DrumBeat: May 15, 2007
Posted by Leanan on May 15, 2007 - 9:02am
Topic: Miscellaneous
Capitalism has proven to be environmentally and socially unsustainable, so future prosperity will have to come from a new economic model, say some experts. What this new model would look like is the subject of intense debate.Brian Czech, president of the Centre for the Advancement of the Steady State Economy, a Washington, DC economic think tank, disagrees:One current states that continuous growth can be environmentally compatible if clean and efficient technologies are adopted, and if economies leave behind production of material goods and move towards services. This is known as sustainable prosperity.
The idea that growth can be sustainable by dematerialisation is "nonsense", in Czech's opinion. Producing services requires use of natural resources like energy and the money generated will be used to buy something."Neoclassical economists at the World Bank, USAID (U.S. Agency for International Development) and elsewhere continue to believe there are no limits to growth," Czech says.
"At the end of the whole process, we will have a plant that's been inspected and refurbished, and repaired and good for reliable and safe operation for another period of time," he said...."We will also have additional capacity to convert heavy oil into gas and diesel," he said.
While that won't increase the output of the plant, it will lessen the amount of asphalt the refinery produces.
Connecticut - GOP: Suspend Gas Tax
Legislative Republicans said today they will try to amend as many bills as possible in the final weeks of the session to suspend Connecticut's 25-cent-per-gallon state gasoline tax from Memorial Day to Labor Day.
Jet fuel shortage averted at Yellowknife airport
Midnight Petroleum's resupply arrived after the Merv Hardie ferry crossing at Fort Providence opened for the season. The company's supply of jet fuel had dipped so low last week that fuel was being rationed and pilots told to fly into Yellowknife with their own fuel cache.Imperial Oil, which supplies Midnight Petroleum, blamed last week's fuel shortage on the Mackenzie ice crossing at Fort Providence closing a week earlier than expected this year. The fuel was stuck on the other side of the Mackenzie River.
Hercules Offshore Responds to Unrest in Nigeria
Hercules Offshore said that it is taking precautionary measures with its liftboat operations in Nigeria because of the current unrest arising out of the recently held local and national elections and the resulting decision of its customer, Chevron Nigeria Ltd., to temporarily cease certain operations to protect the safety of personnel. In response to the unrest, Hercules has developed a security plan with Chevron. Under the plan, Hercules Offshore will evacuate all non-essential expatriate personnel from Nigeria. Hercules Offshore will also move ten liftboats currently operating for Chevron to a more protected area in Nigeria and temporarily cease operating those vessels.
The changing face of oilsands mining
The landscape of the oilsands mining sector is rapidly changing, and so too is the technology to process the tons of ore. Oilsands operators can now choose a new mining technology – mobile crushing - to use at their mine sites, depending on a number of factors. As part of its next expansion – Voyageur South – Suncor has announced it will start to replace some of its truck and shovel fleet with these mobile units.
The discovery of a large oilfield in Bohai Bay off northern China is of great significance for Beijing's oil-security strategy, which is the key to sustaining the country's economic development. No wonder Premier Wen Jiabao said he was so excited upon learning the news that he could not get to sleep that night.
Five Leaders Make Caspian Energy Security Agreement
Leaders from five European and Caspian Sea nations agreed Saturday to work together on energy security issues and on a possible extension to Poland of a pipeline carrying Caspian oil.
Petroecuador Plans to Militarize Oil Ops
Ecuador's state oil company Petroecuador plans to sign an agreement next week with the nation's armed forces to protect all oil production operations in the country, Petroecuador said in a statement.The agreement aims to stop theft, the cutting of secondary pipelines and other attacks faced by Petroecuador's production subsidiary Petroproduccion.
Russia: where's it heading in nuclear?
The civil nuclear industry of post-Soviet Russia has been beset with funding problems. Now, with the overhaul of the industry, is the country’s new build programme realistic?
To be globally competitive Russia needs a viable energy strategy The issue of energy security continues to dominate Russia's agenda. In his annual address to parliament, President Putin stressed this topic, too. While highlighting Russia's role as the world's largest oil producer in 2006, Putin lamented the sluggish pace of developing the nation's refining industry, which lags behind world leaders. Questioning Russia's ability to extract the maximum value out of its natural resources, Putin ordered the government to develop a set of measures intended to stimulate growth of the domestic refining sector.
Part I: Planning for a Climate-Changed World
As the global picture grows grimmer, states and cities are searching for the fine-scale predictions they need to prepare for emergencies--and to keep the faucets running.
The Chrysler Challenge: Embrace Fuel Efficiency
German automaker Daimler announced that it was selling Chrysler, at a rock-bottom price, on the same day that retail gasoline prices hit a record high: $3.07, on average, according to the Automobile Association of America. The timing of these two events was coincidental, but it underscores the challenges facing Chrysler and other U.S. automakers: how to transition from the Age of the SUV to the Age of the Prius, the popular hybrid car made by Toyota.
Last week, a reader sent me an elaborate Powerpoint show put together by a Peak Oil "optimist," someone who believes that there are vast recoverable reserves of oil waiting to be be tapped out there – as opposed to those like myself who don't think new supply will offset declines in the known oil fields of the world. It seemed to me that most of this optimist's case was based on the fantasy that the tar sands of Alberta and the oil sands of the Venezuelan jungle will make up for what we no longer get out of places like Ghawar in Saudi Arabia, Cantarell in Mexico, West Texas, and the other old standbys.
Saudi and Kuwaiti butane and propane prices increased by 30 dollars a ton
The increase in the prices of the two liquefied gas products is attributed to the prevailing high crude oil prices, which hover at 60 dollars a barrel and to difficulties in meeting demand on the part of petrochemical producers, as well as to supply side tightness.
New gas pains: where is it all leading?
To a lesser extent, the term "peak oil" is popping up in a surprising number of conversations these days. Google gives you almost five million hits on the term in under a second. The idea is that we're running out of cheap oil, and as it gets more expensive to extract, it becomes harder and harder to keep up with demand. The price climbs. Shortages are the norm. Gas-out may take on a whole new meaning.
US government fans homeland terrorism fear: Washington consensus plans for martial law, nuclear terror holocaust, behind closed doors
This rhetoric coincides with a larger effort on the part of elite policy shapers to manufacture, and sell, a nightmare scenario to an American public that is beginning to distrust its government, at the very moment that the real possibility of a resource-depleted post-Peak Oil American dystopia, the decline of the American empire, is beginning to hit home in earnest.
The problem I find with apocalyptic visions of life after oil is that they forget one small thing--human ingenuity...In a nutshell, peak oil is going to drive us into the future whether we like it or not. The tricky part is figuring out what's on the energy horizon. And better still, how to profit from it. One of the rising successors to oil's throne is nuclear energy...
The reason we went to war in Iraq was not to get their oil, but to stop them from producing oil. Peak oil is a myth. I’ll have to admit it was an idea that I once believed until I found out that the oil companies wrote the report that founded the idea of peak oil. The cold unvarnished truth is that Cheney and his Big Oil friends have manipulated this war from its inception until now, all to increase oil profits.
Panel: Climate change will hurt Africa
Global warming isn't just a matter of melting icebergs and polar bears chasing after them. It's also Lake Chad drying up, the glaciers of Mt. Kilimanjaro disappearing, increasing extreme weather, conflict and hungry people throughout Africa.
Logistically, Liz has a vision
The scope of the problem is very big, with climate change and the looming prospect of peak oil [supply]. Freight is also very reliant on road transport, so if we run out of petrol suddenly, what do we do?
Gas prices hit a new record at the pump
Gasoline prices hit a new record at the pump on Monday, but gas futures prices fell on concerns that $3 gas will crimp demand. Oil prices, meanwhile, rose on reports of refinery problems in the U.S. and abroad.The average national price of a gallon of gas hit $3.073 on Monday, up almost a penny from Sunday's also record-setting price, according to AAA and the Oil Price Information Service. Gasoline is now well above the previous record of $3.057, set on Sept. 5, 2005, soon after Hurricane Katrina.
Traditional production unfit for half of Kuwait's oil reserves
More than half of Kuwait's oil reserves will not be produced through cheap traditional methods, Deputy Director General of the Kuwait Institution for Scientific Research (KISR) Dr. Nader Al-Awadhi said yesterday. Kuwait's oil reserves are estimated at about 95 billion barrels, among the biggest worldwide. Most production, if not all, is being produced through traditional methods, Al-Awadhi told a KISR workshop on "Managing Carbon Dioxide for Improving Oil Production" that started yesterday.He expected that the traditional methods would produce 45 billion barrels, but could not be used for the rest (i.e. 50 billion barrels). Thus, emerges the necessity of developing new feasible environment-friendly methods for producing heavy oils, he said adding that oil production operations over the past years had focused on light oil.
OPEC sees ample crude stocks to cover demand
OPEC said on Tuesday that crude oil inventories were more than enough to cover fuel demand during the peak summer travel season, rebuffing calls from consumers for more supply.The monthly report from the Organization of the Petroleum Exporting Countries also showed members were keeping a lid on supply, despite a rise in prices to above $66 a barrel from about $50 in January.
Qaeda Suspects Planned Attacks on Saudi Oil
Four suspected al Qaeda members arrested in Saudi Arabia last year had planned to attack the kingdom's oil facilities and other Gulf Arab oil producers, they said in confessions shown on Saudi television on Tuesday.Saudi police arrested the four in April last year in connection with a failed attack two months earlier on Abqaiq, the country's biggest oil-gathering facility.
Conoco oil project slammed with huge tax bill
Venezuela said Friday it had levied the largest tax bill in the nation's history on an oil project led by ConocoPhillips, the lone holdout in President Hugo Chavez's oil nationalization crusade.
Venezuela nationalizes foreign oil rigs
The Venezuelan government of firebrand President Hugo Chavez said Monday it was taking control of oil rigs from multinational firms, in the latest of a wave of nationalizations.
With the consumption of oil exceeding new finds the Peak Oil crisis is almost upon us
The growth in oil demand now exceeds the rate of new discovery - meaning a looming crisis for the industrial world!
Bush: Air quality changes will take time
President Bush responded Monday to a Supreme Court ruling by ordering federal agencies to find a way to begin regulating vehicle emissions by the time he leaves office.
US: New Russian gas deal bad news for Europe
A pipeline deal signed at the weekend by Russia, Turkmenistan and Kazakhstan, giving Russia access to gas from the Caspian Sea, is bad news for Europe, US Energy Secretary Samuel Bodman said here on Monday."Europe needs to diversify its energy sources and Europeans should take due note of this," Bodman told a press conference during a meeting of the International Energy Agency.
Arguments in federal gas mileage suit
Lawyers for 11 states and several environmental groups told a federal appeals court Monday that the Bush administration failed to consider global warming when setting new gas mileage rules.
Bush vies to wean US off foreign oil
President George W. Bush, facing mounting disquiet about global warming and sky-high fuel prices, Monday ordered his government to slash America's dependence on foreign oil.
They ran our SHPEGS project on the mainpage of SlashDot last night.
There is also this related Shrinking Cost of Solar Thermal Article.
Do you have a Site Meter? If so, how much traffic did that bring in? How have the technical comments from the SlashDotters been generally supportive?
Slashdot has a lot of "first-post" comments that come in without reading the article. This is the 3rd time they have run something on the project, and although the comments aren't really negative, the value comes in in about a week when people with a real interest have read through all the information and thought about the idea for a while.
There is a lot of "it's not obvious until someone points it out" in a simple system and everyone has their own agenda, but since I improved the presentation materials and references, I really don't get much negative feedback. A small prototype has to be built to move forward.
Back in January, it ended up being about 12,000 unique visits from the Slashdot article.
That's interesting. Back in the day Slashdot used to be worth 10,000 unique visitors in the first hour, tailing off depending on what other stories came along later. I saw that on a story we had posted. If they are really down at <5000 they must really have been hit by the Diggs and Reddits of this world.
check the alexia rankings, they tell the tale of the largely non technical audience.
the non-techies have gone to digg.
I still find reddit useful and interesting, mainly because the links all go back to the main stories.
Slashdot, inflammitory headlines/summaries, excellent community, excellent posts.
Digg exicitory headlines, horrible community, horrible posts
reddit typically accurate headlines, multiple submissions of similar stories(++ in my opinion), no comments in general
The higest impact will always probably be digg, as it is the lowest-common-denominator of the interet. Nothing wrong with that, however it has a definite audience.
Some of it is due to saturation and I get away with it because the project is not-for-profit and steam-punk, but a lot the Slashdot regulars have seen the SHPEGS information before.
The other thing is the posting of the details of the Microsoft patent infringement claims today. Slashdot is still very open source/anti-Microsoft and although there is geek interest in renewables, it's an IT crowd with a lot of personal and business investment in open source software.
The article activity on SlashDot is more spread out than it used to be. A large portion of the hits occurred more than 12 hours after the story was posted. The main link in the article also pointed to the TFOT article/nterview with a lot of redirects coming back from there today. Which I would interpret as people actually reading the TFOT article.
Looks like Prof Goose has added the Ghawar story to Slashdot. Visit the firehose and up vote it and we'll see if it gets posted.
Digg and Reddit appear to be blackballing theoildrum.com for the moment. I'd guess the small scope of the usual posters and the poor submission to acceptance ratio.
consider a different idea for the blackballing, perhaps denial. or unfamiliarity with any of the subjects. Who even knows what/where/who/when Ghawar is when its submitted, titles mean alot.(my opinion of digg is 12-20 year olds in terms of 'emotional intelligence' with some more mature individuals trying to cut the cheese)
my suggestion is, "LARGEST OIL FIELD, GHAWAR, IN COLLAPSE"
there is a difference between 'selling' a point and convincing people.
i looked over the pdf.
one thing that was missing was the capital and ongoing maintenance costs.
Do you have an estimation of these?
It's difficult to have anything realistic without a prototype and then a demonstration sized system. I made some general estimations in the TFOT interview.
I would think that generally the costs would be in the order of magnitude of solar thermal projects like Nevada Solar One with the assumption that there is significant output gain in the air->heat transformer system and the entire system has similar output in a lower insolation location. Sorry for being vague, but the project is at best at the proof-of-concept stage and a long ways from feasibility studies. I would expect that integration with other renewable systems like bio-methane production and structure heating will help with feasibility, along with the location independence not requiring a large long distance transmission investment.
whenever you have an estimation, feel free to post an update on the web and shout it out. I'll come around looking. I don't forget much, especially if the project is as interesting as this one.
If anyone here has an interest in participating in an API conference call tomorrow, Wednesday the 16th at 2 p.m. EST, please e-mail me (the address is in my profile).
The topic is gasoline prices. If you think they are too high or that you are being gouged, and you write a blog, newspaper column, etc., then you are the kind of person they are looking to include in the call. They are looking to take tough questions, and while I will probably join in on the call, I am not the best person to grill them on gas prices (which I don’t think are high enough).
The call will feature chief economist John Felmy, as well as Ron Planting, who is API’s manager of statistical information and analysis. John testified before congress last week. You can read his testimony here.
Anyway, if you have some questions on gas prices, or about production related issues, drop me a note and I will get you in on the call. Ideally, you should be associated with some group (you could be Joe Blow from The Oil Drum), and you should have a couple of questions handy. The API said I can invite others to participate, but they want the list of participants beforehand.
The question I'd REALLY like answered is: "How can we get gasoline prices up even higher and keep them up to encourage energy conservation & efficiency?" My guess is that this question wouldn't go over very well.
;-)
Agreed, so how about a variation on the topic?
"From the perspective of Europeans, our gas prices are deceptively cheap. How do our prices stay so far below that which English or German Citizens pay, for example? (insert current EU prices) Is it a healthy energy or business policy that keeps this valuable resource 'artifically' cheap, instead of letting the rules of Supply/Demand determine what we'd be paying?"
Is that a useful way to put it in the language they would be able to hear?
Bob Fiske
This may help:
1 US Gallon equals 3.7853 litres
A pound sterling is worth 1.98 US Dollars (todays rate)
Therefore Yesterday I paid $ 1.8612 per litre or
$ 7.045 per US Gallon
Note: US and Imperial Gallons are not the same*
I am sure mainland Europeans are paying not dissimilar rates.
You have a way to go yet I think...
Still , maybe you will start to buy conventional cars that can do between 40 and 50 mpg (off the shelf, not uncommon)
* I think our gallons are bigger, like our condoms, hence we dont need such large, macho cars :-)
Instead of a "Don't fill up day" to push prices down, we should organize a "Fill up your car and jerry can day", to draw down gasoline inventories and push prices up.
If we raise gas prices in the U.S. via higher gas taxes, U.S. consumption will go down, but won't that just mean the BRIC countries (Brazil, Russia, India, China, etc.) will use more oil? The end result will be that they'll have strong economic growth and we'll have a recession. If the rest of the world doesn't also reduce consumption, how will it help the situation? Doesn't it just put more of the burden on the U.S.?
Jevon's Paradox bites again.
Antoinetta III
If you raised the gas taxes in USA to the European level, it would curtail the US gasoline consumption, and give us all moore time to mitigate the coming crisis. Is it really good for anybody, that 5% of the world population uses 25% of the global oil recources???
You in US are screwed anyway because of your high oilconsumption, and your living on credit. You will end up as a third world country.
It won't mitigate the coming crisis if other nations increase their oil consumption in response to lower oil prices due to lower U.S. consumption. Its the "prisoner's dilemma" -- The only way it will work is if all nation's cooperate and reduce their consumption. If only a few reduce, the others gain a (short term) advantage by buying the surplus oil while it is still cheap.
When world exports start to drop significantly, the nations at the front of the line will get their minimum needs met (they will cut back as well, but at a pace that their societies can accept). The nations at the back of the line will just have to do without.
So far, the nations at the back of the line are all 3rd World nations without strong exports. But Uncle Sam is next in line.
Today, we sell $2 for every $3 we buy and we export paper and ownership of US based assets to cover the rest. Basically the reverse for China.
China is working diligently to expand export markets in oil exporting nations (I remember reading that over a half million Chinese are working in Angola on a variety of development projects).
China will get what they want FIRST post-Peak Oil, as will the other strong exporters that have goods and services the oil exporters want in quantity. The USA will have to make do with what is left over (how many barrels of oil for Hollywood movies, Boeing a/c, wheat (no corn), and Microsoft licenses ?).
So we should build a non-oil transportation alternative ASAP, convert to VERY fuel efficient cars ASAP, expand bicycling lanes and parking ASAP, etc. to make what little oil we can buy post-Peak Oil go as far as possible.
The very *LAST* thing I would worry about is the United States conserving too much !
Best Hopes for Rational Planning,
Alan
If OPEC is defending a price floor (as they claim) they will just pull the oil off the market to match our cutback. So the oil will last longer.
That assumes that other nations won't increase consumption if the U.S. cuts back. That's my point -- other nations will buy the oil that the U.S. doesn't consume. China and India are growing very fast and they will take all the oil that the U.S. doesn't want. OPEC will never have to defend a price floor. The net result is that the U.S. will have a recession and other countries will benefit from more oil.
Why would higher gas taxes (particularly if other taxes were reduced as an offset) trigger a recession ?
Alan
Robert...if you care to ask these questions, I would appreciate it:
1 - Why are there so many more US refinery issues this year than what appeared as "normal" in the past?
2 - Why is the margin between wholesale gasoline price and retail price larger now than say 6 months ago?
Thanks
I will ask those.
If others have questions, but don't want to participate in the call, list them and I will try to ask them.
Cheers, Robert
Hi Robert,
If you are going to field the questions, I have one:
"The current gasoline inventory tightness appears to be aggravated by lack of increasing gasoline imports, do you see the gasoline import situation improving significantly in the near term? If so, from where?"
Thanks for all you hard work Robert!
1. Are low gasoline inventories more related to refinery utilization or lower finished product imports?
2. Assuming lower finished product imports are playing a role, how much of this is due to the fall of the dollar?
For #1 my unsupported assumption is that we are experiencing the SAME frequency of maintenance issues as before. I would forward the fact that those who own the refineries are not incompitent, and have charted what "typical maintenance" should look like for a given year. (ie every year 25 +/- 2 issues are typically needed to be taken care of)
This refinery issues problem is an artifact of running the plants at HIGHER capacity. If you move from 75 to 95 percent of capacity downtime hurts production. The news seizes on the downtime (which was typical before) and tries to place blame(why is there so much downtime). The newspapers AMPLIFY issues at hand, and the issue here is low refining capacity.
I have no hard evidence to support my statements, however I may be inclined to do a simple google search for "refinery downtime" for the yearly ranges 2000-01, 2001-02 and all the way up to 2006-07.
It may yield something useful.
No, your comments are pretty much spot on. The refineries didn't suddenly start experiencing more problems than normal (although they haven't been quite the same since Katrina). What's really happened is that we require them to run in the 95 percent range in order to meet demand, and any blips are enough to upset supply. And the media notes the price increase, and reports on the refinery issues.
Robert, this relates to another question I asked you elsewhere about the upper bound of refinery capacity and for which I was told it was simply land. However, how feasible is it to operate a single refinery in partial operation mode? If you take a refinery down for maintenance, does it almost certainly guarantee that the entire refinery is down?
If so, then the downside to simply expanding capacity is loss of redundancy. In other words, 100 smaller refineries operating at 95% capacity but where one has a problem is a far smaller issue than 10 refineries operating at 95% and one having a problem.
Thus, while it is expensive, it would seem to benefit US (at least in the short term) to encourage the building of separate refineries as opposed to simply expanding existing ones. Of course, all refineries should be planned to allow expansion too. Perhaps a better question is what number of refineries would be better for the nation as a whole in order to provide reliability of supply? Yes, I realize this would entail some cost but it would seem to be a more easily manageable cost since the cost would be spread out over the lifetimes of the additional refineries rather than creating short term volatility in the market.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
...while it is expensive, it would seem to benefit US (at least in the short term) to encourage the building of separate refineries as opposed to simply expanding existing ones.
Given the implications of Stuart's essay yesterday. It seems likely that we will soon see less that 85 million barrels per day. So why ramp up? In that scenario, refinery capacity going forward will not be an issue.
The other elephant in the room is this... the domestic auto industry is already past peak. Sales stink. Chrysler was just sold. Ford will be next. Why chase that trend with refineries?
If you take a refinery down for maintenance, does it almost certainly guarantee that the entire refinery is down?
No. In fact, you almost never - and I would say probably never with a large refinery - take the entire refinery down. A small refinery, yes. But a large one with multiple versions of everything, no. Capacity will be diminished during the turnarounds, but not taken all the way down.
Incidentally, I just now saw your post. I guess I must have replied to someone else as you were writing this one, because my search of "[n" never showed this one as a new post. I don't know if there is a way around that, but I don't like the fact that when I write a response, everything is marked as read when I post the response (that is all the posts that were being written and were completed before I finished mine).
That's all from me for today.
Since the switch I noticed that too. When I post and its taken me a while the new posts posted in the mean time get marked off as read and you miss em.
Reply in new window and CLOSE the window after post.
I'll be on the call tomorrow too. I'm not an energy techie, but will be asking more about policies indicated by their analysis. Loose cannon jacking in from left field.
Stuff like:
cfm in Gray, ME
That doesn't help. It still nukes all the "new" flags for messages that are posted while you are reading and replying.
Apparently, this is a rather intractable database issue with Drupal.
I do not hit post till I have read all the [ new ] flags, then I renew just BEFORE I hit post. Thus any posts added whilst I was reading/writing, get their new flags.
Actually, I do this about 80% of the time. Self discipline ...
Best Hopes for Infinite growth in software quality (and music),
Alan
Leanan,
It would be nice if users could set backward their own "timestamp" within a topic -- say, a button to "rewind" by 10 minutes, 30 minutes, or whatever. Just a thought.
Ah, so we can imagine a refinery as a sort of holographic image, with subsets of the refinery being refineries in themselves? Good to know.
That raises another question - how often are refinery expansions an occurrence of expanding an already existing subunit that is capable of functioning on its own versus the addition of a new subunit that can function on its own? Again, I am thinking about redundancy here and curious as to what fraction, in your experience, of these expansions are of one form or the other?
Catch you later, Robert! And yes, the tendency of the drupal software to mark everything as read is annoying. I'm sure it can be fixed but may require custom code to do so.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
A series-parallel circuit is probably a better analogy.
But isn't running the refineries at a higher capacity cause them to require maintenance more often?
If you drive a car at 95% capacity (100 mph) all the time, you will need to do the fix it more often than if you drive it at 80% capacity (75 mph) all the time.
No new refinery has been built in the U.S. since 1976.
The oldest operational refinery in the U.S. was built in 1881 in Bradford, PA.
A number of refineries were aged and corroded. Unscheduled maintenance, fires, and scheduled maintenance when they had down time for switching from making more heating oil to making more gasoline and back again in the autumn has meant that demand is outstripping supply.
A number of nations; especially Russia and China have seen car sales grow rapidly. It may take about 15 years to build a refinery in some areas due to legal and environmental issues and lengthy construction contracts. There may be enough oil left in the world to last for years, there is not enough gasoline to keep prices low today.
With rumors of an imminent peak of oil production by 2015; companies might be reluctant to build new refineries.
Because of free market economies if there is gasoline in storage for sale in Europe and someone in Asia wants it, it might be sold and put in a special products tanker and moved. This drives the price up as people realize the inventories were shrinking and they had hoarding instinct. If prices stay high, refinery capacity expansion might eventually fill the gap if demand does not grow too fast. There are 100-200 fields in the North Sea of 10-20 million barrels a piece. All of these do not equal one Buzzard field and that was one of the largest discovery in the North Sea of the past decade. The North Sea is a micro-oilfield region compared to the world, yet the world is finite and what happened in small areas will eventually show up as a global trend.
Usually gasoline inventories should be building in the spring, this year the build was coming late and the summer driving season begins June 1. The hurricane season will offically begin the same time. There has been one named storm in the US Atlantic so far this year. If driving demand drops due to high prices the inventories might build and prices stabilize or eventually drop. The world has the lowest global gasoline inventories in the past 16 years. It is not as easy as send a tanker to the Persian Gulf and fill up with gasoline when gasoline consumption was up in OPEC nations as well.
Since the current spotlight in the US is on refineries, is TOD due for an article about US refineries or the "basics" of refinery construction and maintenance?
It would also be nice to know the state of affairs of refineries in other countries if the data is available. I am sorry I do not have time to do this research and I'm sure most is on the internet.
I know we have posted refinery info. here at TOD in the past.
Wikipedia is not bad if you want a description of the unit operations in a refinery.
Refinery design and maintenance issues would make for a long post.
I would not have all the data about refineries to be an authority. Had noticed that while oil inventories were rising, gasoline inventories were falling. Some simple math and voila; refinery bottlenecks.
I could not guarantee that peak oil will not happen until 2015 either. There was a month spike in 2005 in oil production that has not been surpassed to date, although average daily 2006 production was slightly higher than 2005.
A number of forces were converging to drive up the price of gasoline.
Question:
Is the API considering endorsing non-oil transportation alternatives ?
Specifically, 1) electrifying our freight railroads and shifting freight from truck to electrified rail (sneak in if you can "and trade 20 BTUs of diesel for 1 BTU of electricity") and
2) A crash building of Urban Rail with comparable trades and
3) Massive preference and facilities for transportation bicycling.
These measures could save more oil than ANWR can produce, and "production" can only increase.
And people that rely heavily on electrified transportation are little affected by higher gas prices.
Best Hopes,
Alan
Alan,
You ought to join the call.
Perhaps.
I got a call this morning from my parents and, as soon as I wrap up loose ends, I am flying out to Kentucky to help with my mother (not life threatening).
If I do not fly out tomorrow, OK.
Send the API my standard links (posted them again near the bottom of this DrumBeat).
Best Hopes,
Alan
xxxxxxxxx
Just found out that I will NOT be flying out tomorrow. I am on "24 hour notice" to get there when/if needed.
Yes, I would like to join the call (I know that it is about bedtime in Scotland, so respond tomorrow if need be.
AlanfromBigEasy,
I heard this on CNBC this morning and thought you might enjoy it. During Berkshire Hathaway’s recent investor meeting, apparently after discussing railroads' advantages over trucking:
Question: Why didn’t you buy railroads earlier? They’ve been on a run up.
Charlie Munger: Well, we’re stupid. We should have bought earlier, but at least we’re on it now.
I have always been charmed by the humility of Warren Buffet, a trait apparently shared by Mr. Munger. Humility is, IMHO, a good trait in investing.
I bought RRs earlier (a different set than Berkshire Hathaway) and have done quite well. Florida East Coast RR was just bought out, so I need to figure what to do with my money.
One advantage to BH ownership (especially when >50%, BN-SF is only ~10%) is a long term profits focus vs. short term. Something beneficial to the nation and economy as a whole. BN-SF goes through the area served by an electric utility alos owned by BH. OTOH, BH are NOT engineers, but financial guys. I am hoping ...
Best Hopes,
Alan
Robert,
What I would like to know is that if capacity and import supply tightness are to characterize refinery issues going forward what message would refiners like to see getting out to the American consumer?
Would they like to see a push for acceptance of capacity additions or would they rather see a campaign aimed at transportation fuel conservation?
thanks in advance!
Would they like to see a push for acceptance of capacity additions or would they rather see a campaign aimed at transportation fuel conservation?
Ideally, they would probably like to sell more product. So they would probably like to see the permitting process streamlined. But I have heard a lot of insiders - including my own CEO, in private - call for increased conservation. Now, whether they think that way when the market is amply supplied, I don't know.
Peronally, I think we have a lot of fat to cut in the area of conservation. I think the U.S. could cut its oil usage by millions of barrels a day without too much long-term pain. But we won't do it. We will wait until the market does it to us.
I think the U.S. could cut its oil usage by millions of barrels a day without too much long-term pain. But we won't do it. We will wait until the market does it to us.
Robert,
Wow! Yes so much fat. If we were a corporation we would certainly be doing some streamlining right now I'd imagine. It just seems that we are using too short a horizon if we don't push conservation.
If there is substantial damage to fuel infrastructure from any foreseeable above ground factor during one of these tight spots some sectors might have trouble recovering, no? How about a gasoline or diesel SPR?
thanks again!
The corporation I own, while only a small internet service provider, is seriously minimizing energy consumption. Far beyond the ROI. I see it as a matter of resiliency. We used to have maybe a dozen machines on 24x7 in the office - not including the colo - functions separated and redundant. Now we are putting all the functions on two machines, with others that can boot up to replace. And I wonder if those two can be laptops powered off PV. They will be on next hardware cycle. I want grid to go down and us to stay live. That's where I'm steering customers too.
I don't know that actually qualifies as "conservation" replacing server grade machine with a laptop. That might be sort of like replacing my 40mpg older honda with a prius. Too bad Moore's Law doesn't apply to cars. On second through, good thing it doesn't.
cfm in Gray, ME
As noted a couple of days ago in a Drumbeat, I have been impressed with the Apple Mac Mini (dual core Intel, choice of 1.6 or 1.8 GHz). Laptop technology in a compact form and power consumption in the 25 to 40 watt range (per blogs).
Can be operated under Windows (both Apple & 3rd party software AFAIK) and Linux.
6.5" rounded square, 2" high. Auxiliary drive (ANY ATA 3.5" drive) can be mounted in Firewire connected inclosure (6.5" rounded square) for extra storage capacity.
I would grid connect PV (perhaps and/or small wind turbine) and buy largest UPS available# (potentially several). Minimize power use (corded keyboards & mice, turn off Airport). In an extended blackout, turn off connection to grid and have PV/wind feed batteries. Wind would keep the all night drain on the batteries from happening.
# You do NOT need maximum watts drawdown, but maximum amp-hours. I might get a smaller UPS (with a 12 V lead acid battery) and attach an Optima yellow or blue top battery/ies in parallel.
Best Hopes,
Alan
"If we were a corporation we would certainly be doing some streamlining right now I'd imagine."
Well, a lot of corporations have been and are streamlining: aka outsourcing & lay-offs. How much more energy efficient can you get than to start load shedding one's own US employees who contribute to the consumption of 25% of the world's resources! That's one way of creating a portion of US demand destruction, albeit not a nice coordinated way.
As far as the US government goes, I believe it was recently reported that our armed forces are the biggest users of oil, but expecting that we'll be cutting back on all their wasted ways of use is far fetched. My gut tells me we'll continue to feed this foreign land orientated war machine even as the homeland goes belly-up. Now that's short-sighted!
"It just seems that we are using too short a horizon if we don't push conservation."
Indeed!
I do suppose the "US could [otherwise] cut is oil usage by millions of barrels a day without too much long term pain," but the "market" -- whether financial, political, social, or technological -- isn't properly set-up to engage such a "long term" "conservation" outcome without a vast short term upheaval. (Just what is a steady state resourse and economic based world like? Now try imagining getting there if we haven't any real ideas as to what it means.)
Hence, we'll continue to unquestionably genuflect before the holy shrine of the 'free-market' medicine of creeping oil prices (and all it's other betrayals of our long term prospects).
IMHO, this "market" reliance has usurped all our better senses while positing that the seven deadly sins will help promote and provide for Heaven on earth.
Count me a non-believer, at least until we suffer a lot more pangs of market placed based faith.
That's one way of creating a portion of US demand destruction, albeit not a nice coordinated way.
Certainly.
What you are describing here it seems is a kind of death by a thousand cuts to the US economy with fuel prices being one element. The slow, deliberate but uncoordinated elimination of the employment of the least affluent will be working it's way up. The unhappy progression is that while many have all the money (and energy) they can burn the subtle fact seemingly escapes notice until later on. In this pyramid scheme the viability of the whole depends on the survival of the majority.
My gut tells me we'll continue to feed this foreign land orientated war machine even as the homeland goes belly-up. Now that's short-sighted!
Mine too. TPTB will be in a position to prioritize. I see the producer world of energy having a long hand-out line of higher to lower priority users extending from the source to the last consumer. These include the extractor, the export consumer and his military, the 'protector's' military, the import country's government, agricultural production and transportation, and then finally the (optional) domestic consumer.
(Just what is a steady state resource and economic based world like? Now try imagining getting there if we haven't any real ideas as to what it means.)
We'd maybe start by doing triage. It might be noted if the typical present consumer of a product has a high degree of disposable income or not. What is the least productive and unessential product that is the most vulnerable to high fuel prices. (perhaps the junk food industry as a thought)
And on the other end what is the most essential and the least vulnerable to fuel costs. (perhaps locally grown produce) What steps can be taken to convert an unsupportable sector over to some more useful function? (unused motel space to workers quarters)(snack food production to local whole food processing) I think this will be happening de facto as failing businesses are either abandoned or taken over by new ideas. Will it take us to 'steady state'? We seem to be going to 'lower state' like it or not.
Since the proactive solution approach is not dominant then a more adaptive one may be our best shot.
Hence, we'll continue to unquestionably genuflect before the holy shrine of the 'free-market' medicine of creeping oil prices (and all it's other betrayals of our long term prospects).
IMHO, this "market" reliance has usurped all our better senses while positing that the seven deadly sins will help promote and provide for Heaven on earth.
Very powerful stuff. And true. The essence of peak oil, and what the market thinkers don't seem to realize, is how buoyed up every process has been by the unseen, nearly free, energy extravaganza of the past. The limited dispersal of this lifeblood in the future will mean myriad formerly successful business models will utterly crumble.
The synergy of collapsing consumerism coupled with surging energy costs to the producer will catch so many endeavors by surprise.
Have to acknowledge your conclusion that the natural selection process we will undergo will not be pretty. Also unfortunately the 'market based faith' probably has a ways to run yet.
As many folks begin to see futility in the growth based economy they will begin independently to take steps to build something more sustainable. There certainly will be alternatives tried. This new paradigm will not be utopia but hopefully it'll be better than living off the ruins of our consumer way of life!
Interesting question. One thing I am certain of: "steady state" need not imply "static and unchanging". Creativity and discovery can continue to enrich our world and improve our quality of life, even given an unchanging level of resource utilization.
I am also certain that efficiency and productivity and conservation must become supremely important; these will be the primary values around which all economic and social and cultural activity must be oriented. Note that if a creative way is invented to do more with less, then this creates a surplus that becomes available to use to do something else that previously was not possible. Such gains (call it economic growth if you will) will be hard won, but not impossible to realize.
It follows from these premises that such a steady-state society/economy must be predicated on the elimination and avoidance of waste in all of its forms. The circle must be closed and everything recycled. Nothing must be produced or bought unless it is really truly needed; much modern marketing and advertising would become an utterly antithetical practice in such a society. Everything that is built must be super durable and repairable -- no more throwaway junk. Needless to say, anything that uses any form of energy must be as efficient as possible, and energy-using things must be kept as minimal as possible.
Avoidance of waste also means putting everything and everyone to their best productive use. How can inputs of scarce resources for the maintenance of grass lawns be justified when those yards could be put to more productive use growing fruits or vegetables? How can we afford for any able-bodied or able-minded person to just sit idle when there are socially or economically useful tasks to which they could be employed? Even if the value added by such work is minimal, and even if the pay for such work is therefore less than a living wage and must be supplemented, it would still make sense to engage such people to produce whatever added value that they can. Retirees and unemployed people sitting at home and doing nothing would thus become a distant memory in such a society.
There would still be banking and finance in such a steady state economy, but in a very different and probably much reduced form. A steady-state economy implies a steady state money supply; both inflation and deflation of the money supply must be prevented to avoid introducing distorting market signals into the economy. With a steady state money supply, the scope for returns on investment through either capital gains or interest would be considerably lower than what we presently experience. There would still be a positive rate of interest, because all productive assets -- incuding money -- would necessarilly have to have a rental value to assure maximum productive allocation and to avoid waste. In such an economy, if sufficiently complex, there is still plenty of room for a wide range of financial intermediation. I am less sure how much scope would remain for what is essentially speculation. In a steady state economy I would imagine that risk premiums would be considerably higher than what we work with today.
The above is by no means a complete outline of what a steady-state economy would look like, but I believe that these things are pretty much essential and inevitable.
How we get from here to there - that's another question!
I'd like to run the following through the TOD Meat Grinder and see if there is anything like a usable question for your conference call:
"Everyone is looking for a scapegoat in the rising prices of gasoline. How long do you suppose it’s going to be before someone starts touting these numbers in the main stream media?
The USA uses about 10 million barrels per day of gasoline. That’s about 400 million gallons being used by a population of 300 million or about 1.3 gallons per day.
There are some where between 10 and 20 million illegal aliens in the USA – Maybe more? If each is consuming the average USA number of 1.3 gallons, then the illegal aliens are consuming 13 to 26 million gallons of “our gasoline” every day. If all the illegal aliens were deported tomorrow then our consumption would drop by 13 to 26 mg/d and there would be 13 to 26 mg/d more going into inventory for a net gain of 26 to 52 mg/d. (6.5% to 13% of total consumption?)
In these very tight gasoline supply times that would very likely result in a drop in gasoline prices. I have no idea exactly what the price drop would be, but would be interested in hearing from the petroleum professionals here what they think the drop might be. As little as 5 cents per gallon to maybe $1.00 per gallon?
So, are all the legal citizens of the USA paying a lot more at the pump for gasoline because of the illegal aliens in the USA? Is Joe Sixpack forking over $30 more than he should have to if it weren’t for the illegal aliens being here every time he fills the tank on his SUV?
Could this be one of those issues that could start fueling the fires against illegal aliens (or even legal aliens)??"
And at least give me time to get my asbestos undies on before you TOD folks turn your flamethrowers in my direction.
You aren't the first I have heard argue that point, but I am not touching that one. Too much potential for misinterpretation.
I would bet that illegals are using less gasoline than average Americans. For financial, legal, and logistical reasons it is more difficult for them to own a car in the first place.
If we could magically find a way to remove all the illegal immigrants from the US we would trade what is probably a relatively small amount of demand for gasoline for a large amount of cheap labor. There is a good chance we would replace at least some of that labor with petroleum-powered energy.
Politically it's an argument with too many "what ifs." Big oil makes a much more identifiable target. Furthermore the anti-immigrant platform is a populist movement and does not share the support of business. It's also a geographically contrained issue as only 1 in 4 Americans believes that illegal immigration is a serious problem in their own community.
There are enough people in the US who are "fired up" enough about illegal immigration/undocumented people/whatever your preference that they need not make that series of intellectual jumps...requires too much thinking of our fellow Americans. At any rate, even on this forum, one regularly is confronted with xenophobic comments.
Jon, be careful what you sow.
Most of the people in the US are not native by any stretch of the word. They are all immigrants who wanted a better life and were willing to work their tails off to get it. The current group of "illegals" is no different, just a few years later than the rest of us.
Hate machines quickly build a life of their own. The Germans ended up destroying their own country and all around them.
Compassion is always a better plan. There are too many young people in Mexico for the number of jobs. We should be supplying free birth control and health care. Then there would be no need of fences and multi billion dollar patrol agencies and Mexico would be in excellent economic shape.
China's April Crude Oil Imports Rise 23 Percent to New Record
http://biz.yahoo.com/ap/070515/china_oil_imports.html?.v=1
3.62 mbd
China imported more coal in April
http://www.businessweek.com/ap/financialnews/D8P4O7GO0.htm
China's coal imports rose 27.1 percent from a year ago to 4.92 million metric tons in April
China,
1)Buying oil with dollars?
2)Converting dollars to oil?
3)Buying long term US debt?
I'll take door #2...and a tank farm for $500 mil. please.
I have though the Chinese would use those reserces for resources and it is the smartest play. Buy what you need with junk paper. Sweet!
Gas prices hit a new record at the pump
This "crisis" has been a long time in the making. I have been warning of this for months. If you watch the EIA inventory reports, it has been obvious that we were headed that direction. In fact, a month ago I even got into a little debate with Doug MacIntyre - author of This Week in Petroleum. He argued that prices were likely to fall from April levels. I argued that they would keep going up. See the second half of:
This Week in Petroleum 4-18-07
I am just waiting for Doug to concede that I nailed it. :-)
Predicting that gas prices will keep going up through summer is more like "thumbtacking it" or maybe "double-sided sticky taping it", but you were right. :)
Predicting that gas prices will keep going up through summer is more like "thumbtacking it" or maybe "double-sided sticky taping it", but you were right.
Understand, though, that I have been warning of impending trouble since February - and not just that prices would go up through summer. We all know that prices head upward when summer arrives, but I argued that this year was going to be remarkably tight and would likely see record prices. And the EIA actually disagreed, arguing on several different occasions that prices were likely to moderate. They also forecast that prices would top out well below $3/gallon.
You, Doug and FTX have provided great insight to this sub-crisis rushing towards us. FWIW, I think you nailed the price situation perfectly.
Didn't everyone pretty much agree that this week is a milestone per se?
IMPORTS of gasoline must rise significantly this week.
Or this summer will see new thresholds of price 'gouging' in the eyes of J.Q. Public.
Looking forward to the analysis of tommorow's inventory reports.
IMPORTS of gasoline must rise significantly this week.
At this point, I think it is impossible to avoid a record low inventory situation going into Memorial Day weekend. I would have to do some checking, but I think it would take an incredible inventory build.
FWIW, I do think gasoline inventories will rise tomorrow as the high prices start to bite into consumption a bit. But it's too little, too late.
Does this mean just high prices, or do you think there may be shortages in some areas?
A commenter on the housing bubble blog - in one of yesterdays threads noted that there were sporadic shortages in the Colorado Springs area.
There was a long thread on that story with gas price observations from around the country. The person who commented about the Colorado shortages, when asked how much he was paying, replied that he wasn't paying anything because he was siphoning fuel from a Lexus owned by one of the real estate agents at a nearby subdivision.
I think that was a joke...
Last summer they didn't bother siphoning - too many cars have locks on the fuel doors and anti-siphon devices in the filler neck.
Instead what they were doing is punching a hole in the bottom of the tank and sucking the fuel out - I guess they have some homebuilt gizmo that can do this in a somewhat inconspicuous manner. My recollection was that they were mainly going after big vehicles - ones with big fuel tanks. My little 15 gallons isn't of interest to them when there are bigger fish in the sea.
Talk about your really bad gas mileage. Try zero miles per gallon on for size. Perhaps they are transferring gas from gas guzzlers to Priuses and other high mpg cars. It's called direct action to deal with peak oil and global warming.
No, that's called theft.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
I see some potential for much higher prices if we don't dig out of this hole a bit. I don't think we will see any major shortages; maybe some like we have already seen. After all, there is still a pretty good cushion - 20 days or so of supply. But, this is much lower than normal, and as long as this is the case it will keep steady pressure on prices. And repealing gas taxes (which I just wrote about in my blog; thanks for the links) won't help matters.
If we skate by this summer with no major refinery upsets or hurricanes, we could see prices not too much higher than they are now. But with the current inventory situation, we may be one gulf hurricane away from breaching $5 in a hurry.
Do you remember that e-mail I sent to TOD Staff at the first of March? "Ominous OPIS"? That was when I was coming to grips with the potentially unprecedented gasoline situation this year. I should have bought a crapload of gasoline futures.
Of course at some point not that long from now we'll have to start talking about heating oil. It is not quite as big a deal as it used to be, but the refineries are going to eventually have to stop going full throttle out on the gasoline and start working on heating oil inventories.
20 days is not much cushion---it counts gasoline in product pipelines and barges/railcars, tankers, etc. We are very close to "just in time" for gasoline. The MBA's have been trying for this for years, to sweat out any surplus so as to not tie up cash in inventories, and they have succeeded in reducing the days of supply needed by about 40% over the past 25 years. We will have shortages, and they will cause some needed "demand destruction." They may also start some hoarding, which if it spreads, will compound the shortages. Last time, in the 1970s, the effect of the hoarding was hard to overestimate. Half a gas tank==say six gallons times 200 million vehicles is a lot of oil--about 30 million barrels, or about 4 days of supply. nearly a 20% drop from where we are in inventories. I am very glad I have a TDI too. This is going to be a 'Clusterf#ck' to kick off Kuntsler"s long emergency.