I'M NEW!

10/23/04 | Roper2

[Roper2]

I'm new to FR and from what I've been reading so far, there are quite a few resourceful individuals that spend a lot of time here and seem to be pretty well informed. I'm from Iowa (hick from the sticks, yes) and my business is centered entirely around agriculture. My big question is, can anyone give me a legitimate reason why the diesel prices have shot through the roof over the past month? It's a bi-product of gasoline, therefore should be cheaper than gas, right? Nobody has been able to give me any reasons and ladies and gentlemen this is not going to be hurting just me in the months ahead, guess where all your food comes from? Can someone help me out here? We're now at $2.25 a gallon. By the way, sorry for Iowa's choice in 2000, I think the majority is now seeing the light.

[KriegerGeist]

The left has fought the building of new refineries, so maybe the ones that exist are working so much on refining oil that diesel is less available than usual. Just a total guess.

Yes, what Blogger said. To add to that is not only no new refineries, but the left and the enviro-wackos have caused the shut down of many existing refineries. The liberal-left-Daschles in the Senate blocked the President's energy policy that would have provided a wide-range of exploration, drilling [natural gas and oil] in ANWAR and other states, new refineries, refining (or converting) coal to fuel, oil shale to oil/fuel, bio-diesel from corn and other "renewables", and the list goes on.

Another problem is Mexico and South America having various problems getting the oil out...labor unrest et. al. then, there was the hurricanes that cut production from the Gulf of Mexico. Add to that the increase (explosion actually) in China's oil usage and needs for industry and the domestic side like cars and trucks for people who never had them.

Bottom line: we, the U.S.A. have a steady increase in consumption and a steady reduction (thanks to the liberals) in production and refining capacity. It has been said by even the conservative experts that the situation is not going to get better any time soon. Even with an energy bill passed and the work begins next year, it will take years to recover what the liberals and enviro-wackos with their restrictions and regulations have crippled us. Plus, the fact is that reserves are running out and alternatives like hydrogen power and others have to be developed soon for home, industry and transportation.

I'm no expert, but that is my take on the situation from all the articles and news and columns from here and other conservative web sources like National Review Online, TownHall.com and on and on.

[LOC1]

Refining crude oil is a little like butchering a cow. You cut the cow into sirloin steak, round steak, rump roast, etc. What is left over is made into hamburger. So what is the cost of making the sirloin steak? You know the cost of the cow and the cost to cut it up. Beyond that, assigning cost to any one cut of meat is purely arbitrary. But you also know that the butcher has to sell the sirloin steak, the round steak and all of the other cuts for enough money to cover his cost of the cow and his labor for cutting it up.

Same thing for petroleum products. Diesel is no more a "by-product" of gasoline than a round steak is a by-product of a sirloin steak.

The refiner does not know any more about the cost of any one of his products than the butcher knows about the cost of each of his products. The refiner does know that he has to sell all of the products for more than the cost to buy the crude oil and the cost to process it in the now more expensive facilities required to meet the current environmental laws.

Basically the refiner does the same thing the butcher does. He charges what competition allows him to charge.

This time of year, diesel and heating oil become the prime products as we enter the winter heating season. Except for the sulfur specification, both diesel and heating oil are the same product. When demand increases for one of them, in this case heating oil, it increases the price for both of them.

On top of that general pattern, there is an additional factor affecting diesel prices this year. Beginning in January, 2005, diesel used for transportation on the highway must contain no more than 15 parts per million of sulfur. That is down from the current specification of 500 parts per million. To reach that new lower specification, which was instituted during the Clinton administration, requires new and expensive desulfruization equipment. Many refiners have installed that equipment, but others decided not to participate in that market because of the investment required to remain in it. The net result is reduced supply in the face of increased demand. That makes the price go up as the lengthy supply network requires that the ultra low sulfur diesel be entering the system now to be in place for January of next year.

If you want to find out more about diesel prices start at the following web page and then search the entire site:

http://tonto.eia.doe.gov/oog/info/wohdp/diesel.asp

On the other hand, if you are merely trying to disrupt Free Republic....nevermind.

[M Kehoe]

Welcome to FR. The "Post Reply" button is at the bottom left corner of each post.

5.56mm

[Roper2]

Sorry, don't have any LB's and don't want any. What's your thoughts on bio-diesel? That would go a long ways to ending payments on BMW's in the middle east.

[M Kehoe]

I would have never thought of Teddy as an energy source.

You learn something new every day at FR.

5.56mm

[Roper2]

Thank you.

[Roper2]

Thanks for the info. Just don't like to tv anymore and I like what you all are saying and talking about and agreeing with it.

[Cold Heat]

The product is not a by product of gas, but is gas before it gets further refined.

Our inadequate refiners have switched to home heating oil and there is likely a bit of a supply crunch as usual this time of year.

I have not checked diesel prices here, but they have held their price for quite a while while gas was going up.

I would prepare for higher fuel prices for the foreseeable future and hope it goes down. But, I do not think the international problems in places like Venezuela will allow for much lowering this winter.

If things cool off, it should be back to normal by mid year 05. If things cool off internationally. Right now, every country with storage is packing in as much as they can get and supplies are too tight.

[ItsOurTimeNow]

Can someone tell me when, exactly, FR news forum turned into a chat room?

[DocRock]

"Open it up. If you want to see the wildlife, go to a zoo or watch National Geographic. It's the largest state in the U.S. with least amount of population. I say go for it."

Actually, the temperature of the oil in the Alaskan pipeline has resulted in the wildlife flourishing. In extreme cold, they gather around it for warmth. All the locals I talked to in Alaska were for it, and I made sure to ask all the locals how they felt. Most were emphatic that I should tell everyone in the lower 48 that we should drill in ANWR.

[Doctor Raoul]

Same thing for petroleum products. Diesel is no more a "by-product" of gasoline than a round steak is a by-product of a sirloin steak.

Please, next you'll be telling the liberals that nothing in life is free. That's too much of a shock and makes thier little heads explode.

[Doctor Raoul]

Refining crude oil is a little like butchering a cow.

Or deconstructing a liberal.

[Doctor Raoul]

Can someone tell me when, exactly, FR news forum turned into a chat room?

Don't slip on that wet spot, it used to be a liberal's intellectual arguement...

[LOC1]

The potential for bio-diesel is way over rated. We use about 16 million barrels of oil per day in the US and 82 million barrels of oil per day world wide. (Each barrel is 42 gallons by the way)

At the extreme, bio diesel might amount to 100 thousand barrels per day ten years from now. There is just not enough potential capability to come close to meeting demand for oil.

Before you ask, the same thing is true for ethanol with the following additional observation. It takes more energy to produce a gallon of ethanol than you get when you burn that gallon of ethanol. Further, ethanol reduces the mileage in a car, such that the car requires enough more gasoline that the car's consumption of hydrocarbon based gasoline remains nearly the same as it was before ethanol was introduced into the blend. From a purely energy standpoint, ethanol is a bad idea.

It really is not possible to grow enough bio diesel or ethanol to solve the future current or future needs for energy in the US or the world.

However, there are plenty of hydrocarbon sources in the world. The US has as much coal as Sadie Arabia has oil. In addition there are unconventional sources of hydrocarbons. These include oil shales, ultra heavy oils, oil sands, and potentially methane hydrates. With enough equipment and enough cost, any of these hydrocarbons can be converted to fuels that are usable. We may not like the cost, but we will have sources of energy available.

[Sam Cree]

"this country and for what it stands for."

What does it stand for, to you?

[Redcloak]

It's simple supply and demand. Refiners shifted from other fuels to gasoline when prices first shot up. They were all hoping to make a killing. They promptly oversupplied the market with gas and the price fell. There's a relatively fixed amount of oil available for refining, so other prices went up as gasoline dominated production. The climbing price of oil didn't help either. As refiners see potential profit in other fuels, they'll shift production again, supply will increase relative to a fixed demand and prices for those products will drop.

[ShandaLear]

This is the fourth or fifth "I'm new" post I've seen here in the last few days. It's getting silly.

[Roper2]

What it means to me, I can live my life the way I sit fit and raise my kid how I want to. Just as long as Kerry does not win, nor Hillary in '08. I am a firm believer in the whole phrase "life, liberty, and the persuit of happiness". What the men and women in uniform are doing for you and me, is priceless. What Bush is doing right up my alley. I think I know best how to use my money, despite what Teddy Kennedy or Kerry thinks. I don't need them to tell me what I do or do not need to live in this country.