Another huge oil discovery in Brazil.
What's amazing is not so much that Congress won't allow us to pump oil, which we badly need to do. They won't even allow us to look for it, especially if it's in a "pristine" (aka barren coastal plain, frozen in the winter and a mosquito-infested bog in the summer) region, at least according to Senator McCain.
What are they afraid we might find?
Drill here, Drill now, Pay less? Heh.
Simberg takes direction like a well trained canine. I've heard that the papist K-Lo also listens to the same sources. Sigh.
If you really think this is going to save the Republicans, er, you know, that party you don't belong to or vote for, think again. Rasmussen has Obama beating McCain in VA and Warner at 60 to your pathetic GOP Gilmore at 33. This is hard stuff for morons to swallow. Puckett for example will probably rise to the bait and gag.
The last time Simby was gorging on popcorn about the Dems impending doom, the only thing that really popped was a stinky cork in Simberg's sewer.
Rasmussen has Obama beating McCain in VA and Warner at 60 to your pathetic GOP Gilmore at 33.
I'm not a Republican, Elephant Felcher #3. Do you have a point?
Yeah right. Simby's not a Republican! And McCain calls his wife c**t as a term of endearment! Right.
"Rasmussen has Obama beating McCain in VA and Warner at 60 to your pathetic GOP Gilmore at 33. This is hard stuff for morons to swallow. Puckett for example will probably rise to the bait and gag."
I have $1000 that says McCain carries Virginia. Will you drop your anonnymity and accept my wager?
BTW, Warner is not running as a libtard
Ohhh! Obama has a one point lead in poll of 500 voters!
Just admit who you are. If you are so confident in your victory, this should be easy money.
We KNOW where the oil and gas are. We could be punching holes off the coasts of CA and FL tomorrow in mapped, proven reserves. We could be devolping oil shale projects with current tech. The folks in a SD county just voted to allow an refinery to be built but, of course, some environuts plan to sue to try and stop it.
John Ellis Bush and Governor Arnold are key leaders the fight to prevent drilling off the coasts of Florida and California.
Aren't they Republicans?
Although in Arnold's case it is getting harder and harder to tell. Even for me. ;-)
PS -- I would prefer investing in this approach to giving away federal land for drilling:
Crude oil from microbes:
One of our clients in SE NM thinks they're sitting on top of a new field, but the state and the feds won't let them drill. Seems there's underground salt water and drilling will, somehow, taint the purity of its essences.
ANWR could be opened up for drilling, and drilling could commence off the Florida and California coasts, and a million barrels a day could come out of the oil shale deposits, and it still wouldn't make one penny difference at the pumps.
The refineries in the US are already operating at over 99% capacity. Unless new refineries are built, supply cannot increase no matter how much crude oil there is. Even if ground is broken on new refineries today, they won't come online for years. Of course, enviroweenies have prevented the increase in refinery capacity for decades, and are now reaping what they sowed.
Won't take the bet huh? That tells us everything we need to know about what anonymous coward Fletcher thinks will really happen.
"A wimp can't hang, a wimp shouldn't have came."
Ed is right on target here. This isn't about crude oil prices (though in time that will matter as well), but refinery capacity and the issue of 'boutique blends' that exacerbate the problem. Both of these issues spring from the curse of environmentalism...
As someone who knows a bit about refineries, Ed, let me be the first to tell you refinery capacity is a red herring. Refineries operate at near top capacity because that's efficient. They're very expensive things. Why would you not run one at full capacity? That'd be like buying two computers when you need only one. Wasteful.
Also, if the costs of refining were the big problem here, you'd see a big gap between the price of crude oil and the price of gasoline and the price of gasoline would not track the price of oil as closely, but would instead track the ups and downs of refining, e.g. you'd have seen a much bigger price jump when Katrina hit the Gulf states (where almost all the refineries are) than when the price of oil shot up. Such is not the case.
Carl,
With respect (and I also have some experience with refining, and energy trading in general), you are mistaken. On the subject of refinery capacity, there is a BIG difference between operating at near maximum (which does tend to maximize efficiency in the short term, as you correctly point out) and operating AT maximum, which leaves the system hopelessly inflexible, and subject to massive shortages whenever even small interruptions occur. This is precisely why boutique blends are such a problem. Since it is difficult to store gasoline for any period of time in quantity, as the refinery must adjust for each different blend that is produced, the operators have to calculate the minimum amount of every blend they produce so as not to be caught with excess inventory on hand. This tends to lead to spot shortages, and serious market disruptions. Very little excess refinery capacity (typically 1% or so) means that there is no way to respond to sudden market shortages or other interruptions (natural disasters, maintenance issues, etc.), which means that the intermediary (i.e. futures traders) become overly sensitive to market signals and hence bid up the prices. This explains why the cost of shipment (the differential that you suggested would occur based on distance from the refinery) and tracking (gasoline prices tracking crude oil prices, which they do not) don't happen, as both of these phenomenon are 'swamped' by the behavior of traders responding to inflexible suppliers.
Add more refineries (and even an extended building program would not reduce usage to below 85-90% capacity), and the system becomes MUCH more flexible. This would force commodities traders to become less sensitive to bidding up, as they would run the risk of being caught with excess holdings themselves. All of this would have a strongly negative (in the absolute sense) impact on gasoline prices, and while it doesn't solve the problem, it would certainly help things along.
What's more amazing to me is that everyone thinks that it's any of congress' g/c biz what is or is not exploited on this planet. If property was sold off, it could be used - you know, by man.
When I was in law school 18 years ago, the United States was using about 75 "quads" of energy per year. If I recall correctly, a quad is 1 quadrillion BTUs. I'm sure it has increased since then, what with the digital revolution becoming a household thing.
So, the question is: "Where are we going to get the quads?"
Drill for more domestic oil? Nope. Too environmentally risky.
Nuclear power plants? Nope. Too environmentally risky.
Gas fired generator plants? Nope. Same problem as oil - you gotta drill to get the gas.
Wind power? Nope. The blades are Waring Blenders for migratory birds and besides, they make the horizon ugly.
Geothermal? Please. Get real.
Oil shale? Nope. Have to mine for it. Enviro problems.
Coal? Nope. Have to mine for it. Enviro problems.
Solar? Nope. Would have to cover up too much desert with panels, which means enviro problems.
Hydro? Nope. Can't dam up any more rivers.
Import more oil? Nope. Too much money goes to Islamic terrorists and whackjobs like Hugo.
Conservation? Certainly wouldn't hurt, but its just a band-aid. We may be willing to drive more fuel efficient cars and all, but we are not going to live without our planes, trains, automobiles, A/C, computers and servers, TVs, radios, MP3 players, ovens, fans, printers, copiers, sweepers, fax machines, ceiling fans, dishwashers, clothes washers, dryers, microwaves, lights, freezers, fridges, DVD players, hairdryers, etc., etc., etc.
Resort to a hunter-gatherer economy? OK, I'm prepared and equipped for that. But I don't think many of the rest of you bastards are.
However, the deal is that the laws of physics and thermo-dynamics are inescapable, completely rational and non-emotional, and don't suffer political bullshit one bit. So, the question remains, America: "Where are we going to get the quads?"
Because a place isn't friendly to humans we should just feel free to drill there? Just because it's alternately frozen and a bog means that it doesn't serve a vital ecological purpose?
Brilliant logic in this post, thanks to Insty for pointing this out.
If they won't do the obvious in response to the fuel problem (build refineries, drill for oil, look for oil) then a host of questions come to the fore:
-What less obvious things that could help aren't they doing?
-Have they some agenda we don't know about?
-Are we being punished?
-Are they carrying water for someone?
-Are they in someone's pocket?
-Have we already ceded control of our nation to some foreign entity?
-Are they trying to force an economic collapse?
-Are these resources being held in reserve for follow-on government to appear when the present government collapses/is removed?
I contend that environmentalism, in this context, is nothing but a fig leaf. These may seem like paranoid questions, but when governments purposely turn away from exercising obvious and obviously needed acts of leadership, all cards are in play.
I dunno, Bob. The impulses that drove our medieval ancestors to believe in the concept of a "just price," or to promulgate sumptuary laws, are still very much with us. No conspiracy is necessary, only social parasites like the first and third commenters above, who are convinced that commercial activity is always exploitation and affluence is always founded on theft.
Now, to steer things in a possibly more constructive direction ... how feasible might it be in, say, five more years, to build refineries on offshore platforms, by way of evading the NIMBY crowd?
They're just looking out for us...
Well, Scott, I dunno if expertise in energy trading translates to a good understanding of the engineering issues. Would you say it goes the other way? Could a chemical engineer who knows how to run a refinery trade energy futures like an expert?
This, for example, is strange to me (I come at this from the aforementioned chemical engineering viewpoint):
Since it is difficult to store gasoline for any period of time in quantity
Uh, why? I can think of no reason why gasoline can't be stored indefinitely. Which means to me any issues of volatility in retail demand could be addressed with increased storage and transporation capacity. You don't need any increase in the capacity to manufacture the stuff. Big Auto deals with volatile retail demand all the time, but they do it by keeping large numbers of built cars around in storage lots as a buffer; they don't keep factories idling on standby, to build cars quick if demand shoots up suddenly. That would be wicked expensive and inefficient.
In any event, as I said, the price of gasoline tracks the price of crude oil reasonably well. (Actual data here and here, although, bizarrely, the main article in the latter case seems not to be aware how well the data in his chart contradicts his theory). So I'm just not buying the argument that refinery capacity is driving prices. I realize it's the Conventional Wisdom(TM), but I've never been impressed with the CW. The majority is usually wrong about any nonobvious thing. That's why we're going to get President Obama this fall, for example. That's why when local realtors all told me that 2007 would be a great time to buy a house, because everyone knew the price was going to keep climbing for a few more years, I just laughed. Lemmings, huh?
they would run the risk of being caught with excess holdings themselves.
Not only are they running that risk right now, but I think they are pretty much guaranteed to follow in the footsteps of their brethren in the recent real estate bubble and lose their collective shirts doing so sometime in the next few years. Commodity bubbles are nothing new. We had one in oil in the late 70s, and folks lost fortunes when prices tumbled starting in 1980 or so. The recent absurd run-up in oil prices, with all the accompanying hysterical End Of The World noise, rings very familiar in the ear of anyone who remembers 1975.
Don't be so pessimistic, Letalis. First of all, the US economy has become substantially more energy efficient in the last 30 years. Some nice graphs here. Note particularly that US energy consumption per capita is about 10% lower today than at its peak in 1978, and energy consumption per real dollar of GDP is nearly half what it was in 1970. Those are impressive gains.
Secondly, somewhat off topic, the problem with solar and wind is not the environmental costs, but the straight-up capital costs. Building enough solar panels to supply the US electricity demand would cost roughly $60 trillion just for the silicon itself. (Batteries would quadruple or more that cost, I suppose.) Hard to float a bond that big, huh? You'd see some whopping big increases in electricity prices.
Third, I think you overestimate the commitment Joe Average has to No Nukes Go Solar Now. It's a luxury good. That's why wealthy people buy Priuses. Poor people know damn well it's a bad bargain, trading an extra $10,000 in capital costs for annual $500 savings on your fuel. So I'm sure wealthy Democratic Party donors will indeed be happy to see solar watts at exorbitant price replace oil, I don't think that's going to play well in Peoria, not for long.
We could start looking for oil in ANWAR, offshore, and in your back closet right now, and it wouldn't do a thing to change the price of oil for 10 years.
We could decided to build a new refinery right now, and it wouldn't change the price of gas for 10 years.
In 1998 - 10 years ago - the price of oil was roughly $20 a barrel.
Which seems like a better investment to pay off in 10 years - exploring in ANWAR for oil, or investing in R&D for alternative fuels?
Carl:
Huzzah for energy efficiency. Always a good thing.
Don't disagree with your solar/dollars analysis. I was looking at it from this perspective - the only place in the US big enough to put them is...the federally owned desert (mostly) southwest. And, in order to do that, there are a couple of pesky little statutes like the NEPA, the ESA, etc. I guess, of course, the Congress in its wisdom could always waive the applicability thereof like it has with the "border fence." But then we're back to your dollars problem.
As to nukes, Joe Average isn't keeping us from expanding nuclear power generation. Rather, it is the Congress, state legislatures, and the political/economic/media elite.
I sure don't drive a Prius. I have a wife, 4 kids, 2 dogs and I drive a 1999 Suburban. So what if it only gets 12 miles to the gallon? Its paid for. Long ago. We'll probably drive it until it dies. In another few years, we'll probably drop the coverage to liability and uninsured motorist.
"In 1998 - 10 years ago - the price of oil was roughly $20 a barrel.
Which seems like a better investment to pay off in 10 years - exploring in ANWAR for oil, or investing in R&D for alternative fuels?"
Exploring for oil in ANWAR 10 years ago, when people raised the same stupid objections, would've been a really good idea in hindsight.
Investing in R&D for alternative fuels 10 years ago, when oil was so cheap no one cared, would also have been a really good idea in hindsight.
We can do both. And we should.
TLB wrote:
"Because a place isn't friendly to humans we should just feel free to drill there? Just because it's alternately frozen and a bog means that it doesn't serve a vital ecological purpose?"
Can I just keep putting ? at the end of sentences to come across as cute.
Oh, that's right. Getting oil from ANWR will amount to flipping the entire province over like a giant pancake and sucking the oil brought to the surface up with a giant robot straw. Friggin' idiot.
Carl,
Sorry I didn't reply earlier...
I would argue that engineers are terrible at things like energy trading for the same reasons that energy traders make terrible engineers. Different skill sets, different points of view. An energy trader things instinctively in terms of markets while an engineer things instinctively in terms of physical resolution of the problem in question. Not taht either one is necessarily better than the other (it depends upon what sort of problem you are trying to solve), but they clearly think differently and to pretent otherwise is simply silly.
Moving on to more useful debate however...
Reviewing the graphs you sent (thanks for the links), I don't agree that the price of oil and refined gasoline doing track all that well, particularly in the last 15-20 years. Note that in the 1990s there was actually a slight NEGATIVE correlation and the rise in the 2000s (the oughts?) is far too large in both cases for any useful measurement (too few datapoints as well, but why quibble) to be made. Now, if we could track refinery capacity against these figures as well, I think that we might have a better informed debate, but I confess I don't have the data handy to add it to the discussion. Perhaps later.
On the subject of gasoline storage, I suspect you need to revise your comments. Gasoline stored over about a year tends to dramatically degrade in quality and contribute to the deterioration of the storage facility as well. We could throw in numerous safety issues, but it seems to me to be an extra dollop on a large enough pie. One of the reason that futures trading works so well for gasoline is that it stores so badly, hence the ability to hold product off-market by producers is seriously reduced.
This brings me to my key point, and one that I don't believe (I apologize if I am mistaken) that you have addressed. A larger number of refineries reduces the ability of any individual producer from distorting the market by witholding (intentionally or otherwise) product from the marketplace. As it stands in todays market, even a very small interruption (a storm, an accident, etc.) in operations can cause an enormous ripple effect because of the highly inflexible nature of the product distirbution. The refinery operators themselves aren't necessarily thrilled with the idea of more competitors (what oligopoly is?) but there are enough players in the market that it is quite likely more refineries would be built under relaxed regulatory regimes. As a side issue, the behavior of FERC in the regulation of pipelines (an untold part of the story, particularly for places like CA) deserves much closer examination for many of the same reasons I mentioned above.
Comparing the situation now to that of the 1970s strikes me as profoundly unserious. Refinery capacity is far lower than 1975 (to pick an arbitrary date) there was almost no consumption from places like India and China in that period, environmental restrictions were much looser at that time, etc. I don't disagree with you that oil prices are likely somewhat inflated (Rand makes this point often, and I endorse it, though we might quibble a bit on overall price), but to suggest we are going to see anything even remotely close to the sort of collapse in the late 1970s and early 1980s that destroyed the synthfuels and early generation solar (not to mention nuclear) industries is simply not supported by the facts. Brad Pitt and I are both mammals, but trust me...Angelina Jolie isn't spending the weekend with me anytime soon, and just because 1975 might look a bit like 2008, the differences are bigger than the similarities...
"looking for oil" or "drilling" will have ZERO IMPACT on gas prices for the next 3 to 5 years. This "oil crisis" is nothing more than an excuse for Bush to give the natural resources of this country away to his friends in the oil business.
The only way to impact prices today is to reduce demand.
You want to reduce gas prices:
1) Carpool
2) ride public transit
3) ride your bike.
4) move closer to work
And what about in 3 to 5 years when you are really f-ucked because you didn't drill more or build more refireries 3-5 years ago?
The argument that it wont help until X years into the future has to be the most infantile and retarded one yet.
Whoa, another troll (the ironically named "Independent") recycling dumb-assed ideas from the '70s.
1) Work schedules are rigid enough for carpooling only in bureaucrats' wet dreams.
2) Public transit costs far more per passenger-mile than automobiles.
3) Bicycles are an option only for people who want to arrive at work drenched in sweat.
4) Moving closer to work has a payback time measured in decades.
"Independent," besides being a coward, you're a moron. Three-fifths of the American workforce could telecommute, but that would be a complete end-run around your idiotic ideas.
Mike, people like the (very misleadingly named) Independent aren't going to respond to reason...this is religion to them and the best that you can hope for is that they won't decide to agument our energy supply by trying to burn you at the stake.
Look, even if you are going to assume that we could cut energy consumption by say, 50% (no serious argument to suggest that, but lets assume it anyway), simply growth over time eliminates all of those savings in a single generation. Like it or not, there is a limit to how much can be saved by reducing demand... To put it a simpler way (for those small minds out there), 'You cannot suffer your way out of this...'
Scott brings up a good point. Whether it is a reduction of demand (in the US)of - or an increase in supply (in the US) for - oil, population growth and a rising standard of living in the rest of the world will wipe out those gains before long.
To really solve the problem, a new approach is needed. There are a number of possibilities (solar power satellites, Bussard polywell fusion, Helium-3, etc), but we actually need to try them, rather than imagining them as some far-off future development while doing the same thing over and over expecting different results.