Hydrogen highway: it's a long, hard road ahead

Remember when California Gov. Arnold Schwarzenegger kept talking about a hydrogen highway so he could combat global warming and still drive a Hummer?

Well, although several manufacturers are hooking up Hollywood stars with hydrogen-fueled cars, and they're apparently (pardon the pun) a gas to drive, if you thought that the Hydrogen Highway would open sometime soon, well...sorry, but there will be some delays. Oh, and it turns out the Hydrogen Highway is a toll road.

A new study released today by the National Academies of Science spells out the bad news. The only way switching to hydrogen-powered cars would have much of an impact on greenhouse gases is if they took over a large share of the auto market. But the NAS report says the maximum practicable number of hydrogen vehicles that could be on the road by 2020 is 2 million.

Not until 2023 would the total cost of fuel cell vehicles, including the cost of hydrogen fuel over a vehicle's lifetime, become competitive with conventional vehicles. At that point, the number of hydrogen vehicles on the road could at last grow rapidly, to nearly 60 million in 2035 and 200 million by 2050.

And who's going to pay for the cars until the price drops? "According to the committee, government support via strong policy initiatives as well as funding would be needed until at least 2023," an NAS press release says. "The cost to the government would be about $55 billion between 2008 and 2023; private industry would be expected to invest $145 billion over that same time period."

[St. Petersburg Times photo by Stephen J. Coddington]

Offshore drilling splits GOP lawmakers

The high price of gasoline has cracked the once solid wall of antidrilling sentiment in the Florida Legislature.

"I'm tired of spilling blood in the Middle East for oil," said Senate President Ken Pruitt, R-Port St. Lucie, a drilling proponent whose son is a Marine. "If we're going to protect our nation, you've got to protect resources."

Pruitt was one of a half-dozen prominent Republican lawmakers who told the St. Petersburg Times they would support offshore drilling now. Among those opposing it, though, stands one mighty powerful lawmaker: incoming House speaker, Rep. Ray Sansom of Destin, a town famous for its pristine white beaches, and thus a place where the beach IS the economy.

"I earned the title of 'the Sandman' for protecting our white fluffy beaches to attract tourism," Jones said. "Drilling for oil is dirty and nasty and not economical. I don't care if McCain is president. That wouldn't change my mind one bit."

The tension among the Legislature's Republican majority promises a tense debate should the federal government lift its offshore drilling moratorium in the eastern Gulf of Mexico and leave the issue up to states. Last month Gov. Charlie Crist backed such a plan by Arizona Sen. John McCain, the presumed Republican presidential nominee.

[Photo courtesy Destin Area Chamber of Commerce]

--Jennifer Liberto and Steve Bousquet

Oil demand in U.S. continues to fall. Price of a barrel is down $15 in last three days.

Gasoline demand fell by 5.2 percent last week in the U.S., according to a survey by Mastercard. That's the 12th consecutive weekly drop.
With fears that gas prices are driving inflation, some analysts believe oil may have reached its peak. Oil is now down to almost $129 a barrel. (Prices are still 75 per cent higher than a year ago). Others point out that while we may be consuming less, the developing world continues to demand more.

Does anyone remember a year ago when oil was approaching $80 a barrel some experts were predicting it would fall back to $40? So much for experts. My impression at the time was that it was wishful thinking on the part of the oil and gas industry which was worried about investors pouring money into alternative energy.

But they chose to ignore the fundamental geopolitics of oil. Political instability in oil producing countries, coupled with falling supplies of cheap, easily accessible oil and rising demand in the emerging economies of the developing world, are what drives the prices of oil today.

- David Adams

The quest for greener air travel

Airlines are looking to find ways of cutting their fuel costs and reducing carbon emissions. The New York Times describes the scene at the Farnborough annual Air Show in Britain, including one display of a tank of green algae,  considered a potential new source of  jet fuel. Pratt & Whitney is also displaying a new engine that uses less fuel, is quieter and noise and releases less emissions.

(Photo of the tail of an Airbus 380 by The New York Times)

- David Adams

Bush greenlights drilling offshore, pressures Congress to follow suit

Look out Florida beachgoers -- President Bush is announcing today that he's lifting a longstanding executive order first imposed by his father in 1990 banning offshore oil drilling in the eastern Gulf of Mexico and elsewhere along the nation's coast.

The move won't lead directly to new rigs sprouting off Caladesi Island, of course. Instead it's "aimed at stepping up pressure on Congress to end the prohibition it imposed in 1981," the Washington Post reports.

In a speech last month, Bush called for ending the 27-year-old ban on drilling for oil and gas on the outer continental shelf, "arguing that the country needs more domestic energy production to help reduce dependence on foreign oil and ease upward pressure on gasoline prices," the Post reports. Congress disdained his advice, so now he's charging ahead and hoping Congress will follow, his press secretary explained.

"This proposal is something you'd expect from an oil company CEO, not the president of the United States," said Sen. Barbara Boxer, D-Calif., chairwoman of the Senate Environment Committee, told the Associated Press. "The president is taking special-interest government to a new level and threatening our thriving coastal economy."

Of course, with gas topping $4 a gallon, Floridians may disagree. As one Louisiana resident told USA Today recently, ""It's OK to have an ugly spot in your backyard if that spot has oil coming out of it."

[Photo of Caladesi Island by Jim Damaske, St. Petersburg Times]

--Craig Pittman

Oil prices set new record above $147 a barrel

I know we've said this before, but oil prices set a new record this morning above $147 a barrel, driven by rising tension between Iran and the West and fear of attacks on Nigerian oil facilities, the Associated Press reports.

Back on May 9, David posted a link to a Goldman Sachs prediction of $150-$200 a barrel oil. Looks like we're headed there now.

Some say the run-up in oil prices this year is a commodity "bubble" drive by speculators and investors desperate to take refuge from the falling dollar. Others accuse market fundamentals. Demand has increased while supply hasn't, putting a strain on the oil that's out there.

Equally divided are two camps of thought. One argues for more drilling, the other for less consumption.

-Asjylyn Loder, Times staff writer

[Photo: Associated Press]

The high cost of commuting isn't just the gas

Check out this column from our Hernando County columnist Dan DeWitt. An avid cyclist and nature lover, Dan has been writing about growth and development in Hernando County for years. In this column, he writes about how cheap gas brokered Hernando's fleeting life as a Tampa suburb, and how the high cost of a gallon promises to doom hopes to make it a bedroom community for Tampa commuters.

Also check out a couple of past columns from Dan on a local farmer's market, and on the isolated consumers around Florida that have gone solar.

Do mileage-boosters work?

With gas prices over $4 a gallon, motorists are increasingly attracted to mileage-boosting gadgets and potions. Some claim to increase mileage by 20 percent or more. Others say their potion helps gasoline burn more completely.

Do these products work?

The Associated Press wrote an article that raises questions about the benefits. The Federal Trade Commission urges buyers to beware. The FTC published a cautionary note titled "'Gas Saving': Fact or Fuelishness?" that details some of the fraudulent tactics out there, and lists some products that have been tested by the Environmental Protection Agency.

Some companies claim to have federal approval, but no federal agency endorses gas-saving devices, the FTC said. If a company claims to have been tested by the EPA, ask for the report or contact the EPA directly. The EPA keeps a list of products it has tested, with reports on how the inventions performed.

-Asjylyn Loder, Times staff writer

Oilman T. Boone Pickens says US must invest in wind energy and switch cars to natural gas.

Texas oilman T. Boone Pickens, now a major investor in wind energy and natural gas fuel, on Tuesday unveiled a proposal to substantially cut the nation's reliance on oil imports.

The "Pickens Plan" says the U.S. should spend $1.2 trillion to build massive wind-energy facilities that would supplant natural-gas-fueled power plants, freeing up that fuel for use in vehicles.

David Adams

Oil price falling? What to do about gas prices?

The price of oil has fallen $9 in the last couple of days to around $136 a barrel. Some experts say it could continue falling, bringing down prices at the pump.

Members of Congress are looking at ways to bring down gas prices, including ways to raise domestic production, including offshore drilling.

Florida Senator Mel Martinez isn't buy that.  "I don’t think that solar and renewables are any more of an answer tomorrow than opening up more areas for exploration would be," Martinez told The New York Times.
“All of these are long-term solutions," he added. "In my way of thinking, the most immediate thing we could do to impact prices is consume less."

I was interested yesterday to hear JP Morgan Chase CEO Jamie Dimon blame current oil prices not on speculation or fundamentals of supply and demand, but rather he blames the lack of a comprehensive energy policy in the United States (CNBC video link here).

- David Adams

Gas too expensive? No problem -- if you've got hidden gas tanks and fake credit cards

Five Orlando men who gassed up their pickup trucks at a Gibsonton Wal-Mart Supercenter last month may have found the perfect way to avoid paying too much for fuel.

According to the authorities, they used hidden tanks in their trucks so they could take up to 1,000 gallons of diesel at a time, which they could then resell.

The hidden tanks held 1,000 gallons, so officials figure that the men's profit per load topped $4,000. And how did they plan to pay for all this?

"They used counterfeit credit cards," said Maj. Bob Johnson, enforcement chief at the state Department of Agriculture and Consumer Services, told the St. Petersburg Times. "One guy had 47 cards on him."

As you might suspect, state officials are now warning everyone that the rate of fuel theft appears to be increasing. So guard that gas tank!

[AP photo]

--Craig Pittman

Sex for gas? Yes, prices are finally that high

The cops had staked out the Days Inn on June 27, hoping to catch women trading sex for money.

Instead they nabbed a Kentucky woman who was trading sex for...a $100 gas card from Speedway.

"Angela R. Eversole, 34, of Fort Wright, Ky., is accused of prostitution and doing business without an occupational license," says the Cincinnati Enquirer. "Kenneth A. Nowak, 50, of Avon, Ind., told police they met at the hotel Friday night for a sexual liaison, according to the arrest report. The report says he paid her with a $100 gas card and other gifts."

“When people are selling their bodies for gas, that’s pretty sad,” said Ken Easterling, chief prosecutor in the Kenton County Attorney’s Office. (Of course what's worse is that the gas card is worth maybe 25 gallons. That's what, one and a half fill-ups? Two at the most.)

We'll leave the smutty jokes to the folks at Fark, but for the couple's mug shots and copies of the actual arrest report, go to The Smoking Gun. That said, one last thought: If she had applied for an occupational license, what would she have listed as her job? Oil trader?

[AP photo]

--Craig Pittman

Police to charge offenders "fuel surcharge" for car chases (and those exploding gas pumps will really cost you)

Police car chases are risky enough. Now, defying the police is going to cost speeding drivers even more if they force police to guzzle gas.

From 1 July, motorists caught speeding in Holly Springs, Ga., will have to pay an extra $12 to cover the costs of the gas that police use while chasing them down, says the Atlanta Journal-Constitution.

The town's police chief says he expects the "fuel surcharge" will generate up to $26,000 in revenue per year.

Elsewhere, high gas prices are making police think of other ways to save gas. That includes not sitting in stationary police cars with the air conditioner running. Officers in Pennsylvania are being told to park under a tree instead.

[Still from the movie "Bullitt'' courtesy of Warner Bros.]

- David Adams

Win 'Gas for Life' in the Florida Lottery

The state of Florida is offering an imaginative new lottery prize: gas for life.

The new game called Summer Cash is being offered once a week for the next two months with drawings on eight consecutive Wednesdays, starting July 9. Each drawing will offer up to five winners the lifetime supply of gas. Fifty lower-prize winners each week could end up with a year's supply of gasoline.

- David Adams

Gas prices set new record

You're probably tired of hearing this, but oil and gas prices set new record highs Monday morning.

Oil prices surged past $143 for the first time ever Monday morning and gas prices reached an all-time high, the Associated Press reports.

Nationally, a gallon of regular averaged above $4.08, according to AAA Fuel Gauge report. In Tampa-St. Petersburg-Clearwater a gallon of regular neared $3.98.

-Asjylyn Loder, Times staff writer

Tampa Bay energy roundup

There's a bunch of energy news around Tampa Bay in the last few weeks. Rate increases are coming so fast and thick it's hard to keep track of what it's all for.

Let's start with this week's news. Tomorrow, Progress Energy and Florida Power & Light, as well as some smaller Florida utilities, will ask the Public Service Commission for a rate increase for fuel. (My story in Sunday's paper explained why fuel is getting so expensive.) The gist is that utilities are not allowed to profit from fuel. It's a "pass through" charge. If approved, it will hit bills on Aug. 1.

Tampa Electric isn't asking for a fuel rate increase yet, but it has asked for a base rate increase. Utilities can profit from base rates. (From a shareholder point of view, utilities had better show a profit.) Tampa Electric and Peoples Gas, both owned by Tampa-based TECO Energy, requested base rate increases that it hopes to add to bills by next May.

As if this news isn't enough of a bummer, there are more increases on the horizon. First, fuel again. Every Fall, the utilities estimate what they will pay for fuel the following year. Fuel costs are up nationwide, and Florida is no different. (If a hurricane hits the Gulf coast, fuel costs could get a lot worse.) Progress Energy has already predicted that it will ask for additional fuel rate increases that will start in January. (This is on top of the increase sought Tuesday.) Expect similar news from Tampa Electric, Florida Power & Light, and pretty much every utility that buys fuel to run its power plants (i.e., every utility.)

Gas pump prices around the globe

Want to know who pays how much around the world for gasoline? Here's a graphic from The New York Times published today. Higher rates tend to insulate drivers from price spikes.

An accompanying article notes that on a percentage basis, "Europeans have had to absorb far smaller increases in gas costs than Americans in recent years. They’re used to paying double what Americans do — or more — and they live accordingly."

- David Adams

Oil prices set new record

The Associated Press reprtes, "Oil futures shot above $140 Thursday after OPEC's president said oil prices could rise well above $150 a barrel this year and Libya said it may cut oil production.

Light, sweet crude for August delivery rose as high as $140.39 in afternoon trading on the New York Mercantile Exchange before retreating slightly to trade up $5.53 at $140.08. Final prices weren't available, but crude appeared headed to a record settlement."

Arnold puts down Crist and McCain over offshore drilling

California Governor Arnold Schwarzenegger made a guest appearance today at the Florida Climate Change Summit in Miami hosted by Governor Charlie Crist.

Arnold had lots of praise for Crist's leadership in Florida on tackling climate change.

But he appeared to issue a firm rebuke to politicians (including Senator John McCain and Crist) who have suggested ending a ban on offshore drilling in the Gulf of Mexico. "Anyone who tells you this will lower our gas prices anytime soon is blowing smoke," he said.

Schwarzenegger's press spokesman Aaron McLear called me a short while ago to stress that this comment was NOT directed at Crist or McCain, and instead was targeted specifically at the impact of offshore drilling on gas prices. "He was not referring to either one of them. Neither Crist nor McCain has said offshore drilling is going to immediately reduce gas prices," McLear said.

However, the California Governor remained firmly opposed to offshore drilling, McLear added. "He doesn't believe in offshore drilling. Her certainly doesn't agree with McCain and Crist on that."

My own view: it seems pretty clear to me that when McCain and Crist raised the offshore drilling issue last week, they both had gas prices in mind. Our paper's reporting certainly reflected that.

For the record, here's are Schwarzenegger's exact words today:

"Politicians have been throwing around all kinds of ideas in response to the skyrocketing energy prices, from the rethinking of nuclear power to pushing biofuels and more renewables and ending the ban on offshore drilling, it goes on and on the list. But, anyone who tells you this will lower our gas prices anytime soon is blowing smoke."

(more speech highlights below)

- David Adams

Crist clarifies his position on offshore drilling

Addressing his Climate Summit in Miami this morning, Florida Governor Charlie Crist could not ignore the thorny issue of offshore drilling in the Gulf of Mexico.

Clarifying his apparent reversal last week over offshore drilling, he called for an "open discussion" of the issue "without compromising Florida's sensitive eco-sytems and her natural beauty."

He went on: "Only when we are able to do so far enough from Florida's coast, safe enough for our people, and clean enough for our beaches, should we even consider increasing our oil supply by drilling off Florida's shore. Let me repeat: far enough, safe enough and clean enough."

As someone sitting next to me said: "That's a lot of qualifications!"

- David Adams

[St. Petersburg Times photo by Scott Keeler]

- David Adams

"It´s not a bubble, it´s a tumor." Congress discusses oil price speculation

Those were the words of one expert who testified in hearings before Congress yesterday about the dramatic rise in oil prices. One energy analyst said the real price of oil was only $60 a barrel. Others say the culprit is a tight market for oil which has forced up prices.

In recent years, commodities markets have seen a flood of new money from institutional investors — such as hedge funds, pension funds and index funds linked to commodities. Investment from commodities-linked indices jumped from $13 billion in 2003 to $260 billion today, according to Michael Masters, the head of Master Capital Management LLC, a hedge fund.

Some blame energy trading markets that were deregulated in late 2000 at the request of Enron. MSNBC 'Countdown' host, Keith Olbermann has pointed the finger at Senator John McCain´s economic advisor, Texas Republican Phil Gramm who chaired the Senate Banking Committee that wrote the deregulation.

A congressional committee is investigating the issue. But results aren´t expected until the Fall. I wonder what the price of oil will be by then!

- David Adams

Offshore drilling = kiss your clean beach buh-bye

Stephen Leatherman has seen every kind of beach in America, and he really likes the ones in Florida. The man known as Dr. Beach usually ranks them among the prettiest in America. This year he picked Pinellas County's own Caladesi Island as No. 1.

If oil companies start drilling in the eastern Gulf of Mexico, that's likely to change. "We've got some of the finest, whitest sand in the world," said Leatherman, a professor at Florida International University in Miami. "Oil doesn't seem to go with that. … This could lower the value of our beaches."

Where there's offshore drilling, the beaches suffer, and so does the water. There are spills large (like the fiery Ixtoc blowout that dumped 3-billion barrels of oil into the Gulf of Mexico in 1979, pictured here) and small, as well as a plethora of pollution. Oh, and all those fish swimming around the derrick? Don't eat 'em.

Here's the full story about the consequences of offshore drilling from today's St. Petersburg Times, and here's one about Gov. Charlie Crist's about-face on the issue, and here's an excellent examination of whether all this will have any impact at all on rising gas prices.

[Photo of Ixtoc oil spill from NOAA]

--Craig Pittman

Jeb Bush on oil drilling

Our sister blog The Buzz caught up with the former Florida governor today at an education summit in Orlando. Here's what the president's brother had to say (note foreshadowing: Yeah, he's backing McCain's position).

Read it.

Iraq oil goes to big four in exclusive deal

Nearly four decades after being kicked out of Iraq, four Western oil companies are on the verge of signing no-bid contracts to service Iraq's largest fields, according to today's New York Times.

"Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company . . . are in talks with Iraq’s Oil Ministry," the Times reports. "The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations."

The no-bid contracts -- unusual for the industry -- gives the big four a leg up on more than 40 other companies, including companies in Russia, China and India that wanted Iraq's business too. "The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production."

Is Iraq the safest oil field to be working these days? Although they're not burning the way they were back in 2003, it's still a risky location. But with oil prices what they are today, "there is no shortage of companies coveting a contract in Iraq. It is not only one of the few countries where oil reserves are up for grabs, but also one of the few that is viewed within the industry as having considerable potential to rapidly increase production," the Times notes.

[AP photo of Marine and burning oil well at the Rumeila oil fields in Iraq,  March 23, 2003]

--Craig Pittman

Florida Republicans split over offshore drilling

Senator John McCain's flip-flop on offshore drilling appears to have split Republicans in Florida.

While he has received the important backing of Governor Charlie Crist and Senator Mel Martinez, but others are sticking to the 27-year-old moratorium. They include members of Congress: Ileana Ros-Lehtinen from Miami and Vern Buchanon of Sarasota; as well as Ray Sansom, the incoming leader of the Florida House, and Republican House Speaker Marco Rubio.

Former Governor Jeb Bush is standing by his position in favor of limited offshore drilling. (As Governor he tried to negotiate a federal-state compromise in 2006 to keep drilling 100 miles away from Florida shores. He now suggests reviving the 2006 compromise to protect Florida's coast while lifting the moratorium on domestic oil and gas drilling.)

Click here to read an in depth story from The St Petersburg Times Washington bureau about the Republican move over oil drilling.

Click here to listen to what Governor Crist had to say about offshore drilling when he visited The St Petersburg Times editorial board in 2006 to seek the paper's endorsement for Governor.

Click here for a story on where South Florida Republicans stand in The Miami Herald.

- David Adams

The offshore drilling debate on The Diane Rehm Show

For an excellent discussion about offshore drilling in the US, and the current energy crisis, listen to The Diane Rehm Show on NPR this morning.

Click here for a link to the show.

Bubble or not, oil moves on latest supply news

UPDATE: The Associated Press reported late Thursday morning that oil prices fell on news that China will raise prices, possibly dampening demand for oil in the gast-growing nation.

An attack on an oil installation in Nigeria pushed oil prices up Thursday morning, while hopes for increased production from Saudi Arabia and mixed U.S. supply reports restrained rising prices, the Associated press reported earlier Thursday.

For the latest news on oil prices, check in with our Money channel.

Today's oil news from the Times

Blame speculators for $1 of every $4 you pay for a gallon of gas, said one critic in today's Times story by Kris Hundley.

In the story, Michael Greenberger, a former regulator with the U.S. Commodity Futures Trading Commission, the federal agency charged with overseeing the futures market, said the whole system is out of whack.

"Right now the market is overwhelmed by speculators," he said, noting that OPEC has said oil prices should be around $70 a barrel, not nearing $140. "If they're not policed, speculators will distort the market and drive the price in any direction they want to take it."

Also in today's paper, Times Washington reporter Wes Allison writes about the push to lift the ban on oil and gas drilling along the U.S. Coast. With gas at $4 a gallon, some politicians think it's time to take a second look at the nation's offshore oil. Critics of the move say it won't help prices but will hurt the environment.

The story reported, "Wednesday, Democrats touted a federal Energy Information Administration report that found that drilling in waters now off-limits "would not have a significant impact on domestic crude oil and natural gas production or prices before 2030."

The report also noted that oil prices are set on the world market, and that untapped U.S. reserves are too small to make much of a difference."

Read more on the topic here and here.