A Primer on Gasoline Blending
An EPRINC Briefing Memorandum
Refineries produce a more expensive fuel blend during the summer to cut down on smog during hot months. Stations nationwide will start selling a less-expensive winter fuel usually by mid September, which on average means that winter gasoline is less expensive than summer gasoline.
Gasoline is composed of many different hydrocarbons. Crude oil enters a refinery, and is processed through various units before being blended into gasoline. A refinery may have a fluid catalytic cracker (FCC), an alkylate unit, and a reformer, each of which produces gasoline blending components. Alkylate gasoline, for example, is valuable because it has a very high octane, and can be used to produce high-octane (and higher value) blends. Light straight run gasoline is the least processed stream. It is cheap to produce, but it has a low octane. The person specifying the gasoline blends has to mix all of the components together to meet the product specifications.
There are two very important (although not the only) specifications that need to be met for each gasoline blend. The gasoline needs to have the proper octane, and it needs to have the proper Reid vapor pressure, or RVP. While the octane of a particular grade is constant throughout the year, the RVP spec changes as cooler weather sets in.
The RVP is the vapor pressure of the gasoline blend when the temperature is 100 degrees F. Normal atmospheric pressure varies, but is usually around 14.7 lbs per square inch Read More >>>
EPRINC Announces New Member of the Board: Dan Nelson
EPRINC PRESS RELEASE
Dan Nelson, a former elected officer of the Exxon Mobil Corporation has joined the Board of Trustees of the Energy Policy Research Foundation, Inc. (EPRINC). Mr. Nelson served in numerous positions at Exxon Mobil reflecting the full range of complexity of the petroleum industry. He brings to EPRINC unique experience in supply and trading, LNG development, production and refining, and project management throughout the Middle East. His last position at Exxon Mobil was Vice President for Government Affairs, where he was responsible for the company’s Washington-based government relations activities.
“Dan brings enormous experience and international reach to EPRINC’s programs and we are extremely fortunate that he has agreed to join EPRINC’s Board of Trustees,” said Lucian Pugliaresi, President of EPRINC.
About EPRINC
EPRINC, located in Washington, D.C., researches and publishes reports on all aspects of the petroleum industry which are made available free of charge to all interested organizations and individuals. It also provides analysis for quotation and background information to the media. EPRINC has been called on to testify at every session of Congress in the last decade and its chairman and president have served on virtually every National Petroleum Council study of oil issues.
More information about EPRINC, including access to all the Read More >>>
WSJ: The Crude-Oil Market’s Future Tense
The Wall Street Journal published an article today (on the back page of Money & Investing for those of you with a hard-copy) on how crude oil’s recent price rebound reflects expectations for future supply growth, or lack thereof. It mentions EPRINC’s March 2008 report on above ground “silent disruptions” to the world’s crude oil supply. (Link to EPRINC’s report, republished in the Oil & Gas Journal in July 2008: Silent Disruption Limiting Oil Supply) The article is in a way a brief update of that report, arguing that crude oil’s 2009 rally can be in part attributed to investor expectations of a world in which crude oil supplies will continue to be limited after an economic recovery due to above ground conflict and political limitations, and not necessarily limited crude reserves.
Read the article at wsj.com: The Crude-Oil Market’s Future Tense
Cash for Guzzlers
The House Committee on Energy and Commerce reached an initial agreement on a proposal to promote sales of new automobiles in the U.S. market. The program is designed to increase auto sales and at the same time enhance the fuel efficiency and environmental performance of the U.S. auto fleet. The program resembles an initiative undertaken by the Unocal Corporation in the early 1990s to remove older autos from the market in an effort to find a lower cost approach to meet local air pollution standards.
Whether or not this program will stimulate auto sales is debatable and not the focus of this paper. Instead, this paper examines the program’s impact on U.S. gasoline consumption and tailpipe emissions. While the program may stimulate auto sales, the benefits in reduced demand for gasoline and total loadings of emissions from the tail pipe are minimal.
The “cash for guzzlers” program provides vouchers towards the purchase of a new vehicle if a consumer trades in an older car. A consumer will qualify for a voucher if they turn in a vehicle that achieves less than 18 mpg and replace it with a new car that is at least 4 mpg more efficient. An improvement of 4 mpg yields a voucher worth $3,500 and an improvement of 10 mpg yields a voucher worth $4,500. Under the proposed program consumers may also purchase a SUV or light truck. The new light truck or SUV vehicle must be 2 mpg more efficient in order to earn a $3,500 voucher or 5 mpg more efficient to earn $4,500 voucher. The program seeks to replace one million vehicles and will remain in Read More >>>
Gazprom, Is It Time to Hit the Reset Button?
This EPRINC report, “Gazprom, Is It Time to Hit the Reset Button?,” (Download PDF) examines natural gas pricing and transportation costs in the European market. The article appears in a slightly abridged format in the March 9, 2009 edition of the Oil and Gas Journal.
Diversification away from Russian gas has been a major theme, not necessarily faithfully implemented, of European energy security policy over the last 20 years. The view that “excessive” dependence on Russian gas would place Europe in a vulnerable position has been a central theme in U.S. foreign policy which has encouraged the Europeans to seek alternatives to Russian gas, through greater production from the North Sea, imports of LNG, alternative fuels, and direct pipeline links to the gas reserves in Central Asia. The Russian-Ukrainian “gas” war that took place for 20 days in January 2009 and the disruption in December 2005 have reinforced European and American concerns regarding the reliability of Gazprom as a major gas supplier. The European Union’s foreign policy chief, Javier Solana, stated that Europe had paid a heavy price from the disruption and would review its energy relations with Russia and Ukraine as a result of the interruption in gas supplies and that efforts to further diversify energy sources would move to the top of the agenda.
It is EPRINC’s assessment that the current environment of rising transit risks for European gas Read More >>>
