IT'S A FUEL PROBLEM, NOT A FUEL ECONOMY PROBLEM

Every single day, the United States ships $600,000,000 out of the country. That's what it costs us to pay for the oil we buy from other countries at $50 a barrel. It is the single biggest cause of our massive trade deficit.

The U.S. uses roughly 20 million barrels of oil every single day, and about 60% of that is imported. About 10 million of those barrels are used in transportation, including the kinds of cars and trucks you and I drive, plus all the planes, trains, heavy trucks and off-road vehicles in the country.

Yet, our entire effort to reduce our dependence on oil is based on Corporate Average Fuel Economy regulations (CAFE). And that only impacts passenger cars and light trucks. In other words, the industry that causes less than 50% of the problem is bearing 100% of the effort to fix it. No other industry is being regulated to reduce our dependence on oil, and that doesn't look like a very effective approach to me.

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John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.
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Russia has long been included under the "emerging markets" umbrella that carmakers have been saying would lead to future industry growth. The economic fallout put an end to those predictions, with Russia suffering just as badly – and if you include the oil sector, some would say even worse – as any other economy. But even though sales are down, Frost & Sullivan predicts that Russia could rebound to be the world's 3rd largest auto market by 2012, behind the U.S. and China.

The prediction is based on steps Russia is taking to strengthen its automotive sector: it is increasing import tariffs and limiting the importation of used cars. The new importation law, similar to one recently passed by Bolivia, reduces the maximum allowable age of an imported car from 7 years to 5. Russia is also reviewing bank lending practices, since the money it flushed into the economy hasn't really had an effect on loan availability yet (not unlike the U.S.).

Lending and the size of the import tariff that Russia imposes seem to be the most important factors in making this prediction come true. But one thing not mentioned in Frost & Sullivan's forecast was oil. When the world economy gets off its knees, the price of oil is going to head for the moon again, and "expensive" oil means more Russians with money, and that could mean a return to more sales, provided the country's oil barons share the wealth. You can read the full press release after the jump.

[Source: Frost & Sullivan]

The Rocky Mountain Institute has created a nifty interactive map that shows you where the U.S. gets its oil from, along with how much - and who - the U.S. pays for its oil. Based on the thickness of the lines, you can see just how much black stuff is coming from where. The map goes as far back as 1973, the year of the first oil crisis, and is accompanied by a graph charting usage and dollars since then. As you'll notice in the pic above, we give a whole lot of money to Saudi Arabia, as well as our Canuck friends up north.

Additionally, RMI has included information on oil production in the Arctic National Wildlife Refuge and the Outer Continental Shelf (in the Gulf) There are some interesting factoids to be found: ANWR drilling wouldn't start until 7-12 years after it's opened up, and peak production - up to 1.9 million barrels-per-day - isn't expected to commence until 20-30 years after that. Thus, drilling in the OCS probably won''t have any impact on fuel prices until 2030. Follow the link to check it out for yourself. Hat tip to reader Rick!

[Source: Technology Review]

Can you hear that? Those are the war drums, and more and more of them are beating the same tune: bring on the gas tax. An editorial in The Gray Lady is the latest and arguably the weightiest to join the shock troops advocating for higher gas prices. The writer proposes a fluctuating consumption tax that would keep gas at least $4 per gallon in 2008 dollars, while an economist suggests a sliding tax on the price of a barrel of oil to achieve the same effect.

The NYT admits "a bitter recession is not the most opportune time to ratchet up the price of energy." But it balances that against the coming Obama administration's aims, the government's enviro-friendly suggestions to the U.S. auto industry, and Americans' claims to want to get off of foreign oil.

Although not mentioned specifically in the Times piece, some recommend a gas tax for a reason that has nothing to do with environmental stewardship: state governments need money. States are making enormous budget cuts, trying to sell and lease their lotteries, state parks, roads, bridges, and even their airports, and lining up for federal aid totaling hundreds of billions of dollars, and still saying they won't have enough money. The answer to "Will there be a gas tax?" could be, as Jesse Jackson once said, "The question is moot!" The question is not whether there will be a gas tax, but whether you will pay your additional taxes at the pump, at the toll booth, in your paycheck, etc...

[Source: New York Times]

You didn't really think OPEC was going to pack up its supercar fleet and shut down the holiday mansions while $1.55 gasoline -- and that's in California -- ruled the day, did you? Oh no. OPEC hasn't merely cut production, it gutted production by the never-before-seen amount of 2.2 million barrels per day. As for the market, surprised as it might have been, fazed it wasn't: oil sank to $40.20/barrel immediately after Khelil's announcement. Those are 2004 prices, which means – as far as oil's concerned – we're living Back to the Future.

[Source: MSNBC via Truckblog, photo by XcBiker | CC 2.0]

The US, and in fact the entire civilized world, is knee deep in a financial meltdown. However, crashing stock markets and crumbling banking institutions have led to one pleasant side effect. The price of gas is dropping faster than the NASDAQ. A quick trip through south-east Michigan shows that gas prices have dropped below the $3.00 threshold, and tumbling crude prices show that even cheaper petrol is on the way. A barrel of oil now costs $77.70, which is in stark contrast to the $147 per barrel crude in July that lead to $4.25 per gallon gasoline. That's a drop of nearly $9.00 today alone, and OPEC has scheduled an emergency meeting to try to halt the precipitous drop of black gold. And since we're paying under $3.00 per gallon for oil that was purchased last month, that means we won't bear the fruit of the recent drop in crude until November.

While many of you were with us in praying for this drop, it's coming at a huge price. Gas is becoming more affordable because a set of Texas-sized Brembos put the brakes on energy use, but at least it's cheaper. At this rate, if the get depressed about the economy, we can afford to go for a quick ride without having to take out another loan on our crashing mortgages.

[Source: CNN Money]

A number of factors are conspiring to create a situation that recently would have been unthinkable: the United States as a supplier of gasoline to world markets. According to Booz & Company, those factors are the rise of biofuels in the West, the introduction of plug-in electric and other alternative fuel vehicles, and the growth of the really cheap car, like the Tata Nano.

The United States imports oil to feed its gasoline habit, but the U.S. has refining capacity that developing nations cannot match. The U.S. is also lowering its reliance on traditional gasoline due to the price, states' mandates on switching to biofuels, and the dawn of mass market alternative fuel vehicles. This adds up to the United States importing oil, and then selling it to nations like India and China to feed their larger appetites for gasoline.

In the middle of all of this are the refineries, who made predictions for today's business plans two decades ago. Sure, no one is crying for them -- they need extra pages to include the zeros on their profit statements -- but they have to start figuring out who's going to need which products and how they are going to deliver them. And, by refining company standards, they need to do it quickly, which is a method of operation they aren't well versed in.

[Source: Green Car Congress via Kicking Tires; Photo CC 2.0 - National Archives]

There's been a lot of head-scratching about the exact cause of the meteoric rise in price for a barrel of oil. Are speculators driving it to turn a quick buck? Is it the weakening value of the U.S. dollar? How about increaded worldwide demand? Chances are, all those forces are playing a part in the rise of fuel prices, and no single solution is likely to fix the problem.

Just as it was starting to look like prices would rise on a daily basis for the rest of eternity, the price of a barrel of oil dropped by $16 from Tuesday to Thursday. Economists point to the dismal economic and inflation news as a main factor for the drop. All we know is that ever since gas got more expensive, everything else started to follow suit. That leads us to spend less on things that we don't absolutely need, which probably isn't good for the economy.

With news of the large drop in the price of a barrel of crude, Wall Street got all excited and responded with a couple days of very positive gains in the stock market. Good news, right? Well, oil jumped by over $2 on Friday morning alone, so we'll have to see. Is the $4 per gallon nightmare almost over? Probably not, but we can hope.

[Source: Yahoo, Photo: Getty/Justin Sullivan]

A company called LS9 is creating nearly pump-ready oil using single-celled bacteria. They start with industrial yeast organisms or "non-pathogenic strains of E. coli," and redesign their DNA so that they produce a different kind of waste. Crude oil is not far removed, molecularly, from the fatty acids expelled by yeast or E. coli during fermentation, so a little bit of DNA alteration bypasses the fatty acids and produces "Oil 2.0."

The "bugs" can be fed a variety of feedstock, from politically sensitive corn to Brazilian sugar cane to California wheat straw to Southern wood chips. The result is the same: crude oil that is almost ready to pour into your car. What's more: the enterprise is carbon negative, putting out less CO2 than the operation requires. At the moment it takes a 1,000-liter fermentation machine one week to make a 40-gallon drum of crude.

It will be a moment before they have a seamless industrial-sized operation. And there is that little concern of hundreds of billions of genetically-altered critters getting free and wreaking havoc on kids and puppies. But the promise of a steady supply of safely created $40 oil -- because even the Volt will need oil -- is not a bad thing to consider. Thanks for the tip, Brad!

[Source: Times Online via Engadget]

It's a complex issue, this business of oil. With stock markets and unemployment numbers taking their lumps, civilian unrest at oil and food prices, and politicians weighing in with all manner of cures and pronouncements, the Group of Eight nations got together to try and figure something out. The result: they want oil producing companies to produce more oil while they work on creating oil-independent fuel sources.

It's the equivalent of Wimpy saying to Popeye, "For a hamburger today I will gladly pay you on Tuesday." The G8 nations, including the U.S., want more of the black stuff to see them through this rough spot. In the mean time, all countries but Germany pledged to begin exploring nuclear power and building reactors, and examining technology like carbon capture and storage. Think of carbon storage as a sealed, underground landfill for coal plant emissions. If they can get it to work -- and find the space -- they can use more coal without creating more emissions.

An OPEC representative said there would be no decision on any production change until it convenes its next meeting in Vienna on September 9. In the mean time, the retail price of oil has passed $4 nationwide in the U.S. for the first time ever, and you can probably expect to pay more for gas as each week of summer passes.

[Source: Detroit Free Press]