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Not really. You don't own or control the commodities markets. You can take oil off of NYMEX, but I think the Brits, Russians, Arabs, Iranians, Chinese, Brasilians and everyone else would tell you to bite your ass if you told them to take it off of their markets.
How do you know?
It's mid-Fall approaching Winter in the Northern Hemisphere, and mid-Spring approaching mid-Summer in the Southern Hemisphere. Countries that use home heating oil or oil fired power plants would be wise to replenish their reserves to meet future demand while the price is low. That would drive prices up.
Maybe if you ask real nice, Obama will buy your gasoline for you, so you don't have to cancel your NetFlix subscription.
Your supply of gasoline is fixed. You have 49 operating oil refineries, but only 17 produce gasoline, and it's the same 17.
No matter what you do, your supply of gasoline is completely flat and will never ever increase, until you build a new oil refinery dedicated to gasoline production, and no one will do that because neither the White House nor Congress will formulate a cogent long-term energy policy, and without that, no one would be stupid enough to invest money in a new oil refinery dedicated to gasoline production.
Every day, your population increases, and there are more and more drivers on the road demanding gasoline, so increasing demand for gasoline against a flat supply of gasoline will do what?
There you go.
Don't forget that you had one of the worst corn harvests in a long time and corn jumped $1/bushel to $7.50/bushel. Ethanol isn't free, you know, and it's made from corn. Granted, December corn has dropped to $6.30/bushel but next year's harvest already don't look good and pressure on corn prices drives up ethanol prices, which drive up gasoline prices.
All true. Unfortunately, diesel fuel refining capacity is in no better shape--thus the "inversion" that has occurred in the last 5-6 years, with diesel fuel prices higher than gasoline prices. That is far more damaging to this country's long-term future than gasoline prices because, as an oil industry expert said in a meeting I attended several years ago, "Americans drive on gasoline, but the economy runs on diesel fuel." A supply crisis in diesel fuel in the US--which I consider pretty likely to occur sometime in the next few years--would send the US economy into full meltdown, with nasty things like food shortages and local famine conditions not beyond the realm of possibility.
Not really. You don't own or control the commodities markets. You can take oil off of NYMEX, but I think the Brits, Russians, Arabs, Iranians, Chinese, Brasilians and everyone else would tell you to bite your ass if you told them to take it off of their markets.
How do you know?
It's mid-Fall approaching Winter in the Northern Hemisphere, and mid-Spring approaching mid-Summer in the Southern Hemisphere. Countries that use home heating oil or oil fired power plants would be wise to replenish their reserves to meet future demand while the price is low. That would drive prices up.
Maybe if you ask real nice, Obama will buy your gasoline for you, so you don't have to cancel your NetFlix subscription.
Your supply of gasoline is fixed. You have 49 operating oil refineries, but only 17 produce gasoline, and it's the same 17.
No matter what you do, your supply of gasoline is completely flat and will never ever increase, until you build a new oil refinery dedicated to gasoline production, and no one will do that because neither the White House nor Congress will formulate a cogent long-term energy policy, and without that, no one would be stupid enough to invest money in a new oil refinery dedicated to gasoline production.
Every day, your population increases, and there are more and more drivers on the road demanding gasoline, so increasing demand for gasoline against a flat supply of gasoline will do what?
There you go.
Don't forget that you had one of the worst corn harvests in a long time and corn jumped $1/bushel to $7.50/bushel. Ethanol isn't free, you know, and it's made from corn. Granted, December corn has dropped to $6.30/bushel but next year's harvest already don't look good and pressure on corn prices drives up ethanol prices, which drive up gasoline prices.
No we don't control commodity prices, just the commodities we choose to use.
I think oil is pretty cheap considering it's a finite resource that will run out in about 60 years. What are future generations going to use? I doubt that batteries will ever be good enough to power over-the-road trucks, airliners, or ships.
All true. Unfortunately, diesel fuel refining capacity is in no better shape--thus the "inversion" that has occurred in the last 5-6 years, with diesel fuel prices higher than gasoline prices.
I'd have to look to see what the refining capacity for diesel and how many of the 49 operating refineries are producing it. It's low, and costly, mostly because of sulfur redux due to the fact that heavy oils in the US have high sulfur content, and I think most of East Texas Sour is refined into diesel and petro-chemical and not gasoline (because of the cost).
That is tied into the decision made in the 1970s, after the EPA was created.
You had dozens of refineries all over the US that were 70-90 years old, built before anyone was concerned about the environment, or knew about the ill-health effects (they dumped gasoline and other chemicals where ever they wanted -- they didn't know what it was).
They chose to import light oil and built the refineries to handle that, while shutting down the old out-dated refineries (many of which were smack in the middle of a city).
They didn't have the catalysts or chemicals to break down the heavy carbon chains, so they were only getting 6 gallons of gasoline out of a 42 gallon barrel of heavy oil (they can get 9 gallons now).
Also, that refinery capacity was designed to meet a population of 270,000 in the mid-1990s. This is early in the second decade in the 21st Century and the population is nearing 310 Million. Obviously, their capacity is inadequate, and the only way to remedy that is new refineries (that no one will build because no one will invest in them until there's a clear fuel policy for the future).
Quote:
Originally Posted by jazzlover
That is far more damaging to this country's long-term future than gasoline prices because, as an oil industry expert said in a meeting I attended several years ago, "Americans drive on gasoline, but the economy runs on diesel fuel." A supply crisis in diesel fuel in the US--which I consider pretty likely to occur sometime in the next few years--would send the US economy into full meltdown, with nasty things like food shortages and local famine conditions not beyond the realm of possibility.
That's why I advocate moving 85% of all freight by rail.
You'd never be able to move 100%, because it just wouldn't be worth it to build rail lines in some parts of the country, but you can move the bulk of it and dramatically reduce diesel consumption, which would go a long way to off-setting Cost Inflation on food prices, and reducing the price of food stuffs.
There's no need to be transporting corn and wheat (or anything else) in diesel over-the road trucks thousands of miles when you can haul more cheaply and efficiently that with rail cars.
Quote:
Originally Posted by Retroit
I think oil is pretty cheap considering it's a finite resource that will run out in about 60 years.
You aren't going to run out in 60 years. The oil in the 5 Central Asian States is 5-7 times more than all of the Middle East, and eastern Russia has twice as much as Central Asia.
I think oil is pretty cheap considering it's a finite resource that will run out in about 60 years. What are future generations going to use? I doubt that batteries will ever be good enough to power over-the-road trucks, airliners, or ships.
Looking at the math -- We will not be able to afford Oil much sooner than 60 years.
But you sound like you are stuck on yesterday technology for a present and future problem.
I'd have to look to see what the refining capacity for diesel and how many of the 49 operating refineries are producing it. It's low, and costly, mostly because of sulfur redux due to the fact that heavy oils in the US have high sulfur content, and I think most of East Texas Sour is refined into diesel and petro-chemical and not gasoline (because of the cost).
That is tied into the decision made in the 1970s, after the EPA was created.
You had dozens of refineries all over the US that were 70-90 years old, built before anyone was concerned about the environment, or knew about the ill-health effects (they dumped gasoline and other chemicals where ever they wanted -- they didn't know what it was).
They chose to import light oil and built the refineries to handle that, while shutting down the old out-dated refineries (many of which were smack in the middle of a city).
They didn't have the catalysts or chemicals to break down the heavy carbon chains, so they were only getting 6 gallons of gasoline out of a 42 gallon barrel of heavy oil (they can get 9 gallons now).
Also, that refinery capacity was designed to meet a population of 270,000 in the mid-1990s. This is early in the second decade in the 21st Century and the population is nearing 310 Million. Obviously, their capacity is inadequate, and the only way to remedy that is new refineries (that no one will build because no one will invest in them until there's a clear fuel policy for the future).
That's why I advocate moving 85% of all freight by rail.
You'd never be able to move 100%, because it just wouldn't be worth it to build rail lines in some parts of the country, but you can move the bulk of it and dramatically reduce diesel consumption, which would go a long way to off-setting Cost Inflation on food prices, and reducing the price of food stuffs.
There's no need to be transporting corn and wheat (or anything else) in diesel over-the road trucks thousands of miles when you can haul more cheaply and efficiently that with rail cars.
You aren't going to run out in 60 years. The oil in the 5 Central Asian States is 5-7 times more than all of the Middle East, and eastern Russia has twice as much as Central Asia.
Much of this post is spot-on--especially the part about rail having to play the major role in freight transport (and, I think, for medium-distance passenger transport) if we are to have any decent economic future in this country.
As for refining capacity, there are very few refineries in the US that can refine sour high-sulfur crude into diesel fuel. The last one I'm aware of that was retrofitted to do that was the Frontier Refinery in Cheyenne, Wyoming a few years ago. As for building more refineries, the whole "environmental" argument is really a straw-man. An oil company expert explained to me nearly a decade ago why no new refineries are being built in this country. His very logical explanation was this: The oil companies know better than anyone else that domestic reserves of usable crude oil (as well as foreign sources) are now ever more rapidly depleting over the long-term. The big fight among the refining companies is now over acquiring ownership or control of those remaining reserves. As he noted, the best place to find oil these days is on Wall Street, not out in the oil patch. That is why we've seen the merger/acquisition mania in the oil industry over the last 10-20 years--it's about those oil reserves. Given that the oil companies know that reserves are depleting, it makes no sense for them to invest mega-millions in refinery capacity that will, within a relatively few years, have no crude oil supplies to refine. So, they keep the refinery capacity that they have, maintain that infrastructure to the minimum level that will keep it running, and maximize their profits on every gallon of product that they sell. Every "weak sister" refinery that closes just enhances the profitability of the remaining refiners. It's a ruthless game of "last man standing." When one understands the basic fact--that oil reserves are depleting just like the "Peak Oil" theorists prognosticated--the business decisions being made today by the oil refiners make perfect sense.
This is an interesting thread, given that gas prices are about $.20 LOWER per gallon in the past 2-3 weeks than they have been for months. At least in my area. We've all been commenting on how nice it is to see gas prices dropping again. Down another $.03 this weekend.
I'd have to look to see what the refining capacity for diesel and how many of the 49 operating refineries are producing it. It's low, and costly, mostly because of sulfur redux due to the fact that heavy oils in the US have high sulfur content, and I think most of East Texas Sour is refined into diesel and petro-chemical and not gasoline (because of the cost).
That is tied into the decision made in the 1970s, after the EPA was created.
You had dozens of refineries all over the US that were 70-90 years old, built before anyone was concerned about the environment, or knew about the ill-health effects (they dumped gasoline and other chemicals where ever they wanted -- they didn't know what it was).
They chose to import light oil and built the refineries to handle that, while shutting down the old out-dated refineries (many of which were smack in the middle of a city).
They didn't have the catalysts or chemicals to break down the heavy carbon chains, so they were only getting 6 gallons of gasoline out of a 42 gallon barrel of heavy oil (they can get 9 gallons now).
Also, that refinery capacity was designed to meet a population of 270,000 in the mid-1990s. This is early in the second decade in the 21st Century and the population is nearing 310 Million. Obviously, their capacity is inadequate, and the only way to remedy that is new refineries (that no one will build because no one will invest in them until there's a clear fuel policy for the future).
That's why I advocate moving 85% of all freight by rail.
You'd never be able to move 100%, because it just wouldn't be worth it to build rail lines in some parts of the country, but you can move the bulk of it and dramatically reduce diesel consumption, which would go a long way to off-setting Cost Inflation on food prices, and reducing the price of food stuffs.
There's no need to be transporting corn and wheat (or anything else) in diesel over-the road trucks thousands of miles when you can haul more cheaply and efficiently that with rail cars.
You aren't going to run out in 60 years. The oil in the 5 Central Asian States is 5-7 times more than all of the Middle East, and eastern Russia has twice as much as Central Asia.
Actually Mircea, this was a good post. I was annoyed when Buffet bought me out of BNI, even if it was %270 of my purchase price. Rail is the way to go.
Though its not going to be a libertarian that brings about this reality.
Much of this post is spot-on--especially the part about rail having to play the major role in freight transport (and, I think, for medium-distance passenger transport) if we are to have any decent economic future in this country.
As for refining capacity, there are very few refineries in the US that can refine sour high-sulfur crude into diesel fuel. The last one I'm aware of that was retrofitted to do that was the Frontier Refinery in Cheyenne, Wyoming a few years ago. As for building more refineries, the whole "environmental" argument is really a straw-man. An oil company expert explained to me nearly a decade ago why no new refineries are being built in this country. His very logical explanation was this: The oil companies know better than anyone else that domestic reserves of usable crude oil (as well as foreign sources) are now ever more rapidly depleting over the long-term. The big fight among the refining companies is now over acquiring ownership or control of those remaining reserves. As he noted, the best place to find oil these days is on Wall Street, not out in the oil patch. That is why we've seen the merger/acquisition mania in the oil industry over the last 10-20 years--it's about those oil reserves. Given that the oil companies know that reserves are depleting, it makes no sense for them to invest mega-millions in refinery capacity that will, within a relatively few years, have no crude oil supplies to refine. So, they keep the refinery capacity that they have, maintain that infrastructure to the minimum level that will keep it running, and maximize their profits on every gallon of product that they sell. Every "weak sister" refinery that closes just enhances the profitability of the remaining refiners. It's a ruthless game of "last man standing." When one understands the basic fact--that oil reserves are depleting just like the "Peak Oil" theorists prognosticated--the business decisions being made today by the oil refiners make perfect sense.
It is exactly these kinds of realities that make our current economic system bankrupt. This is a classic case where capital is at a disincentive. Taxing refinery charges at this point would shut the door on profitability at this layer. If this were coupled with lowered taxes on energy feed stock, it would create the opposite insensitive to increase refining capacity. People who make money building trucks want roads. People who make money on roads like road blocks.
You tax the monopoly surplus. That is how you fix it.
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