Posted on 01/13/2011 11:48:03 AM PST by bananaman22
According to a loosely-organized apocalyptic Christian movement, May 21, 2011 will be the "end of days." On or about that same date, the price of oil in the United States will begin to climb to $4 a gallon, according to two savants of the oil industry.
The former is highly unlikely but the latter is very probable.
The escalation in the price of oil is predicted by the legendary oil man T. Boone Pickens, known for his financial acuity as well as his oil expertise, and John Hofmeister, who retired as president of Shell Oil Company, to sound the alarm about the rate of U.S. consumption of oil.
In an interview with a trade publication, Hofmeister predicted that oil would rise to $4 a gallon this year and to $5 a gallon in the election year 2012. Separately, Pickens—who has been leaning on Congress to enact an energy policy that would switch large trucks and other commercial vehicles from imported oil to domestic natural gas—predicts that oil currently selling for just over $90 a barrel will go to $120 a barrel, with a concomitant price per gallon of $4 or more.
The Obama administration appears to have been slow to grasp the political implications of an escalation in the price of oil. When asked about it, outgoing White House Press Secretary Robert Gibbs referred the questioner to the Department of Energy.
Not everyone is alarmed by the incipient rise in the oil price. Republicans, who are especially close to the oil industry and its Washington lobby, orchestrated by the American Petroleum Institute, think that a great deal of hay can be made while this particular sun shines. They plan to attack the administration for spending too many resources on alternative fuels, over-regulating the industry, and keeping too many federal lands away from oil prospecting. They also accuse the administration of being too frugal with its release of drilling areas in the Gulf of Mexico and on the two coasts, as well as Alaska.
The Republicans have unlikely bedfellows in their quest to politicize the price of oil. They are joined by environmentalists who have long believed that only high prices will break America's passion for the automobile.
Environmentalists have long advocated European-style taxation to drive motorists out of their cars and onto buses and trains.
A third interest group that will take some pleasure in rising oil prices are those who are invested in alternatives such as ethanol, oil from algae and electric vehicles.
Meanwhile, the International Monetary Fund is keeping an eye on the price of oil, according to Caroline Atkinson, director of external relations at the IMF. She told a Washington press briefing that the IMF is particularly concerned with food and other commodities that are directly affected by the price of oil. Full article at: Oil and gas prices
The Offshore Drilling Ban that is in place today has been existence for 30 years. And while part of that ban was lifted last year, there has not been activity in those areas.
As for the moratorium on Gulf drilling after the BP disaster, it was a necessary action at the time, but should have been lifted sooner.
The whole idea that we are not drilling in the US is complete BS and the idea that we are not producing oil is nonsense as only Saudi Arabia and Russia produce more oil.
Sure, there is 55 gallons in a barrel. $4 x 55 = $220. The post said OIL to reach $4.00 per gallon.
An oilfield barrel is 42 gallons.
There is also a refining margin to account for. A barrel of raw oil does not make 42 gallons of gasoline and it costs money to refine and transport. You of course can’t do that without buying a refinery and trucks and such.
A better approximation is the current price of gasoline / the current price of oil = $/gallon of gasoline / $/barrel of oil.
e.g. $2.89/gallon / $91.00 / barrell = 0.03186 gasoline / barrel
Then $4.00 gasoline / 0.03176 = about $125/barrell oil
Oil will not reach $4.00 per gallon. I believe the title of the article was “Who, How and Why: $140 Oil and $5 gas”
The profit margin on gasoline goes down when oil price goes us since refiners try to offset the lack of demand to keep the refineries running optimally and also a result of them getting caught with lower priced contracts vs. spot oil prices.
I think the $4 a gallon quote was supposed to be for gas, not oil. My $220 comment was meant as a tease. Question for you, it appears you know a bit about the oil business, in this country a barrel of oil, grease, kerosene, etc. is sold in 55 gallon drums. I’m clear on all of the input costs that have to be considered to get finished product to market and that barrel is only a term to calculate bulk volume but why is an oilfield barrel 42 gallons and not the US standard of 55 gallons?
A standard oil field barrel is 42 gallons or 5.615 cubic feet. This is the standard used for all oil field calculations involving this measure.
Wish I had a nickel for every time I’ve punched 5.615 or .1337 into a calculator. If I did I wouldn’t still be doing it.
Well, actually I probably would because I really like what I do most days.
The steel drum is 55 gallons.
“They are joined by environmentalists who have long believed that only high prices will break America’s passion for the automobile.”
If gas keeps going up, the only thing that’ll be broken is some environutzi’s nose.
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