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179 comments on DrumBeat: May 20, 2007
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179 comments on DrumBeat: May 20, 2007
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GAIA Host Collective
and another question.. what is total refinery capacity in the US against total consumption?
ie. what proportion of gasoline has to be imported?
Incidentally, that 70/30 analysis is mine. Stuart was coming up with some different answers.
To meet demand, right now we require roughly 1.3 million bpd of a total consumption figure of around 9.4 million bpd. In peak season, that demand number will go up to about 9.6 million bpd and the import number will need to follow (which also depends on how high refinery utilization goes).
I think I have decided to write a post on exactly why gasoline prices are rising. There are 3 factors to explore: Supply is down. Why? Imports are down. Why? And demand is up. I am doing a bit of research right now.
does it seem feasible to you that there may be refineries in africa and elsewhere that are processing less now than two years ago because local economies can't afford the price and because the refineries aren't fitted out for exporting products?
No doubt demand is down in many 3rd world countries. While we have been experiencing record demand here in the U.S., since crude production has been flat someone must be getting by with less.
Your question made me curious about refineries in Africa, so I poked around and found this:
http://www.mbendi.co.za/indy/oilg/ogrf/af/p0005.htm
Be interesting to see some production statistics from some of the African countries, but I am not sure that information is readily available. We end up with anecdotal evidence.
I think this also opens up a big can of worms as the worlds crude supply gets heavy and sour.
This link seems very good.
The topping reforming refinery is what we consider a simple refinery. So this means many of the third world refineries are probably only efficient with light sweet crude.
The implication is these countries will not have the capitol to convert to complex refining and thus we should see the poorest nations suffer the worst since they are competing for light sweet crude or refined gasoline with America.
I think this is the reason that refined gasoline on the global market is in short supply its now cheaper for the poorest countries to import refined products then to run their light sweet refineries. This is probably what is driving the Brent price since its Nigerian light thats the key.
This will get worse as the production of light sweet declines.
Yet one more time it looks like the pressure that peak oil puts on the oil infrastructure will ensure that we will have serious problems well before the predictions of geologic peak based on capacity. So we have indeed in essence lost a bunch of refining capacity because of the peak of light sweet even though the total oil volume has not decreased as much.
Because of above ground factors such as this the effects of peak oil are advanced by 1-3 years beyond what a simple supply analysis indicates. Of course Nigeria is now the biggest exporter for the US over KSA so it seems we have no intention of letting the poorest countries even get the light sweet they need to sustain themselves. I think my musical chairs/russian roulette model is correct. We can't even handle the peak of light sweet crude.
"I am doing a bit of research right now."
If you didn't see it, I put a comment towards the end of yesterday's DrumBeat which may be relevant. High Asian demand for naphtha may cause problems for the US this summer as exports from Europe are sucked East. It's also interesting that Saudi Aramco has apparently informed Asian suppliers that it will be cutting supplies of naphtha in the second half.
For anyone who wants to make their own (eyeball) judgement on the relationship between WTI crude and RBOB gasoline, here is the chart. It'll take a few seconds to load, and once it has done so drag the left hand side of the time period bar so the chart extends out from the initial 200 days to 658 days. Then look at 2007 vs 2006.
Brent may tell a slightly different story.
that is a very interesting chart with a very large spread opening up since Feb this year.
if only we could do the same thing for Brent and TAPIS oil price, which i think would track regional gasoline prices a little more closely.
Go back clear through 2006 and you see the exact same pattern as we are seeing now - as summer driving season comes along, the price of gasoline climbs above the price of crude and stays well above or just slightly below til roughly early August when if falls well below crude again.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
... and how much of the rise is from the dollar decline (if any) ? Does that have an indirect effect on oil prices (since other currencies can bid more aggressively for oil than we can ?
CW
Global peak: 2007 - 2010
Global decline rate, Post peak: 2%
Economic response: Severe global recession, ~5 years, then slow recovery