TimesToCome

A barrel of crude oil holds about 42 gallons of crude.

This 42 gallons of crude is converted to about 20 gallons of gasoline.

The gas tax varies by state from .08 to .45 per gallon.

If we look at prices from 2007 we can see the price per barrel of crude is about ~1/3 to a half the price per gallon at the gas pump.

So about a third to a half of the price per gallon can be traced to crude. This means at $121 /barrel we’re looking at $3.04 to $6.34/gallon regular in our near future. At $200 /barrel it’ll be about $7.20/ to $10.80/gallon.

Gas prices world wide range from about $8/gallon in Europe to about $1/gallon in the Middle East at a time when we are paying $3.50/gallon.

Gas prices are rising now because the US dollar has been falling. In order to bail out the hedge funds which invested heavily in high risk mortgages and the US government which has spent far more money than it has fighting a war in Iraq the Federal Reserve has been busy printing money. More money means less value per dollar.

This has the effect of the US consumer bailing out the mortgage crisis and federal debt in the form of high costs for all goods not just gasoline. Whether or not this is the correct way to fix the problem I know not. It is certainly the traditional way the government has bailed itself out of trouble in many a country.

Is the future all bad? Perhaps not. If the rate of inflation can be kept under control it may be a little painful but not a disaster. And some of the money invested in the war will come back to us. After WWII transistors and radar and other war inventions brought about new industries in the private sector. There is every reason to believe that all the research and development in robotics for the war will spur new industries and bring more robots into our lives.

Sources:
History of crude prices
History of US gas prices

More information:
A Primer on Gas Prices
Estimated Gasoline Price Breakdown

Yes, if not now soon. The question we really need an answer to is how much and for how long will it do so?

The 2005 Energy Policy Act requires that 5% of US gasoline needs come from renewable fuels by 2012. This has led to a gold rush and created several boom towns through the middle of the country. We now have 116 working ethanol plants and 79 plants in various stages of construction. Ethanol production is expected to double to 11 billion gallons by year end.

Ethanol plants are expected to use 139 million tons of corn from the ’08 crop. Farmers have produced the third largest crop ever, 10.7 billion bushels. 20% of last year’s crop went to ethanol production making up 1% of the US fuel needs. Corn fields are now replacing other crops as corn becomes more profitable rising to $4.20/bushel double what it was earlier this year, but still behind 1996′s $5/bushel. This has allowed farm subsidies to drop from 20 billion in ’06 to an expected 13 billion in ’07.

The US produces 40% of the world’s corn followed by China in second place. Corn production is expected to rise 8% this year with an additional 85 million acres to be planted. The rising prices are pushing out the planting of other crops, soybean prices have already risen 41% and meat prices are expected to rise at least 6% to cover loses being sustained now. The rising prices are also hurting the ethanol refineries especially as the price of ethanol has dropped from $77/barrel to $60/barrel.

The US food supply was made up of 15% corn products in the 1950s and 1960s. This dropped to 11% in the 1970s and then rose to 17% in the 1980s and to 22% in the 1990s.

An average American spends 10% of his/her income on food down from 15% in the 1970s, 20% in the 1950s, and 25% in the 1930s. Perhaps with the cost of corn based foods rising our obesity epidemic may take a break? You might have already noticed all the news stories about how cheap food is now for Americans compared to historical prices.

Not long ago ethanol took more energy to create than it gave off. Now it gives off 25% more energy than was used to create it. New technology is rapidly changing the energy we are getting back from ethanol production. The newer technologies are also looking at using switch grass, waste products, and other fast growing plants to be used in future ethanol production. So although a food cost increase is here, it should not be for long.

{*25% more energy than was used to create it – this does not mean we are creating energy out of nothing. It means we are not putting in the energy in the form of farm machinery, ethanol production machinery, or electric energy to produce ethanol – }

More Information:

Rise in Ethanol Raises Concerns about Corn as a Food

Ethanol’s Corn-Feb Boom Holds Hidden Costs: Higher Food Prices

Net Energy Balance of Ethanol

MIT experts foresee sustainable ethanol production

US Food Supply

Americans Spend Less than 10% of Disposable Income on Food