What’s going on?

We asked two experts — Susanne Garfield, spokeswoman for the California Energy Commission and Tom Kloza, Chief Oil Analyst of the Oil Price Information Service — to explain the diesel conundrum. Here are excerpts of what they told us:

Q: AAA reported in their Daily Gauge Fuel Report that gas prices are decreasing because demand is decreasing. Is this not true for diesel?

Garfield: While gasoline powered vehicles are increasing their fuel efficiency, this isn’t happening in the diesel sector, especially in the heavy duty trucks.

Kloza: Demand for the U.S. is decreasing for all products, diesel included. But the rest of the world’s appetite for diesel has increased. The U.S. has become a large exporter of diesel.

Q: Why have diesel prices been slower to decline than gasoline prices? And why does diesel cost so much more than gasoline when it used to cost less?

Garfield: It all boils down to demand. Demand for diesel has been growing faster than the demand for gasoline California and worldwide. Diesel consumption in freight, transit and off-road uses is expected to continue to grow with population and economic growth.

Kloza: Emerging economies tend to need diesel — to power trains, trucks and electrical generation — before they need gasoline. Plus, many parts of the world prefer diesel to gasoline for their automobiles. Diesel is more expensive to produce than a few years ago, thanks to the removal of nearly all the sulfur. Diesel has fetched $20-$30 a barrel over the price of sweet crude for much of this year and gasoline has barely fetched any margin over crude.

Q: The California Energy Commission Weekly Fuels Watch Report reported that diesel production has risen 24 percent from last year’s amount, but prices are still a lot higher. Where is the diesel fuel all going?Garfield: Again it’s demand and diesel is traded on a world commodity level so it’s shipped to those markets that are paying. California refineries are obligated to fulfill their in-state and out of state contractual agreements however any excess will be sent to where the demand is.

Kloza: We’ve seen a commodities boom in agricultural products. That has meant that there is more demand for the fuel used to plant and harvest these products - diesel transportation demand in the U.S. is almost certainly lower now that the economy is slowing.

Q: Looking ahead to this winter, what do you think will happen to the price of diesel? Will demand for heating oil drive up the price even more?

Garfield: Since fuel oil used for heating in winter months we wouldn’t be surprised to see upward pressure on supplies and higher diesel prices. Several factors can exacerbate or moderate supplies and prices - will temperatures be normal or colder than normal this winter? Earlier winter than normal? Is there enough fuel oil in storage before winter or will it be an earlier and harsher winter that puts upward pressure on prices? How much heating oil is in storage? Are wholesalers or consumers buying in advance? Although Californians don’t use heating oil they way they do on the East Coast or Midwest, higher crude prices will impact diesel prices which impact products and transportation. High crude oil prices now are already making it more challenging for consumers they probably aren’t buying much now in advance for the winter months. People are finding it more difficult to afford just their normal heating oils bills.

Kloza: Prices will be incredibly wild - much will depend on the price of crude, and I suspect that the ultra low sulfur diesel that is the standard for most of the U.S. will continue to fetch a large premium versus crude. I would estimate that U.S. average prices for diesel will range between say $4.50-$5.50/gal., with the higher numbers reserved for California. The one thing you can count on is that chaos, or volatility in the parlance of the traders, will continue. Large ranges and generally bipolar markets - the manic phases have been quite extreme in 2008.

Related stories …

• Less pain at the pump as prices slide
• O.C. drivers pay more for hot gas
• Gas prices force more to stay home, eat in — Nielsen
• Will offshore drilling make a difference?

Post from: Gas pains

“I’ve been following the development of these. I’m all for it. I love technology. But if it cost more, that’d be a tough decision. I’m earth friendly. However, the price of gas is absurd.”
— Chris Weber, information technology consultant, Costa Mesa

“If it’s cheaper than gas, I’m all for it. I’ve got a 16-year-old who just started driving, so I’d support anything that makes the price of gas go down. … I’m assuming it’d be cleaner air. For me to pay more, it would have to have a good impact. I’d do what it takes. But No. 1 is the money.
— Cindy Patton, homemaker, Irvine

“I love the idea of fuel cell, but it’s never going to happen, because we don’t have the infrastructure to make. That’s an investment this country isn’t going to make. I think the next car is going to be electric with a back-up of gas, something like the Chevy Volt.”
— Keith Felch, musician and electric bicycle enthusiast, Aliso Viejo

“I’m really interested in all alternative energy vehicles.”
— Phil Norton, retired high school teacher and bicycling enthusiast, Irvine

I’m not the only guy test driving the Equinox. To see how the U.S. Postal Service is trying out the vehicle, CLICK HERE.

Related stories …

• Driving without gasoline, running on hydrogen 2
• Driving without gasoline, running on hydrogen
• Falling in love with hydrogen
• Powered by hydrogen
• High gas prices can be “absolutely good,” Santa Ana mayor says
• Fuel cell SUV not ready for mass production, Irvine driver says
  
• Irvine couple first to test GM green car

Post from: Gas pains

Noise. The Equinox scores high in that category, which is critically important for Debbie. She has sensitive ears and frequently complains about the cars outside our home that hit the brakes and then stomp on the gas as they negotiate the four-way stop at our corner. The Equinox, with its electric motor, is almost silent. “If this is the solution to noise pollution, I like it,” she said.

Safety. Debbie, like many of us, recalls the newsreel footage of the Hindenburg hydrogen-filled air ship explosion. A Web site called Hydrogen Now! argues that hydrogen is actually safer than gasoline, that the problem with the Hindenburg was not hydrogen, but the zeppelin’s flammable coating. As part of its information packet with the Equinox, GM includes photos of a car’s gasoline explosion, which looks like a Hollywood spectacle, and a hydrogen explosion, which resembles a giant — but relatively harmless — cigarette lighter flame. So the hydrogen looks better on paper. Debbie remains skeptical. Old newsreel footage is tough to erase from our memories.

Range. With 4.2 kilos of hydrogen, the Equinox is billed to be able to travel between 150 and 200 miles. During our drive through Long Beach and San Pedro, the dashboard display usually read that we were getting more than 50 miles per kilogram. But the indicator that showed how many miles were left in the tank seemed to fall really fast. I was so concerned about running out of fuel that I arranged to go to the only filling station in Orange County to tank up again (more on that later). “I like to go more than 200 miles to fill up,” Debbie said.

Ride. The Equinox is a typical American SUV, riding high and bouncy as a boat. Debbie noted that the upholstery, dash buttons, interior finishing and other details were pretty uninspiring. I told her what the GM folks had told me: The goal is to create a green car for the type of person who already drives an American SUV, something in the $25,000 to $30,000 price range. Decent price, she said, but it would be nice to get more for your money — of course.

Cost. That’s still the unanswered question. GM won’t say how much hydrogen costs. The economy of the vehicle ultimately depends on an unbuilt infrastructure to make and distribute hydrogen. We have the technology. We just don’t have the other part.

Debbie’s bottom line — and it goes back to the noise issue: “If this is the wave of the future, I like it.”

And, as all good husbands say, “I always listen to my wife.”

Click here to see a video of the Equinox by my colleagues Camino Alonso-Ponga and Maria Garcia.

Coming up: What’s the real cost/benefit of hydrogen?

Related stories …

• Who needs gas? He’s running on hydrogen
• Falling in love with hydrogen
• Powered by hydrogen
• High gas prices can be “absolutely good,” Santa Ana mayor says
• Fuel cell SUV not ready for mass production, Irvine driver says
• Irvine couple first to test GM green car

Post from: Gas pains

It looks and feels pretty much like a regular gas guzzling SUV, except it’s decorated with decals saying “H20,” “FUEL CELL” and “ZEROemissions.”

Turn the key and the only way you know the motor is running is by the lights on the dashboard. It takes about 10 seconds to get ready to roll in the newest version of the Equinox. It used to take 30 seconds.

There’s a screen on the center of the dashboard that shows how hydrogen flows into the fuel cell, creating energy. Instead of emissions, cartoonish blue dots stream toward the four tail pipes. The only “exhaust” is water.

Pop the shifter it into drive and you can’t hear anything, except the whir of rolling tires and the whisper of the wind.

From the Register’s parking lot, I took it for a quick spin onto the I-5 Freeway, heading south. For once, because this is a green car, I can take advantage of the carpool lane, if I were driving solo. For me, that’s one of the major attractions for an eco car — getting to drive fast. But I was traveling with a two other people from work and one from General Motors, so we qualified for the diamond lane legally no matter how you cut it.

The Equinox accelerates smoothly, even with the added weight of extra passengers. There’s no transmission, so the acceleration occurred without shifting through gears. You can’t see the engine — it’s just an electric motor anyway, so there isn’t much to look at.The Equinox’s manual says it goes 0-60 in 12 seconds. I counted outloud when we rolled onto the freeway and it seemed like we reached 60 mph in less time.

Todd Goldstein, the “Vehicle Responsible Engineer” who served as my instructor on the intricacies of the Equinox, said the engine produces 93 kilowatts, which is comparable to about 125-130 horsepower.

The Equinox’s three fuel tanks — manufactured by Quantum Fuel Systems Technologies Worldwide Inc. of Irvine — pack enough compressed hydrogen to travel about 200 miles.

I don’t plan on driving that far over the next couple of days. One of the dashboard features shows how many miles you’re getting per kilo of hydrogen. During most of my short drive, I was getting more than 50 miles a kilogram.

Goldstein said a kilo of hydrogen is roughly equivalent to a gallon of gasoline when it comes to energy — so that seems pretty fuel efficient — 50 miles a kilo.

I took the Equinox for another spin in the afternoon. The cartoon image of its fuel system gets boring pretty fast. I prefer to play around with the XM satellite radio. I was trying to find a good station as I whisked along the 55 Freeway. Then I noticed that the traffic ahead — even in the carpool lane — had ground to a halt.
I can report this: The brakes work very well.

I’m happy to report that photographer, Kate Lucas, was wearing her seat belt.

Tomorrow: What my wife thinks.

Also, see how postal workers in Irvine are trying out the Equinox.

Related stories …

• Falling in love with hydrogen
• Powered by hydrogen
• High gas prices can be “absolutely good,” Santa Ana mayor says
• Fuel cell SUV not ready for mass production, Irvine driver says
• Irvine couple first to test GM green car
• Fisker wins round against rival eco car maker

Post from: Gas pains

Since peaking on June 19, the average price of a gallon of regular in Orange County has declined almost 15 cents. In the past week, prices fell 6.3 cents.

On Friday, the price of a gallon of regular in Orange County was $4.452, down from an all-time high of $4.598.

A spokesman for AAA said prices are probably falling because of a new economic reality: less demand.

“Decreased demand finally may be playing a role in helping to bring down local gas prices,” said Auto Club spokesperson Jeffrey Spring. “Motorists are reducing the amount that they drive, and they can save even more money on fuel just by driving the speed limit, particularly on the freeways.”

Unlike gasoline prices, diesel has been inching up. Today, AAA reports an Orange County average of $5.150 a gallon. The record was set May 30 at $5.164.

The prices on the chart below were based on Thursday’s numbers. To see the latest AAA figures, CLICK HERE.

And on the lighter side, if drivers slow down any more to save on gas, they might see more skateboarders, like this dude — courtesy of my Beach Blogger colleague Laylan Connelly — who recently shredded down the 405 Freeway.

Related stories …

• O.C. drivers pay more for hot gas
• Gas prices force more to stay home, eat in — Nielsen
• Will offshore drilling make a difference?
• Survey: Gas tops travel frustrations. Take our poll.
• Heating gas price up 79% in a year

Post from: Gas pains

Gas flows out of the typical pump in Orange County at 75 degrees in July and 80 degrees in August and September, a survey for the Energy Commission reports. But the pumps measure the fuel at 60 degrees, which means we’re getting less for our money.

“We know gasoline expands when it’s hotter,” said Susanne Garfield, spokeswoman for the commission. “This isn’t a news flash.”

Gas expands by 1 percent for every 15-degree rise in temperature, which means Orange County gas users are paying 1 percent extra for each gallon of gas during the hottest months of the year. That adds 4 to 5 cents per gallon at today’s prices.

The energy commission is considering whether to adjust the base temperature to around 72 degrees and require fuel pumps to add measurement devices that adjust to gas temperatures. A recommendation is due in September.

Consumer Watchdog, a Santa Monica-based advocacy group, says the energy commission’s findings show there should be no delay in changing the state’s methods for measuring gas.

“California has confirmed that fuel is routinely sold at temperatures high enough to short-change motorists year-round, and the same is true across the southern and southwest U.S,” said Judy Dugan, research director for Consumer Watchdog. “The weights and measures officials who should have fixed this years ago refuse to take their responsibility to consumers seriously. It’s time for lawmakers to step in and end this ripoff.”

Truckers are also upset about the high cost of hot gas. Diesel temperatures are even more volatile than gasoline, because many stations store diesel fuel in above-ground tanks.

“For many of our drivers, paying extra for hot fuel is the last straw, especially at today’s prices,” said John Siebert, hot fuel project team leader at Owner-Operator Independent Drivers Association, a Missouri-based association of truck drivers. “When you’re paying through the nose, you want to at least get what you paid for.”

The Energy Commission is not sure changing the measurement would really save consumers and gas sellers money. The new equipment would cost $12,000 to $17,000 per filling station, Garfield said, “and the station owners probably want to recover their costs” which means they’d pass raise the cost at the pump.

Here’s the average temperature of fuel in several Southern California

Source: Division of Measurement Standards, California Department of Food and Agriculture.

This survey collected the temperatures of gasoline and diesel at various locations throughout California for one year, from April 1, 2007, to March 31, 2008. County officials sampled fuel temperatures of 87 and 91 octane gasoline, and diesel fuel, where available, at approximately 20 percent of the service stations in their respective counties.

To see the complete data on fuel temperatures, CLICK HERE.

Why do the temperatures vary?

The biggest factor is the temperature of fuel when it’s loaded into delivery trucks, which are not insulated, Garfield said. Once it’s underground, she said, “It’s like a thermos. The temperature doesn’t change much.”

One more thing: It doesn’t matter what time of day you buy your gas. The temperature is not significantly different in the cool morning or hot afternoon.

“That’s an urban myth,” Garfield said.

The best way to save money on fuel, Garfield said, is by driving conservatively and maintaining your vehicle: Slow to 55 mph on the freeway, avoid jack-rabbit starts and stops, and keep your tires inflated.

For tips on saving gas, CLICK HERE.

Related stories …

• Gas prices force more to stay home, eat in — Nielsen
• Gas prices continue downward creep
• Gas prices falling by a half-penny a day, AAA says
• Survey: Gas tops travel frustrations. Take our poll.
• Heating gas price up 79% in a year
• Crude prices drop, but probably not for long
• California gas prices still nation’s highest
• High gas prices can be “absolutely good,” Santa Ana mayor says

Post from: Gas pains

The survey of 50,000 consumers taken in June shows 52 percent of people eat out less, up 14 percent from a year ago, while 51 percent “do more at home,” up 12 percent from a year ago.

People also reported they are buying cheaper groceries and cutting more coupons.

So this is really a case of gas pains hitting people in the stomach.

Another interesting finding: No matter how much people pay for gas, they still aren’t using public transport.

The survey by Nielsen, perhaps best known for monitoring television audiences, did not report if people at home are watching more TV.

To see more details, CLICK HERE.

Related stories …

• Will offshore drilling make a difference?
• Gas prices continue downward creep
• Survey: Gas tops travel frustrations. Take our poll.
• Heating gas price up 79% in a year
• High gas prices can be “absolutely good,” Santa Ana mayor says

Post from: Gas pains

“I readily concede it won’t produce a barrel of oil tomorrow, but it will reverse the psychology,” Bush told a White House news conference today.

Here’s a look at what news sources have reported about the prospects.

Is there oil?
The Arctic National Wildlife Refuge has 10 billion barrels of oil. Continental U.S. offshore drilling has 18 billion barrels. Shale in the West has 18 billion barrels. An estimated 10 billion barrels of oil are available off the California coast.

How long would it take to get to the gas pumps?
Oil from Arctic National Wildlife Refuge would take 10 years to get to gas pumps. California offshore drilling would be about the same.

There is currently a shortage of drilling rigs. There is no drilling equipment available until after 2012, according to Sen. Dianne Feinstein, D-Calif., a foe of offshore drilling. From that point it would take at least seven years for any oil to be available from new drilling.

Will it have any effect on prices?
There’s a 95 percent chance of finding 5.7 billion barrels of oil and a 5 percent chance of finding 16 billion barrels in the Arctic National Wildlife Refuge, according to the Department of Energy. The DoE projects, if 5.7 billion barrels are found it will lower the price of crude oil by 41 cents a barrel (in 2006 dollars) in 2026. If 16 billion barrels are found it will lower prices in 2025 by $1.44 a barrel.

Today the price of one barrel oil has been trading on the New York futures market in the range of $136 to $147 a barrel.

Public opinion: 57 percent of Americans support drilling in new territories.

Post from: Gas pains

The Automobile Club of Southern California reported the average cost of a gallon of regular dipped to $4.494 in Orange County, down by one-tenth of a penny over night. The average has slipped from a record of $4.598 set June 19, but soared $1.43 in the past 12 months. That’s a 47 percent increase.

Nationally, the Energy Information Administration reported the average cost of a gallon of all grades of gasoline dipped this week to $4.113, down one-tenth of a penny from a week ago, but up $1.064 from a year ago.

California’s average cost was $4.52, down 3 cents from last week, but up $1.362 from a year ago. That’s more than any other region broken out by the EIA.

The price of crude oil futures on the New York Mercantile Exchange was trading around $145 a barrel, up from its close Friday at $144.41. Crude oil accounted for 75 percent of the cost of a gallon of gas, the EIA reported in May.

Related stories …

• Gas prices falling by a half-penny a day, AAA says
• Survey: Gas tops travel frustrations. Take our poll.
• Heating gas price up 79% in a year
• Crude prices drop, but probably not for long
• California gas prices still nation’s highest
• High gas prices can be “absolutely good,” Santa Ana mayor says

Post from: Gas pains

The average cost of a gallon of regular dipped for the third straight week to $4.524 in Orange County on Thursday, the cut-off time for AAA’s weekly report. O.C. prices dipped another penny overnight to an average $4.513 per gallon.

The record price of $4.598 was set June 19.

But don’t expect prices to stay low for long. Trading of crude in New York jumped again Friday, trading above $143 a barrel for August futures. The New York Mercantile Exchange had closed at $136.77 on Thursday.

“Gas prices have dropped by about half a penny a day in most areas this last week,” said Auto Club spokesperson Jeffrey Spring. “Often when prices hover at near-record levels as they are now, we see average prices that are very similar in different areas. The difference between the lowest and the highest gas price averages in Southern California is less than 10 cents right now.”

To see the latest averages in California, CLICK HERE.

Related stories …

• Survey: Gas tops travel frustrations. Take our poll.
• Heating gas price up 79% in a year

• Crude prices drop, but probably not for long
• California gas prices still nation’s highest
• High gas prices can be “absolutely good,” Santa Ana mayor says

Post from: Gas pains