Friday, September 5, 2008

Save Gas, Be Patriotic, and Save Money (Version 2)

By Edward Smallwood

Every year or so I send out an email to all of my friends. In this email I detail ways to save gas, why, and how much you can save in your budget with relatively minor changes in behavior. This time I decided to completely revamp that letter to more directly address current concerns in this country.

I’m sure you’ve heard the arguments that the cost of gasoline is controlled by supply-and-demand economics. As the supply dries up, the cost goes up. As demand drops, the price drops. There is definitely an element of truth to this, but there is one other thing that can affect this price artificially—commodities trading. If you think that the price of oil is going to go up in the near future, you can buy it in a sense on the commodities market. This artificially pushes the price of a barrel of oil upwards because that barrel you bought isn’t going to be delivered to a refinery to be turned into gasoline, kerosene, or PVC plastics. Now that it looks like Americans can control their behavior a bit, driving fewer miles, investing in oil at $200 per barrel doesn’t look like such a good idea, and the price of oil dropped dramatically to below $110 per barrel—much more than the 4% drop in miles driven this summer. Now that hurricanes are headed to the gulf region, where oil is drilled, we’re watching oil prices start to go up to over $120 per barrel, and that’s before any drop in oil production. The hurricanes haven’t reached oil production or refining facilities yet. Supply and demand? Nope, commodities trading and speculation that the hurricanes this year might damage oil production or refining. That’s why you’ll be paying more at the pump today.

There are quite a few people out there trying to convince you to let the oil companies start drilling for oil in protected areas to bring that price down further, and make us independent of foreign oil. There are some significant problems with that argument. For example, the areas they are talking about hold only a small fraction of the world’s reserves. There isn’t enough oil in the areas that they are talking about combined to fuel the United States for a year. There is no energy independence to be had from drilling in these areas. And considering that it would be several years before any oil came from these sources, the White House estimates 10 years or more, there will be virtually no change now in the cost of oil from making this decision. We could make a bigger dent in the cost of gasoline by pursuing hybrid, natural gas powered, and electric vehicles for a similar investment, causing less damage to the environment in the process, and helping to make us more competitive in the world market for vehicles. That means more American jobs, folks. T. Boone Pickens the oilman (architect of The Pickens Plan), and Rep. Roscoe Bartlett (R-MD) understand this, and we need to get the word out. Using government funds to drill for oil instead of looking for alternatives is throwing good money after bad.

Also, there is no current biofuel or other alternative to jet fuel. When it costs as much to fuel a fighter plane as it does to buy one in the first place, we’ll be glad we didn’t use up all of our domestic oil reserves. Trust me folks. We can’t invade foreign countries to get their oil for our use if we can’t get there in the first place. So for national security’s sake, we need to keep our domestic reserves safe and off the market. If you support the military, you must be against domestic drilling right now.

There are other urgent national security reasons why we need to cut our consumption of oil. Iran is a major exporter of oil—85% of its income is from oil. According to the U.S. Department of Energy, it is not possible to buy gasoline that is guaranteed to be free of Iranian oil. Even if it were, when you buy gasoline, you are putting an upward pressure on the price of oil that benefits Iran. If you are at all concerned about the Iranian nuclear program building atomic bombs, then you should be concerned that you are directly funding the work on those same weapons that could be used against us every time you fill up your tank.

Saudi Arabia, nominally our ally in the Middle East, at one point created a special account in all Saudi banks called Account 98, and encouraged their people to deposit money into that account. These funds were dispersed to the families of suicide bombers in Israel. In addition, 15 of the 19 hijackers on 9/11 were from Saudi Arabia, as is Osama Bin Laden himself. Al-Qaida was founded in Saudi Arabia as an organization that was against U.S. military bases there. Saudi Arabia gets 90% of its export earnings from oil, so any funds from Saudi Arabian backers of terrorism are pretty much oil based. Considering the Saudi governmental connections to Account 98, that pretty much destroys any argument that the Saudis are not connected to terrorism.

Although Account 98 was closed due to international pressure, other private accounts have been opened for the same purpose since then. In short, Saudi Arabia is the source for much of Al Qaeda's funding.

If you are concerned with the environment, then you are probably concerned about Carbon Dioxide emissions. Every gallon of gas used puts almost 20 pounds of carbon dioxide into the atmosphere. If you’re driving about 12,000 miles per year (a good estimate for most folks) and getting 21MPG on your car, you’re putting out about 11,200 pounds (about 5 tonnes) of carbon dioxide each year from that car alone.

With these reasons, the old question from World War II suddenly becomes relevant again: “Is this trip really necessary?”

For those trips that are necessary, there are some ways to reduce your usage of gas. Keep your car in good shape, meaning that you should make sure your tires are properly inflated, that you have air, oil, and fuel filters in good shape, and make sure your car is properly tuned up. According to the EPA, this alone can save up to 19%. Fixing a faulty oxygen sensor can save as much as 40%! In addition, driving the speed limit (or a bit below) will improve your gas mileage, as will slowly cruising up to stop lights instead of keeping your foot on the gas until the last second. Rapid starts and stops at stoplights and stop signs waste gasoline and decrease your fuel mileage.

Now, there’s a trip that many people can cut out of their daily or weekly routine. It’s leaving your work place to get lunch every day. I’ve seen many people do just that at some of my jobs, and the cost really adds up. Here’s where you can save fairly dramatic amounts of money.

Let’s say you work 5 miles from the fast food place where you like to eat every day, and you own a Toyota Prius Hybrid. According to the EPA, you’re getting around 48MPG for that trip. I filled my gas tank at $3.85 per gallon a few days ago, so let’s use that price for gas. The total cost for gas each day is a whopping $0.32. Let’s say that your favorite value meal costs $5. Each day, you’re paying $5.32 for lunch (both food and fuel). That’s $26.60 per week, about $106.42 per month, or $1330.21 per year. Now, if you buy “Budget Gourmet” TV dinners for $1 at the supermarket each time you go, and get a soda from the machine for around $0.75 each day, you’re paying $8.75 per week, about $35 per month, or $437.50 yearly. The weekly savings is $17.85, monthly is $71.42, and yearly is $892.71. I don’t know about you, but I’m sure I could figure out what to do with an additional $893 per year.
Keep in mind those are the figures for the most fuel efficient gasoline/electric hybrid car you can buy today. You’re more likely to have something like a Honda Accord which gets around 22MPG. Your yearly savings by eating in jump up to $987.50 with this car. That’s enough for a decent vacation. And all of that is assuming that your car was getting its EPA estimated gas mileage already. If not, and you got it fixed up, all of that savings can be added in.
My dad used to brown bag all the time when I was a kid, and he had the right idea, didn’t he? We get to figure out what to do with our own money, instead of giving it to the heads of ExxonMobil and McDonalds. What a thought!
Now, when you have extra money to spend, most people will either spend it, or invest it. Either way, you’re helping the economy.
So, greater national security and an improved economy. All of that without us having to rely on people in Washington. Can anyone tell me what the down side is to all of this? So, we have to “sacrifice” a little by remembering to bring lunch instead of going out for a Big Mac? Not much of a sacrifice, if you ask me.

So, the next step is yours. You can help yourself and all of us by following these suggestions, or follow these suggestions and tell your friends so we can all do this together. The more people who join in, the better off all of us will be.

Tag, you’re it.

Sources of Gasoline:

EIA Primer on Gasoline Sources and Markets:

Cost of running a car for lunch:
Multiply distance to lunch place by 2, then multiply the result by the mileage of the vehicle, then multiply the result by the current cost of gasoline. Add the cost of lunch to the result (I assumed $5.) Multiply the result by 7 for the weekly cost, and so on for monthly and yearly costs (I subtracted out 2 weeks for vacation from the yearly result.)
Fuel mileage source:

Country of origin for September 11 Hijackers:

Saudi Arabia’s Economy:
CIA Factbook:

Iran’s Economy:

CIA Factbook:

Account 98:
Forbes Magazine, 10/18/04 Cover Article, “Terror Inc.”, by Robert Lenzner and Nathan Vardi:

The Pickens Plan:

Rep. Roscoe Bartlett (R-MD):

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