Posted on 04/25/2006 7:29:28 AM PDT by kellynla
WASHINGTON (Reuters) - President Bush will direct the U.S. Energy Department on Tuesday to temporarily halt deliveries of oil to a strategic reserve in order to get more fuel on the market and help reduce rising gasoline prices, a senior administration official said.
The official said Bush in a morning energy speech, will tell the Energy Department to suspend deliveries this summer while supplies are tight "and defer the deposits until the fall, and then you have more oil on the market."
(Excerpt) Read more at money.cnn.com ...
Drop all the goobermint taxes from gas — 50¢ to 60¢ / gal — and things will instantly get better.
Get the damned goobermint out of the gas-taxing business!
I wouldn't mind the feds rolling back the gas tax to its original 4 cents/gallon. I suspect they'd still get billions to help fund new interstates such as 22, 69, and 73. The states can take care of the rest (established interstates, U.S. routes, National Highway System, mass transit, etc.).
the major oil companies don't want to build anything, they like the situation just the way it is. tight refining capacity, lack of storage for refined products, high prices and high profits. why would they invest to change a system from which they are reaping record profits?
I think we all agree but it's just that you seem to missing the part where the gas tax is much higher than it needs to be.
(1) The Federal gas tax is completely unnecessary as the states can now build roads completely on their own.
(2) The Federal tax takes money out of the state that could be used to build roads rather than being loss in yet another layer of bureaucracy and corruption. This forces to States to raise the gas tax to make up for this short fall.
(3) By controlling the purse strings with matching funds and grants, the Feds force the state to build roads for political reasons rather than for best use. This forces the states to have a higher gas tax than necessary as many road projects are just waste or pork.
(4) Very few states are mandated to use gas tax proceeds exclusively for road building. There may be a law that seems to stipulate that but they almost all contain exceptions that make the law meaningless.
In reality, Ohio wouldn't have to charge $.60 per gallon if the federal government would eliminate it's gas tax. Eliminate the federal gas tax and almost every state could lower it's tax as well and road building would actually improve.
"the major oil companies don't want to build anything, they like the situation just the way it is. tight refining capacity, lack of storage for refined products, high prices and high profits. why would they invest to change a system from which they are reaping record profits?"
It's humorous to see the envirowhackos blamed for all petro evils, as if the wonderful altruistic Big Oil really, sincerely wants more supply and lower prices!
US refiners get rid of sour oil
by Steve Everly
17-11-04 In a year that has seen oil prices reach record highs, it may seem odd that producers have been offering discounts to get rid of the stuff. But that has been happening with crude oil known as "heavy sour," which is different from the "light sweet crude" whose per-barrel price is most often quoted as the price of oil.
In fact, more than three-fourths of US refinery capacity can process heavy sour, which typically sells for a few dollars less than light sweet crude because it is not as easily refined. And this year, as Persian Gulf producers have flooded the market with additional supplies of the heavier sour crude, the sweet and sour price gap has grown even wider, reaching $ 17 to $ 18 the last week of October.
That's good news for US refiners, which are considered to be in a better position than those in other countries to take advantage of the discounts. Indeed, earnings announcements by US refiners are singling out the cheaper sour crude as a major reason for their growing profits.
"This has resulted in excellent refining margins," said Curtis Hyatt, an associate director for the Cambridge Energy Research Associates, an energy consulting firm. But it's unclear how much, if any, of the savings from the cheaper crude oil have benefited US consumers.
"I haven't seen anything that the savings have been passed through to consumers," said Tyson Slocum, research director for the energy program at Public Citizen, a public interest group in Washington.
Beyond improved refinery profits, the discounts are highlighting the growing role of heavy sour in meeting demand for petroleum products. Light sweet crude such as West Texas Intermediate is needed by a majority of the world's refineries. But the sweet crude is estimated to constitute only 30 % of the world's reserves. The heavier sour crude oil accounts for the balance.
Worldwide, OPEC estimates that 45 % of refining capacity can use heavy sour oil. Refineries, for a hefty price, can be upgraded to handle heavy sour. Still, few expected in 2003 that refineries would soon have to scramble to find light crude.
Such a scramble occurred this year when OPEC took most of its surplus oil production out of mothballs to try to moderate rising oil prices and meet rising demand. Most of the added oil was medium and heavy sour, which did not help greatly in some regions. In Asia, for example, where China's growth is driving demand, OPEC estimates that only 30 % of refineries can process heavy sour oil.
So, light sweet crude such as West Texas Intermediate remained in relatively short supply, putting more pressure on the price. In contrast, plenty of sour crude was on the market, which triggered additional discounts for it. At one point this year, a barrel of Arab Gulf Dubai heavy sour crude produced in the United Arab Emirates was $ 18 less than a barrel of West Texas Intermediate, the US benchmark. As the price of light sweet crude has dropped, that gap has narrowed, and it dipped just below $ 13.
But the gap is farmore than is historically normal -- it was about $ 4 a year ago -- and OPEC has clearly been irked by accounts of record prices for Texas sweet crude while its members have gotten far less for their sour crude.
"Not withstanding those headlines marking benchmark price levels, another major but less widely reported market characteristic is the increasing gap between light sweet and heavy sour grades," according to OPEC's Monthly Market Report for October.
Light sweet crude has its advantages. Light oil, compared with medium and heavy, is more easily refined into a high percentage of high-value products such as gasoline. And "sweet" oil contains less sulphur than sour does, and sulphur must be removed to meet environmental regulations. As a result, heavy sour costs more to refine, meaning its producers must offer it at a discount off the price of light sweet crude.
When the price gap widened between sweet and sour crude, US refineries were better able than most to take advantage of the gap. Refineriesalong the Gulf Coast, which account for about half of the country's refinery capacity, are considered the most sophisticated in the world. Venezuela, which is a major producer of heavy sour oil, became partners in some of those refineries to ensure a market for its oil.
"We're probably in a better position than most to handle these heavy oils," said Joanne Shore, an analyst for the Energy Information Administration. In addition, California refineries have been upgraded to handle heavy sour crude, and most of those in the upper Midwest are also thought to be capable of handling heavy sour crude.
Another indication of the country's increasing use of lower-quality crude oil is that the Strategic Petroleum Reserve, which is meant to help the United States in case of a major disruption in oil supplies, is two-thirds sour crude and one-third sweet crude.
So given that tilt toward lower grades, is it misleading to use the widely reported price of West Texas Intermediate, a US benchmark for light sweet crude? Analysts say no, in part because oil is a worldwide market and sweet crude is a crucial part of it. In addition, sweet crude is needed by many US refiners.
The wide difference between sweet and sour crude prices is important to most US refineries. Valero Energy, the country's third-largest refining company, in a recent filing with the Securities and Exchange Commission, said a "significant" percentage of the oil it used was sour crude, and the difference between sweet and sour crude prices affected its profitability.
Premcor, another US refining company, reported third-quarter earnings of $ 145 mm, dwarfing the $ 60 mm it made in the same quarter a year ago. Premcor singled out the use of sour crude for its contribution to those profits.
"Margins have been enhanced by what appears to be a longer-term widening of the differential between light low-sulphur crude oil and heavy high-sulphur crude oil," Thomas O'Malley, the company's CEO, said.
It can cost hundreds of millions of dollars to upgrade a refinery to process heavy sour, but the current discounts for sour crude are making such investments look good. However, there are concerns that the costs of converting more US refineries will be much harder to recoup if the discounts return to levels of just a year or two ago. Hyatt, of the Cambridge Energy Research Associates, said the wider price spreads between light and heavy crude should last through at least next year. But any reduction in worldwide demand for oil or more supplies of light sweet crude, which may be possible from Russia and Africa, could cause the price spread to narrow.
"If that happens, the shift would not be permanent," he said.
But longer term, the ability to use heavy sour crude is an issue that's expected to confront the refining industry because of the vast reserves of the oil. OPEC, whose members already have large amounts of sour crude to sell, think the time is now to upgrade more facilities worldwide -- and even in the United States -- to add more flexibilityin handling different types of crude.
The US refinery system could use the additional flexibility, according to OPEC. Though much of the industry can refine sour crude, refiners have no excess capacity to adapt to growing demand and the United States is importing about 10 % of the gasoline it needs. It is further pressed by the need to produce several "boutique" gasoline blends to meet environmental regulations in different parts of the country.
As S.A. Kermati, a petroleum products market analyst for OPEC, summed it up: "The situation is very fragile, especially for a market which is leading the rest of the markets."
Source: Kansas City Star
Thank you for the 411.
"The minor amount from earmarks would pay for nothing."
A couple hundred billion - namely the $286 billion highway bill - is nothing? Talk about a "worthless" statement.
(1) The Federal gas tax is completely unnecessary as the states can now build roads completely on their own.
I agree in part. The Constitution does allow Congress to levy taxes for Post roads. If the Interstate Highways were designated Post Roads in addition to defense Highways I could see a valid reason for maintaining the tax for that specific purpose.
(2) The Federal tax takes money out of the state that could be used to build roads rather than being loss in yet another layer of bureaucracy and corruption. This forces to States to raise the gas tax to make up for this short fall.
Taking the federal matching funds out would necessitate an increase regardless though it would most likely be smaller than the 18.5 cents currently levied.
(3) By controlling the purse strings with matching funds and grants, the Feds force the state to build roads for political reasons rather than for best use. This forces the states to have a higher gas tax than necessary as many road projects are just waste or pork.
no disagreement here
(4) Very few states are mandated to use gas tax proceeds exclusively for road building. There may be a law that seems to stipulate that but they almost all contain exceptions that make the law meaningless.
that sounds like something that the people of the states need to take up with their legislators. Though It really shouldn't make a difference whether the money is in a separate pot or if it is all coming out of one. After all we were told that the Lottery profits would be used for the schools and they kept their word the only problem was they took the other money that should have gone to the schools and gave it to other projects. Nothing unfortunately is perfect.
In reality, Ohio wouldn't have to charge $.60 per gallon if the federal government would eliminate it's gas tax. Eliminate the federal gas tax and almost every state could lower it's tax as well and road building would actually improve.
Ohio isn't that bad with the gas tax (yet) Governor Shaft did raise the tax 6 cents recently I think it is 26 cents for the state plus the 18.5 federal with a 3 cent surcharge for diesel.
please cite sources for your "couple hundred billion". The most I can find is 27 billion and regardless the federal government shouldn't be in the road business unless the roads are designated Post Roads.
Please I have no time for silly emotive outbursts.
We use to just shut in sour oil. There wasn't any demand for it and it couldn't be processed by most refineries. It was almost bad as a dry hole. Soon it will be our primary source.
Might not be any investors that want to take the risks. The government changes its mind every year.
The most dangerous thing about high gas prices is that it can easily open the door to high inflation, not just because of the effect of the price of gas but because of the greed that it could unleash across the economic landscape.
It could become a case of "they get away with high gas prices so let's raise the price of this and raise the price of that."
That's how inflation sometimes gets started, nothing but pure unchecked, unbridled, unleashed greed that sees no boundaries and spreads like wildfire.
It's good that President Bush is making moves against the high price of gas. A signal needs to be sent.
It would take more than an executive order to drill of California and Florida. By federal statute, the states have veto power over drilling. It would take an act of Congress.
Relief here also, now we can fill our boat's 300 gallon gas tank.......
Sure the oil is there but everyones so damned concerned about breaking a blade of grass while trying to drill.
SORRY MY BAD, HOPE THIS LOOKS BETTER (OR WORSE?)
"Tell me again why I vote for Republicans?"
Best Case Scenario: 2008
Speaker Pelosi
Senate Majority Leader Reid
President Hillary Rodham Clinton
Worst Case Scenario 2006
Speaker Pelosi
Senate Majority Leader Reid
Impeach Cheney
Obstruct VP Choice
Impeach Bush
President Nancy Pelosi
VP *insert any moonbat*
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.