Friday, September 02, 2005

The Gas Situation

Lindsay shed some light on the gas situation right now. If I remember hearing this correctly, the Saudis did tell us they won't be able to meet our oil / gas needs starting in 2015. Isn't that a hint and a half for the jackass in the White House to really start investigatin alternative energy sources?

Well, I've decided to post Lindsay's response. It's pretty eye opening....

Cincy! $36 for HALF a tank??? Dear God!!!

Basically, there's a ton of factors that are causing this spike in gas prices. First, demand for oil has skyrocketed. The Indian and Chinese economies are using up a TON of oil and will continue to do so in the future (an interesting aside, checkout the fight between their state oil companies for oil in the Caspian). U.S. oil demand is also expected to grow. Even with these high gas prices...people are still buying H2s so they can navigate the mean streets of their suburbs.

Oil producers can't keep up with this demand. This isn't like the 1970s, when the shocks were due to a political embargo by OPEC. Bush can "pressure" all he wants, but OPEC members are pumping at full capacity. OPEC (nor Russia) itself isn't a huge fan of these high prices...Russia would usually like to see $30-35 barrel. They're afraid that if oil prices are too high, it will cause a rcession, demand will drop, resulting in huge economic losses for them (and oil is the ONLY income for these countries, so it's disastrous) so they are pumping all they can to bring some equilibrium back to the market. Iraq won't be producing at full capacity for awhile...pipelines are constantly blown up, and many oil-producing countries aren't politically stable - rioting workers, shutdown refineries, etc. The areas where oil is cheap and easy to produce are drying out, whereas there is a ton of oil under the Caspian and the permafrost of Siberia, but it's extremely expensive to get out of the ground.

Of course, cars don't run on oil - it has to be refined into gasoline, which is another problem. There haven't been any refineries built in the U.S. since the 1970s. People don't want them in their communities, and oil companies don't want to build them - they're expensive and the profit margins from refining aren't that high (hard to believe, eh? lol). So, a huge growth in gas use, and no new refineries that can keep up with this. Also, states have different rules on what can and can't be added to gas. In California, for instance, the gas prices are always higher due to environmental regulations that stipulate the gas has to be "cleaner." So companies can only sell this specially refined gas in that state and can't draw on stocks from say, Texas.

And on top of this, the Gulf region is devastated...they produce a third of U.S. domestic oil supply...that's 1.5 million barrels a day that aren't reaching the market. Refineries are sitting under several feet of water, oil rigs are drifing around...it will be awhile before production is up again.

When I eventually have enough money to buy a car, I seriously think it will be a hybrid...I don't see these prices going away anytime soon.

Hope that helped...off to the pub now! :)

I think I need to head to the pub myself; working here sucks ass!!!

7 comments:

IndependentGrl said...

If you add stupid newscasters who report that every gas station in a particular state is closing after 4 PM and won't open until next Tues., it becomes a completely INSANE situation.

Vespa anyone?

Cincysundevil said...

IG-
So true; my friend's in the South were saying that gas was being rationed to like $20 per car!!

I wish I was coordinated enough for a Vespa (sigh)

Alan said...

What Lindsay hasn't mentioned here is the Peak Oil problem. Peak Oil is the point at which any particular oilfield has exhausted half of its reserves, in other words the field has passed the peak of its production and is in decline. At this point the cost of extraction increases as the oil has to be extracted from deeper reserves. Drill bits have to be drilled deeper, greater pressure is required to pump the oil to the surface. Therefore as the cost per barrel for extraction increases, so the cost per barrel rises in the world markets.

What most people don't understand is that oil is not merely used for fuel. Oil is used in the manufacture of plastic, and right now the world would fall apart without plastic. Worse still, oil is used in the manufacture of pesticides and fertilisers. The mass production of foodstuffs depends on oil.

The US passed the Peak Oil mark years ago. North Sea Oil has also passed Peak Oil, as have most of the South American reserves. The middle-east and Asia will be passing it within the next five years.

The US government estimate that the total oil yeild for the planet is approximately 3000 billion barrels. Others estimate it is only 2000 billion. We have so far used approximately 1000 billion of these, and we are using it at a greater rate every day. If we carry on using oil at the current rate we will have exhausted the worlds supply in 40 years.

With all the above taken into account that means that in 40 years... you know the scenes of famine in Africa you see on the television, that's going to be us. Maybe not us exactly, I'll be 80 years old by then. But our children.

So when I see people complaining that gas is too expensive (and incidentally the price of gas in the US is approximately half that in the UK, one third of that in the Netherlands) my reaction is to say, wrong, it isn't expensive enough. It should be at least twice that. More if possible. Because only if we increase the price can we discourage people from using it needlessly. And the additional revenue generated should be pumped into alternative forms of transport, and research into alternative fuel sources.

I know it isn't a popular viewpoint. But it's the only one that makes sense.

MoDigli said...

Man, I really need to simplify and just BIKE it! This IS NUTS!!!

It would be nice if more cities invested in GOOD public transport, too. Not just the big cities like NYC, Chicago, and San Fran, for example.

Brookelina said...

Stupid cars! Stupid oil! Stupid gas! Stupid president!!!

Paisley Whitworth said...

Pah... I pay about the same price for half a tank of petrol in Britain, but then I do drive a tiny European car compared to, I imagine, your large American one... The price of petrol here is about $1.70 a litre, compared to roughly $0.60 a litre in America... You guys don't know your born...

Paisley Whitworth said...

Goddamit, I meant 'you're', not your... And it's my bloody language and all...