Alkylate Shortage May Push-Up Gas Prices by .50 a Gallon
Experts predict pump prices will spike by as much as 50 cents a gallon later this year, as refiners and gas stations switch from winter- to summer-blended fuels. Speaking to AP [via the Pittsburg Post Gazette], analysts blame an alkylate shortage. This little-known and expensive gasoline additive replaced MTBE two years ago, when regulators found the potentially cancer-causing additive seeping into ground water. The oil companies deny they’re limiting production of alkylate. Valero Energy GM John Pickering says their Paulsboro refinery in New Jersey makes enough alkylate to meet its needs, but concedes that there is a national shortage of the additive in the spring and summer. Other refiners say they’re reluctant “for competitive reasons” to reveal how they blend gasoline, or whether they face alkylate shortages. Little wonder Hawaii passed a law (yet to be enforced) requiring local oil refineries to reveal their pricing practices.
Glenn is a baby-boomer, born in 1954. Along with his wife, he makes his home in Connecticut. Employed in the public sector as an Information Tedchnology Specialist, Glenn has long been a car fan. Past rides have included heavy iron such as a 1967 GTO, to a V8 T-Bird. In between those high-horsepower cars, he's owned a pair of BMW 320i's. Now, with a daily commute of 40 miles, his concession to MPG dictates the ownership of a 2006 Honda Civic coupe which, while fun to drive, is a modest car for a pistonhead. As an avid reader, Glenn enjoys TTAC, along with many other auto-realated sites, and the occasional good book. As an avid electronic junkie, Glenn holds an Advanced Class amateur ("ham") radio license, and is into many things electronic. From a satellite radio and portable GPS unit in the cars, to a modest home theater system and radio-intercom in his home, if it's run by the movement of electrons, he's interested. :-)
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As for close to losing money, no, but they were not quite raking it in either. Oil companies are being run less and less by petro engineers and geologists, and more and more by MBA's and Accountants. A dozen years ago, there was a definite boom and bust cycle (the oil guys are all about producing oil and would spend all sorts of money doing it), but now they invest as if they are in a constant bust. (Damn money men, if you are looking for a conspiracy on oil prices it is likely happening on Wall Street rather than in Texas. The oil guys used to reinvest everything and more when the price of oil went up, which always drove it right back down.) Also, when oil is low, they all stop bidding up government leases. That is why Clinton had to offer leases without royalties to get them to bid and drill back in the nineties. Of course, the US government and it's people reneged on the deal and there is now a fight to get the royalties paid. Yes, we ARE acting like a banana republic. That happens when less than half the voting public actually supports the government with tax dollars. As for alkalyte vs. ethanol. Both are oxygenates. I do not know specifics why or when one is used rather than the other, but I do know that transportation issues make it hard to use ethanol at all refineries. I will have to ask around to get to the bottom of that one.
Alkylate is used by pretty much all refineries. Its made by basically putting two butanes together. You need to blend it into other components to raise the octane and reduce the vapor pressure of gasoline. Almost all gasoline contains some alkylate, even the stuff with ethanol in it.
Oil is the only business where cutthroat competition drives prices up.
Gardiner, Huh? How does that work?