Conserve More Fuel

How to Conserve More Fuel with Hybrid Cars?

By Andi Bintang

Most hybrid cars are made for fuel efficiency but you can further squeeze extra miles out of a gallon of gasoline buy adapting the same good driving habits you do in your gasoline-engine vehicles.

1. Go easy on the brakes. Your hybrid car has the regenerative braking system that recaptures the energy lost from braking and stores it back to your batteries. If you brake slowly, you give your electric motor more time to store power thus, recovering more energy back to the batteries. If you brake hard and abrupt, the regenerative braking system will not be able to recapture much of this energy and your brakes will take most of the work.
2. Drive at slow speed. When you drive at a slow speed, you are running the electric motor. This saves a lot of gas. Also high speed driving requires your engine to produce extra power to drive the car forward and push it through the air. This consumes more gas just to overcome the aerodynamic drag. (Take note: the air is much denser on snowy, rainy, and slushy conditions. This makes the engine consumes more fuel to push the vehicle through the air.)
3. Avoid quick acceleration. The electric motor can only give your car a certain amount of power. When you require more speed and step on the gas pedal, the combustion engine kicks in to provide that extra speed you need, thus consuming more fuel. Quick acceleration in gasoline- or diesel-engine car wastes a lot of energy and so with hybrid vehicles. If you need to accelerate, do it gradually if possible.
4. Check your tire pressure. Tires are made to improve safety and the quality of the ride. It is not actually made for efficiency but you can actually use the tire to significantly improve your gas mileage. Use and maintain the maximum recommended tire pressure for your car on the sidewall and not the psi supplied by the manufacturer on the doorframe. Also use low-resistance tires for better mileage.
5. Avoid rush hour. Stop-and-go traffic consumes a lot of gas.
6. Use low octane gasoline. Not only it is cheaper, vehicles are actually designed to run well on low octane gas. Check your manual.
7. Glide. If you are comfortable with driving back and forth to neutral, you can get the best out of your speed. Coasting in neutral gives you a longer cruise and better use of energy.

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Going Farther on Oil

As I was perusing my UC Davis alumni magazine last night I ran across a short article mentioning a new book from a professor, Dan Sperling, who directs Davis's well-regarded Institute of Transportation Studies. I know him slightly from his participation as in invited expert in a scenario workshop many years ago, so this caught my eye. His book, which I haven't read yet, examines the impact and implications of the rapidly growing global vehicle population, which he sees reaching the two billion mark within the next 20 years. In the article he suggested that this would require an entirely new transportation energy mix, made up of hydrogen, electricity, and advanced biofuels. That certainly fit my own long-standing expectations, as well. However, it occurred to me to wonder just how far we might be able to stretch the transportation fuels we get from oil, and just how far short they would fall as the global car-park expands. To my surprise, it doesn't require very aggressive assumptions concerning improvements in fuel economy, reductions in vehicle miles traveled, and additional oil supplies to cover the needs of a significantly larger number of cars in the world.

The starting point for such an analysis is current oil supplies and the way we process them. Global oil output in 2008 reached 86.5 million barrels per day (MBD), including crude oil, natural gas liquids, and the volumetric gain that occurs when you run them through a modern refinery. Roughly 60% of that input is currently turned into gasoline, diesel and jet fuel. Improvements in refining technology should make it possible to push that fraction to perhaps 70%, at the expense of heavy fuel oil displaced from power generation and shipping. So even if global oil output plateaued at only 90 MBD, a scenario that would probably seem optimistic to the adherents of Peak Oil and pessimistic to some industry experts, it could still yield 63 MBD of liquid transportation fuels. Set aside 7 MBD of that for jet fuel and kerosene and another 26 MBD for trucking and home heating oil, and we're left with 30 MBD of gasoline and diesel for passenger cars. That's roughly 25% more than current global consumption in light-duty vehicles, including the couple of MBD of diesel fuel that power Europe's popular diesel cars.

That doesn't seem to get us nearly far enough, until we consider that in the near future, cars will become much more efficient than they have been, particularly in the US, where an improvement from the current notional average of 25 mpg to the required 35.5 should eventually reduce average fuel consumption per mile by 30%. If the recent reversal in annual vehicle miles traveled persists after the recession ends, that would compound future fuel savings. When we consider that new cars in Europe currently average about 35 mpg and are required to reach approximately 43 mpg by 2015, based on a standard of 130 grams of CO2 emitted per kilometer, and that China has also introduced stricter fuel economy standards, it's not hard to imagine the average world car getting 40 mpg by 2020. That doesn't even require the majority of cars to be hybrids, let alone plug-in hybrids. If that average car drove 9,000 miles per year, it would consume 225 gallons of fuel annually. Following this back-of-the-envelope calculation to its conclusion, our 30 MBD of petroleum-based fuel for light-duty vehicles would be sufficient to cover Dr. Sperling's 2 billion cars with a little bit left over.

I'm not for a moment suggesting that this is the likeliest scenario, or that it means we don't need any of the advanced biofuels or electric vehicle technology currently under development. As I've pointed out frequently, fleet turnover in the developed world has slowed, thanks to the recession, and we can expect a long "tail" of older vehicles to persist for some time. However, the results of this simple exercise surprised me; I had expected the final number of cars that could be supplied by oil to be much lower. So while our transportation energy mix in the next couple of decades is still likely to include a much greater variety of fuels and an increasing penetration of electricity, we should not lose sight of the potential for realistically-achievable fuel economy improvements and non-efficiency conservation--driving personal cars less and relying more on mass transit and electronic trip substitution--to be the most important "transition fuel" in our arsenal, as we reduce our present reliance on oil, in order to tackle energy security and climate change.

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Apollo, Forty Years Later

I couldn't let the 40th anniversary of the first moon landing pass by without comment, and not just because of what that event meant to a space-obsessed 11-year-old in 1969. Aside from numerous calls for an Apollo program for energy, or the periodic allusions to energy and climate change as the equivalent of the space program for our time, Apollo's extraordinary accomplishment might still have some lessons to teach us about what it takes to achieve goals of such a magnitude--as well as the proper limits of those lessons. It's also high time to give some serious thought to the role of space exploration in our future.

Although I had originally intended to post on this subject next Monday, on the anniversary of the day that Neil Armstrong stepped onto the lunar surface, it struck me as more appropriate to commemorate the entire mission and the enormous effort that went into planning and executing it. I was pleased to find a website called "We Choose the Moon" that will retrace the events of Apollo 11 in real time, beginning exactly 40 years after the launch on July 16, 1969. NASA has put up a 360-degree interactive panorama of the lunar landing site, and the New York Times has extensive coverage. As interesting as these sites are, however, none of them can recreate the feeling of that long-ago summer, when families and neighbors gathered around their TVs--many of them new color sets bought for the occasion. That cohesion proved fleeting, and it seems almost alien today. Sadly, so does the remarkable combination of urgency and patient, meticulous planning without which the moon landing would have remained as impossible as it must have seemed a decade earlier.

When President Kennedy made his speech to Congress in 1961 setting the goal of landing on the moon within the decade, the technology to deliver that outcome did not exist. The first American manned space flight by Alan Shepard had taken place just three weeks earlier, and the first unmanned Saturn V moon rocket wouldn't be flight-tested for another six years. The financial cost of the moon landing program was so high--roughly $150 billion in today's dollars--because so much of it had to be designed and built from scratch, from the vehicles to the entire infrastructure to assemble, launch, monitor and control them.

It was also high because despite the intense pressure of needing to pull off this feat within eight years, it involved the step-by-step incremental development and demonstration of the capabilities that would ultimately be required. For example, the Gemini Program, involving 10 manned launches in 1965 and '66, was mainly intended to test techniques such as rendezvous, docking and spacewalking that were integral to executing the Apollo concept for going to the moon. Then, between the disastrous Apollo 1 launch pad fire, which forced NASA to redesign the Apollo capsule, and "The Eagle has landed", there were four other manned Apollo flights, each testing incrementally more complex elements of the lunar mission. This was the epitome of combining bold strategic planning with planning by doing; that much, at least, seems broadly relevant to our current energy situation.

The US moon landing effort of the 1960s created a vast technical and industrial pyramid. At its apex was the delivery of a cumulative total of 12 Americans to the surface of the moon and their safe return home. If Apollo 13 had not experienced its well-documented accident, and if the last four missions hadn't been cancelled and recycled into the Apollo-Soyuz demonstration of US-Soviet Detente, plus three visits to the Skylab space station, that figure might have reached 22. Yet as impressive and unprecedented as that was, and in spite of a host of valuable breakthroughs and spinoffs in electronics, medicine, and other fields, this is precisely where all of the analogies between energy and Apollo break down. Remaking our energy systems to provide the safe, secure, affordable and environmentally-sound means of energizing the entire economy--national or global, take your pick--will be nothing like making a few trips to the moon and then turning our back on it for four decades. It will require a durable bi-partisan consensus in government for at least a generation and enduring public support of a kind that NASA was ultimately unable to sustain.

At the same time, the US manned space program has reached an existential crossroads. The shuttle is on its last legs, and its planned replacement, the Orion/Ares system won't be operational until at least 2015. The International Space Station could be "de-orbited"--allowed to burn up in the atmosphere--as early as 2016 if new funding and a renewed purpose aren't found. This is the context for a blue-ribbon panel that will advise the administration on NASA's future direction. Ambitious plans for a return to the moon and an eventual manned mission to Mars look vulnerable to budget concerns.

I would be remiss if I didn't also mention the enormous potential of space to contribute to solving our energy and environmental problems. Whether in the form of space-based solar power or potential deposits of exotic nuclear fuel on the moon, the long-term solutions to the earth's environmental challenges and resource needs must eventually capitalize on the boundless energy and materials available outside our atmosphere. I'm also mindful of the profoundly-expanded perspective that space exploration has provided us. The widely-recognized "Earthrise" photo from Apollo 8's trip around the moon in late 1968 probably did more to awaken our environmental consciousness than a thousand speeches and rallies.

With the economy sunk in a deep recession and the country grappling with the seemingly intractable issues of health care, gargantuan deficits, and a looming retirement crisis, I can't imagine a better time to recall a moment when we proved that we could accomplish almost anything, if we set our minds to it. I don't know how much the media intends to play up this anniversary. NASA certainly has big plans. Although 50th anniversaries tend to make bigger splashes, the ages of the Apollo 11 crew and the surviving scientists, engineers and others who made their journey possible preclude waiting another decade to stage a proper celebration of their achievement. I'm looking forward to explaining to my daughter just how thrilling it was to watch that first fuzzy broadcast from the moon.

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Hybrid Electric

How Does Hybrid Electric Vehicle Work?

You probably own a gasoline- or diesel-engine car. You may have heard of electric vehicles too. A hybrid vehicle or hybrid electric vehicle (HEV) is a combination of both. Hybrid vehicles utilize two or more sources of energy for propulsion. In the case of HEVs, a combustion engine and an electric motor are used.

How it works depends on the type of drive train it has. A hybrid vehicle can either have a parallel or series or parallel-series drive train.

Parallel Hybrid

The parallel hybrid car has a gas tank, a combustion engine, transmission, electric motor, and batteries.

A parallel hybrid is designed to run directly from either the combustion engine or the electric motor. It can run using both the engine and the motor. As a conventional vehicle, the parallel hybrid draws its power from the combustion engine which will then drive the transmission that turns the wheels. If it is using the electric motor, the car draws its power from the batteries. The energy from the batteries will then power the electric motor that drives the transmission and turns the wheel.

Both the combustion engine and the electric motor are used at the same time during quick acceleration, on steep ascend, or when either the engine or the motor needs additional boost.

Since the engine is directly connected to the wheels in a parallel drive train, it eliminates the inefficiency of converting mechanical energy into electrical energy and back. This makes a very effective vehicle to drive on the highway.

Series Hybrid

The series hybrid car also has a gas tank, a combustion engine, transmission, electric motor, and batteries with the addition of the generator. The generator can be the electric motor or it can be another separate component.

The series configuration is the simplest among the 3. The engine is not connected to the transmission rather it is connected to the electric motor. This means that the transmission can be driven only by the electric motor which draws its energy from the battery pack, the engine or the generator.

A hybrid car with a series drive train is more suited for city driving conditions since the engine will not be subjected to the varying speed demands (stop, go, and idle) that contributes to fuel consumption.

Series-Parallel Hybrid

The series-parallel configuration solves the individual problems of the parallel and series hybrid. By combining the 2 designs, the transmission can be directly connected to the engine or can be separated for optimum fuel consumption. The Toyota Prius and the Ford Escape Hybrid use this technology.

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The Wrong Flex-Fuel

An article in today's Wall St. Journal highlighted another of the more obscure provisions of the mammoth climate bill recently passed by the House of Representatives. The section in question relates to the "Open Fuel Standard", which would authorize the Secretary of Transportation to require auto makers in the US to build a specified proportion of "fuel choice-enabling automobiles", including flexible fuel vehicles (FFVs) that can run on fuel blends containing a high percentage of methanol, as well as the more common E85 ethanol blend. This harkens back to previous efforts to launch methanol as a consumer fuel. Fortunately, those failed to gain traction, and we should hope that continues to be the case. Methanol makes a fine racing fuel but is entirely unsuited for mass market application.

I'm perplexed why one member of Congress would be quoted as saying he wouldn't have supported the Waxman-Markey bill without its methanol provision. A simpler alcohol than ethanol, methanol is produced mainly from natural gas, rather than from biomass, and it is a common industrial chemical. Because its economics depend on low-priced sources of natural gas, much of the world's methanol is produced in the Middle East, and some plants in North America have closed. It's not clear that increased US methanol demand would be met by either domestic or non-hydrocarbon sources, so its efficacy in addressing either energy security or climate change looks questionable. That's just as well, because methanol offers an inferior way to deliver energy to vehicles, even compared to ethanol, and its toxicity makes it a poor choice for a consumer fuel.

Start with the energy side of these drawbacks. Turning natural gas into methanol consumes around 1/3 of the energy content of the gas, similar to producing hydrogen from natural gas. As with H2, there's no way to recover those losses when burning methanol in an internal combustion engine, so while direct emissions might be lower, indirect emissions negate most of that benefit. We'd be much better off just putting the natural gas directly into cars. Then there's fuel economy. Even after you modify a car to run on a 50% (M50) or 85% blend (M85) of methanol and gasoline, you can't compensate for its lower energy content without precluding operation on ordinary gasoline. While a car running on E85 typically uses 40% more fuel per mile than on gasoline, you'd need 75% more M85 to go the same distance, because methanol's energy content is 25% less than ethanol's and less than half that of petroleum gasoline. So a Ford Fusion FFV that gets a combined 21 city/highway mpg on gasoline and 15 mpg on E85 would deliver a paltry 12 mpg on M85. Even with the car's generous 17.5 gallon fuel tank, its range on M85 would be barely 200 miles.

As if these practical considerations weren't a sufficient disqualification, methanol's handling risks ought to put it out of the running for our future fuel mix. The basic problem is that, unlike gasoline or ethanol, methanol is a neurotoxin. Ingesting even a small quantity can lead to blindness or death, as described in the Material Safety Data Sheet from Methanex, one the world's largest methanol producers. Its vapors aren't much safer, and it can even be absorbed though the skin. These properties create serious concerns for both bulk handling and at the point of sale. Gasoline is hardly as safe as water, but at least if you spill some on your hand, you don't need to be hospitalized. While methanol can be handled safely by trained personnel in industrial facilities and storage terminals, that doesn't extend to the gas station forecourt, where it would pose a hazard to both customers and employees.

Consumers have rejected methanol fuel before, and I am pretty confident they'll do so again, but possibly not before the government imposes another expensive mandate on an automobile industry that surely doesn't need such distractions. The inclusion of this half-baked idea in the House climate bill is a further indictment of its managers' approach of garnering votes one special interest at a time. The Senate has an opportunity to avoid this trap by stripping out all these extraneous provisions and sending a bill to the eventual House/Senate conference committee that focuses squarely on reducing emissions without making concessions to every member's pet idea.

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Biodiesel from Sugar Cane

I was intrigued by a story in yesterday's MIT Technology Today concerning a company that is applying biotechnology to convert Brazilian sugar cane to diesel, instead of ethanol. Amyris apparently intends to buy existing mills and convert them to produce hydrocarbons instead of alcohol. It has started up a demonstration-scale facility for this process near São Paolo. With so many other firms pursuing next-generation biofuels from cellulose or algae, tinkering with the most efficient current means of producing ethanol might seem an odd thing to do, but that efficiency is precisely the reason for choosing this pathway. Amyris sees an opportunity to produce a much better transportation fuel than ethanol at a cost low enough to compete with petroleum products, even if oil prices don't return to the levels we saw last year.

Energy efficiency and high energy returns on energy invested are essential to producing competitive biofuels in a way that avoids the trap the US corn ethanol industry fell into in 2008. Ethanol producers didn't benefit nearly as much from last year's high oil prices as they--and their investors--expected, because the rising cost of the large energy inputs required to make corn ethanol rose in tandem with the price of the fuels it was supposed to displace. This is an example of what some analysts call the Law of Receding Horizons. After factoring in the cost of natural gas-based nitrogen fertilizer, diesel-powered cultivation and harvesting, and gas-fueled distillation, the relatively small energy surplus created wasn't worth enough to make the operation profitable, even at the highest oil price in history.

Amyris's concept breaks out of this trap in several ways. First, by starting with sugar cane in the tropics, it avoids the large energy inputs associated with crop fertilizer. The article points out two other key benefits: Brazilian sugar/ethanol mills are net energy producers, not consumers, by virtue of capitalizing on the energy content of the waste left over from the grinding and fermentation process. In addition, while the ethanol produced by traditional fermentation is water soluble, requiring a lot of energy to separate the two, the molecules produced by the company's tailored microbes are not; the diesel precursors separate from water at little additional energy penalty.

The advantages of this approach continue after production, because of the properties of the fuel. Although it is possible to build engines that capitalize on ethanol's high octane and other properties to deliver fuel economy that nearly matches gasoline, the vast majority of the ethanol produced today will be burned either as a 10% blend in conventional cars or as a higher mix in flexible-fuel vehicles that must still be able to operate reliably on gasoline. That precludes the modifications that would compensate for ethanol's 33% lower energy content, compared to petroleum gasoline. Producing biodiesel instead of ethanol puts the fuel into engines that can take full advantage of its environmental properties, while yielding a roughly 30% fuel efficiency gain versus gasoline--and thus roughly twice the fuel economy of ethanol. Amyris claims that its biodiesel would be fully compatible with petroleum diesel, creating a significant advantage over biodiesel produced from soybeans, canola (rapeseed), and other vegetable oils. These so-called FAME biodiesels can normally only be used in blends of less than 5-10% in petro-diesel, to protect the sensitive fuel injection mechanisms of modern diesel engines.

There's no free lunch, of course. Part of diesel's advantage comes from its higher energy content, compared to either gasoline or ethanol, and the energy in the quantity of cane that would produce 100 gallons of ethanol could only yield around 60 gallons of diesel. However, when you burn these fuels in real cars--such as the VW Jetta that is available in both gasoline and diesel versions--the ethanol would take you around 1,650 miles, while the smaller quantity of diesel would be good for nearly 2,000 miles. That 20% improvement results from the higher efficiency of compression ignition engines over spark ignition.

This idea looks clever for another reason. Brazil has become a large exporter of ethanol, but the world's biggest ethanol market is protected by an import tariff designed mainly to recover the $0.45/gal. US ethanol blenders' credit. Meanwhile, the EU, which uses little ethanol, but where half of all new cars run on diesel, has just imposed an anti-dumping tariff on biodiesel imported from the US. That creates an opening for Brazilian biodiesel produced from this process to compete into a market that can't get enough diesel fuel. All that remains is for Amyris to demonstrate that the additional capital and operating costs associated with converting ethanol mills to produce diesel are small enough to preserve the big advantage they start with by choosing the world's most efficient biofuel source.

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Speculation Witch Hunt?

This morning's financial press was riveted by the prospect of the Commodity Futures Trading Commission (CFTC) imposing tough new regulations on energy markets. Speculation has been widely blamed for the run-up in oil prices since early spring--as well as for last year's roller-coaster up to $145 per barrel and then down to $34--though in a subtle but important shift the focus seems to be turning to volatility, which is a very different thing than absolute price levels. I don't need to add my voice to the many already warning that limits on speculative positions could hamper the proper functioning of the market by drying up liquidity and depriving "legitimate" participants of the access to hedging they need. Instead, I believe the CFTC and its supporters in Congress and the administration are barking up the wrong tree, altogether, based on a fundamental misunderstanding of the markets.

Let's begin by stipulating that speculation probably has a finite but impossible-to-quantify impact on oil prices. I pointed out this likelihood in mid-2007, when oil prices were at roughly their current level and before they began their wild ride. I've also described the difficulties involved in discerning precisely which trades are speculative and which aren't, based on my own experience trading oil commodities, futures and derivatives over a 10-year span earlier in my career. However, the current determination to clamp down on speculation appears to be based on two hypotheses that are not only unprovable in the real world, but probably entirely false: First, that in the absence of speculation, oil prices would not have spiked to nearly the degree they did last year and would be much lower today than they are, and second, that a market without speculators--or indeed without any futures trading at all--would be inherently less volatile than one in which those factors are present.

The latter proposition is easier to refute, because we've seen ample volatility in markets for which no futures contracts or easily-traded derivatives exist. I experienced this first-hand in the west cost spot gasoline market in the 1980s, a market consisting entirely of the trading representatives of local refiners and a small number of trading companies, some with storage tanks but many with no fixed assets other than a phone and a desk. Every time a refinery experienced a major operational upset, the market would spike by as much as a dime a gallon--a significant fraction of the value of a commodity that was trading well under a buck at the time. I recall one instance when the coking unit of my employer's L.A. refinery had a major fire and was out of commission for several months. Local supplies weren't adequate to cover the shortfall, and the gap had to be filled through imports. I started buying gasoline cargoes at around $0.60/gal., and by the time I had lined up all the supply we needed the price had hit $1.00/gal. before it fell back to more normal levels. That's volatility, and it is a feature of markets in tight balance between supply and demand, whether or not speculators play a role.

The question of where oil prices would have ended up last year absent speculation seems much more complex, until you consider that between 2002 and 2007 global oil demand had been growing steadily at an average rate of more than 1.5 million barrels per day (MBD) per year, outpacing the growth of global supply, and crucially of non-OPEC supply. The latter was essentially flat from 2004-7, when the price of oil roughly tripled from the low-$30s to the low $90s. In effect, the demand curve was marching to the right against a supply curve with a sharply steepening slope, as spare capacity was used up and the long inherent time lags for new oil projects constrained the amount of new production that could be brought on quickly. That path was then quickly reversed in mid-2008, once it became clear just how rapidly demand was falling, both in direct response to the high price of petroleum products--the full manifestation of which in many markets was delayed by government price controls--and by contraction of the global economy due to what we now know was the onset of a recession on a scale not seen in decades. Between February and September of last year, demand in the developed world fell by an astonishing 3.5 MBD. We'll never know whether prices would have fallen sooner if speculation hadn't maintained its momentum during the first half of 2008, but it's borderline delusional to imagine we wouldn't have spiked above $100/bbl without it.

The Wall St. Journal's "Heard on the Street" column on this topic begins with the sage observation that blame is a commodity in infinite supply. To that I would add that we rarely like to apportion that blame on ourselves, though in this case the government would do well to consider how its own actions exacerbated last year's oil price spike and the run-up in prices we've seen this year. The oil markets are mainly driven by supply and demand, and with OPEC maintaining remarkable discipline and cohesion in the face of last year's demand collapse, the supply component that has the most influence in holding down oil prices is non-OPEC production. What has our government done to promote that production? Have we seen our elected officials traveling the world and using their influence and the still-considerable diplomatic and economic leverage of the US to urge producing countries to increase access for foreign firms and investors to new oil exploration and production opportunities, on attractive terms, as the Chinese government has? Have they fast-tracked development in the most promising regions of our own country that were off-limits for drilling, including the eastern Gulf of Mexico, where reserves have already been discovered?

Such actions didn't even occur under an administration that was widely viewed as being in the pocket of the oil industry, and they certainly aren't happening now, for reasons I could devote many more paragraphs to dissecting. "Drill, baby, drill" has given way to tax, baby, tax--and I'm not referring to the climate bill, here, but to earlier talk of a windfall profits tax to fund tax relief for the middle class, which has morphed into an effort to close perceived tax loopholes such as the intangible drilling allowance for producers and the manufacturing tax deduction for refiners. None of this is going to add a barrel of real oil to our supply, and it seems likely to eliminate more than a few, while we pin our hopes on corn ethanol that still only supplies 2% of our total liquid fuels demand, after adjusting for its lower energy content. How much of the market's volatility ultimately derives from our own deeply conflicted attitudes towards oil?

Oil prices have fallen by $10/bbl. or around 14% since June 29. This coincides with a general recognition that the economy hasn't yet turned the corner to a real recovery; we've also seen the S&P 500 drop by about 7% since mid-June. Now, you might suggest that this proves that speculators had driven up prices unrealistically, but it makes at least as much sense to suggest that the producers and consumers of physical oil and its products have altered their buying and inventory decisions in light of new information about the likely state of the economy for the rest of the year. No one can win that argument, but we can all lose if regulators impose tough new controls on energy markets based on a misunderstanding of what has occurred. To that end, while I am deeply skeptical of the idea of anyone at the CFTC passing judgment on what is and what is not a proper hedge, I wholeheartedly support Chairman Gensler's call for greater transparency of market reporting, and for a healthy dialog between the industry and its regulators aimed at reining in those practices most likely to add speculative froth to the market without contributing meaningfully to the liquidity required by all participants. Let's get the additional insights that transparency will bring us, before we decide to blunt the tools that actually provide one of the few means by which firms can mitigate the effect of underlying physical market volatility on their activities.

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