Sunday, June 01, 2008
CNN report "Fuel Nightmare" on oil prices
This evening (Sunday June 1), CNN Investigations featured a very useful report on the oil price crisis, “America's Fuel Nightmare.” At 8 PM EDT, running for one hour, hosted by Ali Velshi.
The show started by reporting that the Federal Trade Commission has been running an investigation of oil futures prices since December. On May 31, 2007, the price for crude was $64.01 and it has more than doubled in one year. Michael Greenberger from the Commodities Futures Trading Commission was interviewed. While some improprieties may be discovered, it is unlikely that the FTC will find a “smoking gun.” Golbal demand is outstripping supply, and the tendency is for fuel prices to be very inelastic.
There was a discussion of websites that monitor gasoline prices, such as Automotive.com and gasbuddy.com. A reporter drove around Brooklyn NY and found that prices changed too quickly for the websites to be accurate, and sometimes lowest prices were miles away, as in New Jersey. The highest gasoline prices in the nations seems to occur at Death Valley, CA (I think it was $5.14).
Driving tips were discussed. It may be wise to turn off the ignition if idling for more than 30 seconds, and one driver even turns off the engine when coasting to double his gas mileage. Tires should be maintained at exactly the recommended pressure. Either running the car air conditioner or opening windows (leading to air drag) reduces mileage by about 1 mpg.
The predicament of suburbanites was discussed. They will tend to demand that auto companies give them rechargeable hybrids. Real estate prices may fall further in suburbs and rise again in cities, although employers could decide to disperse (motivated by broadband Internet) and government policy could actually encourage them to do so (as in a recent Washington Post Magazine fictitious story). Creatively engineered vehicles, like the hooded “bike mobile” could be developed.
The possibility of making gasoline and especially airline fuel from coal was discussed. The Air Force is already willing to encourage a gasification plant and mine to be built in Montana. But raising the demand for coal, plentiful in the US, would raise energy prices the way ethanol fules have helped increase food prices. Furthermore, strip mining and environmental damage and global warming might increase.
The prospect of finding more oil through drilling was discussed. Brazil (already heavily into ethanol fuels from sugar cane) is said to have huge offshore deposits under 10000 feet of ocean, very expensive and difficult to get out. But it might be profitable to extract it now.
Another Hurricane Katrina could boost fuel prices another 15-20% if there were major damage to the facility at Port Fourchon, LA, at the end of the Intracoastal Waterway, south of New Orleans.