Monday, April 28, 2008

Insanity at the Pumps

what a difference 10 years makes...

Like a lot of Lowcountry denizens, and just like a huge block of the American populace as a whole, I have a hefty commute to work in the wee hours of the morning. My personal commute begins at 3:00 AM when I turn the key, fire up the XM radio feed, and glide through the darkness on 17-A from Walterboro to what seems like my home away from home deep in the heart of North Charleston’s Industrial Wastelands. Before I got transferred to the main Charleston plant from our satellite branch in Walterboro, my commute was nothing; I live 5 minutes from the branch and I used to fill up once a month. Now, unfortunately, I fill up every 4 days or so, using about ¼ tank a day. Most often, I fill up at about 3 in the morning on Friday, and I end up having to add a little to the tank to make it home Thursday afternoon, sometimes Wednesday, just enough to make it home to start the process all over again. The drive to work is just over 43 miles each way, so you do the math: I drive about 1600 miles a month just to get to and from work, not counting the gas burned sitting in that Mongolian Goat Rope known as Traffic On Dorchester Road Between King’s Grant And Bacon’s Bridge Road.

So, with that said, is it any wonder I get sick to my stomach every time I look at the price signs at gas stations? Each day I get that knot in my bowels as the price climbs higher and higher. Pretty soon I’ll be forced to look closer to home for a job, but there’s damnably few opportunities in Colleton County that pay what I’m making with my current employer, and I can’t afford to take any real pay cuts. And here in the Lowcountry we’re getting slightly better gas prices than are being seen elsewhere in the nation, so others have it even worse than we do here. We’re all feeling the pinch. I know I’m not alone. Higher fuel costs have jacked up the price of almost all consumer goods. A 12-pack of cheap Wal-Mart cola has gone up a good 40 cents in the past 6 months. A frozen entrĂ©e that my wife liked to take to work for lunch went up aalmost 65 cents a package in the span of a month. You name the item, it’s gone up: milk, cheese, bread, all the yummy basics. It’s gotten to where most American families are having to adjust their menu choices because of rising costs, and literally re-structure their entire family budgets around the cost of gas. I shudder to think at how many family vacations will be cancelled this year. I mean, who can afford the sky-high airfares? That leaves driving as the alternative, but who can afford the gas to just drive to a destination instead?

As of last week, California is home to the nation's highest average gas price, $3.87 for regular unleaded; diesel is pushing $4.43 a gallon, according to Troy Green, with AAA.

Here is a glimpse of prices across the state, according to AAA as of April 23:
•San Francisco $3.97 per gallon; last year $3.47
• Los Angeles $3.85; last year $3.32
• San Jose $3.89; last year $3.36
• Sacramento $3.86; last year $3.30
• San Diego $3.88; last year $3.35

San Francisco is the most expensive city, averaging $3.97 a gallon. However, a drive around the city shows many stations have jumped over $4.00. The national average for regular unleaded is $3.53 and rising daily. Last year at this time, it was $2.86 per gallon. According to AAA, 24 states and the District of Columbia are averaging at or above $3.50 a gallon for regular unleaded. The state with the lowest gas is New Jersey, at $3.34 per gallon. No wonder some Californians are hopping the border to Mexico to fill up on gasoline that a couple weeks ago was averaging $2.64 a gallon.

My PT Cruiser has a 15-gallon tank. I used a calculator I found embedded in an article at that figured out how many hours you need to work to pay for a tank of gas based upon your pay rate and the given price of gas, which was $3.38 a gallon. Seems that at the time, I needed to work over 3.57 hours to get a tank of gas at $50.70. For those of you who drive a dainty little Prius, it’s still costing you $40.22 to fill that 11.9-gallon tank. And for those of you with a fuel-whore Hummer H2, that 32-gallon tank is costing $108.16 to fill, at a ponderous average of 10-13 miles per gallon. Or is that feet per gallon? Oh wait…a lot of you drive Uber-Whore vehicles that demand Premium Gas. Better start panning for gold in the local streams…

So, what to do? That’s the question.

How about we open up the north slope of the ANWR to drilling? The ANWR (Alaskan National Wildlife Refuge, pronounced “Anwar”) has a huge supply of oil ready to be drilled, estimated at between 4 billion and 10 billion barrels’ worth. Yeah, I’m not exactly keen on disrupting a national wildlife area with oil drilling either, but we really need to do something to get things under control. How about doing more drilling in the Gulf of Mexico? Last May it was widely reported Chevron and two oil exploration companies announced the discovery of a giant oil reserve in the Gulf of Mexico that could boost the nation's supplies by as much as 50 percent and provide compelling evidence oil is a plentiful deep-earth product made naturally on a continuous basis. Known as the Jack Field, the reserve is estimated to hold as much as 15 billion barrels of oil. Chevron discovered the field some 270 miles southwest of New Orleans by drilling the deepest to date in the Gulf of Mexico, down 28,175 feet in waters nearly 7,000 feet deep, some seven miles below the surface of the Earth.

Also, last year reports started circulating that Chinese firms are planning to slant drill off the Cuban coast about 45 miles from Key West in the Florida Straits, tapping into U.S. oil reserves (Oh, wait, isn’t that the Jack Field?) that we aren’t tapping into ourselves due to Florida’s strict state laws that won’t allow drilling off the Florida coast. As China increases its reach around the world it is seeking oil, which it lacks domestically. China is eager to tap into oil reserves in the Florida Straits and then make a deal with Cuba to control it. The Chinese have already reopened an abandoned Russian oil refinery in Cuba. Much of the gas refined there is believed to be destined for Freeport in the Bahamas, where the Chinese, through a front company called Hutchison-Whampoa, have developed a massive port facility and airfield. With the refinery reopened and expanded it will also meet the needs of Cuba, cash- and energy-strapped since the Soviets pulled out in the early 90's. Chinese drilling will be even more of an environmental hazard since China is not as concerned about or equipped to deal with any potential ecological disaster as a result of a spill, as evidenced by how polluted their own capital of Beijing is. China is in a mad scramble to try and clean things up a bit before the Olympics this summer. My heart really goes out to the athletes who’ll have to try and breathe in that noxious cloud of crap surrounding the city.

And last week I heard that America is sitting on top of a massive oil field that could potentially make America energy-independent from foreign oil, and until now has largely gone unnoticed. Thanks to new technology, the Bakken Formation that covers North Dakota and portions of South Dakota and Montana could eventually boost America’s oil reserves by an incredible 10 times, giving western economies a boost against OPEC’s short leash on the oil supply and making threats of disrupted supply by hostile nations like Iran and Venezuela pretty much irrelevant.

The USGS (U.S. Geological Survey) released a new report giving an accurate resource assessment of the Bakken Oil Formation, claiming that at this time there is about 4.3 billion barrels of recoverable oil, but it is hoped that new horizontal drilling technology coming available, it is believed that from 175 to 500 billion barrels of recoverable oil are held in this 200,000 square mile reserve that was initially discovered in 1951. The USGS did an initial study back in 1999 that estimated 400 billion recoverable barrels were present but with prices bottoming out at $10 a barrel back then the report was dismissed because of the higher cost of horizontal drilling techniques that would be needed, estimated at $20-$40 a barrel. The current price of oil teeters around $119.00 a barrel, and that makes it pretty cost-effective now to try it. The oil itself is compressed in shale rock, and a good portion of the vein is under a huge lake, so new drilling techniques have had to be developed to get to the oil and be able to extract it. I’ve read somewhere that America imports 14 million barrels of oil, so if we cut off foreign imports totally, we’ll go through a potential 200 billion barrels in just under 40 years. Scary to think we go through that much, actually, but if we do decide to opt for cutting the foreign-oil stranglehold we can maintain our independence while using the time to develop alternative energy sources before we run our own reserves dry.

And while we’re at it, put a couple new refineries up there to do something with that oil instead of pipelining it to the Gulf Coast to be refined. It’s been 32 years since we last built a refinery in this country, y’know.

However, I somehow think that we’ll bend over and let OPEC shaft us some more to placate our “friends” in the Middle East, and we’ll never make serious attempts at large-scale alternative energy source usage because the multi-gajillion-dollar Big Awl™ companies will never….EVER…..allow their sky-high profits to go to the wayside.

I copied down a pie chart that I saw in an issue of Maxim Magazine back when gas was only $3.18 a gallon in the fall and I reproduced it here in a larger format, showing you where that $3.18 actually goes:

4¢--Gas station credit card fees—Gas station owners don’t really make money on the gas itself after paying AMEX, Visa, and MasterCard for the privilege of letting you pay 14% interest on that expensive gas. That’s why you pay 3 bucks a bottle for tap water with a fancy label.

4¢--Gas station property fees—They have to pay for that building with Third World restrooms somehow.

4¢--Gas station payroll—Because that surly employee who cleans that Third World bathroom once a year doesn’t work for free, right?

20¢--Federal taxes—The Feral Gummint ™ has to pay for the Global War on Terror and bridges to uninhabited corners of Alaska without holding a bake sale.

21¢--State taxes—Expect higher rates in California, where tree-hugging liberals use the money to pay for those Granola-head environmental laws.

33¢--Distribution and Marketing—This includes getting the gas to the consumer, and for cool ads that make you think that they donate more than 1/1000 of 1% of their profits to the environment.

53¢--Crude oil costs—World demand is so high that most oil-producing countries are generating way beyond OPEC limits and they just keep jacking the per-barrel price daily.

73¢--Refining costs—US refineries have been operating, so we’re told, at near-peak capacity. And with every hurricane, equipment failure or butterfly wing flappage, the supply drops and prices skyrocket.

$1.06--Crude oil PROFIT—One could conservatively reckon that the oil companies were breaking even back when crude was just $25.00 a barrel. With prices now at almost $120.00 a barrel, a massive chunk of it is pure profit for Big Awl™, which explains why four sheiks have recently built luxury yachts over 450 feet long, and one is spending over half a billion clams on a flying palace, as I covered here:

(By the way, a US Navy Burke-class guided missile destroyer is only about 50 feet longer than those yachts.)

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