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Start getting used to living with less oil

    Re May 20 letter, “U.S. can’t tell Saudis what to do with their oil,” by Sidney Woodcock: I agree totally with Mr. Woodcock’s assessment of what we can tell the Saudis to do with their oil. It’s theirs, and they can do whatever they want with it.
    In the context of oil reserves peaking everywhere, one explanation of their reluctance might be that they simply want to conserve their oil so it lasts longer. There’s also the possibility that because of the reserve situation, they are unable to increase oil production on our command, anyhow. This precious and most convenient resource is fi nite, nonrenewable and has no substitute — and we’re just beginning to appreciate how precious it is. Woodcock’s prediction of $5 per gallon appears to be imminent.
    We might at least reciprocate by immediately setting up an oil/gas/natural gas conservation program in this country, as Jimmy Carter did during the 1970s. Reward carpooling, set up communications to enhance it, help the railroads and buses, put in Toonerville Trolleys between towns, wear sweaters or carry a hand fan as needs be. Perhaps trip simulators might be a good new product (made in the USA), so the family can sit in the car in the garage this summer and go wherever they want for almost nothing. Instead, Bush goes begging so we can continue our car-based lifestyle. We are eating ourselves up with the car; call it auto-autocannibalism. If you haven’t read James Kunstler’s “The Long Emergency,” do so now You’ll recognize that the emergency is already under way.
ROBERT C. DEVRIES
Burnt Hills

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Fearing energy crisis, survivalists hunker down
Growing number of people prepare for worst by setting up homesteads
BY SAMANTHA GROSS The Associated Press

    BUSKIRK — A few years ago, Kathleen Breault was just another suburban grandma, driving countless hours every week, stopping for lunch at McDonald’s, buying clothes at the mall, watching TV in the evenings.
    That was before Breault heard an author talk about the bleak future of the world’s oil supply. Now, she’s preparing for the world as we know it to disappear.
    Breault cut her driving time in half. She switched to a diet of locally grown foods near her upstate New York home and lost 70 pounds. She sliced up her credit cards, banished her television and swore off plane travel. She began relying on a wood-burning stove.
    “I was panic-stricken,” the 50-year-old recalled, her voice shaking. “Devastated. Depressed. Afraid. Vulnerable. Weak. Alone. Just terrible.”
    Convinced the planet’s oil supply is dwindling and the world’s economies are heading for a crash, some people around the country are moving onto homesteads, learning to live off their land, conserving fuel and, in some cases, stocking up on guns they expect to use to defend themselves and their supplies from desperate crowds of people who didn’t prepare.
    The exact number of people taking such steps is impossible to determine, but anecdotal evidence suggests that the movement has been gaining momentum in the last few years.
    These energy survivalists are not leading some sort of green revolution meant to save the planet. Many of them believe it is too late for that, seeing signs in soaring fuel and food prices and a faltering U.S. economy, and are largely focused on saving themselves.
    Some are doing it quietly, giving few details of their preparations — afraid that revealing such information as the location of their supplies will endanger themselves and their loved ones. They envision a future in which the nation’s cities will be filled with hungry, desperate refugees forced to go looking for food, shelter and water.
    “There’s going to be things that happen when people can’t get things that they need for themselves and their families,” said Lynn-Marie, who believes cities could see a rise in violence as early as 2012.
    Lynn-Marie asked to be identified by her first name to protect her homestead in rural western Idaho. Many of these survivalists declined to speak to The Associated Press for similar reasons.
    These survivalists believe in “peak oil,” the idea that world oil production is set to hit a high point and then decline.
    Scientists who support the idea say the amount of oil produced in the world each year has already or will soon begin a downward slide, even amid increased demand. But many scientists say such a scenario will be avoided as other sources of energy come in to fill the void.
    On the PeakOil.com  Web site, where upward of 800 people gathered on recent evenings, believers engage in a debate about what kind of world awaits.
    Some members argue there will be no financial crash but a slow slide into harder times. Some believe the federal government will respond to the loss of energy security with a clampdown on personal freedoms. Others simply don’t trust that the government can maintain basic services in the face of an energy crisis.
    The powers that be, they’ve determined, will be largely powerless to stop what is to come.
    Determined to guard themselves from potentially harsh times ahead, Lynn-Marie and her husband have already planted an orchard of about 40 trees and built a greenhouse on their 7.5 acres. They have built their own irrigation system. They’ve begun to raise chickens and pigs, and they’ve learned to slaughter them.
    The couple have gotten rid of their TV and instead have been reading dusty old books published in their grandparents’ era, books that explain the simpler lifestyle they are trying to revive. Lynn-Marie has been teaching herself how to make soap. Her husband, concerned about one day being unable to get medications, has been training to become an herbalist.
    By 2012, they expect to power their property with solar panels and produce their own meat, milk and vegetables. When things start to fall apart, they expect their children and grandchildren will come back home and help them work the land. She envisions a day when the family may have to decide whether to turn needy people away from their door.
    “People will be unprepared,” she said. “And we can imagine marauding hordes.”
    So can Peter Laskowski. Living in a woodsy area outside of Montpelier, Vt., the 57-year-old retiree has become the local constable and a deputy sheriff for his county, as well as an emergency medical technician.
    “I decided there was nothing like getting the training myself to deal with insurrections, if that’s a possibility,” said the former executive recruiter.
    Laskowski is taking steps similar to environmentalists: conserving fuel, consuming less, studying global warming and relying on local produce and craftsmen. Laskowski is powering his home with solar panels and is raising fish, geese, ducks and sheep. He has planted apple and pear trees and is growing lettuce, spinach and corn.
    Whenever possible, he uses his bicycle to get into town.
    “I remember the oil crisis in ’73; I remember waiting in line for gas,” Laskowski said. “If there is a disruption in the oil supply, it will be very quickly elevated into a disaster.”
    Breault said she hopes to someday band together with her neighbors to form a self-sufficient community. Women will always be having babies, she notes, and she imagines her skills as a midwife will always be in demand.
    For now, she is readying for the more immediate work ahead: There’s a root cellar to dig, fruit trees and vegetable plots to plant. She has put a bicycle on layaway, and soon she’ll be able to bike to visit her grandchildren even if there is no oil at the pump.

TOBY TALBOT/THE ASSOCIATED PRESS
Above, Peter Laskowski stacks firewood at his Waitsfield, Vt., home. Above, Laskowski plants vegetables at his remote home. Convinced that the planet’s oil supply is dwindling and the world’s economies are heading for a crash, people around the country are moving onto homesteads, learning to live off their land, conserving fuel and, in some cases, stocking up on guns they expect to use to defend themselves and their supplies from desperate crowds of people who didn’t prepare.

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VIEWPOINT
To help achieve lower gas prices, make your voice heard
BY JAMES TEDISCO For The Sunday Gazette
Jim Tedisco is the Assembly Republican Leader and represents parts of Schenectady and Saratoga counties in the 110th District.

    In the late 1970s, we saw our economy mired in recession, gas prices at record highs, OPEC nations largely dictating fuel costs and politicians talking about energy independence.
    In May of 2008, we have an economy mired in recession, gas prices at record highs, OPEC nations largely dictating fuel costs and politicians still talking about energy independence.
    As the saying goes, “the more things change, the more they stay the same.” The eerie resemblance today’s run-up in gas prices has with what occurred nearly 30 years ago has proven that maxim. Oil was recently trading at $135 per barrel, with some energy commodity analysts predicting it could go even higher. If it does, $5 for a gallon of gas could be much closer than people think, or want.
FAMILIES HURTING
    Anyway you slice it, families are hurting. This is especially true here in New York state where, in addition to paying some of the highest gas prices — and gas taxes — in the Northeast, we also pay some of the highest property taxes and Thruway tolls. Taken together, these burdens add up to a crushing squeeze on middle-class families. For the purposes of this column, I would like to address the gas price-gas tax connection that is contributing to the squeeze so many families are feeling.
    New York state imposes three separate taxes on a gallon of gasoline and diesel fuel. Those taxes are an eight-cent motor fuel tax, an eight-cent sales tax and a 16-cent Petroleum Business Tax. These taxes, along with local and federal taxes, contribute to the price of gasoline and diesel fuel. When compared to our neighbors, New York has the highest gas taxes — and gas prices – with the exception of Connecticut. All the other surrounding states — New Jersey, Massachusetts, Pennsylvania and Vermont have lower gas taxes and — surprise, surprise — lower gas prices than we do.
    Why is it that states surrounding us in the Northeast — who have lower sales taxes than New York — can continue to sell the gas for less, but critics of the summertime gas tax holiday would make us believe if we reduce our taxes, we still won’t save a cent? Have petroleum companies picked only New York state to gouge? Or, could our high gas taxes and prices be just one more symptom of New York’s internal taxand-spend policies?
    Clearly, there is a direct connection between the gas taxes New York state imposes and the gas prices motorists pay. We are not talking about sightings of Elvis or Bigfoot. The phenomenon I speak of — the link between high gas taxes and high gas prices — is very real.
    Of course, identifying the problem is only half the battle. The other part, the hard part, is figuring out how to solve it. That is exactly what our Assembly Republican Conference has done in introducing a two-pronged plan to deliver short-term and long-term relief from excessive fuel prices.
TAX HOLIDAY NEEDED
    First, the short-term: our conference wants to provide motorists with a “summertime holiday” from gas taxes. The legislation we introduced — Assembly Bill A.10818 — would suspend the three state taxes on a gallon of gasoline and diesel fuel from Memorial Day to Labor Day. Our bill would, on average, save motorists roughly 33 cents per gallon of gasoline and 31 cents per gallon of diesel fuel. Think about the amount of driving you and your family will do between now and September and you’ll see how quickly the savings add up.
    Addressing fuel-price spikes also requires a holistic, long-term approach. Once again, our conference took the lead by introducing Assembly Bill A.5798, legislation that would enact an “Alternative Fuel Incentive Fund” to bring more renewable and alternative energies to consumers. Specifically, our bill would support things like the development of cellulosic ethanol — the good kind of ethanol — and provide greater financial incentives for people to make their next car purchase a flex-fuel or hybrid vehicle.
    Our proposals have received strong support, from both business and environmental groups, never an easy feat. However, there is a catch. A big one. The speaker of the Assembly.
    The speaker has blocked both of our initiatives — Assembly Bills A.10818 and A.5798 — from coming to the floor and receiving an up-or-down vote. This is part and parcel of the dictatorial, not democratic, manner in which the Assembly is run.
    Our conference will keep speaking out on the need to provide both short-term and long-term relief to motorists and continue trying to make real change happen. You can support our efforts by going to http://www. tediscostake.com  and adding your name to the thousands who have already joined our online petition to make the summertime gas tax holiday a reality.
    The speaker is betting you won’t make your voice heard on the need for lower gas prices. He thinks you’ll forget, or get distracted, as the days and weeks go by. Together, we can show him he’s wrong and that some things, even in New York, can change.

M. RYDER/NEWSCOM

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$4 gas raises price of small used cars
BY TOM KRISHER The Associated Press

    DETROIT — The beige 2003 Honda Civic sat on Mike Haile’s used car lot in Atlanta for only three days before he sold it for $8,200. And that was $300 more than the asking price.
    The car, with 62,000 miles on it and equipped with an automatic transmission, sunroof, air conditioning, side airbags and a compact disc player, is a perfect example of what Haile and other auto industry experts say is a consequence of nearly $4 per gallon gas: A run-up in the price of used small cars.
    “These little cars are very hot, like hotcakes; they sell fast,” said Haile, who has filled his 15-car lot with smaller vehicles he bought at regional auto auctions in Atlanta and Orlando, Fla.
    In the past month, Haile says, the price of used small cars has risen dramatically as gasoline steadily escalated to a record nationwide average of $3.80 per gallon.
BIDDING WARS
    At the auto auctions where dealers get many of their used vehicles, bidding wars are erupting over compacts, he says.
    “It’s extremely high right now,” Haile said. “The small cars are very hard to get right now. The cars that were $5,000 are now $7,000.”
    In the past year, the average used small car price has gone up 2 percent, from $9,278 to $9,470, according to wholesale auto auction data collected by the National Automobile Dealers Association. There’s evidence that the growth in prices is accelerating, according to recent data from J.D. Power and Associates.
    The increases are in contrast to used full-size sport utility vehicles, whose prices have dropped $1,600 to $2,000 in the past year, said Paul Taylor, the NADA’s chief economist. The average sale price of all used vehicles in the U.S. dropped 2.5 percent in the past year, the NADA reported.
    The swings are directly related to gasoline prices. For the past three years, small and midsize used car prices would rise with seasonal oil price increases, then drop when fuel prices moderated. But gas prices haven’t dropped and continue to rise this year, which has kept the smallcar trend going, Taylor said.
    Historically, gas prices have risen, then fallen as U.S. demand has dropped, Taylor said, but this year has been different with demand rising in emerging countries.
    “The important question is: Is this actually the end of that long-term 50-year trend, and are we headed for a period in which the real price of gasoline . . . started an upward trend?” Taylor asked.
    Tom Libby, senior director of industry analysis for the Power Information Network, a division of J.D. Power, said gas prices could drop and demand could once again shift back toward larger vehicles.
    “I’m really reluctant to commit to saying this is the way it’s going to be, just because of history,” Libby said. “We’ve seen prices go up before and we’ve seen them come down.”
    Libby says his company’s data show the biggest used car price increases in the super-small category, cars such as the Toyota Yaris and Chevrolet Aveo. The average sale price of the dinky cars sold in March and April of last year was $9,355. That rose 7.3 percent to $10,039 for the same period this year, Libby said.
    J.D. Power’s data shows the small car price trend may have accelerated in the past two months. The average used Civic, for example, rose in value by 2.7 percent from April 1 through May 11, according to data that J.D. Power collects from new car dealers that also sell used cars. The price of used Ford Focuses rose 1.3 percent during the same time, from $9,838 to $9,963.
    After Haile sold his Civic, he kept getting calls responding to his advertising. He wonders now if he should have asked for more.

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The price at the pump starts with a barrel of oil
Those who sell gasoline have little control over cost
BY JOHN PORRETTO AND JOHN WILEN
The Associated Press

    Consider the game of chicken that plays out every day across Pennsylvania State Highway 441. In Marietta, where the road hugs the Susquehanna River, a Rutter’s Farm Store gas station stands on one side, a Sheetz gas station on the other.
    Kelly Bosley, who manages Rutter’s, doesn’t even have to look across the highway to know when Sheetz changes its price for a gallon of gas. When Sheetz raises prices, her own pumps are busy. When Sheetz lowers prices, she has not a car in sight.
    She calls Rutter’s headquarters to report the competition’s new price and wait for instructions. “I call a lot of times and say, ‘They went down, hurry up! Hurry up! Call me! Call me!’ Or it could be where theirs goes up, and I’ll say, ‘Take your time! You know, I like being busy.’ But I have no control over that.” You think you feel helpless at the pump? Bosley makes a living selling gas — and even she has little control over what it costs. So how exactly are gas prices set? What determines the hairpulling figure you see displayed in large electronic or plastic numbers?
    It all starts with oil.
    The biggest factor in the skyrocketing price of gasoline is the historic ascent of crude oil, which has surged from $45 per barrel in 2004 to more than $135 this past week.
    In the first quarter of this year, based on a retail price of gas that now seems like a steal — $3.11 a gallon — crude oil accounted for all but about a dollar, 70 percent of the cost, according to the federal government.
    The rest is a complex mix of factors, from the cost of turning oil into gas to taxes to marketing costs to, sometimes, nothing more than the competitive whims of your local gas station owner.
    Not that understanding the breakdown makes it any less cringe-inducing to fill ’er up.
FAT CATS ARE TARGETS
    The knee-jerk villains in all of this are the oil companies, fat with multibillion-dollar profi ts, frequent targets of populist anger. But wait: The oil companies don’t set the price of oil or the cost of a gallon of gas.
    Prices are a function of the open market, the result of futures contracts being traded on the New York Mercantile Exchange, or Nymex, and other exchanges around the world.
    Buying the current July crude oil futures contract means you’re buying oil that will be delivered by the end of July. But most investors who trade futures have no intention of ever accepting the underlying oil: Like stock investors who frequently buy and sell their holdings, they’re simply betting that prices will rise or fall.
    Of late, on the Nymex, oil futures have been rising.
    Why? Blame the falling dollar. Oil is priced in U.S. dollars, and the weaker the dollar gets, the more attractive dollardenominated oil contracts are to foreign investors — or any investor looking for a safe haven in the turbulent stock market.
    The rush of buyers keeps pushing oil futures to a series of new records, and the rest of the energy complex, including gasoline futures, has followed. That pushes up the price of gas that goes into your tank.
    There is some evidence Americans are buying less gas as the price marches higher, and common sense suggests they would cut back even more if gas rose to $4.50 or $5 a gallon.
    Lower demand should mean lower prices — but it takes time for that to happen, given the enormous scale of refining operations that produce gasoline.
    “Once demand begins to slow, that needs to translate into inventories, then you get some price weakening,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. “But it takes a while.”
OIL VS. GAS PRICE
    Oil and gasoline prices often move in the same direction, but they aren’t linked directly. In fact, while oil prices have more than doubled in the past year, gasoline is only up about 19 percent during the same time.
    Oil prices often fluctuate with production decisions from the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude, or when conflict in the Middle East or Nigeria threatens supplies.
    And the rise has only grown more dramatic. Oil sprinted higher this past week, rising more than $4 a barrel on Wednesday alone and past $135 on Thursday.
    As for gasoline prices, they’re closely tied to demand from U.S. drivers and how efficiently refineries are operating. Falling production or inventories often send prices skyrocketing.
    Those prices can vary greatly depending on the region.
    The Gulf Coast is the source of about half the gasoline produced in the United States, and areas farthest from there tend to have higher prices because of the cost of shipping gas via pipeline and tanker truck all over the country.
    Add higher taxes in places like California and New York that push the price higher.
    Oil companies insist their earnings, measured against revenue, are in line with other industries. On top of that, rising oil prices have sharply cut profi t margins for refining, and that hits the major oil companies — which both pump oil and refine it for use as gasoline.
    A giant like Exxon Mobil can handle the blow. Its refining and marketing profits for the first quarter were down 39 percent from a year ago, but Exxon still banked a nearly $11 billion profi t because of the hefty prices earned on crude it pumped out of the ground.
    Smaller refiners aren’t so fortunate. Sunoco Inc.’s refining and supply business lost $123 million in the first quarter, hurt by lower margins. Tesoro Corp. lost $82 million for the same period.
BIG OIL BENEFITS
    In any case, huge profits at big oil companies like Exxon Mobil and Chevron aren’t because of high prices at the pump. Their massive profits are tied to their exploration and production arms, which are benefiting from record crude prices.
    Higher crude costs also have squeezed profits at the refining arms of companies like ConocoPhillips, which don’t produce enough crude themselves to refine at full capacity without buying more oil from other producers.
    Other costs are a factor — though they’ve remained relatively stable.
    For example, federal and state taxes added 40 cents to a gallon of gas in the first three months of this year, roughly the same amount as they added four years ago.
    California’s 63.9 cents of tax is the nation’s highest, Alaska’s 26.4 cents the lowest. How the money is used varies from state to state, though the federal take helps to build and maintain highways and bridges.
    Marketing and distribution costs — the tab for delivering gasoline from refiner to retailer — were 27 cents to start the year, only 6 cents above the cost four years ago.
    The cost of refining added 27 cents to a gallon in the fi rst quarter of this year, a nickel less than what it added in 2004, according to the Energy Information Administration.
    That refining occurs at sprawling industrial complexes across the U.S., with most of the biggest along the Gulf Coast. Barrels of crude arrive each day by pipeline, ship and barge. The refineries, by heating, treating and blending the raw oil, turn out products like diesel and lubricating oil.
    And, of course, gasoline.
RETAILER ROULETTE
    What happens when that gasoline makes its way to your neighborhood gas station?
    Major oil companies own fewer than 5 percent of gas stations. Most are owned by small retailers — and many of them say they’re struggling these days to turn a profit on gas. That’s because wholesale gasoline prices have risen sharply in recent months — again, blame it on crude — but station owners have been unable to raise pump prices fast enough to keep pace.
    And you can’t keep jacking up the price when drivers are buying less.
    Gas station owners face a balancing act: They must try to maintain a price that allows them to afford the next shipment of gasoline but not give the competition an edge.
    Stations pay tens of thousands of dollars for each gas shipment before they see a cent in the register. Eventually, many make only a few cents on a gallon of gasoline, a margin that can disappear altogether when credit card fees are added in.
    In the Philadelphia suburb of Havertown, Pa., earlier in the week, Sunoco station operator Steve Kehler received a load of gasoline — 9,000 gallons — which, at a wholesale price of $3.729 a gallon, cost him 4 cents more than the previous load.
    That left him in a sticky situation: Should he raise prices right away to recoup some of his higher gasoline expenses, or should he hold off for a couple of days in hopes his competitors will also have to raise their prices?
    “I’m surrounded by $3.89’s, and I’m already at $3.91,” said Kehler, referring to his prices and those of some nearby competitors. “I’m going to play a little waiting game right now.”
    The $33,600 Kehler must pay for his overnight gasoline delivery won’t be debited from his bank account for a few days. That gives him a little breathing room, time to hold prices steady. Hiking prices too quickly will hurt sales.
    “I’ll probably change it tomorrow night, at closing,” Kehler said. “I’ll go up 4 cents.”
    That will put Kehler at a gross margin of about 20 cents a gallon. After paying credit card fees, labor and rent, Kehler will be lucky to break even on his gasoline sales; many times, he loses money on gas, relying entirely upon his car repair business for income.
    Most gasoline retailers long ago got past any illusion they can make money by selling gas. They rely on gas sales to drive traffic to their shops, where they hope auto repairs or food and drink sales will help them turn a profi t.
    Thank goodness for beef jerky and sodas.

DON RYAN/THE ASSOCIATED PRESS
Mahesa Kumar changes the prices outside a gas station in Portland, Ore., on Wednesday. A lot goes into the price of a gallon of gasoline, including, shown below, shipping, refining and distribution costs.

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Get more power meters spinning in reverse

    National Grid’s big rate-hike request for natural gas delivery is bad news for ratepayers. Some good news would be the long-delayed passage of a net metering law that would force utilities to buy back power generated by businesses, schools and other nonresidential customers. Passage of such a law may come as early as the current state legislative session.
    Residential customers who generate their own power can sell excesses back to their utility at market rates; in fact, utilities are required to buy such power back from them, which has given homeowners an incentive to invest in windmills, solar panels and other renewable energy technology. But nonresidential customers haven’t had the incentive, thus there’s less of that type of energy being generated (and more that requires the use of dirty and ever-costlier fossil fuel).
    Getting those electric meters to run in reverse would help make this kind of power — which is cleaner, if not initially cheaper — a larger part of the state’s mix. Eventually, that should help lower prices — just what’s needed to offset delivery rate increases like the one for 33 percent National Grid applied for last week.

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Gasoline at $2.03? That’s only the half-gallon price
May 28, 2008
by Eric Anderson, Deputy business editor

Outdated pumps that couldn’t price gasoline above $3.999 a gallon can now post the half-gallon price, according to the state Department of Agriculture and Markets’ Division of Weights and Measures.

Service station operators will have to apply to use the half-price approach. It’s not clear how many service stations face this situation locally, although state officials estimated that no more than 5 percent of the state’s 6,500 retail gas stations, with more than 90,000 pumps, are affected.

And the full-gallon price will still have to be prominently displayed on signs around the station. The pump, meanwhile, will state that the prices being displayed are “one-half total sale” and “one-half price per gallon.” Consumers will have to double the sale total to find out how much they actually owe.

Agriculture and Markets spokeswoman Jessica Chittenden said the stations with the  pumps are typically older, independently owned and often in rural areas. Some seasonal stations, such as those at marinas, also are affected.

There is a fix. Service stations can install a replacement computer. But the primary domestic manufacturer has a 13-week backlog, while a regional equipment rebuilder is reporting backlogs of 17 weeks, according to the Department of Agriculture and Markets.

Stations can use the half-price approach until they’ve upgraded to a new or rebuilt pump computer.

The half-price option orginally was added to state regulations in the early 1980s when gasoline prices topped $1.999 a gallon, and was used again in 2005 when they topped $2.999 per gallon.

This time, the replacement computers go to $9.999 a gallon, so station owners shouldn’t have a problem until gas reaches $10.

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Key supplier to manufacturers raising prices
BY JAMES PRICHARD The Associated Press

    Better start stocking up on diapers and detergent.
    Consumers hit hard in recent months by sharply higher prices for gasoline and food should prepare to start paying more for various household items following Dow Chemical Co.’s decision to raise its prices by up to 20 percent to offset the soaring cost of energy.
    The company, which announced the price increases Wednesday, took the unusual step of directing blame at the nation’s energy policy makers.
    “For years, Washington has failed to address the issue of rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm to America’s manufacturing sector and all consumers of energy,” Andrew Liveris, Dow Chemical’s chairman and chief executive, said in a written statement.
    Dow Chemical’s spiraling costs are “forcing difficult discussions with customers,” he said.
    The Midland, Mich.-based company supplies a broad swath of industries, from agriculture to health care, and any sizable price jumps would likely affect almost all of them.
    The price increases will take effect Sunday and will be based on a product’s exposure to rising costs. Dow Chemical said it spent $8 billion on energy and hydrocarbonbased feedstock, or raw materials, back in 2002 and that could climb fourfold to $32 billion this year.
    Dow Chemical makes everything from the propylene glycols used in antifreeze, coolants, solvents, cosmetics and pharmaceuticals, to acrylic acid-based products used in detergents, wastewater-treatment and disposable diapers.
    It makes key ingredients used in paints, textiles, glass, packaging and cars.
PROFITS DOWN
    The company, whose products are sold in 160 countries, last month reported a 3 percent drop in quarterly earnings amid a 42 percent jump in energy and raw materials costs.
    Its profit margins shrank from 9.8 percent in 2005 to 7.6 percent in 2006, and to 5.4 percent last year. During the 12-month period that ended March 31, the margin narrowed to 5.1 percent, according to Capital IQ.
    Crude oil prices surpassed $135 a barrel last week, more than double the price from a year ago. Rising energy and transportation costs have been blamed for higher food prices, which rose 5 percent last year, the highest gain in 17 years.
    Kevin McCarthy, a Banc of America Securities analyst, said in a note to investors there is “a growing unwillingness among chemical producers to function as an energy shock absorber.”
    “To be sure, cost inflation is not new; it has been an ongoing battle for Dow and others in recent years,” he wrote. “However, we are seeing a new sense of urgency at Dow, and its competitors, to pass along escalating and volatile costs in an environment of decelerating demand.”
    Price increases from major suppliers significantly affect the cost of manufacturing, said Angie Chaplin, a spokeswoman for Solo Cup Co. The Highland Park, Ill.-based company is a customer of Dow Chemical.
    “We absorb as much of these increases as we can through greater efficiency in our own operations, but we have no choice other than to pass on some of the increased cost to our customers,” she said.
    Companies and entire industries are looking for ways to share increases in the cost of doing business, said Mark Stephenson, a spokesman for chemical giant BASF Corp. in Florham Park, N.J.
    “For us, BASF, we don’t consider prices across the board, like you saw with Dow,” Stephenson said. “Rather, we look at the necessity for increases on a productby-product basis.”
    He said BASF had raised its prices for “a handful of products” during the past three months, but he did not know how many products had gone up in the year.
    Another competitor, Rohm and Haas Co., announced April 29 that, beginning this month, it will apply an indexed raw materials and energy surcharge to products made by its Specialty Materials businesses. The index will be adjusted up or down monthly, based on the collective changes in key raw material, crude oil and natural gas costs, according to the Philadelphia-based company’s Web site.
    On Friday, suburban Dallasbased Kimberly-Clark Corp. announced that the consumer products maker will raise prices 6 percent to 8 percent beginning in late July for Huggies diapers, Pull-Ups training pants and Cottenelle and Scott bathroom tissue. Company spokesman Joey Mooring declined to comment on Dow Chemical’s price increases.

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Cut speed limits to force gas savings


If one of the ways to save gas is to slow down, then our speed limits should reflect that.
I remember in the past that the Thruway posted limits of 55 mph for awhile. Why not try it again? And 55 miles per hour could be changed to 45 miles per hour.
I know it wasn’t popular, but it could be tried again as a temporary measure.
PEG LAPO
Delanson

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Regulators investigate U.S. oil markets
BY DAN CATERINICCHIA The Associated Press

    WASHINGTON — Federal regulators are six months into a wide-ranging investigation of U.S. oil markets, with a focus on possible price manipulation.
    The Commodity Futures Trading Commission on Thursday said it started the probe in December and took the unusual step of publicizing it “because of today’s unprecedented market conditions.”
    Crude prices have risen more than 42 percent since early December, even after a decline of more than $4 to $126.62 a barrel on the New York Mercantile Exchange. Gasoline prices are nearing a national average of $4 a gallon, up from about $3.20 a year ago.
    The commission said details of the investigation remain confidential, but announced a handful of other initiatives designed to increase transparency of U.S. and international energy futures markets.
    For example, the CFTC said it will immediately require monthly reports from institutional investors who manage funds designed to mimic the price of crude oil and other energy futures. The goal, the agency said, is to identify the amount of such index trading and to “ensure that this type of trading activity is not adversely impacting the price discovery process.”
    The CFTC also said it has reached an agreement with its British counterpart and InterContinental Exchange Inc.’s Futures Europe to expand surveillance of energy futures contracts with U.S. delivery points, including the benchmark West Texas Intermediate crude, which trades on the Nymex.
    “The implementation of today’s measures will improve oversight of the energy futures markets to ensure they reflect fundamental economic forces of supply and demand, free of manipulation and fraud,” the CFTC said in a statement.
    Analysts said the CFTC action would likely have a limited impact on oil prices, which have risen on a combination of factors, including growing demand in China and other developed nations, the falling value of the dollar, geopolitical tensions and low interest rates, which have fueled a futures buying binge by institutional investors seeking to ride oil’s upward momentum.
    It is the last factor, exacerbated by the Federal Reserve’s efforts to prop up the ailing housing market, that is playing the biggest role in the recent runup, according to Howard Simons, a strategist at Bianco Research in Chicago.
    “Eliminate that excess money and the problem (of soaring prices) disappears,” he said.
    Still, the CFTC action “will have a chilling effect” on speculative investors’ enthusiasm for energy futures, Simons predicted. “What they’re saying … is, ’You either stop this or we’re going to stop it for you.’”
    At least one energy analyst sees trouble on the horizon for pension funds and other nontraditional investors looking to commodities indexes as just another type of security they need to have in their portfolios. If a major price drop occurs, this relatively new breed of investors will want out of energy futures at the same time and it will be “like entering a revolving door at the wrong time in the wrong direction,” according to Cameron Hanover Inc. President Peter Beutel.
    U.S. Sen. Jeff Bingaman, chairman of Senate Energy and Natural Resources Committee, earlier this week asked the CFTC to provide the committee with more information about its oversight of energy commodity markets.
    The New Mexico Democrat said he was concerned about increasing trading activity in U.S. crude oil taking place overseas and in over-the-counter markets. He also questioned the CFTC practice of classifying large investment banks as “commercial” market participants alongside traditional buyers and sellers, and its “continued assertion that noncommercial participants, or speculators, follow rather than lead oil price movements.”
    Bingaman on Thursday said he was pleased with the CFTC steps and that a future hearing will explore how they will address his concerns “that the commission lacks a robust understanding of the oil market.”
    Congress earlier this month voted to give the CFTC greater oversight of unregulated electronic exchanges as a way to protect consumers and deter price distortion and manipulation.
    A Senate subcommittee investigation last year found that hedge fund Amaranth Advisors LLC, which collapsed in 2006 after losing more than $6 billion in natural-gas trades, had shifted its activities to ICE from the regulated Nymex to avoid trading limits, and that the “excessive speculation” raised homeowners’ heating bills.
    Speculation has been cited as one on many factors contributing to surging petroleum prices, along with assumptions about new supplies, limited demand growth, possible supply disruptions overseas and the dollar’s depressed value against other currencies.

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