US energy bill wouldn't lower gasoline prices

Bob Tippee

"Folks," Speaker Dennis Hastert (R-Ill.) said after the US House of Representatives passed comprehensive energy legislation Apr. 21, "it's about gas prices, gas prices, gas prices."

Well, that's malarkey, malarkey, malarkey.

It wasn't about "gas prices, gas prices, gas prices" when the House first drafted then passed basically the same energy bill in 2001-02. Gasoline then was cheap and therefore ineffective as a political lever.

Now, of course, expensive gasoline captures public attention. Lawmakers naturally try to harness the concern in service to energy legislation the White House wants them to pass despite past failures.

They shouldn't promise more than their bill can deliver.

It's true that pieces of the far-flung legislation might increase crude oil supply and encourage refinery expansion, which would tend to moderate gasoline prices. And a controversial provision would let refiners concentrate on making fuel instead of defending their bank accounts against opportunistic lawsuits. The legislation has its merits.

Overall, however, it would more likely increase than lower gasoline prices. Here's why: It would ban methyl tertiary butyl ether and require ethanol in reformulated gasoline. That combination would suppress supply and raise costs of bringing gasoline to market.

Ethanol can't extend supply to anywhere near the extent its supporters claim—if at all. It blends at lower volumes than the MTBE it displaces, requires rejection of light ends from blendstocks during summer, uses considerable amounts of energy in production, and contains less energy than gasoline.

It requires special handling and, because of high production costs, wouldn't be a fuel additive without a generous tax credit. Also, largely because of evaporative emissions, replacing MTBE with ethanol in reformulated gasoline aggravates ozone pollution in some areas and lifts prospects for more costly regulation.

Lawmakers serious about prices would not require ethanol in gasoline. Farm-state lawmakers, however, won't support an energy bill that lacks an ethanol mandate.

To many segments of the oil and gas industry, beneficial pieces of the energy bill justify a trade-off on ethanol.

But no one in the industry should join lawmakers in implying the bill would lower gasoline prices. It isn't so.

(Author's e-mail: bobt@ogjonline.com)

Related Articles

Joint venture advances plan for grassroots refinery in North Dakota

07/30/2015 Quantum Energy Inc., Tempe, Ariz., and a joint-venture partner Native Son Holdings LLC (NSH), The Woodlands, Tex., have filed a minor-source air qu...

Shell to shed Japanese refining assets

07/30/2015 Royal Dutch Shell PLC has entered a deal to sell nearly all of its interest in Japanese refiner Showa Shell Sekiyu KK to Idemitsu Kosan Co. Ltd. as...

BLM seeks comments on proposed Fidelity E&P Utah oil and gas project

07/30/2015 The US Bureau of Land Management is seeking public comments on Fidelity Exploration & Production Co.’s proposed oil and gas project 17 miles no...

BLM issues draft EA for Noble Energy’s latest DJ basin oil project

07/30/2015 The US Bureau of Land Management released a draft environmental assessment for Noble Energy Inc.’s proposal to develop as many as 89 oil wells in C...

Murkowski, Warner want US ready to use energy abundance strategically

07/30/2015 The US should better prepare itself to use its new energy abundance as a geopolitical tool by jettisoning obsolete policies and broadening access f...

Vermilion Energy farms into German acreage

07/30/2015

Vermillion Energy Inc. has signed a farm-in agreement providing access to a nearly contiguous land block in the North German basin.

PA Resources submits Tunisian field development plan

07/30/2015 PA Resources Tunisia has submitted Tunisian authorities a plan of development for Zarat field that outlines a multiphase joint venture between PA R...

Rosneft, ExxonMobil file joint bids for Mozambique offshore contracts

07/30/2015 OAO Rosneft and ExxonMobil Corp. filed joint bids to participate in the fifth licensing round organized by Mozambique’s Institute of National Petro...

Gazprom lets contract for Russian gas processing plant

07/29/2015 OOO Gazprom Pererabotka Blagoveshchensk (GPB), a subsidiary of PJSC Gazprom, has partnered with NIPIgazpererabotka (Nipigaz), Moscow, on design and...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected