Posted on 05/26/2005 10:09:46 AM PDT by liberallarry
True enough, but that doesn't change the fact that we can't refine enough gasoline in this country at present.
The thing that concerns me is that we're importing most of that refined gasoline from Venezuela where Castro Jr. keeps threatening us.
Three Mile Island and Chernobyl put a damper on our nukification. Nuke plants would have to be within 300 miles of the market because of transmission line losses, but that shouldn't present a siting problem. Three Mile Island is not far from the capital of Pennsylvania, which made their hiccup seem vastly dangerous. At the same time there is a remote Alaska village intending to install a small Hitachi nuke, which is interesting in light of the active campaign to deny Alaska all use of nuke power.
There was an article on the frontpage of the WSJ on Monday that stated that the greatest factor in the price of gasoline was the worldwide refinery shortage, not a shortage of crude. Refineries around the world are running at full capacity and just cannot keep up with demand. Sure the OPEC per barrell costs have had an effect, but the fact is that supply and demand are still the greatest determining factor at the pump.
Venezuela is a problem. That is what our lustrous representatives in Washington have been given the moxie to deal with. If we lose the trade link to Venezuela, refineries will be built or expanded overnight, but the price of refined products will skyrocket even with the new refining capacity.
I blame The China Syndrome more than either of those incidents.
Thanks, Hollywood.
We need to get Yucca Mountain up and running as a nuclear waste depository. We need that Hitachi nuke to be built and make national headlines.
We need to have the national debate regarding nuclear energy because, by the end of this century, we will have to have discovered 87 new Saudi Arabias to meet global energy demand if we're going to do it with oil.
Oil at $50 is $1.20 a gallon. Gasoline is $2 or so a gallon, some of which is tax. What is the cost to crack a gallon of oil into gasoline? There is 80 cents to play with.
Everybody already had the Syndrome before the movie came out. it was just another disaster movie, and didn't change a lot of minds. The China Syndrome was well known and the movie borrowed the term for a title.
It rises every year because of overhead, wages, inflation, etc., but it's about 25 cents. Some refineries are more efficient than others.
This coming from who? ...an expert in oil refinery engineering? I didn't think so.
Your comments sure sound like typical anti-business, eeeeeevil corporation liberal blather.
Here are a few links for you to go forth and educate yourself:
You can continue to imagine evil, greedy oil companies laughing at the brutality with which they rape consumers, or you can go learn the facts. Take your pick.
The price hike was touched off by the repeated failure of the Saudis to make up for crude lost to war and natural disaster. This caused analysts to look closely at Saudi production. Many concluded that the Saudi cushion was no longer there, that their biggest field - Ghawar - was in decline, that they would be unable to bring enough new oil on line to compensate.
That combined with similar news from around the world has led us to where we are.
I am retired but still very near the oil industry. I even personally know a refinery manager, and the one before him, but he doesn't have time for former oil people since he has to rub shoulders with Sen Ted "ANWR" Stevens and various top rank international businessmen [Big Oil].
My MBA probably also wouldn't be worth much in this street level discussion.
Considering some of the very public humiliation and business failures of some MBAs, I'd say the degree at best doesn't guarantee respect.
Working in the mining industry, as I do, I am quite painfully aware of the staggering costs associated with plant expansion, especially in a commodity market. The fact that the oil business is quite dynamic, and that profit margins are so slim, I wouldn't rush out to build billion-dollar refineries either.
Increasing environmental regulation continues to add to the cost burden of all such plants, if they don't have the benefit of "grandfathering", as most older plants do. It's easy for me to understand the plight of oil companies as environmentalism continues to drag down on its business, like so many barnacles attached to the hull of a ship. Expanding existing and building new refineries clearly aren't the quick, cheap and simple activities you suggest they are.
Living near, previously working in, and even currently knowing a refinery manager don't seem to have dampened your corporations-are-greedy-evil-monsters sentiments. Did you even read any of the articles I linked to? ...or do MBAs already know all that stuff anyway? ;-)
No. I don't follow links. Maybe somebody else is interested enough to do so. I read these posts to see what the posters think, not what the poster's thought is of what in his imagination he thinks I or some general person might be, or what articles the poster thinks express his thoughts.
Yeah, well the article wasn't talking about Saudi oil, it was talking about non-OPEC sources, which we all know are being held down by environmental restrictions. The fact is that many of the oil reserves that were supposed to be running out, seem to be mysteriously replenishing themselves. Alaska oil was supposed to be almost used up and the oil in the Gulf of Mexico that was running out seems to be just as plentiful as it was ten years ago. Add to that the better methods for extracting oil from shale and sand and we have a much better outlook that would be just fine if we could lift some of the environmental restrictions.
Really? First I have heard of that. The oil seems to be behaving as expected.
As for non-OPEC sources, my reading is that old fields in most countries are declining while new fields are not making up the difference;
"Oil production in non-OPEC countries, for example, is falling with surprising speed. Between June of 2002 and June of 2003, according to the IEA, oil production in three of the four biggest non-OPEC states - the United States, Norway, and the United Kingdom - reported a net loss of output of nearly a million barrels a day, mainly through depletion of reserves. Much oil still resides outside the OPEC countries, but, except in Russia, most of this oil is harder to get at and thus more expensive to drill for and transport; indeed many projects are so costly that they can be handled only by consortiums of oil companies. Even then, much of this difficult oil is simply not economical to produce, and it won't become economical unless oil prices rise significantly [they have since this was written]. Barring that outcome, analysts believe that non-OPEC oil production will fall each year by as much as a million barrels per day. With world oil demand expected to increase each year by nearly two million barrels a day, the global oil industry must somehow add another three million barrels of oil daily just to keep the markets happy. In theory, such production increases are possible. Russia, West Africa, and the Caspian have a lot of oil, at least in the near term, and the Middle East has more than eight hundred billion barrels - more than half the world's total. As we have noted, though, the main challange to energy security is not simply procuring enough oil, but spiriting it out of the ground into the tanks of those who need it. And here is where the trouble starts. Over the next three decades, according to the IEA, the oil industry will need to invest $1.7 trillion simply to maintain its current oil production levels - that is, to find new oil fields fast enough to replace those now in decline or soon to decline. On top of that, oil companies will need to spend an additional $600 billion to meet all the NEW demand, especially from booming Asia. Taken together, that means $2.2 trillion in oil investments - a pile of money, even for oil companies and petrostates - and it's not at all clear where it will come from."
from "The End of Oil" by Paul Roberts - Pages 251-252...and that's just the tip of the iceberg.
Environmental restrictions - sometimes ridiculous and sometimes over the top - are very necessary. It's extremely foolish and short-sighted to abandon them in order to extend profligacy for a few more years.
I have read enough doom and gloom to know that it not valid, whatever the source. I looked into this several years ago, including going through a BP report of the same nature that predicted that we have about 70 years worth of oil in the ground as of 2001.
Companies regularly predict 'proven reserves' that are almost alway lower than the actual reserves finally extracted. their predictions of actual production are SWAGs that assume the known, not the technologically possible in 2030; as such they are almost always pessimistic.
Peaks have been predicted, wrongly, before.
The author of the piece is *not* Exxon-Mobil, but a scarcity advocate who is latches onto a conservative estimate and makes it his only data point. BFD.
It's Bunk ... 3 words: Alberta tar sands.
Proven reserves are usually reported at around one trillion barrels.
There are *at least* 2 trillion barrels worth of 'low-quality' tar sands in canada and Venezuala and in the U.S., among other places ... trouble is it costs around $20-30 per barrel to extract this, higher than the sub-$10 it takes to extract mideast oil the old fashioned way.
So it's not counted as proven reserves, even though at today's prices they could be economically extracted and sold for profit.
Conclusion: IF you assume $40-50 barrel of oil, our reserves *triple*. These reserves are rarely counted as 'proven reserves' but are out there.
Suddenly we go from have 40 years worth of proven reserves, to well over a century, for the whole world.
So the idea of taking this oil is out there, only when we run out of that first trillion barrels of 'cheap oil'.
Here's the other part of it though: Proven reserves today are *higher* than in the 1970s. You talk to a scarcity advocate and they would tell you this is impossible - but it has happened throughout oil history.
Peaks will happen because of economics, not geology. The stone age didnt end for lack of stones; the oil age will end, not for lack of oil, but because the economic alternatives are better.
"But they are the first - and as far as I know - the only oil company to take this position."
Uh not at all .. there was an oil company geologist in the USA in the second decade of the 20th century who said we would run out of US oil around 1929.
He's still wrong.
"The fact is that many of the oil reserves that were supposed to be running out, seem to be mysteriously replenishing themselves."
This mystery is easily understandable if you think about the tradeoffs of looking for oil versus extracting and selling it.
Companies are not in the business of finding oil now to sell in say 2050 ... so *of course* proven reserves will not show a large 'tail'.
"Alaska oil was supposed to be almost used up and the oil in the Gulf of Mexico that was running out seems to be just as plentiful as it was ten years ago."
When they run out of the oil in place A, they start looking in other places.
I'd bet there is a lot of oil in antartica. NO sense in looking yet; maybe wait for $100/barrel oil.
"Oil production in non-OPEC countries, for example, is falling with surprising speed. Between June of 2002 and June of 2003, according to the IEA, oil production in three of the four biggest non-OPEC states - the United States, Norway, and the United Kingdom - reported a net loss of output of nearly a million barrels a day, mainly through depletion of reserves.
----
This is understandable in that the Prudhoe bay and north sea oil fields were started in the 1970s. This is not the end of oil, this is the tailing off of a few particular oil fields.
What he does *NOT* say is that both north sea and prudhoe have produced well beyond the original expectations, and that new technologies is making it possible to extend the life of oil fields, albeit at lower production rates.
Far different from the days of Spindletop.
" Russia, West Africa, and the Caspian have a lot of oil, at least in the near term, ... "
... yes, they do, as does Alaska and California and gulf of mexico and venezuala ... In all cases, verying political considerations are reducing the level of oil production.
If the politics was fixed production would rise.
"On top of that, oil companies will need to spend an additional $600 billion to meet all the NEW demand, especially from booming Asia. Taken together, that means $2.2 trillion in oil investments - a pile of money, even for oil companies and petrostates - and it's not at all clear where it will come from." "
Uh, if demand is "booming" then the price will be paid to support the needed investment to sell the product.
$1.2 trillion is not that much, when 100 billion barrels
is worth $5 trillion at todays prices.
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