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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]

A scientist in the U.S. Department of Energy's science and energy research unit has said "Energy independence is a realistic goal for the United State of America," by 2030. There are, of course, a few caveats to that. First is that by the word "independence," he doesn't mean not using any oil entirely -- he means getting oil consumption down to a point where our usage is "not subject to restraining or directly influenced by others as consequence of the need for oil."

That, Greene says, is an issue of economics, not one of politics or the military (inasmuch as they can be separated). The key is to get the cost of importing oil down to one-percent or less of the U.S. GDP, which, by the way, is where it was during the heady we-can-take-baths-in-oil-there's-so-much-of-it decade of 1990-2000.

Greene thinks the Energy Independence Security Act will be the guide leading the way to this kind of oil independence, due to the CAFE increase, decreased demand for thirsty vehicles, and increased production and demand for biofuels and alternative energy cars. So now that the oil situation is licked, the only thing you'll need to worry about come 2030 is paying $12 for a cob of corn.

[Source: WardsAuto]

For seven years, William D'Arcy drilled well after well in Persia, now known as Iran, looking for oil. With his funding running low, and his employers getting quite impatient, D'Arcy drilled one last well and hit a gusher on May 26, 1908. The rest is history.

Six years after the discovery of the vast Middle Eastern oilfields, D'Arcy and the Anglo-Persian Oil Co. almost went out of business. They literally had oceans of precious oil and, by then, a pipeline to remove it from its remote resting place. What they did not have, ironically, were customers. Cars were the toys of the wealthy, ships mostly ran on coal and so did electrical plants. Winston Churchill, however, saw the benefits of running his navy on oil and soon had World War I to fight. Black gold quickly became one of the world's most coveted resources.

Years later, the Anglo-Persian Oil Co. bought the government-seized assets of a German firm that sold oil in Britain before the war. That company was called British Petroleum, a name adopted later by Anglo-Persian and shortened to BP in 2000.

[Source: BP via Wired]

According to a study by the Energy Watch Group (EWG), all of you Mad Max fans out there might get the chance to live the movie if oil production continues to decline. The oil industry believes Earth's oil reserves can last about another 42 years at current pumping rates. Energy Watch, basing its conclusions on actual rates of production, says that oil production has declined since 2006 and will continue to do so -- by 2030, oil production could be half of what it is today.

The situation we're headed for -- and that some predict as soon as next year -- is called "peak oil." That means that although plenty of oil is still being pumped and sold, there isn't enough of it to go around. And that means the possibility of "widespread blackouts, the virtual collapse of transportation infrastructure in industrialized countries and a shortage of petroleum-based chemical fertilizers necessary to grow most of our food." And that means war, famine, pestilence, and hunger. A situation that is otherwise known as "deep doo-doo."

Of course, the caveat to all of this is that no really knows how this is going to play out. Long-range predictions have a way of being false as often as they're true (paperless office anyone?). We aren't suggesting that EWG is wrong, and we aren't saying that we don't need to be a lot smarter about our resources... but a lot is going to change between now and 2030. Who knows -- if a $30,000 Volt arrives in 2010, we could get another hundred years out of our oil supplies. Nevertheless, in case a Road Warrior future is in store, you might want to start practicing your lines now. Say it with us: You can run, but you can't hide!

[Source: Green Daily]

We resist writing posts on how expensive gas is nowadays because if we made it a habit, that's all we'd write. Every once in a while, however, there's a news story about gas prices that we can't ignore. This past week, the national average price of gas beat the previous record set in the first week of September 2005, the week following Hurricane Katrina's devastating landfall. The national average price of gas peaked at $3.11 that week. Since last January, however, the national average has been increasing on an uninterrupted pace. At the end of the first week of May, the average stood at $309.70. On May 14th, it was reported by the government to have risen to $314.30, eclipsing the previous post-Katrnia record. (Click here to view the government's archive of average fuel prices.)

We don't claim to be analysts in this area, so we wouldn't venture to guess what various factors are conspiring to push the price of gas ever higher. We don't know if or when it will level off, or perhaps even decrease, though we imagine the retreat of summer and colder temperatures will bring some relief. Nevertheless, we though it prudent to point out that as of May 14th, the price of gas is truly at record levels.

[Source: DailyFuelEconomyTip, Energy Information Administration]

Perhaps it's not just gasoline users that oil companies are squeezing -- station owners might be locked in the vice as well. Bob Oyster, a Shell station owner in San Francisco, is making a statement to Shell and to his customers to let them know what he thinks of it.

To hear Bob tell it, Shell has made it impossible to stay in business. After owning his station for 22 years, he's returning it to Shell at the end of the month. Shell charges him more for gas in San Francisco than in other parts of the Bay, where he also owns stations, but won't let him buy gas anywhere else. They have also raised his rent by leaps and bounds. Five years ago he fought to keep his rent at $6,000 per month based on real estate values, when Shell wanted $13,000. This year they again requested $13K. Shell says that's what the market is worth. Oyster says "I got fed up." What did he do? He raised his gas prices to well over $4 a gallon, and ever since, he hardly sees a customer.

"It makes a statement," he said, "and I guess when people see that price they also see the Shell sign right next to it." Like other independent owners, Oyster makes his money off the convenience store extras, but his lot is so small he doesn't have room for much other than candy and cigarettes. He believes oil companies are trying to squeeze out the independents, but Shell says most of its stations are independently-owned and that that number is increasing. "I'm going out with a bang,'' says Oyster. "And I don't care if I don't pump a gallon on the last day.'' And he probably won't: the Chevron across the street sells gas for 70 cents less.

Thanks for the tip, Mike!

[Source: SF Gate]