Thoughts from the Middle of Nowhere

A lot of people are complaining about the profits the oil industry is making and have all kinds of solutions as to how to help consumers past this stretch of high gas prices. The stupidest of these I've heard is a $100 fuel-cost rebate for millions of taxpayers and suspending the federal 18.4-cent-per-gallon gasoline tax.

What good is $100 going to do me with gas prices the way they are? One hundred dollars doesn't go very far in the Last Best Place and the distances we travel. It's nothing more than a big joke. How much administrative overhead will there be involved in issuing this money out to people? The Government doesn't do anything cheap so I bet this will cost taxpayers at least twice what they receive to get their own damn money back from the government. Lastly how much fraud will there be since the government is handing out money? Offer money like this and fraud happens, pure and simple. Some criminally minded, enterprising individuals, will find a way to get extra money out of this ill advised scheme, guaranteed. Overall the $100 fuel-cost rebate is an idiotic idea.

Now on to suspending the 18.4-cent-per-gallon gasoline tax. Another monumentally stupid idea. Consumer usage of gasoline is, for the most part, dependent on the supply and demand equation. If prices drop for gasoline 18.4-cent-per-gallon all of a sudden, the consumer will just see lower prices and consume more gas at the lower price than if it was a higher price which will drive prices back up. Consumers just accept the tax as part of the price of gas and adjust their buying habits accordingly. So it doesn't do any good in the long run. It might give short term, couple of weeks, relief from prices but they will just drift back up due to demand.

Also, that tax money is all ready spent for highway projects throughout the US so suspending the tax means money going out to the projects still but no money coming in to the treasury. Yea, that's all we need, a bigger deficit to deal with along with high fuel prices. Not real smart.

The easiest way to combat these prices? try to adjust your driving habits so you use less gas. I have here on the ranch. Plant crops that require less farming with a tractor. Make every trip out to work count, plan more jobs per trip, so that you drive around less. Go to town less often and do more when you do go to town. These things are not a lot of fun but they are what you have to do to survive. Bitching and moaning don't get you very far, figuring out ways to cope does.

An intelligent hell would be better than a stupid paradise. Victor Hugo

The ethanol industry is having some growing pains. According to this story, the price we will pay for gasoline this summer is going to be significantly higher because there is not sufficient distribution facilities to get the ethanol where it needs to be causing shortages of fuels in some markets.

But there's trouble looming: The ethanol industry might not be ready to satisfy the expected summertime jump in demand. And by crimping the overall supply of motor fuel, this could contribute to a spike in gasoline pump prices at the start of the country's peak driving season.

That, at least, is the view of the Energy Department, which issued a report last month detailing the challenges midwestern ethanol producers will have in getting their fuel to key markets along the East Coast because of railroad, trucking and other distribution bottlenecks. The report also highlighted concerns about the limited output capacity of an industry still in its infancy.

It appears that the oil industry is completely phasing out MTBE, a good thing, in favor of ethanol but the ethanol, since it cannot be transported by pipeline, is going to be in short supply to make up for the MTBE.

Energy analysts said it is unclear whether ethanol producers can manufacture and distribute enough supply once U.S. refiners phase out the use of a petrochemical called methyl tertiary butyl ether, or MTBE, which enables gasoline to burn more completely, and thus more cleanly, but carries some public health risks.

The refining industry says it warned Congress for years about the difficulty ethanol producers would have in offsetting the loss of MTBE, which accounts for about 10 percent of the volume of every gallon of gasoline with which it is blended.

"When it comes to ethanol, Congress is guilty of more irrational exuberance than on any other issue," said Bob Slaughter, president of the National Petrochemical and Refiners Association.

So, we might not make enough ethanol or have the capabilities of transporting it to where it needs to be for the oil industry this coming summer. The solution? Imports.

While U.S. ethanol producers have the capacity to produce roughly 4.3 billion gallons per day in 2006, the near-term crunch means more imports will be needed from Brazil, Dinneen said. The United States imported more than 150 million gallons of ethanol in 2005.

So the plan to reduce foreign dependence on Middle Eastern oil means we will be dependent on South American ethanol. What a plan. I know, the industry will work out the kinks in the US to supply the needs but it strikes me as really funny that the way to make us energy independent is to import more energy from a foreign country.

I will also point out the ethanol industry is taking off and going to be supplying the US with more energy with out the need of mandating that ethanol be put in our gas by the government like the state of Montana did. I claimed all along, while Montana was discussing passing the law, that if ethanol was economically viable a mandate was not necessary to get the business going. I was a voice in the wilderness that nobody listened too while Montana passed the absurd 10% law and now look, ethanol is taking off just like I predicted now that the oil prices are high. The market is working as designed. Amazing isn't it.

The four most beautiful words in our common language: I told you so. Gore Vidal