Archive for the ‘Gasoline’ Category
Presentation Before the Energy Forum
On February 22, 2010 EPRINC made a presentation before the Energy Forum in New York at their event entitled “U.S. Refining Industry - Prospects for the Future.” EPRINC’s presentation, which assesses the impact of the Waxman-Markey cap and trade bill and other environmental and energy policies on the U.S. refining industry, has been posted on our website and can be downloaded here.
The presentation will also be posted at http://www.nyenergyforum.org
A Primer on Gasoline Blending
An EPRINC Briefing Memorandum
Refineries produce a more expensive fuel blend during the summer to cut down on smog during hot months. Stations nationwide will start selling a less-expensive winter fuel usually by mid September, which on average means that winter gasoline is less expensive than summer gasoline.
Gasoline is composed of many different hydrocarbons. Crude oil enters a refinery, and is processed through various units before being blended into gasoline. A refinery may have a fluid catalytic cracker (FCC), an alkylate unit, and a reformer, each of which produces gasoline blending components. Alkylate gasoline, for example, is valuable because it has a very high octane, and can be used to produce high-octane (and higher value) blends. Light straight run gasoline is the least processed stream. It is cheap to produce, but it has a low octane. The person specifying the gasoline blends has to mix all of the components together to meet the product specifications.
There are two very important (although not the only) specifications that need to be met for each gasoline blend. The gasoline needs to have the proper octane, and it needs to have the proper Reid vapor pressure, or RVP. While the octane of a particular grade is constant throughout the year, the RVP spec changes as cooler weather sets in.
The RVP is the vapor pressure of the gasoline blend when the temperature is 100 degrees F. Normal atmospheric pressure varies, but is usually around 14.7 lbs per square inch Read More >>>
Cash for Guzzlers
The House Committee on Energy and Commerce reached an initial agreement on a proposal to promote sales of new automobiles in the U.S. market. The program is designed to increase auto sales and at the same time enhance the fuel efficiency and environmental performance of the U.S. auto fleet. The program resembles an initiative undertaken by the Unocal Corporation in the early 1990s to remove older autos from the market in an effort to find a lower cost approach to meet local air pollution standards.
Whether or not this program will stimulate auto sales is debatable and not the focus of this paper. Instead, this paper examines the program’s impact on U.S. gasoline consumption and tailpipe emissions. While the program may stimulate auto sales, the benefits in reduced demand for gasoline and total loadings of emissions from the tail pipe are minimal.
The “cash for guzzlers” program provides vouchers towards the purchase of a new vehicle if a consumer trades in an older car. A consumer will qualify for a voucher if they turn in a vehicle that achieves less than 18 mpg and replace it with a new car that is at least 4 mpg more efficient. An improvement of 4 mpg yields a voucher worth $3,500 and an improvement of 10 mpg yields a voucher worth $4,500. Under the proposed program consumers may also purchase a SUV or light truck. The new light truck or SUV vehicle must be 2 mpg more efficient in order to earn a $3,500 voucher or 5 mpg more efficient to earn $4,500 voucher. The program seeks to replace one million vehicles and will remain in Read More >>>
Will Ethanol Increase the Price of Transportation Fuels?
This EPRINC report (Download PDF) evaluates the consequences to the U.S. transportation fuel sector of increasing the volume of ethanol in the U.S. gasoline pool above current volumes - now approaching 10 percent of the fuel supply. Additional volumetric increases in ethanol use are mandated by federal law. As federal mandates take the U.S. gasoline pool above 10 percent ethanol blend, and ultimately to higher levels through E-85, the value of additional ethanol supplies is likely to decline dramatically. This cost can only be recovered through higher prices for E-10 and distillate, and depending on a wide range of factors, the mandated volumes could easily drive gasoline and distillate prices up by 10-25 cents/gallon over the next 2-3 years as compared to a scenario without the fuel mandates.
Ethanol has contributed to the U.S. fuel supply and reduced net petroleum imports. If wholesale gasoline prices had remained above $3.00/gallon and were accompanied by rising demand for gasoline, the ethanol volumes mandated by Congress could have been accommodated into the market at a relatively modest cost. However, we are now entering a period of low (or even negative) demand growth for transportation fuels, and more importantly, wholesale gasoline prices remain well below $1.50/gallon. In this market environment, accommodating increasing volumes of ethanol into the gasoline pool will likely require substantial increases in the price of E-10 and diesel fuels as refiners and marketers face the higher costs of meeting the Read More >>>
