Oxygen in gasoline
I enjoyed reading OGJ`s online editorial forum on oxygen in gasoline except for the fact that it was totally irrelevant to the issue at hand. In case you don`t know (although I suspect that you do, but chose to neglect it in your editorial), the point of adding oxygenates to gasoline is to reduce carbon monoxide (CO) emissions, period. As far as I can tell, only the ethanol zealots are making claims that oxygenates reduce NOx and/or hydrocarbon emissions.
I find it telling that the effect of oxygenates on carbon monoxide emissions was not mentioned once in your article. Was this because it would undermine your editorial due to oxygenates` proven capability to reduce CO emissions, particularly in older vehicles? By your logic then, if a health study concluded that exercise does not improve human intelligence, are we to stop exercising, completely ignoring the proven health benefits of exercising? Not only would it be foolish to follow such advice, it would be similarly foolish to follow the logic presented in your editorial. Make no mistake, cut oxygenates out of gasoline and CO emissions will increase.
I also don`t understand why the editorial comes down so hard on the oxygen mandate. Is it because oxygenates don`t reduce emissions of smog precursors? As I mentioned above, this point is irrelevant. Is it because ethanol would require a tax subsidy? Well, as the editorial mentions, as long as there is a choice, methyl tertiary butyl ether will be favored over ethanol. So why worry? Is it because of the underground storage tanks leaking oxygenated gasoline? Well, maybe. But you never develop this argument in your editorial. Come to think of it, your editorial makes less and less sense the more I analyze it.
So, I`m left with the question as to why you are against the mandate, because I don`t see any logical reason in your editorial. The only answer I can figure is that you are against the mandate for some unclear reason (to me, after reading the editorial) and that you are employing the same tactics as other MTBE opponents, i.e., confusing the true issue with side issues that are either irrelevant, illogical, or in some cases, downright misleading.
I look forward to future editorials on this issue from OGJ (I don`t foresee this issue going away anytime soon). However, could you please make them a little more clear?
Chris Nelli
Tomorrow`s energy strategies
The July 12 editorial opines, "The quick rebound (in crude prices) results from extraordinary cooperation among producers universally hurt by $10/bbl oil" (OGJ, July 12, 1999, p. 17). Prices rose due to the perception of cooperation among OPEC and non-OPEC producers. In reality, even if a 90% adherence to the 1999 quota reduction agreement is maintained, crude prices may see $10 again before they see $25 as they did in 1998.
OPEC and non-OPEC producers signed the predecessor agreement to the current one. An OGJ editorial on Oct. 19, 1998, noted "Adherenceellipse reached an estimated 98% last month and might top 100% this month." One consultant noted (Newsletter), "All the fundamentals are in place for a big jump in oil prices within the next six months" as a result. WTI on Oct. 20, 1998, (API figures from the Wall Street Journal) was $13.43, and $16.73 on Apr. 13, 1999. This is a rise, but with $10-12 ($11.43 on Jan. 29, 1999) crude in between, it is not a "big jump in prices." WTI is $20 as this is written, and the Oct. 19 "unprecedented quota discipline in OPEC" has slipped to 90%.
Prices tanked in 1998 and will tank again in late 1999 for the same reason: Iraq. The White House acknowledged Feb. 19, 1998, our warning that Iraq would use any boost in its U.N. oil-for-food sales quota to tank prices, to do economic damage to OPEC Iraq could never do militarily. The U.N. in March 1998 doubled Iraq`s oil-for-food sales to $2 billion/6 months. The White House acknowledged Dec. 15, 1998, our warning that, were the U.S. to attack Iraq then (it did on Dec. 16), that Iraq was suckering President Clinton into attacking so it could negotiate a total lifting of economic sanctions-or at least another increase in U.N. sales. In February 1999, the U.N. raised Iraq`s oil-for-food sales to $5.2 billion/6 months. Actual Iraqi production rose from 1.1 million b/d in February 1998 to March 1999`s 2.6 million b/d. Iraq will in 1999 use its production to punish OPEC and the oil world because it knows the tactic is successful.
That is why, even with "unprecedented quota discipline" OPEC cannot keep oil prices up. Don`t look to "ellipseOPEC and its allies in production restraint, who have assumed responsibilityellipse" (OGJ July 12, 1999, p. 17) to manage prices; until the U.N. is out of the picture (it is as easily suckered as is President Clinton), OPEC quota restraint is totally irrelevant to any level of, or swing of, crude oil prices.
Norman P. Higby
Menlo Park, Calif.
Antidumping questions
There is a great noise by API, Exxon, and foreign governments opposing the "Save Domestic Oil" antidumping case before the International Trade Commission.
George Baker`s cute comment (OGJ, July 19, 1999, p. 32) about the "Oil Economist From Hell" was entertaining, however exaggerated.
My questions are:
- Where were the noisemakers last winter when oil was $8-10?
- Did they cry out when 200,000 domestic wells were uneconomic and tens of thousands of jobs were lost?
- Which ones were concerned that the independent, family-owned, domestic producing firms were prematurely plugging one well every 30 min?
- Which were concerned that premature plugging means permanent loss of billions of barrels of American enhanced-recovery resources-a national treasure lost?
- Could the independent domestic oil producers be excused for trying to survive by any means-even by using the U.S. laws?
- Is it so wrong to let them have their day in court?
Wayne E. Swearingen
Tulsa
