Not any time soon. A more important question is do our politicians have the intestinal fortitude to extract the oil we have and refine it once extracted? Sadly, the answer is probably the same - probably not any time soon.
Vasko Kohlmayer shows us The Truth about Oil:
According the Energy Information Administration as of January 2007 there was more than 1.3 trillion barrels of proved crude oil on earth. Even if this were all the oil on the planet there would be no immediate danger of shortages, because at the current rate of consumption – roughly 85 million barrels a day – this supply would last for more than 40 years.
But the 1.3 trillion in these so-called proved reserves refers only to a tiny fraction of earth’s oil, designating only that portion which can be extracted under current ‘economic and operating conditions.’ As it happens, this figure grows with each decade and usually dramatically so.
In 1882, for instance, there were 95 million barrels of proved petroleum reserves. This number jumped to 4.5 billion in 1926 and then to 10 billion in 1932. In 1944 the quantity stood at 20 billion. In 1950 it leaped to 100 billion and in 1980 it was 648 billion. In 1993 the world’s proved reserves grew to 999 billion, and today they stand at 1.3 trillion barrels.
These figures show that our ever-increasing consumption has not over the years reduced the pool of available oil. In fact, the exact opposite is the case – each successive year we have more of it than ever before. Contrary to the conventional wisdom, mankind’s oil supplies are not getting depleted, but they keep continually expanding.
Read the whole thing. There is a lot of good information.
The general public, however, is largely ignorant of these facts. The divergence between the conventional wisdom and reality could hardly be any wider. Profoundly misinformed and alarmed, people place false hopes in misguided alternatives. Rather than implementing harmful, inefficient and expensive substitutes, we should insist that our government lift the obstacles which prevent us from availing ourselves of this superabundant resource.
113 Responses to “Are We Running Out of Oil?”
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May 9th, 2008 at 9:56 am
What good do the reserves do us if liberal prevent us from drilling for it and block any attempt to build new capacity to refine it. If we fail to present an energy policy that does not include drilling and refinery capacity expansion the price of a gallon of fuel will continue to increase at alarming rates.
The oil companies are willing to spend the capital necessry to increase oil production and refinery capacity in the U.S. If we will just let them. I blame the government for the present mess.
May 9th, 2008 at 10:00 am
Hamous just hates our children and our beloved benefactor, Gaia!
May 9th, 2008 at 10:18 am
Great article Hamous.
As an aside, methinks the general public is generally ignorant of many things and is quite happy with the oblivion.
May 9th, 2008 at 10:21 am
#2 I fear she will exact revenge:
May 9th, 2008 at 10:22 am
I just never have gotten a grasp on this whole energy problem as to why we have one. When I moved to Texas in the 1950’s, driving from Houston to Galveston was nothing but non-stop pumping oilwells. I can’t remember the last time I saw one of those. With the current price as it is, why aren’t the pumps going like crazy. In this article, it appears we have the oil. Our good friends in Kuwait are just loaded with oil. It would seem we could get all we want from them. Someone fill in my many questions on this.
May 9th, 2008 at 10:30 am
Reply to No. 1: I’m with you. If the liberal, environmental wackos had not imposed their will on the American public, we would not be in the crisis we are in now. Let the oil companies use their billions of dollars of profit to build more refining capacity to meet the global demand. If the numbers are true and our consumption goes up and so does our KNOWN reserves then economically the price should go down (supply and demand economics). But when you hender the supply side by limiting the extraction and production, the price has to go up!!!! Thanks Dimwit Libeals, you managed to screw something else up!!!!!
May 9th, 2008 at 10:35 am
It will also be interesting if the abiotic oil thesis proves true.
May 9th, 2008 at 10:43 am
Hamous,
I think I will trust the Oil & Gas Journal first. Your link looks as cheezy as Wisconsin in the summer.
Simple
May 9th, 2008 at 10:46 am
“America is sitting on top of a super massive 200 billion barrel Oil Field that could potentially make America Energy Independent and until now has largely gone unnoticed. Thanks to new technology the Bakken Formation in North Dakota could boost America’s Oil reserves by an incredible 10 times…”
http://www.nextenergynews.com/news1/next-energy-news2.13s.html
“Recent discussions regarding the advent of a peak in global crude oil production generally fail to address the potential of America’s rich, massive oil shale resources to augment petroleum supplies”
http://www.fossil.energy.gov/programs/reserves/publications/Pubs-NPR/40010-373.pdf
“Man working to convert all that grows into fuel surprised by ‘inattention’”
http://wnd.com/index.php?fa=PAGE.view&pageId=61808
We have what we need, so let’s get it.
May 9th, 2008 at 10:51 am
6 - Has it ever occurred to you that maybe the refiners do not want any more refineries…as it keeps supplies low and prices up? And why have refiners closed many of their refineries over the past 20 yrs?
And why are the current refineries only operating at 85% capacity…should they not make a REAL effort to ramp up production to 92-95%?
And I am just sure you and your fellow conservatives would love to have a refinery in your backyard or next to your kid’s elementary school…
May 9th, 2008 at 10:51 am
What exactly do you disagree with, Simple?
May 9th, 2008 at 11:04 am
#10 I grew up with refineries ‘in my backyard’. Refineries are great sources of well-paying local jobs. Gas and oil products have to come from somewhere.
May 9th, 2008 at 11:13 am
Here’s one under the “2 birds with one stone”…
Mescans(and Jorge Bush) want us to give them $500 Mill in (supposed) law enforcement equipment and training to fight the cartels and for border enforcement.
I say OK, as soon as we recieve 3,968,253.96 barrels of Pemex crude in return.
May 9th, 2008 at 11:16 am
We ran out of $20/bbl oil a long time ago, but then we found lots of $30/bbl oil and so on. The harder the gov’t makes it on the producers and refiners (read onerous taxation, ridiculous restrictions and regulations) the more expensive crude and its products become. If an operator can not produce the crude at the market price level and make a reasonable profit margin (at least 10%ROI) the crude will stay in the ground.
When one harkens unto ignorant, emotion-driven, liberal/marxist eco-nazis destruction always follows. Remember what they said about the Alaska pipeline, how the carribou would be exterminated? Reality reveals that the carribou benefitted from the pipeline because it warmed the immediate area and prevented the ground from freezing and allowed the vegetation to grow longer thus providing more food. The warmth also helped the animals as they did not have to deplete fat stores as much to survive. Remember also bacd in the late 60’s early 70’s it was global cooling that was going to kill us all; and then it was the “population bomb” etc. etc. Let us not forget that Bill Clinton declared one of the largest known high-quality coal fields a nature preserve and prevented its exploitation to the benefit of the Riaddy family in Indonesia. The libs try to squeeze us to gain power - plain and simple. The harder they can make it for the average joe to make it on his own the more they “need” government. The more power we allow to the nanny-state elitist nazis the worse it is for all of the rest of us; just look at history, it happens every time it is tried.
May 9th, 2008 at 11:49 am
In the early 70’s I was working for the DOD at Ft Detrick Md. Had a part time job pumping gas at an Exxon station next to the fort.
If I remember correctly due to the “gas shortage” we were only allowed to pump gas depending on the odd/even number of the car plates.
The only thing I know for a FACT was there was no “gas shortage” like people was led to believe. I received a number of calls from our supplier of gas during this time; they wanted to make a delivery. Told them no, as I still had too much gas in the storage tanks. We were “encouraged” by the supplier to pump gas no matter what the restriction was.
Was amazed at the number of “friends” I had from my day job that dropped by to “talk” and “oh by the way, mind filling the tank”
May 9th, 2008 at 12:01 pm
From Victor Davis Hanson, who asks if “ecologically speaking, drilling oil in about 2000 acres in the north of Alaska is all that different from dotting our mountain ridges and coasts (ask the Kennedys et al) with enormous windmills or creating vast acres of solar panels throughout our fragile deserts or covering our roofs with panels and pipes and assorted gadgetry.”
May 9th, 2008 at 12:19 pm
14, could not have said it any better.
15, you are remembering correctly. Also, remember how funny it was that the “gas shortage” mysteriously dissapeared when the price per gallon suddenly jumped to $1.00? Funny how that works.
As our technology increases, we will continue to find more and more oil and gas. We have more in the ground than we can possibly use in hundreds of years. And we’ll keep finding more.
What’s stopping us from getting it? The liberal eco-nazis have stopped us from drilling for it. Might hurt the environment. Let me tell you, the Gulf of Mexico right now is cleaner than it ever has been after what, 50 or 60 years of drilling? I’ve personally been to the North Slope where those evil drilling rigs are going to town. Cross my heart, there are more caribou herds than ever before. And it is the same everywhere. Turns out the oil and gas folks are good ol Americans who like a clean country and actually do something about it!
Drilling in ANWR? Drilling offshore Florida & California? Hurt the environment? BALDERDASH!
May 9th, 2008 at 12:42 pm
REDEMPTION and proof that I was right all along. I have always maintained that if the oil companies were allowed to explore and invest in tech, that more oil would be found….
May 9th, 2008 at 12:55 pm
40 years is not very far off. Went by pretty fast for me.
May 9th, 2008 at 1:04 pm
#17 TexKraut
Your kidding right?! The Gulf of Mexico is not cleaner that it ever has been.
May 9th, 2008 at 1:11 pm
#20 that is only because of all of the illegals taking baths in it down in Galveston.. and the CRAP running out of NO into it…
May 9th, 2008 at 1:12 pm
houstondem # 10;
in response I looked Googled (sorry to use such vulgarity here) refinery capacity and this is from the first hit. I don’t know all the lingo terminology but it seems that refineries are either at full capacity or not used at all or a smal part of the refinery is not used. I’ve alread heard as much for the former but for the latter, I don’t know why they are not being used.
Regardless, I’ve purported literaly as long as I can remember to build more refineries. I’ve always looked to refinery construction as a sign of progress.
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/refinery_capacity_data/current/table1.pdf
May 9th, 2008 at 1:12 pm
HoustonDem, source your information and please ensure that they are credible sources. Most refineries run at 95% or better. Refineries wear out. They need permits to rebuild/build new ones. Liberals block the permits.
May 9th, 2008 at 1:17 pm
Bonecrusher #14;
Excellent point. If I may, allow me to add that oil extraction would also help people. The people of ANWR would benefit greatly from the development of oil drilling. From my understanding, Native americans (Eskimos) are among the poorest ethnic group in the US. They also have high mortality rates. Oil drilling would totally foster develpment and investment into their communities; including hospitals.
May 9th, 2008 at 1:21 pm
22, 23 - straight from the EIA
http://tonto.eia.doe.gov/dnav/pet/pet_pnp_unc_dcu_nus_m.htm
23 - Now you need to cite when and where “liberals block the permits”. Especially since we have been in the minority for about 28 yrs now.
How many refineries were approved and scheduled to be built in 2005-2006 when CONSERVATIVES held the white house, senate and house? Zero. I
n Bush’s energy bill did he authorize new refineries to be built? Nope.
You guys are giving environmentalists too much credit. They are not nearly as powerful as you seem to think they are.
May 9th, 2008 at 1:24 pm
BigIron# 23;
From what I pulled from Google (sorry for the vulgar word) it looks like 95% capacity is correct. Also I’ve understood that one reason a sneeze in the Middle East triggers oil prices to shoot up is that the drilling and refining processes are at their peak and so anything to potentially distrupt that peak would result in the inability to meet all the oil needs and therefore drive up demand and thus the higher oil price.
Drilling more and building more refineries are keys to prevent these price spikes. And from my understanding, oil execs are totally willing to oblige. But too many liberals (Dems & Repubs) fight against that.
May 9th, 2008 at 1:25 pm
houstondem
just wondering, if we are running the refineries at 85% capacity why are we now importing refined fuel from outside the United States? Why is it that at least 2 new refinery permits have been in review for 5+ years and appears to be no where near being approved?
I do not know why any oil company would even bother given the onerous process they have to go through to get permitted, then spend several billion dollars to construct the plant to produce a product that they make about 8 1/2 cents a gallon on currently. It makes even less sense when you have 2 Presidential campaigns promising to take the evil oil company profits and redistribute them to people that refuse to take care of themselves.
May 9th, 2008 at 1:27 pm
houstondem # 25;
Republicans might have controlled tCongress, but never Conservatives. And Bush in *NO* cConservative. Liberals should be happier he’s in office.
May 9th, 2008 at 1:37 pm
And liberals block the permits in COURT, no in congress.
May 9th, 2008 at 1:38 pm
Houstondem - Liberal Bill Clinton vetoed all legislation passed by a conservative congress related to a sound energy policy. Once we had a president that would have signed such legislation, and who has proposed a sound energy policy, the liberal Senate democrats filibustered such legislation so that it never made it out of congress. Republicans have not held a 60 vote majority to stop it.
http://www.heritage.org/research/EnergyandEnvironment/wm1112.cfm
May 9th, 2008 at 1:43 pm
27 - Maybe because they are running at 85%. Maybe because we don’t have enough refineries.
Hey I am not denying a shortage of gasoline. My point is that the oil companies and refining companies have no desire to build more refineries. From a business point of view it does not do them any good to build more refineries. Especially when you are making record profits. But it is silly to blame the “tree-huggers”. It’s not that hard to lobby for the oil companies and get new refineries built…yet it has not been done.
May 9th, 2008 at 1:48 pm
Yes it has…killed by the liberal Democrats and their Birkenstock-wearing allies.
May 9th, 2008 at 1:49 pm
20, oh yes it is.
May 9th, 2008 at 2:00 pm
#32
The oil refinery project in Arizona started the permitting process for what is to be a 150,000 barrel per day plant in 1998. With luck they may be able to start construction in late 2009 or early 2010. Construction could be complete by 2015. They have spent in excess of 30 million dollars just trying to get the permit and will spend in excess 3.2 billion on construction.
All of this to build the cleanest state of the art refinery in the world, in a remote location with argue ably 90 percent local support.
With all of this going for them it still took 10 years to get to the construction phase. Why would anyone subject themselves to this if they were not committed to building a new refinery?
Why would anyone else would want to go through the crap?
FYI- there is no shortage of gasoline if you are willing to pay the price of imported fuel. If you want the prices to go down we need 2 things, more oil and more domestic refining capacity. As long as liberals continue to block the efforts to get more of both you can expect to see the prices to rise and you can thank your liberal friends.
May 9th, 2008 at 2:02 pm
32 - When?
Again you all are missing the point. As far as building refineries - this just goes to simply business. If it’s profitable to build them, they’ll be built.
The reality is that its not smart business. A new refinery would take years to build - if the prices are really spiked due to temporary concerns about the Middle East, Venezuela, Nigeria or whatever it makes no sense to invest assuming today’s prices will last.
In addition, with all the move towards alternative fuels, is it really worth building a refinery that could be useless in 20 years due to reduced demand?
Refineries are long-term projects and require looking at long-term horizons. If prices rise in the short-term, the oil companies don’t care - that’s just more revenue with limited additional expense, as we’ve seen in recent years.
Oh and upon a little research they are trying to build a new refinery - in Arizona. But apparently they are having trouble getting investors. No trouble from the eeeeevil tree huggers and no trouble getting permits.
May 9th, 2008 at 2:03 pm
#34 Right. And on top of that, now the liberal Democrats are trying to impose a windfall profits tax on oil companies. Only in the minds of socialists is a 10% profit called a windfall.
May 9th, 2008 at 2:06 pm
#35 - I showed you one example in #30
And, as trl3 pointed out, it took 10 freaking years to go through the permitting process for the plant in AZ. 10 years! Is it any wonder they’d have trouble finding investors?
May 9th, 2008 at 2:09 pm
LOL HoustonDem, shame on you using selective data:
Look at all refineries here:
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/refinery_capacity_data/historical/2007/table1.pdf
I see utilization rate of 97.5%.
Let’s review the numbers as of January, 2007:
Atmospheric Crude Oil Distillation Capacity:
U.S. Totals:
Capacity barrels per day: 17,443,492
Operating: 16,997,792
Idle 445,700
Utilization: 97.4449%
Houston Dem, they do have to have down time for maintenance you know!
May 9th, 2008 at 2:14 pm
The permit for the Arizona Refinery took 8 years and 30 million dollars to get. Is that what you define as trouble free permitting? Investors were extremely cautious and hard to come by given the threat of lawsuits by environmentalist. Funding has been secured and Construction is set to commence next year.
10+ years from conception to start of construction all due to environmentalist obstruction or threat of obstruction.
The Engineering and constructions phases together can be completed in 3 1/2 to 4 years. If not for the obstructionist during the permitting phases the plants we need would be on the ground.
This is really a joke on the environmentalist because any new plant would be cleaner that the producing plants (all of which are 30+ years old)we are forced to keep on line.
May 9th, 2008 at 2:15 pm
36 - Yeah because the tax subsidies given to the by the conservative republicans has worked so well!!!
May 9th, 2008 at 2:16 pm
38 - “Let’s review the numbers as of January, 2007″
Uh you may want to look at the calendar. It is May 9, 2008.
May 9th, 2008 at 2:18 pm
Houston dems ask how many plants were permitted in 2005 and 2006 and answers zero. This is not true, the answer would be 1, the only one approved in 30+ years because of Liberal interference.
May 9th, 2008 at 2:20 pm
42 - Are you talking about the arizona refinery? “The oil refinery project in Arizona started the permitting process for what is to be a 150,000 barrel per day plant in 1998″
Your words not mine…
May 9th, 2008 at 2:20 pm
houstondem #35
Former Conoco-Philips exec was on Pat Gray and Edd Hendee and pointed out that if you put in *all* alternatives fuels into the pot, they would make up only 20% (maybe he said 25%) of the fules we need. Oil and nuclear power are the best means to provide the fule resouces we need.
May 9th, 2008 at 2:23 pm
Only a liberal could define a small reduction in the taxes of entities paying tens of billions per year in taxes a subsidy.
May 9th, 2008 at 2:25 pm
Hey Houston Dem, let’s take a good look at the numbers from your website in YOUR #25:
http://tonto.eia.doe.gov/dnav/pet/pet_pnp_unc_dcu_nus_m.htm
Remember this is the website you provided HoustonDem. Let’s look at those Feb 2008 numbers, the last given:
Operating Capacity: 17,588,000 BPD
Operating: 17,259,000 BPD
Idle: 328,000 BPD
Now I don’t know where they got 85%, but I calculate a utilization rate there of 98.13%!!
What do you come up with in your math?
May 9th, 2008 at 2:29 pm
houston dem
You really should learn to read. The process was STARTED in 1998 it was permitted 8 years later during the 2005 2006 time period you cited.
Any time it takes 8 years and 30 million dollars to obtain a permit for a cleanest refinery known to man, being located in a remote area with 90 percent local backing something is wrong.
Then you have the environmentalist wackos trying to scare away investors by threatening to file lawsuits which could delay the project even more causing the investors to lose their investments.
May 9th, 2008 at 2:32 pm
46 - Gross Input to Atmospheric Crude Oil Distillation Units / Operable Capacity = Operable Utilization Rate.
In fact it has gotten worse. “U.S. refineries operated at 81.4% of their operable capacity in the week ending April 11, the Energy Department’s statistical arm said last week. The last time the utilization rate fell below 80% was in October 2005 after hurricanes Rita and Katrina devastated refineries along the U.S. Gulf Coast.”
http://www.marketwatch.com/news/story/gasoline-refiners-slow-output-rate/story.aspx?guid=6634214A-A8E7-423F-9A0A-C5119FC8661C&dist=SecMostCommented
May 9th, 2008 at 2:33 pm
Big45Iron
I am ashamed of you for exasaguating. That is only 98.1294 percent utilization.
Did they happen to mention that we use 20+ million. The excess has to come from somewhere.
May 9th, 2008 at 2:37 pm
#48
That would be the time they normally go down for maintenance and for the formulation retooling required by government regulation.
May 9th, 2008 at 2:39 pm
There are 161 different grades of crude oil as defined by the Department of Energy. Individual refineries are constructed to refine some, but by no means all, grades of crude. Crude can vary tremendously in content and consistency. Heavy, sour crude from Venezuela and California is not suitable for the light, sweet crude operations indigenous to the Gulf Coast. Oil thicker than molasses is expensively extracted from Lake Maracaibo. And yet, when my uncle ran operations for Tenneco (Tennessee Gas) in Bolivia during the 1960s, they had raw crude that would pool out of the ground. His men would pour it through a strainer/filter and put it in their diesel trucks and drive off.
The worldwide production of light, sweet crude like West Texas Intermediate and North Sea Brent has been steadily declining with the balance made up by heavier, higher sulphur oil. The bottom line is it is more expensive to refine and produces less finished product ber barrel. Unfortunately, the increase in world refining capacity in the last decade has been almost exclusively in light sweet crude operations. Coupled with the fact more nations are demanding cleaner burning, lower sulphur gasoline and diesel, this has resulted in an actual net reduction in fuel capacity.
One major problem in the United States was the result of the hurricanes on the Gulf Coast in 2005. Most of the scheduled maintenece shutdowns were postponed because of the lost capacity from Katrina. Much of that had been done piecemeal or not at all and the fires and explosions in many refineries in 2007 have been attributed to those delays. Additionally, many of the refineries which have not undergone shutdowns for maintenance have reduced or stalled portions of their operations in order to keep them going under stressful conditions and out of safety concerns. Also, refineries, under alot of pressure from many corners, are trying to do maintenance a little at a time inorder to avoid a complete cease of operations. That explains much of the approximately 15% under-utilization.
Oil drilling, transportation, refining and delivery is a very complex industry and does not lend itself to easy solutions, no matter how hard the ignorant and uninformed complain.
May 9th, 2008 at 2:45 pm
Let’s see - 30+ year old refineries will be inherently less efficient than new ones. Add to that the downtime due to tree hugger-mandated seasonal turnarounds to produce envirowhacko-friendly blended fuels (now causing food shortages in third world countries) and 85% is probably a high number.
May 9th, 2008 at 2:46 pm
Houstondem
The only thing standing in the way of new refinery construction is the onerous permitting process and threats of lawsuits by environmentalist. It just is not worth the Time, Money, or Aggravation, only to have Liberal presidential candidates claim that they are evil money grubbers getting rich off the back of the poor and vowing to confiscate they profits.
And the truth is the Government gets more out money from the oil companies and through the sale of oil related products than the oil companies do. And the Government does not produce a damn thing for they money they siphon off.
May 9th, 2008 at 2:50 pm
Houstondem
I have to wonder at the logic of people who think a 10% profit is too high. Just think of all the jobs the evil oil companies are providing. If you want to jump on evil companies for excessive profit, how about credit card companies that get approximately 3% of each credit card sale and then sometimes charge 30% interest, compounded daily, with various excuses to ding customers with late charges. Why not start in on them - they don’t even produce anything we use.
May 9th, 2008 at 2:52 pm
#33 TexKraut
So a “dead zone” in the Gulf of Mexico the size of New Jersey is a sign of being cleaner than it’s ever been?!
May 9th, 2008 at 2:55 pm
trl3
It is not just environmentalists. Over 50% of the 300 million Americans now live near or on the coasts or the Great Lakes. Most of the new residential construction in these areas is decidedly upscale. Unfortunately, constructing refineries near the Intracoastal Waterway is the most efficient and monetarily intelligent thing to do.
None of the new coastal residents want new refineries built near their property so much of the local political opposition has been bi-partisan, shall we say. The other financial obstacle has been the popularity of coastal living has driven land costs throught the roof which has also been a factor in locating refining plants.
Daniel Gross wrote this 4 years ago for Slate.com:
http://www.slate.com/id/2102031
May 9th, 2008 at 2:55 pm
#55 Isn’t Christopher Walken in The Dead Zone? Maybe the Gulf of Mexico just needs more cowbell!
But seriously, the “dead zone” is primarily due to the outflow of the Mississippi River, not oil drilling in the gulf.
May 9th, 2008 at 2:55 pm
Oil is still being created. Each day is the final day for somewhere to have oil created. I think people think it’s finite. Now our demand could ( I suppose) one day over-reach the making, but this article makes me think it’s way in the future.
May 9th, 2008 at 2:56 pm
Question for HoustonDem
If it is your position that the failure to drill for oil in the U.S. and that refining capacity is more than sufficient in the U.S. just exactly what is it that is causing the prices of gasoline to go up to it’s current record levels and just what can be done about it?
May 9th, 2008 at 2:56 pm
HoustonDem, did you bother to read that article? What does it say about profits?
May 9th, 2008 at 3:01 pm
51- Basically you are making the same argument that I am making. It’s a BUSINESS. It does not behoove them (refiners) to run at 95-98% capacity or else they would. They shut down the gulf coast refineries in 2005…so why did they not repair them to operate at full capacity? It also does not behoove them to build more refiners or else they would.
It’s not as complicated as you make it out to be. Less refineries = more profiit. In a capitalist society there is nothing wrong with that…but don’t blame the enviromentalists.
And we are forgetting the biggest culprits of the price spike - the speculators. I know LST’s balls-to-the-wall capitalists will come to their defense but the fundamentals do not justify the current price of oil and gas.
May 9th, 2008 at 3:02 pm
#56 Texpat
I agree with you.
Then what is it that held up the permitting process for a state of the art plant planned for Arizona the would refine heavy crude, would be the cleanist operating plant in the world, is located in a remote area, has the backing of 90 percent of the local people, and a capacity of 150,000 barrels a day.
May 9th, 2008 at 3:06 pm
Texpat
Also one one the lessons we should have learned from Katrina and Rita is that the refineries need to be dispersed better.
May 9th, 2008 at 3:07 pm
60 - Which is why you don’t see a rush of new refineries. Re-read #35.
May 9th, 2008 at 3:10 pm
houtondem
Almost every major oil company in the U.S. today would be willing to build a new plant if it were not for the onerous permitting process and treat of lawsuits from the environmental lobby.
The Arizona plant is not the only permit submitted in the last 30 years to construct a new plant. They are they only ones that did not eventually give up because of the process.
May 9th, 2008 at 3:11 pm
Three facts:
1. It takes 20 years (or more) to get your money back on a refinery.
2. Refining operations lose money, as they do now, when there are big run-ups in raw material pricing.
3. Major oil companies would much rather have lower steady oil prices than flucuating markets like today. They can establish predictable ratios and spreads in their refining operations and make a reasonable and good profit. Chasing oil and gas finds and putting enormous amounts of money at risk is not what they really want to do. Wildcatting is not their bag.
May 9th, 2008 at 3:13 pm
Texpat
What is your assessment of what it will take to stop the prices from continuing to spiral out of control? I am pretty sure there is no short term solution, I am wondering what you think must be done in the long term.
May 9th, 2008 at 3:13 pm
HoustonDem, what would have happened to gas prices in 2005 had the refineries stayed down long enough to modernize in 2005? What would have happened to the supply of gasoline in 2005 had the refineries stayed down in 2005? How long would it have taken the refineries to get permits to modernize in 2005?
Why can’t we taze environmentals?
May 9th, 2008 at 3:14 pm
Make that “Why can’t we taze enviromentalists?”.
May 9th, 2008 at 3:21 pm
#57 hamous
The guy made a blanket statement that the gulf is cleaner than it ever was. My bro in law (staunch conservative) works for Texas Parks & Wildlife Dept. doing research on the coast. The gulf aint clean. The research says so.
May 9th, 2008 at 3:24 pm
#61 houdem
No, they didn’t. They were pressured to not do shutdown maintenance the last 3 years to keep prices from spiking even higher. Typically, each year a refinery will shut down completely, usually for 30 days, and the place fills up with contractors who will overhaul everything from stem to stern. That has been happening very seldom since Katrina and Rita hit. It is also my understanding there is still a refinery or two in Louisiana, seriously damaged, which are operating at severely reduced capacities.
May 9th, 2008 at 3:34 pm
#67 trl3
I don’t see any short term solution. New refining capacity would help a little, but it comes down to the cost of crude. And the things I see brewing in the Middle East are not going to contribute to any lower prices soon.
May 9th, 2008 at 3:37 pm
The “dead zone” will get worse too because of increased corn production (increases fertilizer runnoff) for ethanol. Strike another environmental disaster up for the “Environmentalists”.
May 9th, 2008 at 4:10 pm
Guys Houstondem does not understand the facts that it requires an ocean of paperwork, and environmental “studies”, as well as getting people to drop the NIMBY attitude about refineries. Most refining companies would love to build new or upgrade their existing facilities but the red tape and regulations are so anti-improvement, that most companies simply do not try anymore.
http://www.corpwatch.org/article.php?id=12227
Now Houstondem can you tell me how to fix this situation?
May 9th, 2008 at 4:11 pm
#73
Actually the dead zone may get better because the high prices of fertilizer are forcing Farmers to be very careful about the rate of fertilizer being put down. When fertilizer prices were cheap and corn prices high they were over fertilizing in hopes of increasing the yield.
That said using corn to make ethanol as a gas substitute make absolutely no sense whatsoever.
May 9th, 2008 at 4:13 pm
Hamous here is permit # 2 that has been approved.
http://www.courier-journal.com/apps/pbcs.dll/article?AID=/20080502/NEWS02/805020470
Then look at what they are doing with the expansion.
This site is 119 years old…. now tell me what other manufacturing facilities are still running at sites that are 119 years old?
May 9th, 2008 at 4:17 pm
#72 Texpat
So you agree with me that there is no real short term solution and the long term solution involves drilling for our own oil, increasing U.S. refining capacity, and use of reasonable alternative energy sources. (ie more nuclear electric generating plants) I also understand that an almost pollution free coal fired plant may be available in the near future.
May 9th, 2008 at 4:19 pm
One other thing from that previous article on the AZ Refinery…
Looks like job creation, and the last time I checked the government does not do that to well.. Individuals and corporations do. It is time for the environmentalist, and NIMBY mentality to get out of the way and let the risk takers do what they do best. Build industries, create jobs and stimulate the economy.
May 9th, 2008 at 4:19 pm
#77, there is also NG and liquified coal as options for electric power.
May 9th, 2008 at 4:20 pm
Houstondem
I am still waiting for your opinion of what is causing the high gasoline prices and your solution.
May 9th, 2008 at 4:24 pm
I don’t know the background on the Arizona project so I can’t really comment on it. I’m not so sure there would be a rush to build new refineries if you removed the enviromental obstacles. When you crunch the numbers for a refining operation, they are not so great given the time it takes to recoup your investment. That is a function of the cost of construction which contains very stringent enviro regs realtive to earlier times.
I had a friend back in the 80s and 90s who held positions with Shell USA and Royal Dutch Shell. He was a petrochemical engineer and a self-taught computer super-whiz. He designed the hardware and wrote the software to computerize their refining operations. He spent years and years traveling the US and the world installing these systems.
He told me they used to make, for instance, a batch of paint thinner in one refinery and it would take them four complete processing runs before they got the chemical content right. Other times with other products, they might do 4 or 5 runs and end up junking the batch or salvaging only half of it. With his new system, they ran it once and got it right nearly 100% of the time. Those types of huge increases in productivity are not reflected in those government statistics we have been throwing around today.
Computerizing our refineries was the equivalent of building dozens more and is a major reason, until now, the pressure has not been great enough to force construction.
Also, they paid my friend enormously well. He was able to retire at a fairly young age. They were always terrified he would jump ship to somebody else.
May 9th, 2008 at 4:27 pm
Don’t forget as a quid pro quo to the Riady’s for helping him get $6 million in illegal campaign funds funneled from Red China, Clinton did this:
http://www.laissez-fairerepublic.com/indocoal.htm
http://www.washingtonpost.com/wp-srv/politics/special/campfin/stories/cf052797.htm
May 9th, 2008 at 4:28 pm
Texpat, the point is that we as a country are now importing about 10% of our gasoline, but that would not be the case if the restrictions were removed so that as the need for additional capacity could be satisfied either by expansion of existing facilities (which also takes an act of god) or the building of new more efficient facilities.
May 9th, 2008 at 4:29 pm
From bweldon’s #78
See my 3rd and 4th paragraphs above in #81
May 9th, 2008 at 4:33 pm
Now would be the time to start construction while they have profits to work with. There won’t be much incentive to build when they’re paying the proposed 25% tax on their profits.
May 9th, 2008 at 4:33 pm
#82 bweldon
I don’t disagree. However, while increased domestic refining capacity will ease the price of gasoline and diesel somewhat, the huge problem remains the cost of the raw material in a fungible and erratic global market.
May 9th, 2008 at 4:35 pm
Big45 #69;
We should taze environmentalists. That would ease up their stupid restrictions AND keep our police in shape (chasing them down and tazing them). Such thoughts make me happy.
May 9th, 2008 at 4:37 pm
#85 that is where drilling in the US/Canada and Mexico come in. Canada is currently our largest supplier of imported oil, why not support and encourage our neighbors on both sides. As well it would reduce the transportation costs and keep us from having to compete with the rest of the world. The current numbers show that there is enough know proven reserves right now in US-Canada-Mexico to provide for all 3 countries for 40 years. Why not encourage that, the liberals say we should not be over in Iraq fighting for oil, their words not mine, so why not say I want complete North American independence from OPEC and other countries. Think of the shock that bring to the markets..
May 9th, 2008 at 4:37 pm
Hamous, can you check the spit bucket for me please?
May 9th, 2008 at 4:47 pm
#87 bweldon
Good points all. The most diificult obstacles with Mexico involve their constitution and laws prohibiting foreign investment and contractors from working in their country. The only upside to that is it keeps the Chinese from getting in there right now and they are drooling over Mexican oil.
May 9th, 2008 at 4:49 pm
#89 Big
See #82.
May 9th, 2008 at 4:53 pm
#90, actually that rule is being re-evaluated and it looks like foreign investment up to 25% will be the final decision, simply because a large portion of Mexico’s unproven reserves are either in Deep water, or things like oil sands and such.
and Mexico does not have the tech or experience to do those things.
May 9th, 2008 at 5:12 pm
74 - Public Transportation
80 - Speculators. I like the idea of higher margin requirements for futures trading.
May 9th, 2008 at 5:21 pm
#93
I can believe that speculators are part of the problem. Surley your total solution is not “public Transportation”?
May 9th, 2008 at 5:33 pm
Public transportation can be a part of the solution but not all. Magic trains that go from the Astrodome to downtown don’t make much sense. There are a lot of abandoned rail rights-of-way that should be looked at from the major suburbs into Houston. Back in the early ’80s you used to see a lot of company van pools. Tax incentives used to be available for those, I assume they still are.
I live 1/2 mile from work so I’m already doing my share ; - )
May 9th, 2008 at 5:34 pm
Taxing the crap out of energy companies is not a solution.
May 9th, 2008 at 5:48 pm
Commodity markets function best when they are open to as many people as possible. There are speculators in the market and always have been. There have been any number of people state here they should be removed from the markets. This proposal assumes there will only be oil producers and oil refiners participating in the futures markets for oil.
There is one fundamental problem with that. Everybody goes to jail because it would then be called price fixing. Cartels like that are prohibited by US law. The fact it is open to all makes it public and not private.
May 9th, 2008 at 6:38 pm
The only solution I’ve ever seen that made sense was in Virginia. I saw people up and down I-95 drive their cars up on flatbed train cars, and the train went into Washington, DC. Sooooooooooo simple. Why haven’t I seen it used anywhere else?
May 9th, 2008 at 6:39 pm
I was kind of hoping HoustonDem would have a response to my #82.
May 9th, 2008 at 6:46 pm
#98 Big
There have been at least three different promoters try to raise money to get that sort of operation going in the Dallas/Houston/SA/Austin triangle. No one has been able to do it yet. I first saw it talked about in the early 80s.
May 9th, 2008 at 6:52 pm
Texpat - wonder why? Could it be that there’s no money in it for government?
May 9th, 2008 at 7:03 pm
85 hamous,
Oil Companies do not pay taxes. You pay the taxes at the pump and thru every product made by some derivative of oil.
Taxes on the oil companies are about as worrisome as a cloudy day, since they will all have to “pay” the same taxes.
The big players in the oil business are not Chevron-Texaco, BP, Shell, or Exxon. The top tier of oil companies will be PDVSA, Pemex, Petrobras, Aramco, BSP, and all of the other government owned energy companies. They too will find a windfall profits tax as worrisome as a cloudy day. They also sit on 70 - 85% of the readily available reserves. No accident that Halliburtan moved its corporate headquarters to Dubai….That is where the oil is.
There is a lot of energy in the continental US and Canada in the form of shale, tar sands, and coal. We will develop and use these sources, but the pricing of the oil will rise a little more. Processing plants and refineries will have to be built, but this takes time.
Nukes will have to be built also; this too takes time.
Conservation is something that can be done immediately.
It is all about buying time.
Simple
May 9th, 2008 at 7:08 pm
90 Texpat
What makes you think the Chinese are not already in Mexico or Venezuela for that matter?
They are loaning the two governments money for energy projects and are being repaid in oil and oil options.
Pemex is our single largest client. They have been for years, although at different times they took a slight second seat to Petrobras and PDVSA.
Simple
May 9th, 2008 at 7:11 pm
People think oil is high, they should pay attention to what the price of metals has done over the last couple of years. Alot of metals are on allocation right now.
May 9th, 2008 at 7:17 pm
104, Big
Or for that matter the price of cement…sheesh you would think the stuff was made of gold.
Simple
May 9th, 2008 at 7:29 pm
79, bweldon
By NG I am assuming that you mean Natural Gas. I believe it is getting in short supply too. Many of the Cogen operations that opened up during the nineties are shutting down because they can no longer make a profit due to rising fuel costs. The margins on Cogens were always tight, but the amount of money they get for the electricity is at a loss now. They only make sense if the operator has a use for steam generated by the waste heat.
Coal brings its own curse. Coal is high in Sulphur, which must be removed prior to turning it into diesel.
But it beats shivering in the dark
Simple
May 9th, 2008 at 7:49 pm
Simple, on coal, see my #82.
May 9th, 2008 at 8:52 pm
#103 Simple
I never mentioned Venezuela.
I specifically limited my statement to Mexico with the geopolitical ramifications implied by its immediate location to our south. The other factor I had in my mind, which I did not mention, is we have allowed front companies for the Chinese military to gain control of the east and west chokepoints of the Panama Canal.
The Chinese started moving into Venezuela when I was still doing business there in 2001. They started making inroads immediately upon Chavez’s reinstatement after the coup. The media has presented the entry of the Chinese as something that has occurred recently when, in fact, I believe Chavez had something cooked up with them bfore he ever was elected the first time.
May 9th, 2008 at 9:25 pm
Texpat, don’t forget China’s control of U.S. ports too. Fortunately, the Panama Canal isn’t as vital as it used to be for shipping. We can move product faster coast to coast now then we could 60 years ago.
Realistically though, since Bill Clinton sold our ICBM staging and guidance systems to Red China, it’s kind of a moot point what they control. Red China has proven they can accurately target ICBMs and have developed and deployed them. They have a new strategic submarines under cnstruction which are really hidden from us - and they can launch in deep water so are far less detectable. So what places they control aren’t really that important. As we were with Russia, we must now depend on MAD to keep us from going to war.
But at any time, should Red China decide they want Taiwan, they will be able to take it unless we are willing to risk a nuclear exchange to preserve Taiwan’s independence. I am hoping Taiwan at some point detonates a nuclear device just to show Red China they shouldn’t depend on a huge military to cow the USA into turning their back on Taiwan.
My best hope is that Red China slowly (of faster) becomes more democratic, and that the two nations merge peacefully. But until that happens, the nuclear genie will be pushing to get out of the bottle.
May 9th, 2008 at 10:22 pm
#109 Big
The Panama Canal is being widened, deepened and new larger locks added so it can handle the largest ships in the world. In a couple of years, it will be much more important and strategic than it has been in the past. It will, for one thing transform East Coast trade with the Pacific Rim. The ports up and down the Eastern Seaboard are having hissy fits because some of them won’t be ready for the deluge of huge container ships coming up from Panama. Port of Newark/Elizabeth is in big trouble over bridge clearances for these new boats incoming.
May 9th, 2008 at 10:52 pm
Once again I must reiterate that WE have a 6 month window to Blame Much of the oil price on Congress. I am talking about boundless deficit spending lowering the Dollar so much that it plays heavily into the rise in Oil prices. Lets yell loud and often and make them accept some of the blame.
May 10th, 2008 at 3:32 am
Simple - that’s my point exactly. Any tax on “big oil” is a tax on the consumer. The latest push by the dems for a windfall profits tax will only hurt us.
May 13th, 2008 at 5:26 pm
I know it is late to post here but I just ran into this video. I read about this process a while back and forgot about it.
Not the answer but, I think, a significant piece in the puzzle that is energy.
thermal depolymerization
http://uk.youtube.com/watch?v=CWf9nYbm3ac&NR=1