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Old 12-19-2013, 08:27 AM
 
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^The US is "the #1 exporter of fuel" is a half-truth. The US exports a lot of refined fuel because its most of its refineries lack the ability to produce Ultra Low Sulfur Diesel fuel (ULSD) that is required in the US. So, that high-sulfur refined output is exported. The number that is left out of the half-truth is that the US must import most of the ULSD that it uses, offsetting those exports. That is also why since 2007, combined with increased Third World demand for diesel fuel, diesel fuel has cost more per gallon in the US than has gasoline--a situation that was not the case historically before that. The US is one interruption in ULSD imports away from a major crisis in transportation of goods necessary to sustain both the economy and its citizens. As I have quoted several times, an oil industry leader told me a number of years ago, "Americans drive on gasoline, but the economy runs on diesel fuel."

It is absolutely true that lower oil prices would destroy what US crude production there is. The reason is simple: most all of the easy-to-get, cheap-to-produce, and efficient-to-refine oil in the US has already been produced. Most all of the reserves that are left are hard to get, require expensive recovery techniques, and are generally high-sulfur "sour" crude that is very expensive to refine. Without high fuel prices, it is uneconomical to produce and refine those US reserves.

About Bakken--it has been a significant producer, but it is not large enough to supply but a small percentage of the US's oil needs. The people in the oil industry that I've talked to are also somewhat skeptical about how long it will be able to produce. One of the reasons that most of that oil is being transported out by rail--more expensive than by pipeline--is that there is a lot of industry skepticism as to whether or not Bakken would produce oil long enough to make an investment in pipeline infrastructure profitable.

Finally, the whole BS about oil shale in the Green River and Piceance Basins being our energy savior is just that: BS. The reason is that the cost to produce oil from shale ALWAYS increases as fast or faster than the price of oil. It's like a dog chasing his tail. No matter how fast he goes, he will never catch it. If oil went to $500/bbl., it still would not be economically feasible to produce oil from shale. The oil companies have already pretty much voted with their feet on that one. With few exceptions, their strategy now is not to even try to produce oil from the shale beds, but to drill for the methane contained within them.

While all of this is going on, the current administration is doing everything in its power to slaughter the US coal industry--and is succeeding to do so with pretty grim results in Colorado. Two of Colorado's largest coal mines are now shutting down--one almost for sure permanently. Despite coal's bad reputation, it and natural gas are the only two fossil fuels of which the US has considerable economically recoverable reserves. To the extent that coal is killed off by governmental fiat as a fuel source, our natural gas reserves will only be depleted sooner. That is a frightening prospect because for many uses, home heating being one, natural gas is the only practical fossil fuel source of energy.

This country's energy policy is stupid and vile from top to bottom. The most vile part is that the US citizenry is not being told the truth about what lies ahead, nor what is going to be necessary to prepare for it. The Number 1 goal HAS TO BE efficiency and conservation, but all anyone can talk about is getting more production to maintain the current hugely inefficient status quo. That is a road to ruin for this country, with disastrous results and future human suffering that is beyond calculation.
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Old 12-19-2013, 09:03 AM
 
Location: Wherabouts Unknown!
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jazzlover wrote: The most vile part is that the US citizenry is not being told the truth about what lies ahead, nor what is going to be necessary to prepare for it. The Number 1 goal HAS TO BE efficiency and conservation

Another INCONVENIENT TRUTH that most of the population does not want to hear.
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Old 12-19-2013, 09:36 AM
 
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Originally Posted by jazzlover View Post
While all of this is going on, the current administration is doing everything in its power to slaughter the US coal industry--and is succeeding to do so with pretty grim results in Colorado. Two of Colorado's largest coal mines are now shutting down--one almost for sure permanently. Despite coal's bad reputation, it and natural gas are the only two fossil fuels of which the US has considerable economically recoverable reserves. To the extent that coal is killed off by governmental fiat as a fuel source, our natural gas reserves will only be depleted sooner. That is a frightening prospect because for many uses, home heating being one, natural gas is the only practical fossil fuel source of energy.
Coal serves two purposes: baseline power production and the production of refined metals. There are a few substitutes for coal in the baseline role while the production role really doesn't have any. Arc furnaces are a substitute, but the baseline power usually ends up coming from coal, hydroelectric, or nuclear.

Coal has benefited from market distortions for years and is now, unfortunately, on the receiving end of those market distortions. One benefit of this is that coal may become another power production source where the externalizations are captured in the price. It might end up making coal uneconomical compared to other power sources, but such is the path of progress.
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Old 12-19-2013, 09:56 AM
 
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I should add that most of the crude oil exports from the US are high-sulfur crude that gets refined into high-sulfur fuels for use overseas. Because high-sulfur crude is considered a lower grade product, US producers get a lower price for it. Meanwhile, we pay a premium to import millions of barrels of low sulfur "sweet" crude that can be refined and used in this country. That may make the air cleaner in the US, but, on a worldwide scale, the same amount of SO2 is going into the air.

The situation is much the same for coal. The US is now exporting a considerable amount of its coal production. That, again, may be lessening pollution in the US, but the coal is just being burned somewhere else, so the worldwide net environmental effect is the same.

One of the economic distortions in all of this is that those countries willing to burn high-sulfur oil or coal in their countries may have a less healthy population because of it, but it is another way that they can undercut the costs for industrial production of theirs compared to the costs that US producers of goods have to recover. So, in the end, we get cleaner air in the US, but a lot of US jobs and wealth are getting transferred overseas. I wonder what will happen when a lot of those affluent overseas folks can outbid US citizens to have a home in the "clean" US.

Last edited by jazzlover; 12-19-2013 at 10:10 AM..
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Old 12-19-2013, 09:57 AM
 
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Drive up 77 in WV and you will quickly learn how that state feels about the current administration. Coal has suffered a lot recently. Unfortunately about 40% of electricity comes from coal. I believe less than 1% comes from green sources. There is really no way wind can put any type of dent in the US demand for power. Solar has its own set of issues.
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Old 12-19-2013, 12:27 PM
 
976 posts, read 1,320,300 times
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Originally Posted by sammy87 View Post
Drive up 77 in WV and you will quickly learn how that state feels about the current administration. Coal has suffered a lot recently. Unfortunately about 40% of electricity comes from coal. I believe less than 1% comes from green sources. There is really no way wind can put any type of dent in the US demand for power. Solar has its own set of issues.
That's what natural gas is for silly. Except for the price spike that will hit when the US market is integrated with the global LNG market. US producers would make a lot more money exporting natural gas instead of it all being consumed domestically. The price discrepancies between the Henry Hub PI and other PI's around the globe is huge.
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