<DrumBeat: June 30, 2007The Oil Drum"Energy Resources and Our Future" - Speech by Hyman Rickover in 1957>

103 comments on Refinery Utilization Rates and Increase in Use of Heavy/Sour Crudes

Comments can no longer be added to this story.

memmel on July 1, 2007 - 11:45pm Permalink | Subthread | Parent | Comments top

Sorry meant imports of light sweet into second third world refiners that tend to be of the simple variety in the poorer countries. You have to look at where the economic growth has been in the last few years and the bulk of the increasing demand is outside the western nations. Lists of refineries by country are readily available and the concentration of simple in the poorer countries seems pretty clear. Now this does not consider gasoline/diesel imports so its not a complete picture I'm sure they also import significant quantities of finished products but you can see they are probably paying more than their fair share for the recent price spikes.

I just don't think looking at US numbers without understanding the world situation better is not a good idea. I've never liked the focus on the US. I've always felt that by the time real problems start happening here we will be well and obviously past peak. Assuming we peak in 2005 this would mean late 2008-2009 before we should begin to see supply issues here. In the interim reading to much into data from the US is probably a mistake.

I've got no idea why we let our gasoline prices slide so we are not attracting the imports we need this summer this just seems to be simple stupidity but I'd have to guess that the first place we will get hit will be with gasoline imports at some point in the future people are simply not going to cause shortages at home to keep the US market supplied or we are going to fail to compete with closer customers who pay less of a premium. Note the Koreans ship to the Asian markets and the US the US has to cover the additional shipping costs beyond simple price competition. And if things get tight I suspect the jocking for export gasoline will not just be done on pure economics and its not clear th e US will win every round.

So all I'm saying is that when the US eventually has problems it will in my opinion show up in problems securing gasoline imports not oil. And I think the earliest this could occur would be summer 2008. Also if you think about it the oil market itself could be changing fairly rapidly right now so what was true three or six months ago may not hold right now in general we are looking at data thats inexact and often wrong so its fair to consider that we may not really know whats happening for some time. Right now the problems are probably generally in areas we don't have good data which I don't like but the gasoline import/export situation could easily get difficult fast so its something to watch.

Why don't you tell us how you think peak oil will first effect the US besides the obvious of increasing prices.

0
Comments can no longer be added to this story.
OilcoEx on July 2, 2007 - 5:15am Permalink | Subthread | Parent | Comments top

You will stay confused as long as you keep putting the cart before the horse. We don't "let our gasoline prices slide so we are not attracting the imports we need this summer"

First, we are getting plenty of imports. Imports are well above the typical levels of years before Katrina (ie, have to ignore fall 2005 to summer 2006). See

http://tonto.eia.doe.gov/dnav/pet/hist/wgtimus24.htm

Second, who is the overarching "we" that decides to lower prices? Prices slid because production is coming back restoring inventories to a safer level. Speculators liquidated their length when it became apparent there would be no shortfall. The market isn't prescient but it does reflect the common wisdom of the moment. There are more sellers than there were so prices have move back to just too high from obscene.

I don't think peak oil will effect the US beyond increasing prices. There is still a lot of wasteful demand out there that can be trimmed. Ditto countries that import that cannot compete with us for the marginal bbl. They may suffer, but we'll get all the mogas we wish to pay up for.. the only caveat is if Venz, with their enormous export capacity mostly aimed at us, decides to supply other nations for less money instead.

Its not like suddenly one day the world will be short 10% of demand (barring some political upheaval). The tightening will be slow strangulation like a boa constrictor. We'll have a flat supply curve for years and years. And as prices rise, we'll shift demand to other energy sources -- electric cars etc. Kunstler's collapse is bollocks IMO.

0
Comments can no longer be added to this story.
memmel on July 2, 2007 - 10:36am Permalink | Subthread | Parent | Comments top

The cart may well be before the horse as you say but US gasoline inventories have slid to dangerous levels. A hurricane anywhere in the gulf that causes refineries to shutdown simply as a safety precaution could well lead to shortages. Letting our gasoline inventories get close to critical levels is a national problem not a industry issue.

I'm not happy with the current situation and it has nothing to do with prices if we have a hurricane this summer I suspect I'll not be alone in this sentiment.

This is the problem.
http://tonto.eia.doe.gov/oog/info/twip/gtstusm.gif

The west coast is the only place we seem to have decent gasoline stocks so we should be importing gasoline like mad.
Considering a 1%+ demand increase each year and the refinery problems we are having we should have already seen record breaking imports of gasoline. Instead we seem to have embarked on a grand experiment to discover exactly what our minimum operating levels are before we see widespread shortages. But hey I live on the west coast and we get our gasoline from Korea so its not my problem. We at least are not playing the same game.

And finally I am in agreement at least initially for the US I don't see sudden shortages. Later on I disagree mainly since I can't see us going forever without upheaval a world of ever increasing energy costs will not be a nice one.

As far as Kunstler a simple observation once living hours from work and commuting is not perceived as efficient then the value of the far flung suburbs will decrease all thats needed is a trend downwards to stall and reverse suburban expansion people will not buy a deprecating asset. I know for a fact that at least in my field Americans will no longer move too silicon valley to work if they have families and a lot of the senior programmers are leaving and working remotely like a lot of the American employees that work for silicon valley companies. The only people left are either rich executives or H1B's/immigrants living in crappy apartments and condo's with illegal migrant workers. At each economic downturn the immigrants scatter and the H1B's go home.

This goes into the general problem that prices are set at the margin slow squeeze concepts although nice tend to ignore this at some point the situation changes. Silicon Valley has changed into a overpriced slum unless your rich.

0
Comments can no longer be added to this story.
OilcoEx on July 3, 2007 - 3:59am Permalink | Subthread | Parent | Comments top

you seem to approach this perceived problem (gasoline shortfall) from a command and control economy viewpoint. Just who is the "we" in the system that would import gasoline as a buffer and take the price hit if it isn't needed?

We are NOT at some scary level of stocks. We're on the low end of normal and I suspect just like NAIRU, the predicted level at which the shit is supposed to hit the fan is higher e than the reality. When push comes to shove, the system will get by on a bit less. 200 million bbls is a hell of a lot of oil. It's roughly a tank and a half for every person in the country.

Your West Coast gas is not coming from Korea to any great extent. I'm going to guess 90%+ is made in the PAD V refineries. Just 20 years ago, I was exporting US mogas to Japan and Korea. Korea overbuilt refinery capacity not long after so now at time they may well have a tad of surplus for export. California gas is pain to make. We used to find it in odd spots like Finland for example. You need refineries that can make octane without aromatics and with low RVP. Not any easy equation.

0
Comments can no longer be added to this story.
Aniya on July 3, 2007 - 9:19pm Permalink | Subthread | Parent | Comments top

Hello OcE,

Thanks for your comments. I've asked previously and still wonder:

1) re: "There is still a lot of wasteful demand out there that can be trimmed."

- Where do you see this? Could you explain a little further?

- Can it "be trimmed" without altering (presumably in a negative fashion) the economy that relies upon it?

2) re: "... beyond increasing prices."

How do you expect the price increase to effect the economy?

3) re: "Ditto countries that import that cannot compete with us for the marginal bbl."

So, those countries (as entire countries) can "be trimmed"?

What does this look like?

And...what about say, China, deciding to simply purchase contracts, rather than bid for or "pay for" barrels?

And...how does the "we wish to pay up for..." come into it? does this rely on a "healthy dollar"? Or what?

What about US debt?

4) "...suddenly one day"

What about Memmsl's idea concerning the probability of shortages?

5) "As prices rise..."

What about Deffeys' (and others') argument that we will see, not a gradual rise, nor a "slow strangulation", rather increasing volatility in price?

6) And then, of course, the "finale" of a question:

re: "...we'll shift demand to other energy sources..."

And use those energy sources to...

--devour the last fish in the sea?
--in other words, introduce other non-energy resources, which are nonetheless critical in the spot they occupy?
Example, water supply.

7) And may as well ask you about Venezeuala:
re: "...with their enormous export capacity mostly aimed at us, decides to supply other nations for less money instead."

What do you see as the deciding factors on the part of Venz. - either way?

What do you see as "pre-emptive" actions US can take, if any?

0
Comments can no longer be added to this story.