Is Exxon out of gas?

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Are the Exxon gas stations in your area shut down and (supposedly) out of gas? I'm in Fayetteville, Arkansas and the Exxon stations here have been shut down for at least a week now. The local TV news shows say they have been inquiring to Exxon's headquarters, and unbelievably the Exxon people in charge say they don't know why the stations are shut down or why they are out of gas. I have no way of knowing..it is only speculation on my part, but I at least have suspicion that it may be an attempt to foment fears of deprivation in order to drum up support for drilling in the Arctic National Wildlife Refuge. Sort of a mega-extrapolation of the school yard tantrum, where the kid takes his ball and goes home if the others will not play the game the way he wants it to be played.

-- John Fritz (aeon30@hotmail.com), April 05, 2001

Answers

During the "gas shortages" of the 70's; CBS reported that there were tankers waiting offshore at New Orleans which could not unload due to there being no empty tanks to accept the load. Is there a bit of odor comming from the woodpile?

-- mitch hearn (moopups1@aol.com), April 06, 2001.

I spoke recently to someone who's father worked at a plant that refined gasoline. He said during the gas shortage of the 70's the plant kept refining the same batch of gas over and over instead of releasing it for sale just to jack up the prices.

-- Diane (dshogren@uswest.net), April 06, 2001.

The Exxon stations here in AZ are operating normally along with all other stations.

Diane, gasoline is refined from crude oil and once it is refined you can not do it again. It is chemically impossible.

-- Lynn Goltz (lynngoltz@aol.com), April 06, 2001.

Lynn, I'm not a chemist but the guy I was talking to has a degree in it. If you're curious about the details of what they did I can ask him.

-- Diane (dshogren@uswest.net), April 06, 2001.

Diane, I'm not a chemist either, just relying on my organic chemistry classes in college forty years ago. I did not think the industry had developed a new process. Yes, I would be interested (not the molecular details) in the English description of the process.

-- Lynn Goltz (lynngoltz@aol.com), April 06, 2001.

Just for your info. I have reliable info that come around the end of June or first 2 weeks of July gas will be hitting $2.30 a gal. in the midwest. My source told me about last years gas jump and was 3 days off, this year I'm going to believe him. And yes he works for a oil company (M) and they all ready have planned out for the next 9 mths.

-- Tom (tjk@cac.net), April 06, 2001.

Tom, I tend to agree that is the time frame for a big price increase. My reasoning, however, is that is also the start of the summer tourist (vacation) season.

-- Lynn Goltz (lynngoltz@aol.com), April 06, 2001.

Fuel, as alchohol, can be processed in fraction tower distillery/refinery processes that seperates the various grade products at different flashpoints. This may be what is being refered to as "re-refining" in the post above. The longer the process, the higher the proof or octane rating achieved of the final distilled product.

-- Jay Blair in N. AL (jayblair678@yahoo.com), April 08, 2001.

John, could it be that the franchise operator for your local Exxon stations has gone out of business or is in the process of selling to someone else? Exxon rarely owns the stations that carry its name. Like McDonalds and 7-11, they're owned and operated by local franchise operations, so the reason for the closure is likely at the local level rather than higher up. As for summer gasoline prices, Reuters and other news agencies have carried articles recently predicting price hikes to $2 or more on the East Coast and as high as $2.50 in the Midwest and California. Hope it doesn't hurt the tourist trade too much.

-- Cash (cash@andcarry.com), April 08, 2001.

The Exxon stations here are operating. Friday I had my 350 gallon tank topped off at a price of $1.51/9, I could buy it cheaper in town 20 miles away, ($1.49/9) but I would have to carry it in 5 gallon cans. The guy who delivered the gas said that the price here would start to increase next week end, Easter. My local Exxon's price is $1.55/9, diesel is $1.62/9. I am headed to Death Valley Tuesday, through California & Nevada with my pickup and camper, (11 mpg) I expect to be paying $1.75+ for gas down there, if not more.

-- Hendo (OR) (redgate@echoweb.net), April 08, 2001.

After the gas shortages of the 70s the government did an investigations, (as i remember it) and fined some of the big coperations for price fixing and gouging, Exxon was at the top of the list. the government collected, (if they ever did) the money but I never got a check for all that gas I bought at inflated prices. At the time I had an Exxon oil card and charged all my gas, I was doing a lot of driving on my job at the time. It's fine for oil companies to rip off the consumer and then have the Fed fine them and collect. A few million dollars to the oil company is chump change, a signal that they can continue to get away with it any time they want and then, a few years later, after making billions, pay a fine.

And you bet they want to drill in ANWR, I am sure that is one of the first things on Bush's "private" agenda, after all Dick Chaney was CEO of Haliburton, the world largest oil services company and he still holds 8 million dollars woth of stock, (his retirement package).

-- Hendo (redgate@echoweb.net), April 08, 2001.

Ok Lynn, I have the information. His father worked for Standard Oil in Ohio. What they did was re-distill the gasoline. Since they were only selling a fraction of the gas they usually did to perpetuate the shortage and raise prices they would sell a portion of the gas they had in the plant then "bring it back up to volume" so to speak by adding some crude to the gas then redistill the gas plus crude mix. They also had to store more refined gasoline than usual since they weren't selling it so they'd store it in tanks that had been storing crude, then they'd have to redistill that gas since it was contaminated by the leftover crude in the tank.

-- Diane (dshogren@uswest.net), April 09, 2001.

Take a look at what Amory and Hunter Lovins have to say

Frozen Assets? Alaskan Oil's Threat to National Energy Security by Amory B. Lovins and L. Hunter Lovins "We must continue, I believe, to safeguard the Arctic National Wildlife Refuge, one of the last truly wild places on Earth—the Serengeti of the Americas." —President Clinton, January 17, 2001

As you read this issue of RMI Solutions, Congress is debating whether the oil potential beneath the Arctic National Wildlife Refuge (ANWR) in Alaska is worth the environmental damage caused by extracting and burning it. Largely unexamined so far are more basic questions: Is it profitable? Is it necessary? Is drilling a good idea? Is there a better way?

The rationale for drilling in the Refuge is to find a domestic oil supply, income for Alaska, and profit for private firms. The debate focuses on the environmental cost, the human rights of the threatened Gwich‘in people, and opposition from Canada, which shares the migratory wildlife. Yet that energy-vs.-environment debate overlooks important reasons why drilling in the Arctic Refuge would not improve but compromise national energy security and economic vitality, especially when compared with alternatives that benefit both and improve the environment.

FOLLOW THE MONEY First, the economics of drilling for Refuge oil look as unrewarding as its politics. For the oil industry to invest, the Refuge must hold a lot of oil, and the oil must sell for a high enough price for long enough to recover costs and earn profits. When drilling was last proposed in the Refuge, in 1987, the Interior Department tried to boost its case by assuming tax breaks that no longer existed, twice actual oil prices, and twice the likelihood of finding twice the oil that Alaska's state geologist forecast from more complete data.

Despite this generous handicapping, Interior had to admit (in the fine print) that the odds were 5:1 against finding any economically recoverable oil, 15:1 against finding as much as six months' national supply, and over 100:1 against another huge Prudhoe Bay-sized find. Independent analysts using realistic assumptions later found that the expected reserves would be closer to six days' national supply and that the producers would lose money. The only point of agreement was that the Refuge's biological core, its small but critical Coastal Plain, would be trashed.

In 1998, the U.S. Geological Survey did an honest and modern update. It found worse geology, offset by new, fourfold cheaper production technologies. The 1987 estimated average reserve of 3.2 billion barrels of oil could probably still be profitably recovered—if, for decades to come, it fetched an average price of at least $22 a barrel (in December 2000 dollars, delivered to Los Angeles). Historic world oil prices FOB Saudi Arabia have broken the $22 mark only a few times in the past three decades, and tend toward the teens. Sustaining $22+ a barrel for decades would contradict practically every industry and government forecast—and the forecasts are trending down, not up.

The Alaska Department of Revenue earnestly hopes for Refuge drilling so its citizens will keep getting rebates instead of paying income taxes. Yet in December 2000, the Department projected a steady decline in the L.A. price of Alaskan crude oil to less than $13 a barrel in 2009. The latest Federal forecast calls for oil to stay below $22 until nearly 2020; when Alaska last published such a forecast in 1998, it was only $18. That means less economically recoverable oil. Indeed, the USGS says that below $16 (plus any lease fee paid to the Treasury), no economically recoverable oil is likely to be found. Alaska now forecasts prices below $16 throughout 2005– 10, so why drill?

Of course, any forecast of oil prices can be wrong, and most are. Oil prices have fluctuated randomly for at least 115 years. Oil companies routinely assess that risk—though in the Refuge, it's not simply a business decision but also a choice about such public goods as environment and national energy security. But some fundamentals can cut through the forecasting fog.

Astounding advances continue in the technology of finding and extracting oil—supercomputer visualization like X-ray eyes, and precision-guided drilling to snake between pockets of oil. Oil resources, both domestic and global, have therefore stopped declining and started expanding markedly, halving Federal forecasts of 2020 oil prices—now only two-fifths of what Interior assumed in 1987.

Could that new technology tip the economics back in favor of Refuge oil? Most industry experts think not. The more they look at their proprietary Refuge data, the more it seems a multi-billion-dollar gamble not worth taking. That's because the same technological advances that might make Refuge oil worth seeking can also be applied elsewhere. Oil exploration is a global business. With oil everywhere getting rapidly cheaper to find and lift, why look in one of the most hostile and remote places on earth? Practically anywhere else would be cheaper.

During 1998–99, while oil prices soared from $10 to $25 a barrel, the big U.S. energy companies slashed their exploration budgets by 38% worldwide, 66% in onshore America. They see technology becoming ever more powerful, oil more abundant, and long-term prices ever lower, so only the lowest-cost provinces can compete—not drilling above the Arctic Circle. If oil companies believed in high long-term oil prices, they'd be drilling everywhere. They're not.

DEPENDENCE ON OPEC OIL? The second rationale for drilling in the Refuge—relieving dependence on OPEC oil—has also waned. OPEC's percentage of the oil the U.S. imports has dropped by a third since the high-water-mark of imports in 1977. Only one-fourth of U.S. oil now comes from OPEC. Most imports come from more stable Western sources, and are so diversified that a full-scale war in the Persian Gulf in 1991 caused no gas lines at home. We're not as dependent on OPEC as some imply.

Nor are we short of fuels. A White House aide on January 21 provoked merriment in energy circles by claiming that Arctic Refuge drilling was urgent because, as California's electricity crisis showed, the nation "desperately needs more fuel." How much of California's electricity is in fact made from oil? One percent. Of the nation's electricity? Two to three percent. How much of the nation's oil makes electricity? Two percent. California isn't short of fuel. What California is short of is cheap electricity.

If oil-import dependence or oil shortages were a serious problem, though, would the solution to domestic depletion be to deplete faster? Or might other solutions arrive sooner and cost less? If Arctic Refuge oil isn't the cheapest way to provide the services now provided by imported oil, then drilling in the Refuge will make the oil-import problem worse than it could have been. That's because each dollar spent on the costly option could have bought more of the cheap option instead. Choosing the costlier option therefore results in using and importing more oil than if we'd bought the best buys first.

EFFICIENCY: ENERGY WITHOUT RISK Better buys aren't hard to find. In fact, we've already bought a lot of them, though far more remain untapped. Specifically, the past quarter-century's efficiency revolution is now "producing" over four times as much energy as the entire domestic oil industry (and ten times the oil the U.S. imports from the Persian Gulf) simply by using less energy to do more work in smarter ways. More than half the nation's energy services now come from efficient use. Each barrel of oil supports three-quarters more GDP than it did in 1975—and that's just for starters.

Efficiency doesn't risk dry holes. It protects the climate and improves the environment. It will never suffer a terrorist attack. It creates a uniquely flexible and perennially profitable form of all- American energy security. In fact, it cut oil imports from the Persian Gulf by 87% during 1976–85 alone. Yet efficiency is strangely invisible in today's Refuge-oil debate.

The energy policies of the early '70s and the mid-1980s painfully demonstrated how quickly energy gluts happen when customers seek efficiency. Even relatively small efficiency gains offer an enormous potential opportunity to policymakers and entrepreneurs—but a serious risk to energy producers and investors.

The early 1980s saw a two-pronged approach to energy: the government increased supply while customers increased efficiency. Both efforts succeeded—supply modestly, efficiency beyond anyone's wildest dreams. Between 1979 and 1986, GDP rose by 20 percent while the nation's total energy use fell by 5* percent. This stuck the suppliers with costly new supplies without the revenue to pay for them. The resulting energy glut crashed energy prices in 1986, sending many producers into insolvency. Efficiency providers suffered too: as attention waned, many energy-saving programs, products, and services faded from view for the next 14 years.

Yet in the last four of those years (1996–99), almost unnoticed, efficiency unexpectedly came back. Despite record-low and falling energy prices, the pace of U.S. energy savings averaged 3.2 percent per year—nearly matching its early-1980s all-time peak when energy prices were at record highs and rising. Meanwhile, a cluster of random events caused routine blips in oil and natural gas prices just as California's botched restructuring sent Western electricity prices soaring. Those triple price hikes will further accelerate energy efficiency's late-1990s revival.

All this sets the stage for a rerun of a very bad movie—the 1986 price crash that ruined so many energy producers. That crash was caused by mixing two ingredients: an underlying efficiency trend plus a Federal supply stimulus. The first ingredient is now here; the second is promised by President Bush. There's no reason to expect a result different from the past couple of times we've tried the same recipe. The light at the end of the energy tunnel is an oncoming train. The resulting wreck will not be healthy for the domestic energy industries, whose financial stability is an important element of national energy security.

As in the early 1980s, supply expansions will be far less prompt and effective than energy efficiency. This is especially true for Refuge oil, which can produce nothing for nearly a decade anyway, and then, briefly, about one percent of the world's oil. Efficiency, however, is such a vast resource that capturing just a few percent of it could crash the oil price and displace any oil that might lurk beneath the Refuge.

AUTOMOBILE POTENTIAL Let's suppose that a compliant Congress, steady high oil prices, and successful exploration did find the hoped-for 3.2 billion barrels of profitably recoverable oil beneath the Refuge. Over a typical 30-year field life, that averages 292,000 barrels per day, enough to produce about 156,000 barrels of gasoline per day. That would run just two percent of America's present fleet of cars and light (non-commercial) trucks. That much gasoline could be saved by making those vehicles a mere 0.4 mpg more efficient. During 1979–85, new light vehicles gained 0.4 mpg every five months. This trend ended when President Reagan rolled back the efficiency standards—thereby wasting one Refuge's worth of oil, and promptly doubling oil imports from the Persian Gulf. Had the efficiency trend continued, America wouldn't have needed a drop of oil from the Gulf since 1985.

Even with no improvement in vehicle efficiency, just adopting aftermarket tires as efficient as the originals would save several Refuges' worth of oil. So would equipping appropriate U.S. buildings with superwindows, like the 1983 models that have let us harvest 27 banana crops inside RMI's headquarters with no furnace. Superwindows also make buildings more comfortable and cheaper to construct. These are just two examples of hundreds of available efficiency options. In 1989, RMI added up all the main U.S. efficiency options then available (automobiles, buildings, industries—everything). The total was equivalent nowadays to 54 Refuges' worth of oil, at one-sixth the cost.

MOBILITY WITHOUT OIL New technologies for saving energy are creating opportunities faster than the old ones are used up—just like the technologies of finding and extracting oil, only faster. Energy efficiency is outpacing oil production so quickly that even cheap oil is simply becoming uncompetitive. In the not too distant future, we won't need expensive oil because oil, for the most part, won't be in demand. That's especially likely because the biggest efficiency gains are now targeted at oil's biggest user—cars.

The average new American car last year might have been the highest expression of the Iron Age, but its 24-mpg efficiency rating tied for a 20-year low. The auto industry can do better, and is starting to. Briskly selling hybrid-electric cars now include a Corolla-class 48- mpg five-seater and a CRX-class 67-mpg two-seater. An American light vehicle fleet as efficient as those Toyota Priuses or Honda Insights would respectively save gasoline equivalent to the average output of 26 or 33 Refuges' worth of crude oil.

General Motors, Ford, and DaimlerChrysler have already tested family sedans that achieve 72–80 mpg, now headed towards production. For those who prefer small city cars, VW is already selling a 78-mpg model in Europe and plans a 2003 version at around 235 mpg (not a typo). Beyond such straightforward improvements are the stunning advances in fuel-cell cars, now slated for 2003–05 production by eight mainstream automakers. The chairs of four major oil companies have already acknowledged the start of the oil endgame and the dawning of the Hydrogen Age.

By combining fuel cells with sleek, carbon-fiber body materials, the start-up company Hypercar, Inc. has designed a spacious, uncompromised concept car that offers everything you'd find in a midsize sport utility vehicle, but uses 82% less fuel. (For more on Hypercar, Inc., see page 4.) A full 1999 U.S. fleet of such efficient vehicles would save 42 Refuges' worth of oil. Ultimately, globally, they'd save all the oil OPEC now sells.

Hydrogen-powered fuel-cell vehicles could also serve as portable power stations. A full fleet of them, when parked (about 96% of the time), would have enough generating capacity to displace the world's coal and nuclear power plants 5–10 times over. They could help pay for themselves through electricity sales, while halting up to two- thirds of climate change. As fuel-cell pioneer Geoffrey Ballard, Shell Hydrogen CEO Don Huberts, and ex-Saudi Oil Minister Sheikh Yamani successively remarked, the Stone Age did not end because the world ran out of stones, and the Oil Age will not end because the world runs out of oil.

THE INSECURITY OF NORTH SLOPE OIL A further argument for drilling in the Refuge has been to make full use of the Trans-Alaska Pipeline System (TAPS), likely to keep running at half-capacity through at least 2008 as declining Prudhoe Bay output is offset by new oil from other North Slope fields outside the Refuge. If you'd spent $8 billion (in 1977 dollars) for an 800- mile-long, four-foot diameter pipe over some of the most rugged terrain on the planet, you'd want to see it kept busy for as long as possible too. But that business logic compromises national energy security. In 1981, we authored a study for the Pentagon called Brittle Power: Energy Strategy for National Security, which concluded that the Trans-Alaska Pipeline System was among the gravest threats to U.S. energy security. It still is, and Refuge oil would make it more so.

TAPS' operator notes with pride that "without this vital link...the entire nation would be affected." All too true, alas: TAPS carries 18% of domestic oil. And if its flow were redoubled with Refuge oil, it would bring about as much oil to American refineries as the Strait of Hormuz does now. But of these two chokepoints, TAPS is worse: it has no alternative route, and is easy to disrupt but hard to fix. Disruption of any key point in midwinter, when it can't be mended, would cause its waxy oil, over some weeks, to cool, stop flowing, and congeal into a nine-million-barrel, 800-mile-long candle.

The pipeline has uniquely vulnerable facilities at both ends. In between, over half its length is aboveground, accessible, and (says the Army) indefensible. It's already been tampered with, shot at, and bombed twice but incompetently. (The Oklahoma City and USS Cole bombers were busy elsewhere.) A technician accidentally blew up a non- critical pumping station in 1979. Why on earth would the United States want to create another Strait of Hormuz? One is quite enough.

TAPS'S RETIREMENT PLAN? Even if a kinder, gentler world were assured, TAPS's clock is still ticking. The 23-year-old pipeline—now well into middle age and nearing its originally intended retirement age—hasn't aged gracefully. Corrosion, erosion, and the sheer stress of pumping gooier oil are taking their toll. Accidents seem to be rising. Last April, a pressure hammer moved the pipe 23 inches, a serious event that went unnoticed for almost a month. In July, a quarter-ton, four- feet-across, two-inch-thick steel valve ring was stretched into an oval by accidentally being dragged through the pipeline for 400 miles. Then, in October, unsupervised workers set off a spark that could easily have blown up the Valdez oil terminal at the pipeline's south end.

Federal studies of TAPS's maintenance and life expectancy will guide possible renewal of its original 30-year permits, due to expire in 2004. But Refuge oil couldn't start flowing until nearly 2010. By the time it peaked in 2030–40, the pipeline would be 53–63 years old. When Refuge oil tapered off, the pipeline would be nearing its centenary. Does this sound like a prudent way to deliver something supposedly so vital to national security?

When scrutinized from every perspective besides environment—energy security, economic fundamentals, technological advance, the financial soundness of the domestic energy industry—Arctic Refuge oil is a risk the nation can't afford. Its benefits could be achieved by tapping just a few percent of the proven energy efficiency reserves—the cheaper, faster alternatives that are becoming the market success stories of the 21st Century. These alternatives offer economic security and competitive advantage, immunity to price shocks and supply manipulations, and environmental benefits rather than costs.

If any oil exists under the Arctic Wildlife Refuge, its best, safest, and most economic use will be forever holding up the ground under America's last great wildland.

-- John Fritz (aeon30@hotmail.com), April 09, 2001.

Diane, I had not heard of this. Strange and must be expensive, but sounds like it works fine. Guess they must be doing this to placate some gov't inspector. Strange world we live in and getting stranger.

-- Lynn Goltz (lynngoltz@aol.com), April 09, 2001.

Very interesting post John. I especially liked the comment about fuel cell: "Hydrogen-powered fuel-cell vehicles could also serve as portable power stations. A full fleet of them, when parked (about 96% of the time), would have enough generating capacity to displace the world's coal and nuclear power plants 5–10 times over. They could help pay for themselves through electricity sales, while halting up to two- thirds of climate change."

I had not considered this possibility. It really has far reaching effects on the home use of fuel cells. If your car and everyone else's car is producing power for the grid, why have a home based fuel cells?

-- Lynn Goltz (lynngoltz@aol.com), April 09, 2001.

Lynn, They were doing this back during the 70's energy crisis! They were holding back the finished product and also had to keep their factory running so this is what they did.

-- Diane (dshogren@uswest.net), April 10, 2001.

Gas prices increased $0.12 per gallon overnight at our stations, including Exxon. I wonder if it has anything with Easter this weekend?

-- Lynn Goltz (lynngoltz@aol.com), April 12, 2001.

$1.69 for regular as of 3:45 p.m. today. Seems kinda backward raise prices / less Easter travel. I would have lowered prices Thur-Fri-Sat then hit the "suckers" (thats us, lol) Sunday when they started home.

-- Kenneth in N.C. (wizardsplace13@hotmail.com), April 12, 2001.

Ken, who knows. Maybe you are correct and this is the first of two increases this week.

-- Lynn Goltz (lynngoltz@aol.com), April 12, 2001.

-- (noneofyour@biz.com), July 13, 2001