Why Gas Prices Spiked Before Hurricane Ike

It's not a Big Oil Conspiracy:

Here's how it worked. The Knoxville area has several bulk fuel storage depots. Some belong to the chain outfits, others are run by wholesalers that supply independent gas stations. In either case, they manage their storage levels to maintain a competitive retail price. When the price of gas is rising, they maintain a relatively full inventory. This means that on average the gas they store always costs less than the current spot price. On the other hand, when gas prices are dropping, they keep inventories low, so they aren't holding a lot of gas that cost them more than the market price.

It's the exact same thing you do to minimize how much you pay for gas. If the price is going up, you fill up in the morning before the price changes go into effect, and you fill the tank full. When the price is going down, you guy your gas in the afternoon, after the price changes, and you buy just what you need. The wholesalers and bulk storage facilities do exactly the same thing, except on a much larger scale. Gas prices have been plummeting lately, so all of the bulk storage facilities have been keeping their stocks low.

Then along came Gustav, which impacted the ability of refineries to deliver fuel to the regional and local bulk storage facilities. That hasn't been a huge deal because they were drawing down their stocks anyway. But now Ike is headed for Galveston, and the pipelines are being shut down completely. And that is where the fertilizer hits the propeller. When you're in a low stock condition, you are relying on a steady flow of gasoline to maintain smooth distribution. When that steady flow is disrupted, you're only hours away from shortages.

It's been more than a few hours, and shortages are already here.

So the price of a gallon of gas is skyrocketing, even at stations, like Pilot, that have enough gas to get through the interruption without going dry. So why are they raising their prices? Aren't they gouging?

Nope. If you've been out in Knoxville at all today, you've seen long lines of cars at gas stations. You've seen people filling up cars, trucks, motorcycles, lawnmowers and gas cans. They are in a panic mode, and they're buying more gas than usual. Even though Pilot has enough to get through the crisis at normal levels of sales, there's no way they can sustain sales at the rate they are going. So what do they do? They raise prices. By raising prices, they discourage people with brains from buying more gas than they need. They discourage people from driving more than they need to. In effect, they are encouraging conservation by using market forces rather than governmental coercion.

And it will work.

Consider the opposite case, where gas prices remain low, and everybody fills every container they can get their hands on with gas, and the stations run dry for the next three days. What happens when an ambulance needs to gas up? What happens when a fire truck needs fueling? What happens when you have an emergency and you need fuel but can't get any because everybody and his brother is hoarding it?

There are two ways to ration a short supply of a commodity. You allow the market to price it accordingly, and those who really need it will buy it, or you let the government come in and set the price. As a small government supporter, I favor the former. We're still dealing with the fallout of Nixon's wage and price controls from 40 years ago.

Anyway, that's what happened. Bulk storage facilities were acting to minimize the price of fuel and got caught short when the supply was interrupted. Barring major damage from Ike, supplies should be flowing again in a couple of days, and prices will resume their freefall.

True Agenda

Quote I found:

Climate eschatology really is the ultimate in big lie crisis politics. The far-left has failed so comprehensively to make the case for its vision of society and economy that the only thing left to do is to brazenly and repeatedly assert that the world will literally collapse unless we implement this otherwise indefensible vision.

I think most politics (to varying degrees) slips into this realm. Some more than others, but it's always useful to understand the other side's real agenda.

Aegis Success

From StrategyPage:

The U.S. Navy, capitalizing on the success of its SM3 anti-missile missile, wants to equip more ships with it. So far, the seagoing Aegis radar system has used SM-3s to knock down nearly 90 percent of the test missiles fired towards it. This includes shooting down a low flying space satellite. There are 18 U.S. Navy ships equipped with SM-3, and the navy would like enough money to equip all of its Aegis equipped ships (90) with the SM-3.

Plasma Rocket!

How cool is this?

Rather than heating chemicals and directing the resulting gases through high-temperature metal nozzles, VASIMR uses radio waves to create and speed up free-flying, electrically charged particles known as plasma. The concoction is then herded through nozzles made of magnetic fields, not metals like traditional rocket engines.

Russian Cyberwar

21st Century Warfare:

The Georgian embassy in the U.K. has accused forces within Russia of launching a coordinated cyberattack against Georgian Web sites, to coincide with military operations in the breakaway region of South Ossetia.

Probably a fairly easy thing to do knocking out your enemy's websites with denial of service attacks while at war. And probably just as easy to recover against.

I would be more impressed if Russia has accessed Georgia's defense network and done mischief.

The Long View

One of the best from Heinlein:

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as "bad luck."

Largest Known Star

Our Sun is a dust particle compared to it.

NASA's Image Gallery

NASA now has an online image gallery available. Very nice and intuitive interface.

Unintended Consequences of Food-Based Biofuels

Food based biofuels are bad.

Corn is probably the commodity most directly impacted by biofuels. An estimated 25 to 30 percent of the U.S. corn crop goes to ethanol...

The spike in corn prices began with the Energy Security Act of 2005, which increased the goal for ethanol use in the U.S., and Hurricane Katrina.

Overnight the federal government effectively shifted an entire marketplace that impacts every eating citizen of this country.

You can't move 25% of a staple resource like corn and make use of it some other way without an noticeable impact. Though not the only reason for increasing food prices, food based biofuels limit an already valuable resource that our economy needs.

It's simple Econ 101... law of supply and demand. The government created a demand for food-based biofuels where there was none before. So naturally, farmers are going to sell their corn where they can make the most profit, and as the market place is working itself out, 25% - 30% of the supply went to biofuels. That increased the demand for corn's food marketplace, rising it's selling price to match the biofuel's prices.

There is a solution though to meet both our energy and our food needs.

Biofuels from NON-food based biomass. What's biomass? It's not corn.

DuPont Co. has joined a state initiative to build the first pilot-scale biorefinery in the U.S. that would take corncobs and switchgrass grown on Tennessee farms and convert the biomass into ethanol for fuel.

There's still a problem: If farmers grow switchgrass or other more profitable biomass yielding plants in place of their existing corn food crops, the supply will have to be met with new planted acreage or the price of corn will still be higher than it was. But this is a much needed improvement.

A Pill for Prostate Cancer

Wonder Pill to the rescue:

British researchers have made a dramatic breakthrough against a lethal form of prostate cancer.

Trials of a new pill have shown that it can shrink tumours in up to 80 per cent of cases, and end the need for damaging chemotherapy and radiotherapy.

About time. Mice aren't the only ones getting cancer cures now. Congrats to the researchers at Royal Marsden Hospital.

Leadership by Bob Stevens

• Engage fully.
• Listen actively.
• Mobilize quickly.
• Seize the initiative.
• Adapt with agility.
• Persevere in the face of adversity.
• Celebrate the victories with those who have earned them.

Circumstances demand it.
Employees deserve it.

Path of Least Resistance

It's a force to be reckoned with:

T Boone Pickens is absolutely right: we can't go on transferring a trillion a year to the middle east... Whether his conclusion, that we ought to convert to wind power, is correct is another matter. It doesn't look as useful as nuclear, but there are fewer environmental fanatics opposed to wind. I suspect that energy economics is more determined by law suits than by engineering.

That answers one of my questions "Where's the nuclear in Picken's Plan?"

Last Shuttle Launch Schedule

Oct. 8, 2008 - Atlantis (STS-125)
The final service mission to the Hubble Space Telescope (HST)

Nov. 10, 2008 - Endeavour's (STS-126 / ULF-2)
Supply the International Space Station (ISS) and service both Solar Alpha Rotary Joints

Feb. 12, 2009 - Discovery (STS-119 / 15A)
Install the final pair of Solar Arrays to the ISS

May 15, 2009 - Endeavour (STS-127 / 2JA)
Install the Japanese Kibo Laboratory's Exposed Facility and the Experiment Logistics Module Exposed Section

July 30, 2009 - Atlantis (STS-128 / 17A)
Deliver science and storage racks to the ISS and return an empty ammonia tank assembly

Oct. 15,2009 - Discovery (STS-129 / ULF-3)
Stage spare components outside the station, including two spare gyroscopes, two nitrogen tank assemblies, two pump modules, an ammonia tank assembly, a spare latching end effector for the station's robotic arm, a spare trailing umbilical system for the Mobile Transporter and a high-pressure gas tank

Dec. 10, 2009 - Endeavour (STS-130 / 20A)
Deliver Connecting Node 3 and the Cupola, a robotic control station that provides a 360-degree view around the ISS

Feb. 11, 2010 - Atlantis (STS-131 / 19A)
Install science racks to the ISS and attach a spare ammonia tank assembly outside the station

April 8, 2010 - Discovery's (STS-132 / ULF-4)
Deliver maintenance and assembly hardware, the second Russian Mini Research Module, a boom assembly for the Ku-band antenna and spares for the Canadian Dextre robotic arm extension

May 31, 2010 - Endeavour (STS-133 / ULF-5)
Install two S-band communications antennas, a high-pressure gas tank, additional spare parts for Dextre and micrometeoroid debris shields

Politics Has an Effect on the Economy

Bush removes Executive Order restricting off-shore oil drilling.

Almost immediately...

...Oil falls $6 a barrell..

.. and dollar rises...

.. and DOW gains 280 points.

Coincidence? I don't think so. Actions by the government can have both negative and positive effects on our economy. Almost always positive when it gets out of the way.

Peak Oil Worries?

Uh oh:

The kingdom's message was clear: Saudi fields can pump oil to market quickly, if demand warrants...

Three industry analysts in the U.S. said the document's overall conclusion—that the Saudis cannot sustain higher than 12 million barrels a day maximum production for the next few years—appeared to be reasonable. "My view is that when they finish their expansion program they are unlikely to be above 12" million barrels per day, says Roger Diwan, a Middle East energy expert with PFC Energy...

Meanwhile in Mexico:

Mexico's average crude exports plummeted 17.3% to 1.46 million barrels a day during the first five months of the year compared to the year-ago period, contributing to record oil prices.

More reasons to drill at home.

July & August Launch Schedule

Sea Launch - EchoStar 11
July 16, 0521 GMT (1:21 a.m. EDT), Odyssey platform, Pacific Ocean (154° West, 0° North)
The Sea Launch Zenit 3SL rocket will carry into orbit the EchoStar 11 direct-to-home television broadcast satellite. The Loral-built spacecraft will provide services for DISH Network subscribers.

Kosmos 3M - SAR-Lupe 5
July 22, 0440 GMT, (12:40 a.m. EDT), Plesetsk Cosmodrome, Russia
A Russian Kosmos 3M rocket will launch the SAR-Lupe 5 spacecraft into Earth orbit. The craft is the fifth in a series of five German radar reconnaissance satellites. Moved up from July 29/30.

Falcon 1 - Jumpstart
July 29, TBD, Kwajalein Atoll, Marshall Islands
The SpaceX Falcon 1 rocket will launch the Jumpstart mission for the U.S. Air Force Operationally Responsive Space initiative. The Jumpstart mission will fly the Trailblazer spacecraft built by SpaceDev, Inc. Delayed from late June.

Proton - Inmarsat 4-F3
August 13, 2246 GMT (6:46 p.m. EDT), Baikonur Cosmodrome, Kazakhstan
An International Launch Services Proton rocket with a Breeze M upper stage will deploy the Inmarsat 4-F3 mobile communications spacecraft. This is the third of three next-generation satellites in the Inmarsat 4-series. The launch will mark the return-to-flight for ILS and the Proton/Breeze M following the March failure.

Land Launch - MEASAT 3a
August 21, TBD, Baikonur Cosmodrome, Kazakhstan
The Land Launch Zenit 3SLB rocket will carry into orbit the MEASAT 3a television broadcasting satellite for MEASAT Satellite Systems of Malaysia.

Delta 2 - GeoEye 1
August 22, approx. 1850 GMT (2:50 p.m. EDT), SLC-2W, Vandenberg Air Force Base, Calif.
The United Launch Alliance Delta 2 rocket will launch the GeoEye 1 commercial Earth-imaging spacecraft into a Sun-synchronous orbit for the GeoEye company. ULA will conduct this commercial launch for Boeing. Delayed from 2007 and April 16.

Ariane 5 - Superbird 7 & AMC 21
August, TBD, ELA-3, Kourou, French Guiana
Arianespace Flight 185 will use an Ariane 5 rocket with an ECA cryogenic upper stage to launch the Japanese Superbird 7 telecommunications satellite and the American AMC 21 television broadcast spacecraft.

International Space Ship

An idea to send the ISS someplace other than Earth orbit:

The ISS, you see, is already an interplanetary spacecraft -- at least potentially. It's missing a drive system and a steerage module, but those are technicalities. Although it's ungainly in appearance, it's designed to be boosted periodically to a higher altitude by a shuttle, a Russian Soyuz or one of the upcoming new Constellation program Orion spacecraft. It could fairly easily be retrofitted for operations beyond low-Earth orbit. In principle, we could fly it almost anywhere within the inner solar system -- to any place where it could still receive enough solar power to keep all its systems running.

There's even mention of fitting it with ion-thrusters. How cool is that?

ORNL & Lab Worker Cancer Rates

Good news:

A study of chemical lab workers at the government's Oak Ridge facilities found that overall death rates and death rates from cancer were actually lower than in the general population.

Help Ourselves First

Sen. John Cornyn speaks truth:

We’ve put 85 percent of our prime energy exploration lands off-limits. The U.S. is the only country in the world that refuses to develop its own natural resources. With a growing worldwide demand for energy, we’re willing to enrich foreign governments – some of which wish us harm – instead of helping ourselves.

As my former governor is saying, "Find More, Use Less." If the Democrats don't get behind this, they're going to feel the pain this November.

No Oil for You

From Foxnews:

A federal judge has overturned a decision by the U.S. Forest Service to allow oil and gas drilling near a forest and a river in Michigan's northern Lower Peninsula.

U.S. District Judge David Lawson of Detroit ruled Thursday the agency had acted "arbitrarily and capriciously" in 2005 by giving Savoy Energy LP of Traverse City a permit to drill an exploratory well near the Au Sable River's south branch.

...the judge ruled the Forest Service didn't consider how degrading the area could harm tourism, and said the agency did a "woefully inadequate" job of evaluating how the drilling might affect the Kirtland's warbler, an endangered songbird that nests in the area.

These people don't give a hoot about the endangered Kirtland's warbler by the way. It's just the easiest path for them to get what they want.