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Achieving $2 Gas: It’s possible, with the right policy.
NATIONAL REVIEW ONLINE ^ | September 15, 2011 | Robert Zubrin

Posted on 09/15/2011 11:23:28 PM PDT by neverdem

Achieving $2 Gas
It’s possible, with the right policy.

Republican presidential contender Michele Bachman has said that if she is elected, gas prices will fall to $2 per gallon. Such promises have understandably been greeted with considerable skepticism. But $2 gas is exactly what America needs. The question is, how can we get it?

We can’t do it just by expanded domestic drilling. In order for gasoline prices to fall to $2 per gallon, oil prices must be cut to $50 per barrel. And oil prices are set globally, with the dominating influence being the OPEC oil cartel. Since 1973, this cartel, which controls 80 percent of the earth’s commercially viable oil reserves, has refused to expand production, thus keeping petroleum prices artificially high. While, with a more pro-business government, the United States might conceivably be able to expand its production by a million or two barrels per day, OPEC could easily counter by cutting its production to match, or more likely, by simply continuing its non-expansion policy and letting increased Chinese demand take care of the slack.

If we are ever to get $2 gas, the power of OPEC to control oil prices needs to be broken. The United States Congress could do this with a stroke of the pen, simply by passing the bipartisan Open Fuel Standard bill (H.R. 1687). This act would effectively destroy OPEC by requiring that all new cars sold in the USA be fully flex fuel, able to run equally well on gasoline, ethanol, and — most important — methanol. This latter capability is critical because methanol can be, and is, made cheaply in large quantities from coal, natural gas, or any kind of biomass without exception. The United States has only 4 billion tons of oil reserves, but we have 270 billion tons of coal, vast amounts of natural gas, and an enormous capacity to produce biomass. By requiring that all cars sold here (and thus all cars made worldwide) be compatible with methanol, the act would force oil to compete with a fuel whose sources are not controlled by the cartel, and that we and our allies possess in abundance.

Methanol has only about half the energy per gallon as gasoline, but is 105 octane, which means it can be burned more efficiently. Taken together, these two factors make methanol’s current spot price of $1.38 per gallon roughly competitive with $2 gasoline.

Of course, the passage of the OFS bill would not cause gasoline prices to crash instantly. While it would no doubt hit oil futures hard, and thus cut the speculative premium on petroleum prices, the most immediate result of allowing methanol to compete against gasoline in the vehicle-fuel market would be to send methanol prices up, perhaps by as much as 60 percent. This situation would not, however, last for long. Methanol can be made and sold profitably today for $1.38 per gallon. At a 60 percent markup, its manufacture would be super-profitable, and massive amounts of capital would rush in to expand production. This would drive the price of methanol down, dragging gasoline and oil down prices with it, until methanol reached a price point where its production offered no greater profit than that prevailing in the economy at large. The fact that methanol would reach this price — what Adam Smith would term its natural price — follows from the fact that the sources to make methanol are plentiful and diverse, so that no cartel can artificially limit its production.

This underscores the key issue. There is not a free market in oil. Adjusted for inflation, the price of oil has increased eightfold since 1973, but OPEC production has not increased at all. In a free market, such a price increase would spur increased investment, with subsequent expanded production driving the price right back down again. That is why the inflation-adjusted price of coal, and nearly every other industrial commodity, has not risen in four decades. But because of the cartel, oil production has not responded to price increases in the way that it should in a properly functioning capitalist economy. In order for the free-enterprise system to do its work and deliver the cheap fuel the world needs, the ability of this cartel to limit the world’s liquid-fuel supplies needs to be broken. The Open Fuel Standard bill would accomplish that.

High oil prices are wrecking our economy. Since the United States imports 5 billion barrels of oil per year, the current price of nearly $90 per barrel will hit us for $450 billion this year alone, a huge tax on our economy. As a result, millions of jobs and thousands of businesses are being lost. If this wealth-draining process is allowed to continue, fiscal necessity will require us to withdraw the military forces protecting our national interests abroad, without a shot being fired.

Instead of seeking to exploit this catastrophe by placing its blame on their opponents, or posing with empty promises of salvation contingent upon their promotion to higher office, politicians need to take action. Two-dollar gas is not just a nice idea for inclusion in a campaign speech. It’s a critical necessity for economic recovery.

Either we break the cartel, or the cartel breaks us. The Open Fuel Standard bill needs to be passed.

— Robert Zubrin is a member of the Board of Advisors of Americans for Energy and author of Energy Victory: Winning the War on Terror by Breaking Free of Oil.



TOPICS: Business/Economy; Culture/Society; Editorial; Politics/Elections
KEYWORDS: energy; gasoline; methanol; openfuelstandard
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To: neverdem

Nothing like requiring vehicles to run on your favorite energy product.

Jeeeezz.

Let the market work, Neocons!


21 posted on 09/16/2011 4:44:23 AM PDT by Chickensoup (In the 20th century 200 million people were killed by their own governments.)
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To: neverdem
The writer appears ignorant of the dollar value issue in oil trading. When you print more dollars the dollars to buy a barrel of oil go up.
22 posted on 09/16/2011 5:23:47 AM PDT by 1010RD (First, Do No Harm)
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To: neverdem

Simple, you buy oil you pay for it and you take delivery, before you resell it. And you have no insurable interest until you take physical control. Price will drop to $2.00 a gal or lower in hours.


23 posted on 09/16/2011 5:39:48 AM PDT by org.whodat (so Perry's purchase price starts at $5001.00: and $29,000 , was a sell.)
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To: neverdem

Why not shoot for $1.77, the price when O took office?


24 posted on 09/16/2011 5:46:04 AM PDT by InvisibleChurch (welcome dies irae)
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To: neverdem

2$ gas...Not while obama is president!


25 posted on 09/16/2011 5:59:08 AM PDT by chainsaw (I'd hate to be a democrat running against Sarah Palin.)
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To: neverdem
Besides methanol, diesel engines can be converted to run on Liquified Natural Gas (LNG).
26 posted on 09/16/2011 6:09:18 AM PDT by PapaBear3625 (When you've only heard lies your entire life, the truth sounds insane.)
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To: neverdem

“The United States has only 4 billion tons of oil reserves, but we have 270 billion tons of coal, vast amounts of natural gas, and an enormous capacity to produce biomass.”

Faulty analogy. The question is: how many gallons of fuel are created per ton of raw material? What is the energy density of said fuel? What is the extraction and refinement cost of said fuel?

(1 gallon of ethanol <> 1 gallon of gas in terms of energy density.)


27 posted on 09/16/2011 6:49:06 AM PDT by bolobaby
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To: Amberdawn

On the scale that racing uses it, the risk is minimal... But letting the vehicle populace use it is another story. See the MTBE saga and how that crap started showing up in the water supplies everywhere it was used as a fuel additive.


28 posted on 09/16/2011 8:50:02 AM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: Amberdawn; Spktyr; taildragger
I purchased a new outboard motor for my fishing boat.

It has a 3 year warranty. Under the terms of the warranty it states:

"Do not use gasoline that contains more than 10 per cent ethanol or gasoline that contains more that 5 percent methanol."

The warranty further states:

"The use of gasoline that contains ANY alcohol MAY void this warranty."

These terms are not hidden away in fine print, it is in bold print.

29 posted on 09/16/2011 9:53:40 AM PDT by TYVets (Pure-Gas.org ..... ethanol free gasoline by state and city)
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To: Spktyr

So if unburned gasoline gets into the water supply, it’s not a problem? What is your point?


30 posted on 09/16/2011 8:44:56 PM PDT by RussP
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To: RussP

Unburned gasoline does not kill off the optic nerve and cause blindness. Methanol does.


31 posted on 09/16/2011 9:14:00 PM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: Spktyr

Where did you get that information? I’d like to see it for myself. Mind you, I have no doubt that methanol is unsafe to drink, but so is gasoline. I’d like to see an objective source of information that shows methanol to be more dangerous than gasoline.


32 posted on 09/16/2011 11:23:22 PM PDT by RussP
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To: RussP

Call your local poison center. Ask them about lethal dosages.

Average lethal dosage, ingestion or absorption, for your average 70kg adult:
Gasoline: 115-470mL
Methanol: 60-240mL

See the difference?

Another problem is that methanol fires are literally invisible. You cannot see them. Gasoline fires are blatantly obvious. For this reason, IndyCars switched to ethanol from methanol.


33 posted on 09/17/2011 12:06:58 AM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: RussP

Also, here’s the source re: methanol poisoning: http://www.medicinejournal.co.uk/article/S1357-3039%2807%2900324-6/abstract

It’s also nasty because it’s even more readily absorbed into the skin than gasoline. You will need to wear protective gear to refuel a methanol car.


34 posted on 09/17/2011 12:08:37 AM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: Spktyr

I don’t see any comparison with gasoline in that source. Did I miss it? Again, I don’t doubt that methanol is dangerous, but so is gasoline.


35 posted on 09/17/2011 3:59:43 PM PDT by RussP
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To: RussP

Yeah, you did.

Just call 1-800-222-1222 (National Poison Center) and ask them about the toxicity and effects of the two substances. They’re open 24/7.

Gasoline isn’t ‘safe’ but it doesn’t cause irreversible blindness with small doses like methanol does.


36 posted on 09/17/2011 4:06:05 PM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: Spktyr

Hey, I’m not here to argue with you. I checked Wikipedia, and methanol does appear to be very toxic. However, take note of this:

Methanol is readily biodegradable in both aerobic (oxygen present) and anaerobic (oxygen absent) environments. Methanol will not persist in the environment. The half-life for methanol in groundwater is just one to seven days, while many common gasoline components have half-lives in the hundreds of days (such as benzene at 10–730 days). Since methanol is miscible with water and biodegradable, it is unlikely to accumulate in groundwater, surface water, air or soil.[20]


37 posted on 09/17/2011 8:36:26 PM PDT by RussP
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To: RussP

Not so fast, more like 5-10 years under some conditions: http://info.ngwa.org/gwol/pdf/022676595.PDF


38 posted on 09/17/2011 8:54:45 PM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: Spktyr

Here’s more from the Wikipedia page on methanol economy:

# The medical treatment for methanol ingestion is ethanol ingestion. Therefore, methanol fuel could be made safer by blending with ethanol.
# Methanol is a liquid: this creates a greater fire risk compared to hydrogen in open spaces. Methanol leaks do not dissipate. A methanol-based fire burns invisibly unlike gasoline. Compared to gasoline, however, methanol is much safer. It is more difficult to ignite and releases less heat when it burns. Methanol fires can be extinguished with plain water, whereas gasoline floats on water and continues to burn. The EPA has estimated that switching fuels from gasoline to methanol would reduce the incidence of fuel related fires by 90%.


39 posted on 09/17/2011 8:57:18 PM PDT by RussP
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To: RussP

I do research that involves 10-20 gallons of methanol at a time. It doesn’t irritate much and acts on the body over a longer period of time, so it doesn’t SEEM as toxic as it is.

It is, however, short-lived in the environment and doesn’t really contaminate for any length of time.


40 posted on 09/17/2011 8:57:39 PM PDT by jjotto ("Ya could look it up!")
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