a vehicle. And ethanol would need to be much more readily available at gas stations. Mr. Khosla has been lobbying in Washington for government help in both areas.

Source

And this article is back from 2006! I hope I can find something that is more up-to-date, to see how we've progressed.

Nick

[rich76]

Everyone I've asked...that uses ethanol....has told me they get significantly lower MPG on that crap.Soooooo....is it really cheaper to put it in your tank?

[StockTrader]

Originally Posted by rich76

Everyone I've asked...that uses ethanol....has told me they get significantly lower MPG on that crap.Soooooo....is it really cheaper to put it in your tank?

Yep. Even with a 4 MPG loss in performance, I saved $6.00 USD.

Nick

[rich76]

Nick.....what kind of car do you drive and what size is the gastank?

[dlc1483]

Maybe I am geing delusional, but I use the ethanol blend always. I am getting around 22mpg with my 1999 explorer. If I am going to be paying 3.83 for my gas, or 3.93 for the non ethanol I will choose to give money to the farmers for their corn. The biggest thing I did to increase my fuel economy though was to start driving 55mph again. I went from 17-18mpg to 21-22mpg.

[islandgirl]

All this seems to still be very "bury your head in the sand".

Do we really want to be dependant on oil for the rest of our lives? You've got the potential for damaging the areas where you drill (Alaska and off-shore), but more importantly for most folks, you're just continuing to allow the oil companies to profit while putting off the posibility of running low on oil. While I wasn't around for it, I just keep seeing us heading in the same direction as the US did in the 70's.

I'm not saying let's all bike to work and eat granola, but instead of trying to figure out ways to get MORE oil, let's work on alternative power sources to complement what we do need it for. Once we have less dependence on the major oil producers, they'll have less reason to keep raising prices because of supply and demand. We also need to refine more of our own oil!

Corn ethanol isn't the best idea (it's causing numerous issues in Canada), but there are other options. Plus you've got tidal energy, wind energy, solar energy...the list goes on. There are even air powered vehicles being worked on. And I saw in England that they have this "speed bump" that moves when you drive over it. It turns a wheel (turbine I guess?) that then powers the lights etc. You barely notice it when you drive over it (because it "dips" with the weight of the vehicle). Again, another possibility.

I don't like paying $1.50 a litre for gas (costs me well over $100 to fill my tank every week and a bit), but I don't think finding more oil is the answer. It just postpones the inevitable.

[StockTrader]

Originally Posted by rich76

Nick.....what kind of car do you drive and what size is the gastank?

1999 Ford Ranger XLT, V6 with an 18.5 gallon tank.

The last time I was able to fillup with Ethanol, I drove 65 MPH highway for about 200-210 miles, and about 40 miles city. I filled up before I left to head 90 miles south to rural Pretty Praire, KS; but I normally get around 320 miles on 17.5 to 18 gallons.

Nick

[rich76]

Nick....saving $6.00 when you fill up is not saving you anything when you figure the MPG you're losing. You're losing 74 miles per tankfull.........that's 4 gallons of gas.