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5 dollar gas...are we ready?

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Re: 5 dollar gas...are we ready?

Appreciate the follow up. Again, spoke too soon on tractors. But also, I would like to point out the irony of needing petrol products to produce a product to eliminate the need for petrol. To be clear, I suggested anecdotal evidence that ethanol is damaging to some small engines. Blend rates that go higher have hurt the older ones from what I hear. As other posters like Walrus suggest, a different blend rate will also negatively affect storage.
As the % of ethanol goes up, the problem definitely gets worse. No argument there. Engines that run fine on 10% may very well fail at 20%. There are definitely other concerns around storage and the fact that ethanol can deteriate seals and such where it is located, including storage, fuel lines and the actual engines. And yes, the idea of burning fuel to produce fuel is pretty backwards.
 
Re: 5 dollar gas...are we ready?

Given the prices that you see on the stock markets correspond to the last price at which the particular item (at any amount of shares) was sold, that would explain the speculation. However, I have a feeling there are other factors that are to be considered, such as delivery, refining costs, taxes, not to mention profits that took a big hit in 2006-2008 because the gas stations were trying to entice people to get their product at a low price, when if normal profit practices were in place the whole time that gas would have been about $5 per gallon...

Crack spread = difference between what the refineries pay for feed stock vs. what they can sell the products for, at least approximately. Somewhere in the $5 to $10/bbl range is normal. It's running around $30/bbl right now. The refiners are making money hand over fist, and I believe that spread is so high that it's not sustainable. Indirectly, that also means that gasoline prices are too high.
 
Re: 5 dollar gas...are we ready?

Tractors run on diesel...

And I understand the A/F argument, that is what I work on everyday at work. Yeah, running too lean can kill small engines, but that is mostly a 2 stroke problem, and not one that I've ever seen caused by running with ethanol. Around where I come from everyone uses gasoline with ethanol blended in small engines (snowmobiles, 4-wheelers, chainsaws, lawnmowers, weed whips, utility engines, etc) and we've never seen a problem. The stoich A/F of gasoline is 14.7, while the stoich A/F of ethanol is 9. If you're mixing 10% ethanol, that brings the stoich A/F down to about 14.1, which can be a significant amount. Cars deal with this by using O2 sensors to adjust A/F as the EGO gets too low, small engines do not. This is where the assertion that running with E10 can hurt small engines come in, and I'll admit, it is a valid argument, I just don't buy it. First of all, I would expect any small engine without an O2 sensor to be carbureted. On a carbureted engine, the A/F is determined by the jetting, and the A/F is not very consistant when controlled this way, I would expect small engines to be running on the rich side, due to this. It is better to error on the side of rich than lean, which is why you see people trying to get more performance out of small engines by using smaller jets and running lean. Overall, when I look at it, yes, the A/F is leaner when running E10, but I wouldn't expect it to be a problem, due to the way that a normal engine is setup. On the other side of the coin, if I had a performance small engine, in say a racing dirt bike or sled (ignoring the fact that these are already almost always setup to run 100% alcohol), I wouldn't use E10, because these engines are already tuned to run as lean as possible, running ethanol would probably make them run too lean and burn up the engine. On a normal engine, I don't see a problem, and if someone is actually worried about it, put in one size bigger jet, it takes about 5 minutes to do.

In theory, that's exactly why E10 was proposed in the first place- and why California mandated MTBE- both promote a slightly leaner combustion in non-controlled engines, which would lower their emissions. Like you say, most carbs, inlcuding for carbs, are tuned conservative rich, so E10 is won't hurt the engine, and make less emissions....

In modern cars, E10 does not show that benefit.

Sorry about the side track.
 
Re: 5 dollar gas...are we ready?

In theory, that's exactly why E10 was proposed in the first place- and why California mandated MTBE- both promote a slightly leaner combustion in non-controlled engines, which would lower their emissions. Like you say, most carbs, inlcuding for carbs, are tuned conservative rich, so E10 is won't hurt the engine, and make less emissions....

In modern cars, E10 does not show that benefit.

Sorry about the side track.
I don't think its a side track. These are the conversations that I enjoy, the technical stuff is right up my alley, so I guess its a good thing that this is the stuff I get to work with all day. :p
 
Re: 5 dollar gas...are we ready?

Maybe your fancy brand new John Deere's. But my family has a pair of Allis-Chalmers that run on good old unleaded. :p
Yeah, yeah, old tractors were gas powered, but when we're talking about major corn production for food or ethanol, the tractors used are powered by diesel fuel. (we have 1 tractor that is gasoline, and we don't use it anymore, it is pretty much useless for any kind of modern farming.)
 
Re: 5 dollar gas...are we ready?

Crack spread = difference between what the refineries pay for feed stock vs. what they can sell the products for, at least approximately. Somewhere in the $5 to $10/bbl range is normal. It's running around $30/bbl right now. The refiners are making money hand over fist, and I believe that spread is so high that it's not sustainable. Indirectly, that also means that gasoline prices are too high.

For anyone that doesn't know, 1 oil bbl is equal to 42 US gallons. Given that standard, and the relationship between gas prices today and gas prices during the steady rise in around 2008 when the oil price was about the same, that would make sense as to why the national average is about 50 cents per gallon higher. It's a little more than that, but obviously we can adjust for delivery because it takes fuel to deliver. Granted, I don't know exactly what this refining cost was back in 2008.
 
Re: 5 dollar gas...are we ready?

Appreciate the follow up. Again, spoke too soon on tractors. But also, I would like to point out the irony of needing petrol products to produce a product to eliminate the need for petrol.

There's a nice ironic touch to it, but it happens all the time. An economy geared to production system 1.0 uses it to get to production system 2.0. The machines that went on the first assembly line couldn't have come off an assembly line. The derricks that went up on that first oil well in Titusville, Pennsylvania probably got there by steam locomotive followed by horse-drawn cart.
 
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Re: 5 dollar gas...are we ready?

There's a nice ironic touch to it, but it happens all the time. An economy geared to production system 1.0 uses it to get to production system 2.0. The machines that went on the first assembly line couldn't have come off an assembly line. The derricks that went up on that first oil well in Titusville, Pennsylvania probably got there by steam locomotive followed by horse-drawn cart.

A reductionalist could break it down this way. In my mind, it is differentiated since one could see the utility of the food as a means to survive. However, the energy balance ( energy in – energy out) for corn ethanol is 1.3, or 30%. As a worst case, consider the tar sands in Canada which I believe require 1 barrel of oil for every 2 barrels you get, or 50%. Tar sands require a lot of energy to yield product. I would imagine deep sea, and natural gas to be significantly higher than this.
 
Re: 5 dollar gas...are we ready?

For anyone that doesn't know, 1 oil bbl is equal to 42 US gallons. Given that standard, and the relationship between gas prices today and gas prices during the steady rise in around 2008 when the oil price was about the same, that would make sense as to why the national average is about 50 cents per gallon higher. It's a little more than that, but obviously we can adjust for delivery because it takes fuel to deliver. Granted, I don't know exactly what this refining cost was back in 2008.

We had the same question in 2008, when oil price was rising the gasoline price went up in lock step. $147 oil , $4.18 national average.

When oil prices finally dropped the gasoline prices didn't move down to prior levels. I remember posting refining margins went up 50% using earnings reports from oil/refining companies in this time frame when oil dropped and gasoline barely budged down.

Basically oil/refiners found out they could get away with higher profit margins... even with multiple "investigation" of price gouging. I'm still trying to figure out how our AG found no fault with Tesoro (95% refiner) when our gasoline price went higher than California in 2008-09 period when prior to this run-up it was always cheaper (due to 42cents vs 8cent state/local excise tax).

These guys are making record profits with (our) oil AND refined (gasoline) and we got $5.7billion federal taxes? .
Republican have sold us out, but man o man Democrats are really not fighting hard at all. fighting over $2billion/yr. Really.

We are the 3rd largest producer 9m/bpd and #1 consumer 22% of world supply (18m/bpd) and yet our government is making so little money (from producers or users) compared to other countries and oil companies it's not funny.

http://finance.yahoo.com/news/How-t...4.html?x=0&sec=topStories&pos=7&asset=&ccode=
The 41 U.S. oil and gas companies that break out their federal taxes said they paid Uncle Sam $5.7 billion in 2010, according to data compiled by Compustat. That's more than any other industry. Exxon alone paid $1.3 billion. (The company's total tax bill was $21.5 billion, but most of that was paid to foreign governments and states.)
 
Re: 5 dollar gas...are we ready?

We had the same question in 2008, when oil price was rising the gasoline price went up in lock step. $147 oil , $4.18 national average.

When oil prices finally dropped the gasoline prices didn't move down to prior levels. I remember posting refining margins went up 50% using earnings reports from oil/refining companies in this time frame when oil dropped and gasoline barely budged down.

Basically oil/refiners found out they could get away with higher profit margins... even with multiple "investigation" of price gouging. I'm still trying to figure out how our AG found no fault with Tesoro (95% refiner) when our gasoline price went higher than California in 2008-09 period when prior to this run-up it was always cheaper (due to 42cents vs 8cent state/local excise tax).

These guys are making record profits with (our) oil AND refined (gasoline) and we got $5.7billion federal taxes? .
Republican have sold us out, but man o man Democrats are really not fighting hard at all. fighting over $2billion/yr. Really.

We are the 3rd largest producer 9m/bpd and #1 consumer 22% of world supply (18m/bpd) and yet our government is making so little money (from producers or users) compared to other countries and oil companies it's not funny.

http://finance.yahoo.com/news/How-t...4.html?x=0&sec=topStories&pos=7&asset=&ccode=

which would imply that the market has a capacity for more refineries, yes?
 
Re: 5 dollar gas...are we ready?

which would imply that the market has a capacity for more refineries, yes?

Yes.

I love this headline from talking heads in 2007. They forget big oil also control refining (margin) and the record refining profits has risen even higher since this headline.

"Golden age of record refining profits is likely to end by the end of the decade"
http://www.reuters.com/article/2007/10/29/us-energy-margins-idUSL2965346020071029
"Margins will come down from 2004-2007 record levels by the end of the decade as significantly more capacity additions will occur in 2008-2010 when compared with 2000-2006,"
 
Re: 5 dollar gas...are we ready?

which would imply that the market has a capacity for more refineries, yes?

Do you have 9 figures worth of money sitting around waiting to build a new refinery?

There is this thing in economics called a "barrier to entry" which would seem to apply here.
 
Re: 5 dollar gas...are we ready?

Do you have 9 figures worth of money sitting around waiting to build a new refinery?

There is this thing in economics called a "barrier to entry" which would seem to apply here.
If I had 9 figures I'd buy a bunch of hookers, some booze and a pro sports franchise, not a refinery.
 
Re: 5 dollar gas...are we ready?

Two chicks at the same time, man.

10to1-6594944.jpg


Does it surprise anybody -- even the people who whack themselves off to Milton Friedman -- that when five companies control a scarce resource you get a criminal cartel?
 
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Re: 5 dollar gas...are we ready?

Does it surprise anybody -- even the people who whack themselves off to Milton Friedman -- that when five companies control a scarce resource you get a criminal cartel?
So what happens when the government controls healthcare? :p

Would it be an incompetent cartel?
 
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