Supply & Demand?

By Moe Fakih

I remember listening to talk radio in June while filling up my Honda Accord Coupe with 89 Octane at $4.68 per gallon. The oil companies were claiming that refineries have been unable to keep up with demand and that finding new sources and extracting those sources was a costly endeavor - thus $4.78 per gallon in a gas station located in Orange County, California.

People were swearing as they entered fueling stations and they were swearing more upon leaving. It may be interesting to research the statistics on road rage violence during the period where gas was over $4 per gallon.

Today, the United States is on the verge of a major economic meltdown as layoffs are gaining momentum and as the auto industry is eagerly awaiting a loan from the government so they may keep their plants open and keep more American jobs online. If the automakers go under, this will send a shock wave through the economy.

So have the oil companies finally decided to "be nice" and lower prices to help out Joe and Jane American? How can an industry complaining months ago that petrol chemical price hikes were justified since the cost of doing business was high?

It is obvious that market manipulation has been taking place and continues to take place. Today gas is around $1.85 per gallon at the same pump I used in June - that's a difference of $2.83. Has a meteorite full of crude oil landed in some remote desert? How are the oil companies determining this price point? Perhaps the answer wrests with the circle of powerful business interests and bankers that run the show.

I'm not complaining about the price reduction, I'm just asking for a logical explanation based on market dynamics that explains these price fluctuations? Does Anyone know?

Low Carb Diet

By Moe Fakih

In 2006 the California State Assembly passed Assembly Bill 32 - The California
Global Warming Solutions Act (AB 32).  AB 32 requires the California Air
Resources Board (CARB) to develop regulations and market mechanisms that
will ultimately reduce California's greenhouse gas emissions by 25 percent by
2020. Mandatory caps will begin in 2012 for significant sources and ratchet down
to meet the 2020 goals.  State law vests CARB with direct authority to regulate
pollution from motor vehicles, fuels, and consumer products.  

This means that city and county governments must create policies that measure
or quantify greenhouse gas emissions and take action to reduce those emissions.  
Some of these actions may involve creating green building programs, offering ride
sharing programs to reduce vehicle trips, or provide hybrid vehicle only parking
spaces throughout the region. 

In September 2008 The State of California passed Senate Bill 375 (SB 375),
which uses incentives and requirements to encourage local municipalities and
developers to concentrate growth within urban cores or close to public
transportation hubs in an effort to reduce Californians' use of cars, thus reducing
greenhouse gas emissions.  SB 375 makes findings that, based on Item 1 of the
Bill, “Require significant changes in land use and transportation policy in order to
meet the greenhouse gas reduction goals established by AB 32.”  

As a result local governments will be redirecting growth into urban areas which
means taller buildings with access to public transit will become en vogue.  These
same governments need to quantify how greenhouse gas emissions are reduced
either by counting vehicle trips, by calculating the amount of energy saved as a
result of energy efficient buildings, or by other means; however, cities and private
agencies are awaiting more direction from CARB as to how exactly they may reduce
these carbon footprints.  CARB has until December 31, 2009 to report to local
agencies about how to start quantifying and reducing carbon outputs.

So it seems the launch of the green revolution is being mandated by the state to
compel local governmental implementation greenhouse gas reductions.  A few cities
such as the City of Irvine and the City of Santa Monica have begun to aggressively
pursue these measures, and they may serve as test models for other cities to follow. 

Even though they may be able to reduce vehicle trips, local municipalities cannot
control what kind of vehicles people drive or vehicle technologies.  If California or
the nation wants to implement a successful green house gas reduction campaign,
it will also have to address the impact of the automobile directly. The United States
ranks last with regards to fuel economy measures with an average of 25 miles per
gallon per vehicle.  Australia and  Canada average 34 miles per gallon, Japan is at
43 miles per gallon and Europe’s fuel efficiency average is 46 miles per gallon.  

AB 32 and SB 375 will require municipalities to reduce green house gas emissions
by providing a denser mix of land uses with direct access to jobs like in the City of
Los Angeles, create improved mixed use neighborhoods like in Pasadena and
provide access to public transit like the Cities along the southern California
Metro-link transit route. However, if people are unable to link their homes to mass
transit and to jobs, they will continue to drive the most inefficient automobiles in the world. 

Perhaps similar legislation can be passed to compel the auto companies to provide
additional fuel efficient vehicle choices to help reduce green house gas emissions.  
For now it seems most of the pollution reduction pressure is being placed on cities,
counties, transportation engineers, city planners, architects and developers.  Oil
companies and the auto industry will be engaged in business as usual unless the
consumer can compel them to help change direction.  It is only practical to include
all segments of society in tackling the issue of using air as a sewer system especially
the industries that are the grossest violators.