Energy Conservation in Transportation and the Bush Speech on High Gas Prices by Dennis Silverman Department of Physics and Astronomy U. C. Irvine

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Energy Conservation in Transportationand the
Bush Speech on High Gas Pricesby Dennis
SilvermanDepartment of Physics and AstronomyU.
C. Irvine

• President Bushs Speech was Given to the
  Renewable Fuel Association
• April 25,2006

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Excess or Windfall Profits?

• Oil industry profits were 100 billion last year.
• President Bush always used words of investigating
  market manipulation, which is illegal and
  includes price fixing, but never used the words
  excess profits as being something he would stop
  or tax.
• Repeatedly used the words high cash flow rather
  than high profits.
• Only once at the end did he say the words price
  gouging.
• In a capitalist economy, in a non-regulated
  industry, does excess profits have any meaning?
• Perhaps consumers just have to lower demand to
  the supply to stabilize or bring down prices.

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Corn or Other Crops?

• The President praised corn innumerable times.
• Once mentioned other crops might be better.
• Once mentioned sugar in Hawaii.
• Once mentioned corn husks, straw grass.
• Said corn also needed for food and for feedstock.
• Talked about 10 ethanol, 85 ethanol, 100
  ethanol.
• Current 4 billion gallons of ethanol a year is
  100 million barrels of ethanol, or about 11 days
  of US consumption.
• Since ethanol is in short supply but is a
  mandated additive and also needed in the switch
  from MTBE, it may be one cause of high gas
  prices.
• In waiving such a requirement, is the President
  telling the farmers I came to praise Corn, and
  to bury it.
• Farm income last year was 83 billion, with 23
  billion in subsidies.
• Ethanol is subsidized at 50-60 per gallon.

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Bush solution to high gas prices

• Stop filling strategic reserve (only save 70,000
  barrels a day out of 20 million barrels a day oil
  consumption).
• Drilling ANWR would have lowered price 50 a
  barrel, (which is only 1 a gallon, and is at
  least 10 years off).
• (Actually a refinery shortage as a few percent
  still down from Katrina, and a few percent being
  maintained after being on to make up for
  Katrina.)
• Waive anti-pollution additives since ethanol in
  short supply and states dropping mtbe. (We may
  not appreciate the added smog as LA, Long Beach,
  and Riverside highest in particulates in the
  nation.)
• Get governors to use fewer boutique blends, (so
  can transport gas between states, but California
  is isolated).
• Build more refineries (long time scale).
• (We should use some of the reserve of 688 million
  barrels to process more gas in the winter and
  build up stores.)

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Vehicles as Part of the Solution?

• 8 cylinder vehicles are 25 of the market.
• 6 cylinder are 41.
• 4 cylinder are only 30.
• Hybrids are 1, expected to grow to 4 in 6
  years.
• Bush urged more people to buy hybrids.
• Even better, he urged plug-in hybrids which can
  do 40 mile trips on electricity alone, but
  without saying where extra electricity will come
  from.
• They cost 2,000 more than a regular hybrid.
• But their usage is equivalent to paying 1.00 to
  1.50 per gallon of gas.
• (Cylinder-shutdown engines that change 8 to 4
  cylinders when cruising, can save 10-20 on gas
  mileage.)
• He touted hydrogen, without discussing where it
  comes from, or the inefficiencies involved in
  producing it.
• Bush is raising SUV and pickup gas standards by 2
  miles per gallon from 2008 to 2011. Congress can
  raise car standards which have remained the same
  since 1985.

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Automotive conservation solutions

• Could ask people to
• Drive less aggressively on the gas pedal
• Drive at the speed limit
• Plan trips for less total driving
• Use their higher gas mileage vehicle more
• Could promote car pooling
• Could promote taking public transportation
• These actions would actually have an immediate
  effect on lowering consumption and bringing down
  the price of gas.
• In the longer term, people can buy new cars with
  fewer cylinders than their past cars, even
  without getting into hybrids.

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Q. Whos Driving Up Prices?

• A. We are!
• Our pension and investment companies have been
  buying up oil futures in the hope that the price
  will still get higher in the future.
• Our government has been pressuring Iran on
  building nuclear weapons and delivery systems
  causing Iranian threats of disrupting their and
  Persian Gulf oil which is 20 of worlds supply.
• We continue buying more poor mileage vehicles
  with no increase in gas supplies.
• Despite increased prices, we do not respond by
  driving less.
• We lavishly reward gas company execs and fund
  managers based on profits that they achieve.

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What about a windfall profits tax?

• Oil company profits were 100 billion last year.
• Exxon had 36 billion profit on sales of 359
  billion in 2005.
• 18 billion was reinvested in the business.
• 16 billion went to purchases to reduce shares
  outstanding, which will increase the value of
  remaining shares
• 7 billion was distributed in dividends
• Dividends are taxed to stockholders at up to 33.
• When sold, capital gains on increased value is
  taxed at 15.
• Exxon paid out 72 billion in taxes and duties in
  2005.
• So gasoline now has a 50 a gallon tax,
  shareholder profits are taxed at 15-33, and the
  money to buy the gas was already taxed as
  customer income tax. The oil companies paid tax
  or royalty to the countries of origin.
• Is a 2 windfall profits tax really of any use?
• Some of the basic cost per barrel does go abroad
  to the producing countries, and may not be
  reinvested in the US economy.

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Comparative World CO2 Emissions
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Q. Who Does Bush and Other Americans Blame it On?

• A. China, as usual (and India).
• Facts China and US have increased CO2 emission
  the same amount in the last 12 years, so its us
  too.
• But, China has 4 times our population.
• Their gas mileage is 50 better than ours.
• They have abundant public transportation.
• They are limiting their population to one child
  per family.
• Some of their energy is being used to produce and
  ship products to the US.
• They have completed a dam that will provide
  renewable hydroelectric power equivalent to three
  nuclear reactors.
• They are planning 20-30 nuclear reactors, and may
  build many more.

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Fuel Economy
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Is the price rise a good thing in disguise?

• Some would argue that it will slow down
  consumption of a finite resource.
• It certainly should lead to steps for greater
  fuel efficiency.
• It may take time to do this, since petroleum use
  only declined 0.6 last year despite the price
  rise.
• The longer the higher price continues, the more
  effect it has on the consumers total budget.
• From the 2001 census, there were 191 million
  vehicles, with about 14 million per model year
  for the previous 12 years. So it takes about 14
  years to replace the auto fleet, and buying
  better mileage cars will take a long time to have
  a significant effect. They could be effective in
  offsetting increased usage from the population
  growth.
• It is important to realize that in the timescale
  of a decade or two, the price of petroleum will
  rise a lot due to its eventual depletion anyway,
  and we need to start preparing for that now.

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Gas Price and Global Warming

• If the refinery and supply shortage is due to
  Katrinas effect,
• if Katrinas excess strength was due to higher
  water temperature,
• and if the higher water temperature was due to
  global warming,
• then the higher gas price is a feedback of global
  warming trying to slow itself down.
• The flooding of New Orleans wasnt expected for a
  century from global warming. The effect on Gulf
  oil sources and refineries was not foreseen. Nor
  the feedback loop through the gas shortage and
  price rise.
• Nature often works in catastrophic and unforeseen
  ways.
• UC Irvine Earth System Science is hiring three
  professors in abrupt climate change.

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Conservation

• Limiting world population
• Limiting population of largest CO2 producing
  countries
• Mass transit Riding a bus or train uses ¼ the
  gas of a car.
• Transit Villages built around transportation
  lines
• In Europe, per capita gas usage is 286
  liters/year compared to 1,624 liters/year in the
  U. S.
• Fuel economy improvements CO2 emissions from
  new European cars fell by 12 percent from 1995 to
  2003, and manufacturers have voluntarily pledged
  to reduce them by a further 14 per cent by 2008
• Hybrid and Electric cars, cylinder shut down
  engines
• Transportation decreases
• internet and communications for business
• telecommuting
• urban structuring
• Traffic improvement, 93 hours a year lost in
  traffic jams.
• Energy cost increases will drive conservation
  however, this sends the increased profits to
  OPEC.
• CO2 production taxes and increased fuel taxes
  keeps the added price and payments to slow demand
  at home for use in conversion.

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Cost of Gasoline and Taxes

• The cost of gas is around 6/gallon in Britain.
• 60 of the cost of gas in Europe goes to taxes.
• Gas taxes per gallon in various countries
• Great Britain 3.40
• Italy 2.53
• Germany 2.56
• Japan 2.04
• US Federal Excise Tax per gallon is 0.18
• California Excise Tax is 0.18
• Wisconsin is 0.31, Alaska is 0.08
• California State and Local Taxes are 0.14
• Total tax in California is 0.50/gallon
• One way to look at a problem of a true lasting
  shortage, is that the price has to rise until
  consumption equal supply. Rather than all the
  extra money going to profits or overseas
  countries, we could raise the tax the amount
  needed, as Europe and Japan do, and keep the
  extra profit for alternate energy investments, or
  balancing the budget.

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