G.U.N. Oil Report

by Mike Bryson

Portland, OR
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The a short article from last Thursday, TheState covered an interview with oil lobby economist John Felmy.¹ The quick interview shows that Felmy lays the blame on higher oil prices in decreased supply from U.S., Nigeria, Venezuela and Iraq oil wells, as well as the fact that no refineries have opened in the US in ten years due to bureaucracy. He doesn’t cover the fact that the dollar may have lost half its value in that ten year time frame; fiat inflation caused by the Federal Reserve’s doubling of the amount of dollars in circulation over the decade.

In New York, Governor George Pataki signed into law yesterday a bill to make it easier for New York gas stations to sell E85 and ethanol-blend alternative fuels.² New York has some harsh overregulation that prevents gas stations from selling fuels that their brand doesn’t market. This reduces the supply of fuels that a particular gas station can purchase. New York is not the only state with such harsh restrictions on what a company can provide to the consumers. The New York Association of Service Stations and Repair Shops executive director said with only 200,000 alternative fuel vehicles on the road, there’s little market for E85. Are we seeing preferential treatment for a few companies that do offer the E85 blend?

Republican Governor candidate Dick DeVos is offering a campaign promise to cut farm property taxes and develop Michigan into an alternative fuel center.³ DeVos said that he believes the governor’s role must be to provide leadership that promotes an environment of sensible regulation, low taxes, a favorable business climate and a skilled work force for producers, processors and marketers of Michigan’s agricultural products. Considering that previous Michigan politicians are mostly to blame for the state’s destruction through excessive taxation, regulation and bureaucracy, don’t put much faith in DeVos’ promises. Michigan has a very unique opportunity to attract hundreds of businesses if they removed all barriers to competition; their high number of available laborers would bring many corporations back if not for the state’s outrageous preferential treatment. Current Democratic Gov. Jennifer Granholm just signed into law bills that lower the state tax on each gallon of ethanol-blended fuel to 12 cents, down from the 19 cents figured into a gallon of regular gas, and that lower the tax on biodiesel fuel from 15 cents per gallon to 12 cents. Another new law offers grants to gas station owners who want to sell E85 and biodiesel fuel. Here we see some good things (lowered taxes) and some terrible things (state grants) that will likely not just wipe each other out but make things worse for new businesses who will have to pay for the grants through higher prices to the consumers.

Twelve new FlexFuel vehicles have been announced for 2007 by DaimlerChrysler, Ford, General Motors, Mercedes Benz and Nissan.⁴ FlexFuel capability allows the car to accept regular gasoline, E85 or usually a combination of the two. The FlexFuel vehicle makes the most sense as it doesn’t force owners to use ethanol, but it might increase the demand for local stations to carry the alternative fuel.

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Mike Bryson is the news editor of the Global Unanimocracy Network. He lives in the Portland, OR region where he works as an IT business developer and point of sale consultant. E-mail Mike with news links or comments on this report.