It isn't always a perfect match in a given area every week. Notice that Ohio's prices fell faster than the national average. Also, neither climbed as fast as oil so it won't fall as fast either.
Posted on 08/14/2008 9:32:40 PM PDT by bruinbirdman
Opec last month pushed its production to the highest level in its 48-year history even as demand was slipping in the US and Europe, the International Energy Agency (IEA) said on Tuesday.
The combination of surplus supply and weaker demand has pushed oil prices to $113.50 a barrel, down 24 per cent in the past month and the lowest level since late April.
The effort was led by Saudi Arabia, which had come under increasing pressure for doing too little to compensate for lower supplies from countries outside Opec, where growth has been lacklustre as fields have aged in countries such as the UK and Mexico.
In mid-June, as oil inventories were running low, King Abdullah called a high-level international meeting in Jeddah and pledged to help reduce record prices by increasing Saudi production from 9.4m barrels a day to 9.7m b/d, the highest level in 30 years.
The market brushed aside the pledge, sceptical of whether the kingdom would make good on its promise and instead worried about supply outages in Nigeria. The oil price steadily climbed from just below $140 a barrel on the day of the meeting to $147.27 in July.
Tuesday’s preliminary data of Saudi shipments proved sceptics were both right and wrong. According to the IEA, Saudi Arabia did increase its production but not to the degree promised. In July, despite Saudi officials worrying about the impact the slowing economy and high petrol prices were already having on US driving habits, Saudi Arabia increased its output to 9.55m b/d, up 100,000, Tuesday’s report said.
The Saudi increase, which could still prove to have been more generous as new shipping data are collected, coupled with higher volumes from Iran, helped push the 13-member group’s total output to 32.8m barrels a day and the oil price to $114 a barrel.
Opec’s output in July was about 1m b/d higher than in April and significantly higher than the 31.1m b/d in the same month of last year.
Whether Saudi Arabia and Opec will continue to work to reduce prices, or revert to keeping supplies off the market now that prices have fallen, will become clearer at the cartel’s next meeting on September 9 in Vienna.
Opec’s production increase was not the only reason oil prices fell; demand curtailed by economic slowdown and high oil prices had also played a critical role, the IEA said.
The IEA cut its global oil demand growth to 790,000 barrels a day, down from July’s estimate of 890,000 b/d. Some of the demand in rich countries will be lost for ever, it noted, saying: “Even if retail prices ease, it seems unlikely that motorists who have purchased smaller cars will revert to gas-guzzling vehicles.”
But demand growth in emerging countries remained strong, with Chinese consumption rising above 8m b/d for the first time in June, hitting 8.3m b/d.
The market is split about the direction of crude oil prices, but the previous general bullish sentiment is cracking.
The IEA called it “too early to cite definitively a sea change in the market”.
Petro-ping.
The US as a whole could produce more oil than OPEC if Congress would let the companies do so.
They can read the writing on the wall. Once we start drilling on American soil, they have lost us as their biggest customer. Greed is a terrible thing. It has a way of coming back and biting you in the a**! Thank God they did get greedy. Had they not done it, we would have kept on going just like we have been because of the wacky liberal environ_mental_ists. Thanks, OPEC! You actually did us a favor! :o)
OPEC Hates the Ruskies and will increase out if the Bear is on the Move.
So...who is addicted to oil?
This is why we can’t kick the foreign oil habit. OPEC plays us like a fine tuned Stradivarius. When oil prices soar, they make a killing. But they can’t afford to leave them there too long or we will develop domestic sources such as shale and develop alternative energy sources. So oil prices are like a yo-yo, going up long enough to make a windfall profit, and coming down soon enough that energy companies fear developing new domestic sources that have no business case with oil under $60/bbl.
We need the government to put a floor on the price of oil. Put a floor at $60 and encourage US energy companies to produce whatever is viable selling at a fixed minimum prices of $60/bbl. Pending that, we will be dependent for a large share of our oil from OPEC, and they will continue to play us for the fools we are like a fine tuned instrument.
This isn’t rocket science.
Then again, oil is going back to $50 eventually and so long as we don’t mind funding middle east terrorists, I am sure the US people will be A-OK with a return to $2.45/gallon gas. As far as I’m concerned, that’s OK with me, just so long as energy stays relatively cheap.
But when oil comes back to $50/gallon, watch how fast everybody jumps off the alternative energy bandwagon and conveniently forgets all about our “dependence” on foreign oil. SUVs will be selling in short order.
Still, now might be a REALLY good time to start building some refineries that can refine high-sulfer crude. Domestic oil or not, we are going to need those.
Proof too fast... Meant $50/bbl, obviously.
Of course...
If America drills...the party is over...
That’s why production is up. These people are terrified of the Drill now movement. If they produce now and the prices at the pump fall below say $3.50 they hope energy will be off the table in the fall and the haloed one can win. Once the Dems are secure and the no drilling crowd is back in charge then OPEC cuts production and up go the prices the way the haloed one’s interview told us he wanted it.
Good point.
Talking about the off possibility of extracting our own oil has OPEC producing like never before - yet we are told to believe that drilling here and now won’t accomplish anything.
Thanks
That should have been
OPEC (Saudi Arabia) Hates the Ruskies and will increase output if the Bear is on the Move.
They want to kill off political support for American domestic exploration. These are enormous investments - with a slim profit margin, uncertainty in the underlying market price will shift investment to other (more profitable, or less risky) areas. OPEC will do everything it can to control the global oil supply, including these sorts of transparent supply manipulations. Every other source that joins the market is a threat to the Oil Weapon. The more diverse the supply, the better off we all are (save for OPEC).
The interesting thing I’ve seen here in Ohio is that as the price per barrel has continued to drop, the actual price at the pump has crept back up about 8 cents a gallon. Might be strictly anecdotal, but I get the feeling the retailers don’t want us to get back under $3.50 a gallon.
The Saudis upped their production, but of what? Probably heavy, high sulfur stuff that no one wants. It’ll sit there in tankers unsold.
Yes, we need production here and in friendly environs, but we could also use some refineries that can make stinky goop into something useful. There’s a lot of it around, and we might be able to get it cheap sooner than we’ll get any of our stuff out of the ground.
Gasoline prices are still too high.
“They want to kill off political support for American domestic exploration.”
Before the election.
The retailers have no choice but to follow the true market prices. Gas will go down. It just always goes down WAY slower than it goes up. They are all reluctant to lower prices and only do so kicking and screaming. But then somebody else in the food chain realizes that if they undercut their competitors a bit, they will steal business and increase profits. They only get away with this for a brief while, because competitors soon know they are undercut and respond in kind.
Eventually, gas finds its market price. It will go back down.
Domestic utilities have enough trouble charging rates that guarantee investors a reasonable return on equity. This means they have trouble maintaining infrastructure.
In the 70s utility companies were trying to diversify into businesses they knew nothing about in an attempt to boost returns/dividends.
States were telling utilities they had monopolies and shouldn't be able to pay dividends that competed with non-utility companies.
Utilities said, "OK we quit the monopoly part. Let anyone who produces electricity bring it in on our lines (just pay us for what we have) and sell it for what they want. We will just be responsible for infrastructure maintenance and growth and billing.
That's what led to Enron.
yitbos
Saudi Aramco ships more oil than any other company or country, 10% of the world's oil. Half of it's oil goes to the Far East.
Not only are they the biggest player in OPEC but they dominate the refining of oil and manipulate the price. Here's how the hustle works:
Saudi Aramco has an excess refining capability of 2 million barrels a day, that they don't use. The world's largest refineries (Khursaniyah and Shaybah) largely sit idle. They can come completely on-line in little over a month.
No company dares spend billions/years on a new refinery, when the Saudis can threaten to go on-line with 20% more refining and undercut the cost of processing at will and bankrupt anyone that tries to compete.
The Saudis control and monopolize refining. That's why Iran, is now building their FIRST refinery.
Example:
In 1990, Iraq invaded Kuwait, 3 million barrels/day went out of production, oil prices doubled to $40/barrel. Within 4 months Saudi Aramco increased production 60%, made up 75% of the lost production and in one year the price went back down to $20/barrel.
Who can compete with that? No one, and no one ever will. The Saudis can trump anyone and send the price anywhere.
So now the Saudis increase production only .3 million barrels/day and the spot price drops 24% in one month. They have 6 times that capacity UNUSED.
The Saudis are solely responsible for the price of oil.
BTW, the Saudis are discovering more oil each year than they pump. They ain't goin' away.
We can thank our own NY Mercantile Exchange for putting oil on their commodities market in 1983, creating oil futures. In 1986 the Saudis linked their oil price to the spot market.
Every time there's a hiccup in the middle east, a highly volatile futures market (that we created) panics, price skyrockets, and the Saudis never let it go down. Except when we come a beggin' for political cover.
Foreign oil must end if we want our freedom and stability.
In 1970, when the Saudis wanted to buy out 25% of Aramco, they doubled production in three years and did it.
The NEXT year they increased their share to 60%. In five more years, 1980, they owned 100%.
Five years later, 1985, they CUT production 70% to puff up the price.
Our robber barons were rank amateurs in comparison.
Riveting lesson. Thank you.
We could see oil back below 50, where a lot of alternative oil production would still be profitable.
In order for OPEC to crush solar, wind, oil sands, deep ocean and conservation, oil would have to go to below 30.
I’m taking credit for all this.
Going back to my 36 mpg Saturn has crushed oil demand.
It isn't always a perfect match in a given area every week. Notice that Ohio's prices fell faster than the national average. Also, neither climbed as fast as oil so it won't fall as fast either.
Iran already has nine refineries in Tehran , Tabriz , Isfahan , Abadan , Kermanshah , Shiraz , Bandar Abbas , Arak and Lavan Island. They just don't meet the countries demand.
Then why are billions of dollars currently being spent on refinery expansion projects?
http://www.ogj.com/category/online_subcategory.cfm?p=7&cat=Prong&maxrows=38
There is also the 'Cheating' factor. The higher the per barrel price the more likely individual OPEC members are to overpump their quota. When the cheating becomes widespread...
Do the people of Alaska realize they are sitting on a TRILLION DOLLARS worth of oil? Why aren’t they making any noise?
Thank you. Please do not, under any circumstances, BUY A HUMMER! lol.
Iran does have refineries, but none are primarily for the production of gasoline.
Abadan, in 2012 will be their first. Iran mainly does heavy crude processing. They import most of their gasoline as they couldn't justify building their own refineries for what they could buy gas from the Saudis, that was my point.
However, now, the world demand for gas has increased to the point that Iran can't out bid the rest of the world and imports of gas are limited, they are rationing and they are the second largest oil producers in the world.
All because the Saudis are the masters of refining.
The Saudis have screwed up by letting the spot price of oil get so high that others can now justify alternative fuels and new refineries.
The Saudis, in pumping oil, produce a lot of natural gas. So do a lot of countries, like Canada. So the Saudis are not competitive in that market.
What to do with that gas that the Saudis don't want to sell?
THEY USED TO BURN IT.
The equivalent of 1.3 million barrels a day.
The entire US uses 10 million barrels a day: They used to BURN OFF 13% of what our national oil imports are.
Then the Saudis realized they needed fuel themselves for electricity and harnessed the natural gas. So they wouldn't be themselves so dependent on oil and could hold more oil refinery capacity in reserve, a bigger hammer.
The Saudis know that when gas gets to $4/gallon, ethanol is competitive and corn farmers will go to the bank instead of them.
That is why the Saudis are manipulating the price of oil/gasoline. To make it hover at the profitability of our "moonshine gas".
That way the Saudis maximize income and the profitability of ethanol is iffy and we will spend years hesitating.
That is why we need to set a MINIMUM price of oil. That way, our domestic oil refiners and pumpers will have the confidence to build refineries and our corn farmers can offer a competitive alternative. And all of us will have the political will to develop alternative solar, wind, and nuclear power.
It is a rigged game if you play with the Saudis. We can only break their monopoly by rigging it even further.
Refining is the answer, at least temporarily, to stop the Saudi strangle-hold.
The refineries need to be built near where the oil is drilled, that is the problem with ANWAR, it's oil will be much less competitive as crude is expensive to ship.
Off shore oil is, BY FAR, the most competitive oil we can find, and where we should put our political energy.
Again, we need minimum price support to encourage competition. Then lay an energy tax on that domestic oil and give the money to alternative energy development.
No, refineries produce multiple products. They need to be more centered where the products are consumed, either industrial facilities or distribution networks.
it's oil will be much less competitive as crude is expensive to ship
Why do you think it is cheaper to separately ship: gasoline, Aviation Gasoline, diesel, kerosene, Jet Fuel, residual fuel oil, Ethane, Ethylene, Propane, Propylene, Butane, Butylene, Isobutane, Isobutylene, Lubricants, Waxes, Petroleum Coke, Asphalt and Road Oil as compared to Crude Oil? Modern refineries produce all of these and also need inputs of methane, natural gas liquids, hydrogen and others.
Heavy crude processing refineries are needed near the sources to do a rough breakdown so that sweet crude and heavy crude are separated. The problem is cheaply separating out the sulphur in pumped crude.
Each type has a different consumer/usage and value, and needs to go to different locations more efficiently. Road and roof tar have a different distribution system than gasoline and vehicle oils.
If we had offshore oil, fed by pipeline, to on-shore heavy crude refinery processing, then to multi-fuel refineries as you named, all distributed by our domestic oil companies, we would have the most competitive system.
That would keep our wealth here, that could be taxed for alternative fuel development.
If we could solve the sulphur problem, our coal, oil-shale, and tar-sand would make us completely energy independent in a few years at best.
Are you confusing an upgrader plant like what is used in conjunction with oil sands development with a refinery?
There is no reason to separate sulfur from crude away from the market for sulfur. It only makes another product to handle and transport to the same industrial market.
Heavy/light is a completely different topic than sweet/sour. There are plenty of light, sour crudes and there are heavy sweet crudes.
Heavy crudes are not separated to make make light crudes. Initial distillation of any crude produces multiple products.
Heavy versus light only produces the same products in different ratios. Heavier products get more processing to more closely match product demand.
In addition, there are other pre-distillation process that go on like a de-salter. There is little advantage to adding additional upstream processing beside oil/natural gas/water separation.
Each type has a different consumer/usage and value, and needs to go to different locations more efficiently. Road and roof tar have a different distribution system than gasoline and vehicle oils.
Those distribution networks and industrial customers are already in place around our existing refineries. Why would we want to move processing away from them.
That would keep our wealth here, that could be taxed for alternative fuel development.
What? Moving refining capabilities from the West Coast to Alaska doesn't make any domestic change. And since most of our oil is imported, what you suggest would move more jobs overseas instead of keeping them domestic. Most of our imports are heavy crude and we have no problem continuing to build and operate hydrotreaters for sulfur removal.
If I may, I would like to recommend this information source for you and any others interested in learning move about the petroleum industry.
Oil Market Basics
http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/intro.htm#Welcome%20to:
A primer on oil markets combined with hotlinks to oil price and volume data available on the Internet
In its six chapters’ text, it provides an overview of oil markets and how they function. In its graphs, it pictures the trends and patterns discussed. In its more than 400 links, it provides a road map to EIA data and other information on oil markets available on the Web. By design, Oil Market Basics does not provide the most current data, but links to the data.
Table of Contents
Introduction
- HOW TO USE OIL MARKET BASICS
- CHART: U.S. Oil Flow from Source to End-Use, 2004
Supply
- WHAT OIL IS AND WHERE IT COMES FROM
- DRILLING FOR OIL
- HOW OIL IS PRODUCED
- THE IMPACT OF UPSTREAM TECHNOLOGY
- GLOBAL OIL SUPPLY BY REGION
- U.S. OIL PRODUCTION
- ADDITIONAL SUPPLY DETAIL Schematic of a Petroleum Trap
Upstream Technology
- Reserves and Resources
- Federal Offshore
SUPPLY GRAPHS AND CHARTS
- Schematic of a Petroleum Trap
- World Oil Reserves by Region, January 1, 2005
- Cost of Crude Oil to U.S. Refiners, 1973-2004
- World Oil Production by Region, 1980-2003
- U.S. Oil Production by Region, 2004
GUIDE AND LINKS TO SUPPLY DATA AND SOURCES
Demand
- GLOBAL OIL CONSUMPTION
- U.S. CONSUMPTION BY SECTOR
- U.S. CONSUMPTION BY PRODUCT
- U.S. CONSUMPTION BY REGION
- MEASURING OIL CONSUMPTION
- DEMAND GRAPHS AND CHARTS World Oil Demand by Region, 1980-2003
- World Oil Demand per Capita by Region, 2003
- U.S. Oil Demand by End-Use Sector, 1950-2004
- U.S. Oil Demand by Petroleum Product, 2004
- U.S. Petroleum Product Demand by Month, 1998-2002
- U.S. Oil Demand by Region, 2002
LINKS TO DEMAND DATA AND SOURCES
Trade
- REGIONAL IMPORTERS AND EXPORTERS
- GLOBAL PATTERNS OF OIL TRADE
- IMPORT DEPENDENCY
- U.S. TRADE FLOWS
- TRADE GRAPHS AND CHARTS U.S. Oil Imports by Area of Origin, 1973-2004
- U.S. Imports of Crude Oil and Petroleum Products, 1973-2005
- U.S. Oil Imports by Region, 2004
- Movements of Petroleum Products between U.S. Regions, 2004
LINKS TO TRADE DATA AND SOURCES
Refining
- SIMPLE DISTILLATION
- DOWNSTREAM PROCESSING
- CRUDE OIL QUALITY
- OTHER REFINERY INPUTS
- U.S. REFINING CAPACITY
- WORLD REFINING CAPACITY
- REFINING GRAPHS AND CHARTS Typical Product Yield from Simple Distillation
- Average U.S. Refinery Yield, 2004
- World Refining Capacity by Region, 2003
- World Petroleum Product Output by Region, 2003
- U.S. Refining Capacity by Region, 2004
- U.S. Refining Capacity, Crude Runs, and Utilization Rate, 1973-2004
- Profit Rates by Oil Industry Segment, 1977-2003
LINKS TO REFINING DATA AND SOURCES
Stocks
- WHY STOCKS ARE IMPORTANT
- STOCKS ARE SEASONAL
- STRATEGIC STOCKS
- COSTS AND PROFITS
- STOCKS GRAPH U.S. Oil Inventories by Region, December 31, 2004
LINKS TO STOCKS DATA AND SOURCES
Prices
- OVERVIEW: COSTS PLUS MARKET CONDITIONS
- GASOLINE PRICES: AN EXAMPLE
- LINKS TO PRICE DATA
- ADDITIONAL PRICE DETAIL Types of Oil Transactions
- Taxes
- Gasoline Classes of Trade
GUIDE AND LINKS TO PRICE DATA AND SOURCES
Graphs and Charts
Links to EIA Data and Other Web Resources
Quick link to Current Data
Need Help?
Appendices:
A - MAP OF PETROLEUM ADMINISTRATION FOR DEFENSE DISTRICTS
B - LINKS TO ENVIRONMENTAL SOURCES
We have the worlds largest deposit of the cleanest coal in the world. But Clinton and the Democrats signed the land into federal parklands. The other deposit is owned by the Ryadi, big Clinton donor, and from.....Indonesia
My discussion is more basic, we need independent domestic oil production that is fully linked to its own refineries.
When we buy refined and cracked end products from foreign sources we are dependent on their crude and their distilled products and their pricing.
We need to be self contained and have a national energy policy that does so.
You and I can tear this down to a technical discussion/solution with all the facts at hand that devolves into tactics.
America's problem is new strategic analysis that creates a political solution and the willpower to act.
BTW I was in the Anadarko basin in 1982, with Du Pont, and the sweet crude, although limited, was so much easier and less corrosive to pump and pipe. Sulphur is a big problem and the industrial demand is way less than what is produced by sour crude.
Separating out sulphur cheaply is the key to profitable hydrocarbon (of any kind) production.
The lefty environmentalist say that the wings of a single butterfly can cause an ecosystem to collapse. That is why a rat, cockroach...is so important. But, the leftys say the crushing taxes of their schemes have no effect on an economy.
We could triple the amount of domestic oil production before reaching the current capacity of our refineries. We would just replace the imported oil with oil from our own domestic sources.
I don't believe we need to replace it all. But I believe we should at least double our production, that would be enough to replace the oil we get from OPEC, where most of our imported oil comes from.
When we buy refined and cracked end products from foreign sources we are dependent on their crude and their distilled products and their pricing.
Yes, but we only import 1.1 MMBPD of motor gasoline and associated components.
We only import 0.3 MMBPD of distillates like diesel and fuel oil.
We do import 10 MMBPD of crude oil. This is to me is the biggest problem we need to address first.
Petroleum Imports by Area of Entry
http://tonto.eia.doe.gov/dnav/pet/pet_move_imp_dc_NUS-Z00_mbblpd_a.htm
When I was in Anadarko they were capping many wells as soon as they were established because of fear of a glut and no pipelines to refineries, trucking was too expensive, refineries were way off in Borger, TX. Many are still capped.
No, I'm not in favor of such "absolute" type legislation as a ban. I would prefer tariffs on imports, perhaps based upon a gradual increasing amount to discourage it but not leave us in a bind during an upset condition.
That is exactly what I am saying. We need a floor on US oil prices so as to protect businesses who chose to exploit coal liquification and extraction of shale oil, as well as myriad alternatives technologies.
I completely agree with you!!! But our sell-out governments will do whatever their slave masters corporate America tell them to do. And that will be whatever brings them the most profit, even if that comes on the backs of the middle class in the forms of declining incomes reduced quality of life.
I am very pessimistic about this nation getting serious abut exploiting new energy resources. It won’t happen. The powers that be are getting rich off the existing system. The system won’t change until the current robber barrons finds more profit in something else rather than what is enriching them today.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.