Bill O'Reilly is Misinforming Americans About Oil Supplies
Posted by Robert Rapier on March 1, 2012 - 1:44pm
Last week I was interviewed by Alan Colmes from Fox News Radio on the topic of gas prices. During the interview, he mentioned an idea that Bill O'Reilly has proposed, and that is to address gasoline prices by discouraging U.S. oil companies from exporting their products. The critics of Bill's proposal have generally focused on the notion that "We can't tell the oil companies where to sell their product."
However, there is a far more fundamental issue, and that is that the basic facts of his proposal are based on an erroneous assumption. Let's first have a look at the proposal, in his own words:
O'Reilly: We began covering the skyrocketing oil prices last Friday with Lou Dobbs. He was candid, saying because of the mild winter, there is plenty of oil and gas in the U.S.A. So supply and demand here should dictate lower prices.
With all due respect, Bill O'Reilly has a fundamental misunderstanding about oil supplies. There is not "plenty of oil and gas in the U.S.A." He has mistakenly translated net exports of finished products like gasoline and diesel into "plenty of oil and gas in the U.S.A.", as I explain below.
O'Reilly: But of course, they are not lower. They are much higher because the oil companies are shipping their products overseas. Measured in dollars, so oil products are now America's largest export worth $88 billion a year to the oil companies. A decade ago, oil exports were not even among the top 25 exports. Most of the oil stayed here. And with working Americans getting hammered by stagnant wages and huge unemployment, this is yet another punishing situation for the folks.
Most of the oil still stays here. O'Reilly is casually conflating exports of oil products and "oil exports." According to the Energy Information Administration, the U.S. currently produces 5.7 million barrels of crude oil per day, imports 9 million barrels of crude oil per day, and exports 50,000 barrels per day (less than 1% of our crude oil production). The fact that we import 9 million barrels of oil per day demonstrates that we do not have "plenty of oil and gas in the U.S.A." Where does the less than 1% of crude that is exported go? To Canada. And by the way, we import 2.3 million barrels of oil per day from Canada. But why do we export any oil at all? Oil that is exported to Canada is most likely produced in fields that have easier access to Canadian refineries than to U.S. refineries. Clearly, since we import over 50 times as much oil from Canada as we export to them, we aren't doing it because they need the oil worse than the U.S. does.
Now that we have cleared that up, let's examine O'Reilly's proposal:
O'Reilly: However, if the Obama administration wanted to, it could ask Congress to raise export taxes on the oil companies to encourage them to sell their products here. Think about it. The oil companies are regulated by the federal government. They can't drill on land nor in American waters without permission from the feds. Many Republicans want to drill baby drill but what's the point if all the oil goes to China? Increased production obviously doesn't mean lower prices for us.
Here is the reason his proposal would have zero impact on gas prices, and would in fact accelerate the closure of U.S. refineries. O'Reilly believes that U.S. oil companies are drilling for oil, producing gasoline, and shipping that overseas (or simply shipping the crude overseas). As shown above, net imports of crude oil are still 9 million barrels per day -- a number that has not changed much in the past few years. It is the finished products that are being exported -- not crude oil -- and these finished products are being made from imported oil. We have oil refiners like Valero -- who don't actually produce oil at all, but import oil from countries like Mexico and Brazil, refine it, and ship gasoline back to them. Between just Mexico and Brazil (and there are others), we are importing 1.5 million barrels of oil per day, and sending them back about a million barrels a day of finished products. (Some of the oil we get from them does stay in the U.S. as finished products). If you subtract our finished product exports from our oil imports, you still end up with net imports of crude oil and crude products of 8 million barrels per day. Hence, the U.S. still operates at a significant import deficit, which contradicts claims that we have plenty of oil and gas in the U.S.
So how might O'Reilly's proposal play out? It is easy enough to see what would happen. If you put a high export tariff on fuel and made it unattractive for U.S. oil companies to export their products, they simply would not import as much oil. So as gasoline demand continues to fall in the U.S., instead of continuing to import 9 million barrels per day and export 1 million barrels of finished products, we might only import 8 million barrels of oil per day and then export zero. It would not impact the balance of fuel supplies at all within the U.S., but it would lead to faster closures of U.S. refineries as their export markets dried up. So you would see the export problem "solved", and the consequences would be no change in U.S. gasoline prices (Brazil and Mexico would then source their gasoline from someone else who benefitted from the refining jobs) and there would be further loss of refining jobs in the U.S.
Bill O'Reilly is promoting a false belief: that the U.S. is awash in oil and that gasoline prices are high because we are shipping gasoline overseas instead of selling it domestically. The truth is that the U.S. does not produce nearly enough oil to meet our fuel demands, but we import about a million barrels a day more than we need and export some of the excess as finished products, creating jobs and helping the balance of trade in the process. The reason we are doing this is that domestic demand for gasoline has fallen in recent years, and refiners can therefore either close more refineries or they can find other markets for their products. Thus the main reason to reject O'Reilly's idea is simply because it is based on a false notion. He would do a great service to his viewers if he clarified the situation.
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Based on the BP data base there were seven major net oil exporters* in the Americas and the Caribbean in 2004: Venezuela, Canada, Colombia, Mexico, Argentina, Ecuador, Trinidad & Tobago.
Their combined net oil exports (total petroleum liquids) fell from 6.2 mbpd in 2004 to 4.8 mbpd in 2010, a 23% decline in six years.
*Net exports of 100,000 bpd or more
Wes, you actually provided a factual statement. BO provided an opinion. Faux News cares naught for facts...
Craig
Wasn't sure which BO you meant for a second there, had to make sure there wasn't a POTUS reference above.
Maybe the Fox guy could be BORE ? Just a thought.
Impressive one
"Bill O'Reilly is Misinforming Americans"
Nuf said.
Well, actually, that's a verbose way of putting it. "Bill O'Reilly" is enough.
Hate to say it, but it's not just Billo and Faux. It seems there's a lot people conflating oil exports with oil products exports. Here's one of the products articles.
Bloomberg says US is net PRODUCT (my emphasis) exporter:
http://www.bloomberg.com/news/2012-02-29/u-s-was-net-oil-product-exporte...
The problem is that journalists don't do their diligence and explain the difference between products and base oil (crude etc).
If Billo was smart, he'd show that US oil prices are now, temporarily lower, because of oil stranded in the heart-land due to Bakken and imports of Canada's tar sands. This is not a US surplus, just a regional one, but it shows up in lower US prices. Of course that situation will change as soon as the Keystone pipeline is built and that oil hits the Gulf and all the international markets.
So would Billo argue against Keystone? If so, I'd have to laugh and laugh and laugh.
Does Bill O'Really have any respect due? It is Faux News after all.
Has Bill O'Reilly ever backed off any stupid idea he has had? If so, that would be Fox News! As it stands, though, this is why viewers of Faux News not only know less, but believe falsehoods, more than if they had not viewed any news whatever.
Craig
Not likely. Recall that his is the man who, on television, evoked the name of a made up a publication to cite a made up number in support of a personal crusade to boycott French products:
http://mediamatters.org/research/200405020006
To my knowledge, Mr. O'Reilly has offered no explanation or apology for this staggering lapse of journalistic integrity.
Fine writing by Robert Rapier, but I'm afraid he's preaching to the TOD choir.
I don't know why I am even commenting on O'Reilly but I feel compelled.
He is an anomaly- even at Fox. He is definitely not a liberal, but he is not a conservative. He is mostly a populist.
His understanding of basic economics is appalling - especially when it comes to oil and gas. I happened to watch him about a year ago when he went on a rant saying that he absolutely knew that the world oil price was not set by the market - but was decided at the monthly board meeting at Exxon. They decided what it would be. Unbelievable.
But thanks Robert, for trying to provide some factual logic to the gasoline price issue. Think you will ever be invited onto the O'Reilly show? :-)
Not a conservative? Huh?
It's certainly true that what is now known as conservative is often wildly radical, particularly on ecological issues. But Bill O'Reilly is a hard-core conservative, a reactionary.
A populist can stand at any point on the political spectrum. Saying somebody is a populist tells you nothing about somebody's basic position.
O'reilly is a populist right leaning moderate with no understanding of economics.
Alan Colmes, though a liberal, is a long time regular on Fox News and the Fox Business Channel. He will almost certainly alert O'Reilly and other Fox regulars to Rapier's thesis and to his new book. The Fox regular that best understands the situation is probably Neil Cavuto . I actually heard him use the word finite last week while discussing energy
http://www.amazon.com/Power-Plays-Energy-Options-Peak/dp/1430240865/ref=...
I call it CPSR, Cornucopian Primal Scream Response:
Basically, it's cognitive dissonance, and since the facts about an ongoing decline in Global Net Exports of oil (GNE)--with the Chindia region consuming an increasing share of GNE--conflict with their view that we don't have any supply problems, they tend to reject the facts.
Yeah, but he's normally a very selective populist. This one is right out of Teddy Roosevelt's playbook: the government is the little guys' last line of defense against the depredations of giant companies. This is quite different from O'Reilly's more typical "protect the little guy from the government" form of populism. I suspect that he's already been warned by the higher powers at Fox that large corporations are off limits :^)
Yes, that's right, there is a fundamental misunderstanding in the mainstream media about what is going on in the world oil market. They think they can lower fuel prices in the US by cutting off exports because they think the US is now an "oil exporter". Nothing could be further from the truth.
First, lets look at the oil and products that went to the largest export destinations:
Crude oil and products exports, Dec 2011, thousand barrels per day
And then, lets look at the oil and products that were IMPORTED from those countries.
Crude oil and products IMPORTS, Dec 2011, thousand barrels per day
The reality is the US is importing over 3 times as much oil and products from these countries as it is exporting to them. It`s a two-way street for crude oil and products. The US is refining crude oil for many other countries, and sending some of the refined products back to them in return, while keeping most of the products for its own use.
What do they think these countries are going to do if the US cuts off exports to them? It`s obvious. They are going to cut off oil exports to the US in retaliation, and the US will be down over 3.3 million barrels per day of net imports as a result. Imagine what that would do to prices.
Could you make a map, a diagram, of your understanding of the price-setting mechanism into which the U.S. market looks? Because I don't know squat... and everybody is confused.
Confusions:
The U.S.A. exports gasoline. The U.S.A.'s demand is dropping. The U.S.A.'s price is climbing.
-So- The price is artificial?
-But, you have to know- The U.S.A. hosts a refinery service for foreigners. (This article)
The U.S.A.'s demand is dropping. The U.S.A.'s price is climbing. The news features an Iran war.
-So- The news modulates the price?
The U.S.A.'s demand is dropping. The U.S.A.'s price is climbing. Oil is a commodity.
-So- The speculation modulates price?
The U.S.A.'s demand is dropping. The U.S.A.'s price is climbing. China is using oil.
-So- Competition sets the price?
The arguments differentiate by ideology.
It does make sense that if the town crier is screaming war, then the price of a commodity of primary importance would go up. By what mechanism? Does the price propagate backwards from what the user's are led to believe the situation is? Does the price feed forward from what the producers think they can demand in light of such propaganda? Or is any implied connection just more whispers?
It does make sense that if a vital commodity like rice can be gamed (and I still remember the "One Bag Per Customer" signs from 2008), and oil is a commodity, then the price of oil can be gamed. To watch a price triple without any underlying reality belies any "For every winner, there is a loser" zero-sum argument that the commodity price is strictly real. Or is my model of the event wrong? This is when oil hit $150 far too quickly, it seems, to be a reflection of changing physical realities.
ROCKMAN perhaps holds that the price is set in the transactions from the well forward with no attention paid to any non-oil-holding entity.* Other reading suggests that there is virtual holding.
A diagram, for dummies, of an understanding of the underlying mechanism would be of great service.
_____________________________________________
*In times of natural disaster, gas stations, the last holder of product, are seen selling gasoline at very much higher prices... strictly a local effect, yes?
The U.S.A. exports gasoline. The U.S.A.'s demand is dropping. The U.S.A.'s price is climbing.
-So- The price is artificial?
A lot of things go into the price, but the main thing is that it is a global market. The price is not set based on demand in the U.S. Demand can continue to fall here, but if it continues to climb in developing countries then we will pay higher prices.
Ahhh...
Understanding that the gasoline exported is made from oil imported: So, our own production of gasoline from our own oil is sold to us at world prices?
For the most part, yes. There are a number of nuances, such as some Midwest oil being cheaper due to the lack of a larger pipeline to move Tar Sands oil to global markets where the price would be higher. Note the difference between WTI and Brent prices, for example.
The crack spread is the gross profit per barrel between what a refinery pays for a barrel of crude oil and what they get from selling the refined products. This morning, the price spread between Brent and WTI crude oils is $17.
Here are the Bloomberg charts for WTI and Brent crack spreads. If you click on the five year option, you get an idea of historical trends:
WTI crack spread (currently $30):
http://www.bloomberg.com/quote/CRK321M1:IND/chart/
Brent crack spread (currently $13):
http://www.bloomberg.com/quote/ACK321A:IND/chart/
Note that the difference between the two crack spreads is also $17. In other words, Mid-continent refiners are paying WTI crude oil prices, but basically charging Brent based prices for refined product.
Mid-continent product prices are lower than the East and West Coasts, but you also have to consider factors like taxes and regional requirements for specific gasoline blends. However, the crack spread data speaks for itself. The only real winners regarding the current spread between WTI and global crude oil prices are the Mid-continent refiners, but I'm sure some refinery executives are getting some very nice bonuses.
Incidentally, there are only two net oil exporters in the entire Western Hemisphere that have shown increasing net oil exports in recent years, Canada & Colombia, but the combined net oil exports from the seven major net oil exporters* in the Americas and the Caribbean fell from 6.2 mbpd in 2004 to 4.8 mbpd in 2010, a 23% decline in only six years. Mid-continent refiners are providing a billion dollar plus per month incentive for Canadian producers to take their oil elsewhere.
*Venezuela, Mexico, Canada, Colombia, Argentina, Ecuador, Trinidad & Tobago (BP data, 100,000 bpd or more of net exports, total petroleum liquids, in 2004)
Yes, the cost of refined products in the US is determined by the price of oil + the crack spread. As Westexas pointed out, there are now two different crack spreads in the US because the crude oil market has been separated into two different markets by pipeline bottlenecks.
There is a "seaborne" market for crude oil which is transported from foreign countries, and the benchmark oil for that market is North Sea Brent; and there is a "landlocked" market for oil which has no easy way to reach any coast because there aren't enough pipelines to carry it. The benchmark oil for that market is West Texas Intermediate, but the price of WTI is depressed by new oil sands production from Canada and some new domestic oil from ND and TX. As Westexas pointed out, the difference in cost between those two markets is $17/bbl at the moment: $124/bbl for Brent and $107/bbl for WTI.
As it happens, some 80% of the US population lives within 100 miles of one of the coastlines, so the cost of their gasoline is determined by Brent + the crack spread. The people in the mid-continent area get something of a break, but refineries pocket most of the difference between WTI and Brent. In the Midwest, refineries are running flat out and moving products to the coasts as fast as they can to take advantage of higher prices. Products are easier to transport than crude oil.
This raises prices in the Midwest higher than they otherwise would be, and depresses prices on the coast to the point where refineries are losing money, so half the refineries in the Northeast have shut down recently or plan to shut down soon. Prior to their shutdowns, though, because of falling demand in the US, they are exporting excess products to other countries to take advantage of higher prices there, and this accounts for much of the net product export situation the US is now in.
Unfortunately many MSM talking heads have interpreted this to mean "The US is now a net oil exporter", rather than a victim of falling domestic demand and rising global prices.
The bottom line for US consumers - and we have been trying to explain this to confused people here for some time - is that for 80% of them, their gas prices are determined by the cost of North Sea Brent oil plus a modest profit (or loss) for the refinery. The "price of oil" reported by the MSM, which is actually the price of WTI at Cushing, Oklahoma, has little or nothing to do with the price most Americans pay for gas.
a victim of falling domestic demand
Not a victim, a beneficiary: falling domestic demand is a good thing.
If the falling domestic demand were purely the result of technical improvements in efficiency, yes; It's a good thing.
But much of the low demand we're seeing is the result of several million people who no longer have jobs to drive to every day.
Have you seen documentation of that?
Vehicle miles driven have only dropped about 3%, while oil consumption in the US has dropped about 15% from it's peak.
But, (as I posted in today's DrumBeat) gasoline usage has only dropped 7% since 2007 - not much of a decrease, though comparing to VMT it does show that it is inefficient vehicles that are being retired.
Gasoline accounts for a third of the 2.2mbd decrease in consumption, with heating oil being the next biggest (40% reduction) and petrochemical and road asphalt each dropping by about a third.
So, people doing less driving has not been - directly - the major factor in declining US oil consumption.
Gasoline usage dropping more than VMT doesn't actually require fleet efficiency improvements, just folks letting up on the gas pedal. I've definitely noticed lower average light-traffic cruising speeds on LA freeways. Fleet changeover is happening, too, but even slower than implied by the reduction in consumption.
Perhaps. Similarly the reduction in VMD doesn't require an economic slow down: shopping/consumption via online purchases and delivery truck vs mall trips, working from home & telecommuting, etc.
Other ways to reduce VM without job loss: combining shopping trips, carpooling and vacationing closer to home.
Not a victim, a beneficiary: falling domestic demand is a good thing
Yeah, I suppose. If you consider losing your job, losing your vehicle, and losing your house as positive influences in your life, it could be considered a good thing.
The operation was a success but the patient stopped breathing. At least he's not using up valuable oxygen any more. It can be considered a good thing from that perspective.
Rocky,
What caused high oil prices to hurt the US economy in 2008? The fact that it was dependent on imports. If we eliminate oil imports by going to electric transportation we'll have more jobs and much better vehicles.
If we eliminate fuel oil for home heating, we'll have warmer homes, and fuller wallets.
If we replace long-haul truck with rail, we'll have cheaper delivered costs, and lower taxes because our highways will be much cheaper to maintain.
All good.
It was not so much that the US is too dependent on imports, it was that Americans drove far too much in large vehicles that used far too much fuel. When prices went up, this was going to hammer the average consumer regardless of whether it was imported or domestic.
However, the real but unexpected problem in 2008 was that it burst the housing bubble, and the mortgage default rate nearly brought down the banking system. The banks only survived because of large transfusions of government money. This was a secondary effect, but it was bigger than the primary fuel cost crisis.
Moving away from gas guzzling vehicles, getting people off heating oil, and going to electric rail are all good ideas, but it doesn't change the fact the US economy is on life support.
Of course, all this could have been avoided if some reality had intruded into the political system before the roof fell in on people. And, unfortunately, the people and politicians don't seem to have learned much from it.
When prices went up, this was going to hammer the average consumer regardless of whether it was imported or domestic.
Not really. How's Canada doing? How's Saudi Arabia doing? How's Russia doing with high prices? They're doing fine, because they're exporters. Trade balances are what matters. If the trade balance is good, then the country overall will do well. Some areas better than others, of course: Alberta better than Ontario, Texas better than Maine. But, of course, Alberta and Texas have much better trade balances.
it burst the housing bubble
Possibly it affected the timing a little, but....it was a bubble. That meant that it had to burst, sooner or later. Now, a bad trade balance contributed to the formation of the bubble in the first place, but...now we're back to trade balances.
the US economy is on life support.
That's silly. Sure, US debt is rising, but the economy is growing. That's not being on life support.
------------------------------
Let's be serious: it may be a bit of a sacrifice to sell your 12MPG SUV and buy a 45MPG hybrid, but aren't you a lot better off to stop going into debt every month to pay for the fuel??
That's where the US is: it's a nation of SUV drivers, who need to sell their SUVs and buy hybrids. Not a big deal.
'Not a big deal.'
That comment and that general tone is why I have a bad reaction to much of the gist of your writing, Nick.
You want many of the same things for us that I do, but you seem to glibly wave off the road that connects here to there. I believe it will likely be a big deal in many ways..
It's like saying, 'We're a country of Whiskey drinkers that just needs to change over to drinking water. Not a big deal' .. EVEN if many of these whiskey drinkers were looking at their alcoholism and saying "Yes, you're right. I've GOT to quit drinking." , even then, it can very easily STILL be a huge deal, but you act as though it's a walk in the park, and the results are going to be simply rosy.
I don't think it helps your argument, is I guess all I'm trying to say. To each his own, but you advocate for things I believe in, and then make them come of as just unbelievable in their ease and their benefits. I wish you would moderate your (over)confidence with a little more humility sometimes.
With Regards,
Bob
Joe,
I was trying to clarify for Rocky that reducing oil consumption in general is a good sign, not a bad sign, and that in particular vehicles that use much less fuel will make life better for their drivers. So, I said that moving from an SUV to a hybrid is no big deal. And....it's not.
I think this idea is important generally. The oily Powers That Be would like to convince the general public that a transition away from oil (and FF in general) would be bad for us, that it's a thing to be scared of. In fact, the only thing to be scared of is delaying the move - that's scary.
We can't allow TPTB to scare us.
Nick, it is not going to be an easy transition, particularly for the average American. They have structured their lives around driving everywhere in large, gas-guzzling vehicles. They drive to work, drive to the shopping mall, drive their kids to school. They never walk or bicycle anywhere.
They are going to try to retain this lifestyle even when they can't afford it any more, and this is going to cost them far more money than they need to spend. If they simply bit the bullet, bought a very small, very fuel efficient car, and could afford a home where there didn't have to drive everywhere (nearly impossible to find in the US), they would have a lot more money left over to spend on things other than driving. But they won't do this voluntarily because it is too big a transition for them.
The Powers That Be are scared witless by this alternative, and are telling people that it is possible for the average American to continue their lifestyle because America is awash in oil and it will last forever. They are lying, but the average American doesn't know that.
It sounds like we're getting close to agreement.
I agree that it will be difficult for many people in the US to unlearn the idea that oil/gasoline is good, and accept that hybrids/EREVs are much better. Still, that's an intangible problem, not a problem of resources or physics.
One thing we should be clear on: walking, bicycling and walkable neighborhoods are very good ideas, but they're absolutely not necessary to get rid of oil: hybrids/EREV/EVs will work extremely well for that.
The Powers That Be are scared witless by this alternative, and are telling people that it is possible for the average American to continue their lifestyle because America is awash in oil and it will last forever. They are lying, but the average American doesn't know that.
I couldn't agree more.
What people fail to realize is the real 800 pound gorilla in the room, is our food supply. Studies show that we use 10 kilocalories of fossil fuel to produce one kilocalorie of food. We are effectively eating oil, and the supply is just going to drop further in the future. The only way that we could change agriculture to use less fossil fuels, would be to go back to the three field system, which would drop yields by at least 1/3.
A modern field, is not where sun is combined with water and oxygen to magically make food. We dump tons of natural gas, and oil products into a bunch of dirt, and food comes up. They are essentially food factories that run on carbon based fuels with a little help from the sun, and air.
I wonder if people would keep driving their SUVs, if they realized they were burning through their future food supplies.
Studies show that we use 10 kilocalories of fossil fuel to produce one kilocalorie of food.
It's essential when considering our dependence on oil, to distinguish between various time frames.
In the short term, agriculture is very dependent on oil for farm equipment and transportation, and natural gas for fertilizer and chemicals.
Farming only uses a small percentage of our fuel. In the short term personal transportation will take the brunt of consumption reductions, sparing ag fuel supplies. We'll have plenty of fuel for it for many decades
In the medium term, farmers can grow their own fuel.
In the long-term, it's pretty easy to electrify farm equipment and transportation (including electric rail); use synthetic fuels and biofuels for a small percentage of power where it's really useful (e.g., very short, intense combine runs); and substitute low-fertilizer crops (e.g., soybeans for corn) and produce ammonia fertilizer via electrolysis. Synthetic fuels and electrolytic hydrogen would be more expensive, but wouldn't increase overall food costs much.
"Economic studies have attempted to measure year-to-year producer
responsiveness to changes in prices. In the aggregate, studies suggest that a 10% rise in fuel prices is associated with about a 6% decline in use. Fertilizer and pesticide use are also negatively related to changes in their prices. A 10% rise in prices
induces a 6.6% decrease in fertilizer use and a 5.3% decline in pesticide use. As with
energy use, changes in fertilizer and pesticide use may be obtained by switching to
less intensive production methods, or to crops that use fewer inputs. However, the
ability for a producer to implement such changes is greatly diminished once a crop
is planted and the production strategy has been set in motion. Instead, producers tend
to respond to input price changes by altering their crop and activity mix from season
to season."
Randy Schnepf
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Energy Use in Agriculture:
Background and Issues
November 19, 2004
A farmer buys his energy on the same market as everyone else, there may be plenty of energy, but if he cannot afford it, he will not make a profit, and will not stay in business, as far as I know there are no electric tractors yet, and fertilzer made from electrolysis may be possible, but it will be very expensive, and not very practical.
If a farmer grows his own energy, he is effectively converting hydrocarbons into food, then back into fuel. A fairly ludicrous idea.
A farmer buys his energy on the same market as everyone else, there may be plenty of energy, but if he cannot afford it, he will not make a profit, and will not stay in business
Farmers have never been doing better, and that's because of ethanol: it's raised food prices sharply.
as far as I know there are no electric tractors yet
Farm tractors can be electric, or hybrid . Here's a light electric tractor . Farm tractors are a fleet application, so they're not subject to the same limitations as cars and other light road vehicles(i.e., the need for small, light batteries and a charging network). Providing swap-in batteries is much easier and more practical: batteries can be trucked to the field in swappable packs, and swapping would be automated, a la Better Place. Zinc-air fuel cells can just be refueled. Many sources of power are within the weight parameters to power modern farm tractors, including lithium-ion, Zebra batteries, ZAFC's and the lead-acid developed by Firefly Energy (before their demise), and others.
It's very likely that an electric combine would be an Extended Range EV: it would have a small onboard generator, like the Chevy Volt. Such a design would be more more efficient than a traditional diesel only combine, and would allow extended operation in a weather emergency.
Most farmers are small and suffering, but most farm acreage is being managed by large organizations, and is much more profitable. Those organizations will just raise their food prices, and out-bid personal transportation (commuters and leisure travel) for fuel, so they'll do just fine. As farm commodities are only a small %of the final price of food, it won't make much difference to food prices. The distribution system, too, will outbid personal transportation for fuel. Given that overall liquid fuel supplies are likely to only decline 20% in the next 20 years, that gives plenty of time for a transition.
Thank you very much for the links and the observations.
You're welcome!
Why are people at The Oil Drum still discussing Hybrid and Electric vehicles as a possible 'solution' to a liquid fuels crisis? Did everyone fail to understand Jevon's Paradox? Haven't we already established that about half a vehicle's lifetime oil use is it's fabrication? Are people forgetting these findings? Didn't we verify that, for example, it takes more oil to build a Prius Hybrid than it takes to build a HUMV?
Whatever happened to thinking outside the box? Come on, TOD readers, why did no one DING the posters for stating (assuming?) that switching to fuel-efficient vehicles could solve, or even mitigate, a liquid fuels problem?
At this late date, switching to more fuel efficient vehicles, were it actually possible to do in a timely manner, would worsen the problem, not ameliorate it. I thought we had ALREADY REACHED NEAR CONSENSUS on this issue. What are you people thinking, that this incorrect statement gets a 'bye'?
Did everyone fail to understand Jevon's Paradox?
?? That seems unrelated to a situation where oil prices are rising.
Haven't we already established that about half a vehicle's lifetime oil use is it's fabrication?
No. Vehicle manufacturing requires relatively little oil. A modest amount of electricity, but not that much oil.
Didn't we verify that, for example, it takes more oil to build a Prius Hybrid than it takes to build a HUMV?
Seriously?
There are a lot of fresh faces around, and alot of people probably missed these convo's. Why? The information needs a better format maybe? The breadth of materials presented at this site makes it very, very difficult to comprehend, much more to be facile with.. I've been lurking here for years, honestly watching as closely I can in those odd 20 minutes of down time I have in my busy life.. and I knew none of those facts either.. I've been wishing for a peak oil tutorial at this site for ages.. We could make one.. Just need a keypost on it, and I'll gladly give what I can to help compile it.
What you're talking about is an energy FAQ.
So happens, I've been compiling one...
http://energyfaq.blogspot.com/
Up and selling a too-big house and buying a much smaller house, or renting an apartment...I will buy that for a dollar that this is a huge transition and issue for Americans, especially those who are underwater on their montages, or even not quite yet underwater, but with market values well below what they paid for their house...
...however, with respect to cars/vehicles, some 12 million light vehicles are being bought per year in the U.S. ...
...the highest selling vehicle is the Ford F-150...
...I estimate that ~ 80% of those new F-150s are not /needed/ by their owners (based on my observations for many years of whee these trucks come from, where they go, and what (usually nothing) is in their beds)...
And of course there are other unnecessary low-mpg vehicle purchases in that 12 million...
...many of those 12 million new vehicles could be Priuses or similar vehicles, or Hyundai Elantras or similar non-hybrids...
...average 2012 prices paid for F-150s range, depending on the trim line, from ~ $22,600 upwards to ~ $40K...average prices for Priuses are between $29,400 and $27,800..
http://usnews.rankingsandreviews.com/cars-trucks/Ford_F-150/prices/
http://usnews.rankingsandreviews.com/cars-trucks/Toyota_Prius/prices/
...so, for the about the same purchase price (and the US News prices were 'prices paid, including rebates etc), most people who do not need F-150s which get 12-15 mpg city and instead buy a Prius which can carry four adults (five? Center rear seat?) in more than adequate comfort and style with sufficient acceleration and handling performance, while getting ~ 50 mpg city cycle.
...ergo, I have no sympathy for the 'its too hard to change' argument...I have much more sympathy for those who truly are addicted to fattening food, alcohol, etc...than I am for people who cannot buy a different hunk of metal to get from point A to point B, especially in the city.
Obviously, gasoline prices are not high enough yet to change lots of folks' vehicle choices.
Swapping houses doesn't save energy, only change who is consuming it.
The fact that the F-150 is the highest selling vehicle in the U.S. is reflective less of how many half-ton pickups are sold and more of how concentrated the market for half-ton pickups is. Almost all half-ton pickups are grouped into 3-4 models. Other segments of the vehicle market don't have that kind of concentration.
Vehicle February 2012 Sales Pct. Change from February 2011:
1. Ford F-Series________47,273 +25.9
2. Toyota Camry/Solara__45,42 +26.9
3. Nissan Altima_______32,953 +58.4
4. Chevrolet Silverado____2,297 +1.8
5. Honda Civic________27,087 +41.7
6. Honda CR-V________24,759 +29.7
7. Ford Focus_________23,350 +114.6
8. Ram Pickup________22,595 +21.2
9. Toyota Corolla_______22,148 -14.4
10. Ford Fusion________21,773 -5.8
Source: Autodata Corp.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2012/03/01/national/a16...
http://www.examiner.com/cars-in-national/best-selling-cars-of-february-2...
Cars outsell light trucks. Small light trucks (as a class) outsell large light trucks. The top 4 full-size pickups (Ford, Chevy, Dodge, GMC) are basically the entire market. The top 5 midsize sedans outsell them, and there are beaucoup more models in that class (plus the subcompacts, and compacts). Full size-SUV's are unpopular. More people are buying small and midsize SUV's.
Well, of course, you're both right.
We're seeing some encouraging progress in people moving to vehicles that use less fuel. OTOH, we could and should move a lot more.
Make/model sales Feb 2012 (%Ch) city cycle mpg
1. Ford F-Series___________47,273 +25.9_________________12-16
2. Toyota Camry/Solara_____45,42 +26.9__________________21-25 (hybrid available...33 mpg city)
3. Nissan Altima___________32,953 +58.4_________________19-23 (hybrid available...35 mpg city)
4. Chevrolet Silverado-15___2,297 +1.8__________________9-15
5. Honda Civic_____________27,087 +41.7_________________21-26
6. Honda CR-V______________24,759 +29.7_________________22-23
7. Ford Focus______________23,350 +114.6________________26-28
8. Ram Pickup 1500_________22,595 +21.2_________________10-14
9. Toyota Corolla__________22,148 -14.4_________________26-27
10.Ford Fusion_____________21,773 -5.8__________________17-23
http://www.epa.gov/greenvehicles/Index.do;jsessionid=321f6b784b99c2d8c59...
Model city mpg
Toyota Prius_________51
Toyota Yaris_________30
Here is a 'top 10' list of top fuel-efficient cars in the U.S.:
http://www.thesupercars.org/top-cars/most-fuel-efficient-cars/
My over-arching point, supported by the data, is that people in the U.S have numerous choices available for light vehicle purchases which can provide stylish, functional and affordable (right around, or in many cases, lower than, the median 'paid price' for new cars in the U.S.) choices which can greatly increase the efficiency and decrease the amount of fuel used in their driving.
As for the fella shouting in all caps in a recent Drumbeat about 'Don't we know about Jevons (Paradox)?...of course we do...it is just that there are only 24 hours in a day, about a third consumed by sleep/rest, and much of the rest by personal hygiene, work, etc, and by the way, real wages have been stagnant at best for many folks, and there is a significant portion of folks without jobs or who are underemployed...so, although elasticity of demand is a real phenomenon, I think that a some folks are hung up on Jevons as some all-powerful boogieman when it is a minority report issue....my opinion.
1)I agree that much more progress in fleet efficiency is possible via vehicle model choice, even without changes in indivdual model efficiency (which is also needed and happening) -- the question is how to make/keep/accelerate the shifts happening
2)I agree that Jevons paradox is often overstated in argument (almost as much as the tax cuts pay for themselves meme), I'm an engineer, I value efficiency
3)I wish to make the point that the small shifts toward greater efficiency happening in the new car market are happening among the relatively price-insensitive folks who buy new cars. The majority of Americans do not buy new cars and their vehicle preferences have little (not none since they influence resale value) impact on what vehicles enter the fleet.
Given 1-3, what are the best policies to reduce light vehicle fuel consumption?
A sharp increase in CAFE for new car sales, and a sharp increase in fuel taxes (rebated per capita) for those driving older cars.
Defining good public policy is easy. The hard part is getting it past the Koch brothers and their minions: Grover Norquist and the Tea Party.
I agree with the sharp increase and continued rise in CAFE. One of the things I'm worried about in this election is that the current CAFE standard may go the way of the one Carter issued in 80-81 if Obama loses the election. I disagree with the "sharp" increase in fuel tax given the current economic situation, although I have advocated significantly increased fuel taxes here in the past. A per capita rebate would blunt the negative effects, and I'd probably favor it if it included phaseout at higher incomes with no index on the income level at which phaseout began. A more measured and predictable increase would be more to my liking. For instance, in Dec of 2012, I would support passing a law that would phase in higher gas taxes at a penny a week for two years, and then index it to inflation and to fleet efficiency. Call it the FREEDOM Act or the INDEPENDENCE Act or some such nonsense. I would support removing sales tax exemptions on motor fuels in states where they are exempt, and rebalancing sales tax rates to match the broader base (this could be branded as lowering sales tax rates). I would support adding minimum liability coverage auto insurance to the price of motor fuel (folks with points would be required to buy a supplementary policy, other folks could elect to buy supplementary coverage as now). I would support feebate for new vehicle purchase (tax at sale vehicles with fuel efficiency lower than average and rebate to vehicles with fuel efficiency higher than average). I would use feebate inlieu of even higher gas taxes, feebate would be set at the amount of fuel tax (at $1/gal indexed for inflation and fleet efficiency) expected to be incurred or avoided in average lifetime vehicle mileage from a baseline set at the CAFE target level plus a bit or at the average new car level (whichever were higher). Thus folks planning to drive low miles and then sell the vehicle would be incentivized not to buy gas guzzlers and pass them on, and folks who would now purchase a used gas guzzler would be able to afford a new econobox.
B21 - good thoughts as always...
With regards to the tax, I don't think the actual amount, or whether it is gradually introduced or not, is as important as everyone KNOWING that it is coming. If the gas tax law is passed, and people know they will soon be living with higher (and/or increasing) taxes, then they (and especially companies) will make decisions accordingly.
Right now, with the R's campaigning to reduce taxes/prices, is there really a good incentive for a company to make a major fleet change to CNG, when the election may make such investment redundant?
The atmosphere of uncertainty is more damaging than the form of the tax - just announce it, sign it into law, and move on.
I do agree with the feebate plan - that is effectively what we have here in BC with the Carbon Tax - a per head rebate. I don't think it should be phased out at higher incomes, though you could make it taxable in the hands of the recipient - which amounts to the same thing.
I also think that a major restructure in income tax is needed. A higher tax free threshold, and closing of lots(if not all) sorts of loopholes, special deductions, etc...
If the tax free threshold were say $30k, and you allow family income splitting, I think a lot of low income families would benefit, we would see a lot of two income families have person voluntarily exit the workforce (which also, as you pointed out, leads to less VMT, plus a host of improvements in family life and health).
The other part of that is to enforce minimum wage rules, and clamp down on illegal immigrant workers etc, though these things are quite controversial...
Anyway, an increase in the tax free threshold makes it easier for many to get by on less, makes many small businesses and (especially) self employed people more successful and so on.
Today, the best bet is to fight for one of the shrinking number of high paid corporate/government jobs, but, by definition, not everyone can have one of those.
Yes, all good ideas.
One thought: both certainty and simplicity are important. The simpler it is, the more everyone understands it and can plan around it.
...however, with respect to cars/vehicles, some 12 million light vehicles are being bought per year in the U.S. ...
Perhaps, but on net, per person, more vehicles iare coming off the US market than going in. The total number of passenger vehicles per 1000 people in the US declined 3% in the 5 years '03 to '08. I'll wager that decline accelerated in the '08-'09 recession.
Good evidence of saturation of the market.
The US has way more vehicles than it needs - many get very, very little use.
Vehicles these days could be kept 25 years, but they're thrown away to make room for new fashions.
Agreed. And this in particular:
The US has way more vehicles than it needs - many get very, very little use.
is why switching a relatively small part of the US vehicle fleet to more efficient means (e.g. electric taxis) can have a huge impact.
Absolutely.
The taxis around here are getting religion about switching to hybrids - they reduce fuel consumption by about 75% for slow, stop and go urban driving.
+1
Did you read my reply?
I did. You and I have been disagreeing about this 'it's easy, just drive a Prius' meme for a while now. I agree with Bob and Rocky that it isn't easy. I do feel it could be a lot easier if we used government policy to get back out ahead of the ANE decline curve.
Here's a reply I wrote you on the Feb 18th drumbeat that got orphaned when the thread closed. My policy preferences make more sense when viewed thru the prism below.
"As you note, your analysis is on the overall impact on society. If the majority of society (the median American and below) are more adversely impacted than your evaluation suggests, I think it's important to note that.
I AM concerned about the median American rather than the median driver. This 'the poor don't count' stuff irks me more than a bit. You seem to want to discard the bottom quintile in your analysis. But, that's just a matter of focus. I would like to see sustainability done in a way that doesn't injure the average American (right now, the burden of peak oil is felt far more heavily in the bottom half of the population). If that goal is left out, it makes more sense to focus on the very few people who buy new cars. Even if that goal is not left out, one realizes that if the goal is lower impact vehicles for all, then lower impact vehicles must first be purchased by those who do actually purchase new vehicles. It may help in advocating that to realize who actually does that purchasing. Also, if you advocate many more Americans not having vehicles, it has certain implications about alternative infrastructure.
You stated that most people in the lowest income quintile don't drive. That is incorrect. Only 8.7 % of households have no vehicle as of the 2009 NHTS. Not all of these are in the bottom quintile, there are quite a few well-off folks in expensive urban areas without a private vehicle, as well as elderly folks who no longer drive despite not being destitute. What is true is that those with less income drive less than average, mostly because they have less money for gasoline.
The current national coping mechanism for peak oil is largely allowing the standard of living of the poor and middle class to be eroded by squeezing them out of the motor gasoline and heating fuel markets. A lot more gasoline consumption is being foregone by reduced driving (primarily among the bottom half) than by Prius owners. Recognizing this may suggest alternative policy measures to more evenly allocate the pain. Why do we care about peak oil except in its actual impacts on the people who make up society? I appreciate efficiency for efficiency's sake, but ultimately this all matters because of people who will be hurt in the process of unwinding BAU and its aftermath."
I do feel it could be a lot easier if we used government policy to get back out ahead of the ANE decline curve.
That sounds like something we agree on.
I would like to see sustainability done in a way that doesn't injure the average American
The average american isn't poor. Not even the median american. Don't focus just on individual wages.
if you advocate many more Americans not having vehicles, it has certain implications about alternative infrastructure.
I don't particularly advocate that, though I do prefer a low-driving lifestyle.
What is true is that those with less income drive less than average, mostly because they have less money for gasoline.
Much less. Often not at all because of disability. Again, we're looking at households, and there's often a driver and a non-driver in the same household.
The current national coping mechanism for peak oil is largely allowing the standard of living of the poor and middle class to be eroded by squeezing them out of the motor gasoline and heating fuel markets. A lot more gasoline consumption is being foregone by reduced driving (primarily among the bottom half) than by Prius owners.
How do we know the impact is primarily on the poor and middle class, and that it erodes their standard of living?
The easiest strategy for dealing with high gas prices is to switch to a higher efficiency vehicle - that doesn't reduce standard of living. The poor and working poor aren't doing that yet - we know because the prices of used Priuses and Honda Insights aren't significantly higher than the prices of low-efficiency vehicles.
I think they're not doing that in large part because of misinformation of the sort that Robert Rapier is trying to correct. They're being victimized by the oil and car industries.
Recognizing this may suggest alternative policy measures to more evenly allocate the pain.
I think that's a great idea. That would be easy to do, except for resistance from...wait for it...the oil and car industries.
I don't think we're disagreeing...
"Oil Spikes Above $110 On Saudi Explosion Rumors"
http://www.actionforex.com/analysis/daily-forex-fundamentals/oil-spikes-above-$110-on-saudi-explosion-rumors-20120302160591/
So, the price responds quickly to pure speculation, yes?
Actually, a report, which now appears to be false, of an explosion at a major Saudi pipeline would be a material event that should move oil prices, but in any case, I think that annual average oil prices give us the best indication of fundamental supply & demand factors:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RBRTE&f=A
On average, the annual price of Brent increased at 1% per month from 2005 to 2011, although the price has of course gone above and below this trend line.
kal - I'm in a rush right so this might harsh but don't take it that way. First, it isn't "our oil". It belongs to the producers...both domestic and foreign. And they sell at the highest price the market offers. And it isn't "our gasoline"...it belongs to the refiners. Some folks might not like the idea of selling to a foreign buyer. OTOH some folks in the oil producing states don't like selling their production to consumers in other states. But that's free enterprise. As far as oil spiking it didn't. The price bid on future prices spiked. That's the price someone is betting oil will sell for at some specific time down the road. Call it speculation but it's still a bet. They may be right and make some money or be wrong and lose money. I'm selling three truck loads of oil today. The price I'll be getting has nothing to do with futures prices, Iranian pipelines that may or may not have blown up, etc, etc. I'll be paid what my buyer offers. Or I can let it sit in my tanks and make zero income from it for the time being. I'll be selling it today otherwise I'll have to shut my well in because I'm out of tankage.
I have a very simple view of gasoline prices: the retailers charge as much as the buyers are willing to pay. Gasoline consumption has been rising during much of the recent price run ups. Thus the companies are charging exactly what the buyers are willing to pay. maybe not happy about it but are still willing to buy. Though there is an oil price component involved in the cost of gasoline at the end of the day it still boils down to demand and what buyers will pay. If folks stopped buying a lot fuel quickly prices would go down. Maybe a lot if the refiners have too large an inventory. Also, in general, the higher the oil price the smaller the profit margin for the refiners/gas stations. Sometime folks forget that the refiners buy oil...not sell it. Typically when fuel prices rise less is sold. The refiners/retailers make money on a volume basis: better to sell a lot at a lower price than less at a higher price. During very high fuel periods it's not uncommon for some refiners/retailers to sell at a slight loss for the sake of generating more cash flow. Right now there are refineries that might shut down if it weren't for their international sales. Also consider that much of the fuel in the NE US is imported from the EU. Should the Europeans insist that "their gasoline" not be exported to the US? With the NE refinery closures it's likely the NE will become even more dependent upon the EU refiners.
If demand for a commodity is high so will be the prices. If you're a seller of that commodity you make a better profit. If you're a buyer, like a refiner, you pay more. If you're a driver you pay more for a fill up. OTOH, when prices dropped below $10/bbl back in the mid 80's the refiners saw huge profits and a lot of cheap fuel was sold to drivers paying much less than they had been. As I mentioned yesterday: if you're involved in a commodity as a buyer or seller eventually you'll get hammered or make a windfall. It the simple cyclical nature of the business.
With the NE refinery closures it's likely the NE will become even more dependent upon the EU refiners.
And with the refinery closures in the EU, it's likely the NE will become dependent on... wait for it... India!
See the Energy Information Administration PDF that BlueTwilight linked to down the page for all the distressing implications of the shutdowns.
For consumers in the NE, it's not too late to buy more shells for your rifle and put new sandbags in your bunker. Or, for the non-Doomers, at least change out your oil-burning furnace for something else, and sell your Ford F-150 V8.
Ahhh...
So, they can drill* their brains out... "Drill-Baby-Drill"... and it won't make any real difference in the price of oil products in America, yes? The oil product that is fully exposed to the world market is sold at world market prices.
And, so, American tax-payer supplied subsidies paid into the oil industry result in no price benefit to the American people, yes? I had once argued that subsidies paid offset consumer price... but that assumed a closed system.
A congressman was on the air pointing out that, in America, supply was up, demand was down, yet prices were rising. These were the dimensions, the variables, in all that followed. No one in the public-informing conversation offered anything else about the structure they were "illuminating" with their words.
I will suggest, again, that a map, a diagram, a schematic be made of the flows in the system that cause the price. This might be best done as a section, a Wikipedia kind of thing, a feature of The Oil Drum. The kind of knowledge that collects here could find a more lasting and widely valued expression.
_______________________________________________
*...for oil that isn't really there, I do understand. The increase in American production is at the cost of a record number of new wells of higher cost per yield than in the past.
Well, even a relatively small amount of new supply in the global system can make a significant difference to global prices.
And, additional domestic supply improves local employment and reduces the US trade deficit.
I'd be much more excited about consumption taxes than supplier subsidies, but I can see a plausible argument for supplier subsidies.
No kidding about the price response.
There could have an explosion and fire, just not one that disrupted the pipeline.
http://www.bloomberg.com/news/2012-03-02/oil-price-swing-on-fire-report-...
Bill is just the latest in a string of people and articles saying the same thing. George Will made the same essential comment. As has Bloomberg, WSJ and Fortune reporters. Don't you remember just a few years back that these same folks were ruing the lack of new refinery construction in the US and even then refinery utilization was rarely as high as 90%. Now that consumption of transportation fuels has dropped 10% we really have a glut of refinery capacity which of course contributes to why they are closing or seeking buyers. My question which I have not seen addressed anywhere is what could be their motivation for making these unfounded absurd assertions?I really don't think it is sheer stupidity is it? Nobody is that stupid. What is the real reason for these assertions?
The difference between a shortage and a glut can be very narrow. Had fuel demand in America continued on in the direction it was going prior to 2008 we very well may have had refining bottle necks especially when we switch from the winter to the summer blend. Right now since refiners can keep up with US demand, I wonder if anyone wants to build a new refinery right now?
They are asserting that president Obama is not doing enough to reduce the high price of gasoline and implying that, if a Republican president is elected in November 2012, then he would do a better job of lowering the price. Their listeners are that stupid.
Robert thanks for a very clear and informative article. In your interview with Alan Colmes you mentioned that people in the U.K. and Australia are protesting higher gas prices which makes it very clear that supply and demand is working. Higher prices in other parts of the world are causing U.S. refineries to ship some of their product overseas where they can make more profit. Bill O'Reilly isn't the only one who thinks that the U.S. is awash in oil, either. On NPR the other day, Guy Raz interviewed John Ydstie :
What is your take on the closing of the Northeast refineries? According to this article in Truckinginfo the Philadelphia Sunoco refinery produces 24% of East Coast capacity. Maybe that's just for diesel? Is there spare refining capacity nearby?
"What is your take on the closing of the Northeast refineries?"
Those refineries have just been shut down because they weren't profitable. This will likely increase gasoline imports coming from Europe to the East Coast. There is some spare capacity there, though. According to the EIA, average refinery utilization across the U.S. in 2011 was 86%, but in the East region it was 67%.
"...in the East region it was 67%."
OK but they're apparently shutting down more than 33% (100%-67%.) So is this a bit along the lines of when the Post Office computers spot a cluster of underutilized mailboxes, so they close them ALL down instead of just closing ENOUGH down, leaving people with no reasonable access? Wild oscillation from feast to famine?
"Wild oscillation from feast to famine?"
The problem is that each refiner is acting in their own self-interest. In this case, they have all judged that their refineries are unprofitable, and may be shutting down too much capacity. Some of the other refiners are undoubtedly in the same financial position, but they will wait it out to see if their profit margins improve after the refineries are shut down.
With the impending shutdown of the Sunoco refinery with 24% of the Northeast capacity, and two prior shutdowns of refineries in the area each with 13% of the capacity, the Northeast will have lost about 50% of its refining capacity. This is going to affect prices quite a bit because these refineries were selling fuel at a loss.
Gasoline supply will also be affected, but the bigger problem will be ultra-low sulfur diesel fuel. It's not clear where future supplies of ULSD will come from. Refinery shutdowns in Europe have restricted the supply from there. They might have to bring ULSD in from India, of all places, to fill the demand.
There is not much spare capacity nearby - Shell shut down a big refinery in Montreal a bit over a year ago, leaving only two refineries left in Quebec, and prices there have been skyrocketing. Most of the replacement supply will have to come from the US Gulf Coast, but the Colonial Pipeline to bring products from Houston to New York is already running near capacity.
Other existing products pipelines in the area are designed to take product away from the Northeast to the Midwest rather than bring them to the Northeast and would have to be reversed to bring in supplies.
Shippers could bring product in by sea, but most of the ports are intended to bring crude oil to the refineries, not oil products to consumers, and would have to be modified. Additional product supply will have to be brought in by truck or rail from considerable distances away, and that will cost money.
All in all, people in the Northeast are going to be living in interesting times.
What do you do with a closed refinery? Can you profitably sell any of it to anybody else? And what about the land - is it contaminated beyond redemption?
You can often dismantle an old oil refinery and sell it to China, India, or some other developing country.
Generally speaking, the land under an oil refinery is contaminated beyond redemption, so oil companies will never sell an old oil refinery site for fear of lawsuits. They'll convert it into a storage terminal instead.
This was posted recently, but you may have missed it.
Potential Impacts of Reductions in Refinery Activity on Northeast Petroleum Product Markets, U.S. Energy Information Administration, February 2012, (PDF warning)
Helped me a lot when I realized American mass media is not about reporting the news. It's about entertainment, money, propaganda and PR. Seems to me they're a lot like politicians. They play into whatever perspective will attract viewers. Americans are angry at government, oil companies, immagrants, etc. so that's what the media presents especially right now. Truth, ethical journalism, etc have nothing to do with news. I'm not sure it ever has. It's a business, pure and simple.
This needs to be corrected.
There is no way for the people to make informed decisions about energy when the information is corrupted in service of corporate profit and corporate message.
Fox is the result of an effort called "GOP TV" in its inception. "The Fox effect" is current book on the subject.
There were changes to the law made by Reagan and Clinton that brought us infomercials and monolithic media markets. "For the public good" and limits to ownership were thrown away. Just like overturning stock-market regulation (crash of 2008) or "Free-Market" electricity (Enron), or deregulating credit with limits set out-of-state (userious credit cards), the results have not been good for the majority of the people.
Now we have an invisible oil glut in the United States that has become "Common Knowledge".
One would expect a grown man like Bill O'Reilly to know what causes the tides to come in and out twice each day, no? Or how the moon gets up there, no? Or how the sun gets there, no?
Well, you're wrong...
http://www.youtube.com/watch?v=gcUo9Tk0A-s
The fun starts at 1:13 in the video linked above.
Well, I'm glad Bill O'Reilly knows more about oil then you guys do.
Oh wait...LMAO
Oh my gosh that was funny.
Yet, Bill O'Reilly is one of the de facto leaders of the free world through his well-financed, electronically amplified effect on half of the major political parties in the United States of America.
How many of that audience know of any rational discourse made by one Robert Rapier?
In truth, this video is very scary.
Thank you for the clear explanation of our oil imports, exports and refinery utilization. I suppose if O'Reilly didn't exist, I'd still be somewhat in the dark with regard to these issues. It sounds like his ideas would actually have the opposite effect he intends it to have. It would cost the US additional refinery jobs.
Robert Rapier does not seem to have joined Media Matters' War on Fox.
"The mission of R-Squared is to foster civil, objective discussions on energy and environmental issues."
"With all due respect, Bill O'Reilly has a fundamental misunderstanding about oil supplies."
Another source of media confusion.
http://www.energyandcapital.com/articles/oil-shale-or-shale-oil/1186
See also Shale Oil The Elusive Energy by Walter Youngquist in the Hubbert Center Newsletter or his book GeoDestinies
Lying is the primary tool of politics. This is nothing new.
Bill O'Reilly is not a politician, he has his own show as a political reporter. He is supposed to tell the truth in "The No Spin Zone". However it's all spin and lies. But I don't think he was lying in this case, he thought he was telling the truth. He is just down in the dirt ignorant. But you are correct, there is nothing new in that.
Ron P.
The 'In a Nutshell Award' is yours.
NAOM
Well Robert, best you stick to the subject you know best, because it's clear you don't know some of the simplest things about politics.
Fox news is not about the truth, news or fair and balanced. They are about entertainment for the low hanging fruit and to convince them to vote against their own best interest. You should be embarrassed. You have helped give them credibility they do not deserve and hurt your own.
"...They are about entertainment for the low hanging fruit..."
---Is that not true of most cable and network TV.---
I do agree that Fox has been more successful than CNN or MSNBC at amusing the public. Their programs generally come in 1, 2, 3, 4 etc in the cable ratings race, with O'Reilly being #1 for 10 years. RR has picked a good target. I would also like to see him on C-Span.
Fox news is not about the truth, news or fair and balanced.
So your solution to this is to simply ignore them and let their claims stand unchallenged? I have Republican relatives who now understand that what O'Reilly is saying is inaccurate. I presume they aren't the only ones who learned something from this.
You have helped give them credibility
Rebutting falsehoods gives someone credibility? Sorry, I don't agree. It's not as if Fox is some small outfit that nobody listens to. They have credibility with a lot of people, and some fraction of those people are who my post is addressed toward.
You have helped give them credibility they do not deserve and hurt your own.
Oh, no! Someone else is giving O'Reilly credibility by debunking him:
http://www.lewrockwell.com/schiff/schiff152.html
Soon O'Reilly will be so thoroughly debunked that he will be the most credible fellow around.
Schiff says:
"Frankly, this point from Mr. O'Reilly comes straight out of the Marxist handbook"
I guess that this is taking fair and balanced to a new level
Good grief, an entire TOD article on a TV talking head commentary, where he was referencing someone else? TOD posters and others have already pointed to the President's campaign website which stated the not-even-spinnable phrase, "The U.S. has become a net energy exporter", now modified to "net fuels exporter", which is still at least misleading. So, next up, "President Obama is Misinforming Americans", in a pretty big and bold font? No?
Notice how O'Reilly calls on the Obama administration to ask Congress to do something? He has to make it look like Obama is not doing something that should be done rather than calling on Republicans in Congress to ask themselves to do something.
Besides FoxNews, CNBC has pundits on that spread misinformation. They have added a new segment with Trump. Trump is fighting a Scottish wind farm that will be a few miles off the coast right where he is building a luxury golf course and other development. (And as we have seen with Cape Wind, even five miles off the coast is too close for the rich). And then he tells CNBC and it's viewers (without mentioning his personal situation) that Wind Energy hasn't worked out and that wind farms are being dismantled.
CNBC also has pundits that come on and do this "we have plenty of oil if the environmentalists would just let us drill" thing.
Besides FN, CNBC, CBS, ABC, NPR, Assoc. Press, HuffPo, DailyKos, ... there's the US President himself that spreads misinformation.
The problem in the US is that the only way the voters know a politician is lying is if the press gives the correct facts. Just having them on a show and letting them tell their opposing tales and calling that journalism serves no good. Each episode of Meet the Press and their ilk should save a portion of the show where they correct the statements given on the previous show. Instead they end up being infomercials for different politicians and parties.
One of those CNBC pundits (Dan Dicker) was on Rachel Maddow's show last night and while he averred that the peak oil thesis was correct, he claimed that the "peak oil guys" had gotten the timing way off.
Rachel, who I generally like, seemed to credulously accept this "we're now net exporters" nonsense, so the propaganda campaign's effectiveness appears to be politically agnostic.
I can see why the politicians dissemble on this, but I'm not so clear on what motivates analysts like Dicker to maintain the fiction.
Dicker is not exactly the sharpest guy out there.
Misinformation goes in, misinformation goes out.
Twice a day, but you can't explain it... ;-)
I'd just like to point out that Bill O'Reilly has the most popular cable TV "News" show in the USA.
http://www.mediabistro.com/tvnewser/category/ratings
I weep for our future.
Well, Spec, I'm weeping too. But I'm also appreciative of RR stepping up and stating in clear and rational terms just why he is so wrong.
I think this is what it'll take. As we lose Senator Snowe, one of the few remaining moderate Republicans in the Senate, I hope everyone here looks to the very real and dire need for us to keep the middleground populated.
Out at the ends, it becomes an Eye for and Eye.. while somewhere in-between lies the truth, and the ability to see clearly.
I met Richard Heinberg today in Eugene, Oregon, and saw him give a 45 minute lecture, and it was great! O'Reilly needs to invite Heinberg onto the Factor. Yeah right, like that will ever happen. O'reilly is a jerk. Americans all over the country are lining up in droves to see Ron Paul, and Ron Paul is getting huge grassroots support, because Americans want change in ending the wars and having a gold standard and more steady-state sustainable economy, and yet O'reilly says Ron Paul is "unelectable" and wouldn't even count him when he won Factor polls. O'reilly is a jerk. He probably knows the truth, that oil is running out, we have been a majority importer since 1994! He's just a corporate shill, feeding into the infinite growth paradigm that is killing us all.
If O'Reilly interviewed Heinberg he would never let him finish a sentence. He would tell him he's wrong about everything and after the interview he would inform his viewers of the '(in)correct' viewpoints they should lock away in their non-elitists, sheeple brains.
Unfortunately, whether the American public listens to Mr. O'Reilly or not probably makes very little difference!
I just completed some rather extensive travels down to Southern Brazil, up through the Amazon, then visiting the North Eastern coast of the US and then ending my trip in the Pacific North West before returning home to Florida. Everywhere I went I found myself stuck in traffic jams... Airports were packed and planes were as well. Without fail almost everyone I spoke with has some notion that the world is awash in oil and our globally connected world can just continue to hum along if only we can stop the evil oil companies from collectively shafting us. Not one person I talked seemed to be able to make the connection between our economic issues and resource limits in general and the lack of cheap oil specifically.
Almost no one I encountered seemed to be in any way interested in changing away from our current course over the cliff. Everyone was discussing politics as usual, the benefits of our globally connected business and finance, all the while continuing to beat the drums of economic growth, etc...
Good luck folks!
Fred
An opinion piece from another branch of the Murdoch empire, the WSJ (emphasis added):
http://online.wsj.com/article/SB1000142405297020398660457725576133888379...
Gingrich's Energy Charge
To infinity and beyond!
The irony is that the US is still blessed (?) with massive fossil fuel resources, relative to the requirement for 300M people to live a cultured, relatively high tech. long and comfortable life, for a century or more. It is not, however, blessed with enough resources to sustain the 'American way of life' .
"America's supposedly limited natural resources" . . . . if they are only "supposedly limited" but really in abundance then why are so many people eager to drill an area we set aside as an Alaska National Wildlife Refuge. It is right there in the name. The fact that people are so desperate to drill there tells us that they don't have many other options.
If discrete oil fields peak and decline, and if regional production is the sum of discrete oil fields, what always puzzles me is how someone could describe resources as "supposedly limited."
I've been on the slope at summer solstice. That time of year you wouldn't believe how many species are seeking refuge from the mosquitoes. Well pads are very often a preferred refuge from them for the caribou...
...considering that back in the early seventies some wilderness advocates claimed the mere sound of a chainsaw could cause a caribou death (shock? heart attack?...it's been a while since I heard that one) it does seem odd they crawl all over well pads. Of course considering how little used a tool a chainsaw is in the country barren ground caribou call home the whole scenario did sound like a Monty Python bit to me even back then...
...here is the ANWR choice we get these days
1. drill now while we still have enough resources to regulate it and minimize damage to the wilderness...which implies if we drill later when we are near broke we will really tear things up
2. drill a little later while the pipeline is still up but after drill tech has improved even more and will leave an even smaller footprint on the wilderness
3. don't drill, that of course only comes about in one of two scenarios
a. we move away from oil quickly in a decade or two and life goes merrily along with much less crude
b. the economy crumbles and we just don't have the wherewithal to go after oil in tough distant environments anymore.
Which scenario looks most likely to you?
Let's say we somehow manage to get to 3a, well then our highly electrified world is really going to want a lot of copper...
...oh darn change a couple words (copper instead of oil) in the above choices (3a goes away though) and we are talking Pebble Mine (located on/in some of the headwaters of the largest wild salmon run remaining in the world). It is nothing but tough choices when we talk seven billion with an ever increasing appetite for energy.
Probably a better choice is use substitutes for the large majority of current applications of copper: aluminium and fiber optics for wiring are the biggies.
No more copper pots; no more copper downspouts or roofs; take the copper out of nickels (75% copper!); etc, etc.
Probably better choices but not the direction I'm seeing things going right now. The copper industry does not want to shrink you know. None of the other tech's resource requirements you mention come without costs either/always some tradeoff.
So...
One very good thing about the Pebble project so far--it has funded a lot of good science. Nothing gets the money for estensive field work establishing solid baselines like a bit potential resource extraction project in Alaska does. [edit pulled link, wouldn't fully load for me]
back in the early seventies some wilderness advocates claimed the mere sound of a chainsaw could cause a caribou death
Really? Did they stop to think that there are not many loggable trees in areas where the caribou live?
The caribou here in Alberta are more at risk from the wolves, which are far too efficient as predators. The wilderness advocates of course are objecting to the government culling the wolves to keep the caribou from being wiped out. They expect it to work out somehow if you just stand back and let nature take its course.
The local Banff caribou herd, after being decimated by the wolves, was completely wiped out by a big avalanche three years ago. It was sad, they were interesting animals.
Is/was your Banff herd woodland or barren ground caribou? That bunch was all over the road back in early May of 1979, the last time I drove through your area, sorry to hear they are gone.
Barren ground caribou are interesting creatures. I haven't been following it lately but the south Alaska penninsula herd that my wife's family hunts made a major territory shift a decade or so ago. Right after that the population crashed. Followed the wrong leaders I'm guessing. Looks like predator control may be bringing the herd back
The ancient chainsaw hype, likely spawned by writers and demagogues who had never seen a caribou or a chainsaw, I am talking about was referring to the Porcupine herd--that is the herd building TAPS was supposed to decimate. When Vietnam was in full swing and in the years just after it wasn't hard to stir up a young anti-establishment crowd. Fact checking wasn't a big part of the game.
The Banff herd consisted of woodland caribou. When the parks people reintroduced wolves to Banff a few decades ago, they decimated the caribou population, and then in the spring of 2009 an avalanche north of Lake Louise wiped out the last members of the herd. It was sad.
There are 5 herds left in Jasper, which has more caribou habitat than Banff, although they have been reduced severely in numbers by wolves as well. The parks people are talking about reintroducing a new population to Banff from captured caribou, but we'll see.
The non-fact-checking pseudo-environmentalists have a big problem with the concept of species being wiped out by other, non-human species, or "acts of God", but it happens from time to time. They assume everything must happen as a consequence of human action, and that's not always true. Some things just happen despite what humans do, and some consequences of what humans do are totally unexpected.
That being said, if humans want to rescue other species from extinction, they can do it. The whooping crane are a good example.
I'm sure you are correct that a species can be wiped out by another species other than homo sapiens. And it has probably happened any number of times in evolutionary history. However, it seems relatively obvious (to this non-fact-checking pseudo-environmentalist) that currently homo sapiens is the champion at extincting other species. It is highly likely that the mega-fauna species of the western hemisphere were wiped out by humans. And there is really no way to assess in detail the knock-on effects of this overwhelming human influence on the current biosphere on into the future. It's quite possible that if humans hadn't made it to the western hemisphere there would still be massive herds of caribou.... or not, depending on how the chips fell through evolutionary history. What seems clear to me is that, without humans in the picture, there would likely be both enormously more variety and population of species, other than human, inhabiting the entire planet.
Well, in this area (Alberta), we haven't wiped out any large mammal species in the last 10,000 years. Prior to that time about 80% of the large herbivores went extinct, and we think that might have something to do with the arrival of human beings in North America about 12,000 years ago, but we're hoping to avoid repeating that extinction event.
There are still massive herds of caribou in Canada (the barren lands caribou in the northern territories), but the woodlands caribou in this region are at risk. Preserving them may require some control of the wolf population. It's just one of the things we have to do.
A large cougar attacked someone's dog downtown last night while he was walking it near the Safeway store. He chased the cougar off and the dog is only slightly chewed, but wildlife authorities are concerned we have a rogue cougar roaming the streets at night. They are advising the public to walk in groups and carry bear spray, which everybody here has and will probably work on cougars, too. Our wildlife concerns are less theoretical than yours. Human beings are not always at the top of the food chain.
Sorry, RMG, but you get the Darwin award for Anecdotal Sidetracks with that one.
We humans are undoubtedly causing simply unparalled disasters in Ecosystems across the Globe, from Whales, Cod and all other commercial fish stocks, to the Migratory Birds and the Amphibians running out of Wetlands and Rainforests, or the economics that rewards Poaching Rhinos and Elephants.. and that's before we really get into the effects of air and water pollution.
These aren't 'Theoretical', just because I don't have them hunting on the streets of my hometown. Sorry if they sound like dreamy and dramatic World Wildlife Posterboys (no less than Cougars, I suppose).. they are still real, and we're causing THEM far more peril than they cause us.
No Contest.
unparalled might be giving us a wee bit too much credit. Some pretty big stuff has come down the pike in the past...jury is still out on whether we will be around long enough to try and compete with the really big event...
Checked a map, it was the Banff herd we would have been driving amongst, but it was midday the first Sunday in May 1989, not 1979. Yeah the systems are big and complex. One of the finest things about being alive today is being able to learn a little about how so many of the pieces work together. But there is no denying that we humans are a major force in shaping habitat on this planet, and we have been one heck of a big force since we started gobbling up fossil fuel.
It sounds unlikely that you were driving among a herd of caribou - more likely elk (a.k.a. wapiti). There were maybe a dozen caribou in all of Banff park at that point in time, and they tend not to go anywhere near any road - they stick to the high country. There are thousands of elk, and they have no qualms about wandering down the road any time they feel like it.
I do know what caribou are as I've shot a couple and eaten some of many more, and do have a cured hide to look at if I forget, but my memory could be a little fuzzy on the Banff bunch. It was somewhere near Lake Louise on a relatively high road with deep snow around it, the critters were just near a small section of it and were working some plowed out spots--it seems someone had mentioned that is was an unusual thing to see them there, but that was a long time ago and moving the family back to Alaska was what the trip was really all about, so I won't make book that I saw the little Banff bunch. There certainly were elk on the road in a lot a places that day, around just about around every corner in some sections, but at least they were making do on there own, not waiting for hay like the Teton bunch.
My caribou experience is with the barren ground variety. I've had to stop and wait for a fast moving single file of caribou crossing the highway south of Tok more than once. It can be quite a wait, that is part of the Forty-mile herd.
Of course species confusion is possible even for those familiar with the animals. A gold miner friend of mine that hunted the Forty-mile bunch for decades thought the south Alaska peninsula caribou antlers I had bracketing the TV were elk. He had serious eye issues and the antlers were much larger than the ones he was accustomed to. I found them one day when I walked straight out into the tundra near the abandoned Port Moller early warning site. I stopped at a fine vista overlooking a small valley. When I looked down I was about standing on two big antlers that were shed on top of one another. That bull must have liked the spot himself. Lots of amazing country out there for those lucky enough to have a chance to get into it.
Maybe the wolfs should shop further west. I see the Western Artic caribou herd heard came close to half a million animals in 2003, doubling its size of 1970. It's declined since then in some hard winters.
http://www.alaskadispatch.com/article/size-western-arctic-caribou-herd-r...
populations tend to up and down...all populations, but many seem to think humans are immune from this cycle...
I'm not sure why you think many are in denial about human population decline? The obvious greying of the population in many developed countries, especially Japan, seems apparent enough
http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&strai...
The controversy is over the cause: voluntary fertility choices, vs involuntary limits to growth.
It seems mighty clear that Japan and Italy have stable/declining population due to ultra-low fertility due to women having the freedom not to have children, rather than increased death rates due to resource scarcity.
I suspect that the Alaskan pipeline will freeze long before there is any assessment or serious exploration of ANWR
http://www.alaskanomics.com/2011/12/from-2006-to-2011-state-north-slope-...
What? you didn't want to post the chart back to me I just posted to you the other week ?-)
Wonder if plenty of oil O'Reilly has seen it. ~300,000 bpd give or take = magic minimum number these days
yeah it isn't real encouraging but there is more exploration going on up north this winter than in many, many years. We will see if it turns anything significant up. Shell may or may not get a chance to drill in the Beaufort Sea this summer, though I really haven't seen any writeups on how they would deliver any oil they did find there. There are some prospects that could keep TAPS above minimum for a while without ANWR...but until the holes are punched we know nothing.
The collection facilities that feed the pipeline aren't getting any younger either but oil north of $100/barrel can fix that stuff up if big enough oil puddles can be found in the neighborhood....if...if...if
Luke H, I appreciate your up-to-date information. I have been interested in the pipeline situation for many years. I once heard the claim that the pipeline might freeze if the throughput fell to 300,000 b/d. I have since heard higher figures. I also encountered a theory that if the tight hole KIC-i had produced significant oil, we would know about it?? Seems reasonable. Is that adequately confirmed by the following anonymous source or other sources?
http://ngm.nationalgeographic.com/ngm/0605/feature1/text6.html
Is all the fuss over ANWR irrelevant? Various pundits believe that there is much oil to be found in ANWR, off the coast of Virginia, on federal lands and elsewhere. Gingrich was touting $2:50 oil on C-Span this morning.
See also:
http://www.anwr.org/
Robert,
Thank you for your post, and especially for the links.
I read the entire National Geographic article, and have had a decent initial look around the ANWR.org site as well.
I highly recommend the Nat Geo article to TOD readers...note that the link above points to page 6 of 6...I recommend starting from page 1...it is an easy read.
I would be interested in hearing opinions from folks on TOD from AK...
I have no problems with authorizing some limited seismic/discover activities, and something on the order of up to ~ 15-20 test wells, with the proviso that the estimates of oil in place be made public knowledge...heck, Uncle Sam could offer the oil companies which do the work some sweetheart tax breaks on this activity. I think it would be worth it to have some much better data on which to have the ANWR debate.
I imagine that KIC-1 was a bust, or else why wouldn't Chevron be waving this flag to beat the band to lobby for commercial exploitation of this area?
Related topic: Does anyone have the math on how many years the estimated recoverable NG in AK could sate the annual U.S. NG demand, assuming current annual demand stays the same going forward (Not saying this is a valid assumption, just keeping it simple)? ...and how many pipelines would it take to meet U.S. annual demand?
Good article, I've read and linked it here in the past. I did find it interesting that the author thought he had to go to well pads to see where the worlds collided. I thought the true intersect was the cold, hard aluminum skiff, and noisy, smelly, gas guzzling outboard with the wide pale-green white cap frothed arctic river myself--maybe because I worked in Chicago factories as a kid, so I know what it took to make the boat and motor. Could be why I always thought that the collision point when I commercial fished lagoons and bays off the Bering Sea. The industrial gravel pads on the tundra are just more jarring.
Few Alaskans will worry about how many days/months/years oil finds will add to the national countdown. Rather they are concerned with how many more eggs they will allow the golden goose (TAPS) to lay. I did not like the feel I got when driving down the oil company roads on the North Slope. But by just walking out onto the tundra past the Deadhorse runway a half mile or so I could forget that it was all there--of course looking for bears takes a lot of focus and the steady wind is all you hear. It all comes back with a jolt when you turn around and and climb toward the pads, but then the warm, safe shelter with a well stocked larder aspect does take some of that edge off before too long.
from the article
One has to wonder if that old Inupiat knew when he picked that spot that one day he'd be listening to super-suckers for eternity, or at least until the oil runs out.
The oil will run out, and we will chase it until it does. The big question will be whether we will pack off the biggest chunks of our footprints or just leave them on the tundra to rust away. The scars we leave last...at least from our perspective. Scrape away a few inches of soggy matted plant mix on great swaths of the North Slope and you find deep, deep layers of gravel...it's hard to believe that arid region once got enough snowfall to build glaciers big enough to bulldoze and sluice all that material loose. Not likely any scars we leave will be 'forever'...but that just ain't the time frame in which we are wont to operate...
Bill who?
Bill the most-watched cable "news" program host.
I really think our politics would be so much better if people could at least agree upon a basic set of facts. People are casting votes based upon inaccurate information. And it just doesn't get any better. We finally got out of Iraq and it was conclusively shown that there were no stockpiles of WMDs. Yet half the people in the country think there were stockpiles of WMDs found because of what they saw on Fox News. How are we ever supposed to make wise policy decisions if the facts we are starting from are bogus?
funny you should bring that up...darn I was going to avoid commenting for a bit. Around Thanksgiving I was visiting an BO loyalist, and the show was on her TV. Old Bill was chatting with Cheney's kid--the subject was some of Bill's stands on the Iraq war back when it was first going down. Cheney's kid was marching lockstep with her old man's public stance and Bill was saying where he was on record as disagreeing with it at different points.
Anyway they go through this little litany on Iraq and then without stopping too take a breath O'Reilly says 'but then Americans historically were unaware of how dangerous and powerful Al Qaeda was' (or something very close to that)...and bang off to the next topic--what a piece of work.
Debate a bunch of moves in the Iraq debacle and then implicate it in the Trade Center destruction by mentioning Al Qaeda in the concluding sentence on the subject (while actually not mentioning Iraq in that sentence). Still keeping Iraq/Hussein/911 linked as tightly as ever for their less than astute audience by keeping Al Qaeda/Iraq in close proximitiy in the dialogue. Last I heard way more than half the people in the US still believed Iraq was responsible for 911 and that was why we invaded.
Misinformation as a strategic weapon.
Last I heard way more than half the people in the US still believed Iraq was responsible for 911 and that was why we invaded
The vice-presidential candidate for the Republicans in 2008 (and ex-governor of one of the 50 states) believed that even after being named as the candidate. One of the many things her briefers had to try and clear up.
You can hardly blame average Americans for being misinformed when their own leaders and the media have both tried so hard to misinform them.
are you saying even the only ex-governor of my state to quit the job (when not immediately moving on to become Secretary of the Interior as Hickel did) was misinformed...shocking
?-) Well at least both governors who quit were doing so for best interest of the state...Wally by heading the US agency that is the largest land owner in Alaska and Sarah by...well by just going away. Last I heard of Wally before he checked out...he was pushing for a railroad tunnel to Siberia...
Goebbels would be profoundly impressed. The people who watch this stuff absorb a world view that, in a way, is completely consistent and logical, and leverages existing biases and preconceptions. The fact that it is built on a foundation of misrepresentations, and even outright lies, doesn't matter.
One of the things I've found to be really scary is that, on the limited number of occasions that I have visited a US military facility, one almost always sees large screen TVs in the reception areas and cafeteria playing Fox news.
I have some relatives that have succumbed and find it a hopeless undertaking trying to change their minds on, for example, the question of whether climate scientists are part of some global conspiracy. I don't think my experience is unique - there was a study (http://www.springerlink.com/content/064786861r21m257/fulltext.html) that showed exposure to contrary evidence often not only failed to undermine, but even strengthened preexisting beliefs.
So, how do people fight this propaganda?
I talk to people and write my comments, on my blog, on TOD and others.
I write and talk to politicians and their staff.
But this feels grossly inadequate.
There are no silver bullets and the challenges are certainly formidable. However, it may be that the seemingly unstoppable propaganda machine has innate weaknesses of its own and the edifice that has been constructed could easily crumble. I'm not an American, but I do sense that there are signs of overreaching. The spectacle of the Republican presidential candidates falling over themselves trying to prove their credentials as truest believers and extremists is astounding. Then there is the recent incident where Limbaugh called a college coed a "slut" for speaking out in favor of contraception. The lies and hypocrisy could well have been carried too far and may be wearing thin.
So there are grounds for hope that our efforts and those of others will bear fruit. The alternative is too painful to contemplate.
There are some Professors I know at the University here, in the Agriculture Dept. no less, that are ardent Climate Change deniers. This, even though they are having to deal with new pests moving north and have seen the USDA update the Plant Hardiness Zones map. What they get from their Party and their media "sources", i.e. Rush, Fox, and BillO, trumps all else.
One of the things I've found to be really scary is that, on the limited number of occasions that I have visited a US military facility, one almost always sees large screen TVs in the reception areas and cafeteria playing Fox news
Last time I was up Deadhorse way Fox News was blaring 24/7 in the Prudhoe Bay Hotel's cafeteria. I happened to be there when Palin gave her VP nomination acceptance speech--the near zombied out couple/few week on/week off 7/12 working crews were animated almost to life by it (the cheering did have a morbid undertone to it)...
...I don't look for most people to try and complicate their lives by broadening their perspective...but oddly an extended shutdown of Hormuz could radically change behavior in the US, and possibly without actually destroying the country...we will see how it all plays out...no one has deep enough insight or broad enough perspective to fathom what is actually coming down the road
but oddly an extended shutdown of Hormuz could radically change behavior in the US, and possibly without actually destroying the country...
Exactly...
Look at when the last *major* shift in oil policy/management happened in the US - right after the 73 OPEC embargo.
That was when the decision was made to stop using oil for electrical generation, and vehicle fuel efficiency standards were upgraded.
Basically, it took an external event, out of America's control, to ram home the fact that if you are dependent on imported oil, it CAN be out of your control.
The situation today is not much different, and I completely agree that only a real supply shock will result in any real reforms.
I agree that we need to do much more than we are.
OTOH, the US did recently raise the CAFE standards dramatically, and has pushed quite hard for hybrids/EREV/EVs.
Things are happening.
Last I heard 42% of Democrats thought Bush either let 911 happen or made it happen. I don't think that misinformation came from O'reilly.
http://www.911truth.org/images/ZogbyPoll2007.pdf (page 8)
And 19% of Republicans thought the same thing.
It's logical that people who don't like a Republican president would be more likely to believe negative things of him, but Democrats don't seem to have a monopoly on mistrust of their leaders and affinity for conspiracy theories.
----------------------------------------------------
No question we should hold both our leaders and our media to high standards, whether we think of them as "us" or "them".
Still....two wrongs really don't make a right.
And 19% of Republicans thought the same thing.
True enough.
It's logical that people who don't like a Republican president would be more likely to believe negative things of him, but Democrats don't seem to have a monopoly on mistrust of their leaders and affinity for conspiracy theories.
Oh I agree (e.g. birthers), but I do think that much of the mainstream media on the left holds the door open for those views, as does, for example, this forum in this case for singling out a TV opinion talking head for "misinformation" when the US President's campaign site is blatantly misleading on energy.
How does Robert's criticism of O'Reilly's inaccuracy contribute to misinformation elsewhere??
This isn't a sports contest, where criticism of someone should be analyzed in terms of which side it helps.
Right?
I disagree. There are two issues at hand here, not one: i) disposition of US oil/energy resources, ii) causes of misinformation about i) as disseminated to the public. We want to understand the complex information flow to the public, and on complex subjects there is always a tendency to provide simple answers. Here, the O'reilly bit is not laid out as a narrow example of a larger problem to invite further inquiry, which might look like this:
Here we get the appeal-to-emotion of finger pointing at the guy who got it wrong (actually cited someone else who was), "Bill O'Reilly is Misinforming Americans". Our bias is confirmed, now we all *know* where the problem of misinformation lies, and we have been told what is "fundamental" on the subject.
Well, I'm willing to stipulate the current administration might be grasping at misinformation for PR purposes.
Still, as best I can tell the primary source of misinformation is the oil & gas and car industries, via media (Fox particularly); direct advertising; and capture of government.
For example:
"Poor Exxon. They used to be the oil company that everybody loved to hate. This spawn of the Standard Oil breakup had it all: Obscene profits, the Exxon Valdez, a mean CEO who sneered at clean energy, blatant funding for climate deniers.
But now, the new ExxonMobil is just not that special anymore.
It turns out that all the big oil companies are buying elections, paying front-groups to spread lies about climate change and dumping their tiny investments in clean energy while continuing to put out soft-focus ads touting how green and socially responsible they are. And they just don’t seem to care that much about preventing oil spills either.
In these days of peak greed, you have to drill pretty deep in the oil patch to find the worst of the worst.
A real gusher
Well, after coming up with a bunch of dry holes, the environmental and government-reform movements seem to have found the activist equivalent of Old Spindletop: Charles and David Koch."
See http://transitionvoice.com/2011/02/more-reasons-to-hate-the-koch-brothers/
Well, I'm willing to stipulate the current administration might be grasping at misinformation for PR purposes.
Still, as best I can tell the primary source of misinformation is ...Someone else? Not the President of the US who is quoted daily by every major media source in the world, but someone else? Followed by a "more reasons to hate ..." article on some random blog site?
Yes.
Every US president since Johnson has said that dependence on oil imports was an enormous problem, but the oil & gas/car industries won almost all the battles.
So, have you read it?
Here we get the appeal-to-emotion of finger pointing at the guy who got it wrong (actually cited someone else who was), "Bill O'Reilly is Misinforming Americans".
This is not the first time O'Reilly has done this, and he should be accountable for his misinformation. President Obama should be accountable for his misinformation. I don't make these criticisms in any sort of political fashion. If you misinform -- Democrat, Republican, or Independent (that's you, Bernie Sanders) -- then I am apt to call you out. In fact, many people incorrectly assume I am a conservative because of how many times I have called out Pelosi, Markey, and Schumer.
If you misinform -- Democrat, Republican, or Independent (that's you, Bernie Sanders) -- then I am apt to call you out.
Yes? You mean in your TOD articles? From a scan of the titles of your articles going back in 2006, I find only this even remotely relevant to the point:
Keeping Michele Bachmann Honest on Gas Prices
and then here, this?
Obama's Energy Policy: Listening When We Disagree
Very few of my articles are actually published here (maybe 1 or 2%), but if you are looking for some specific to Democrats, see this one for example:
http://www.consumerenergyreport.com/2011/05/23/democrats-and-energy-policy/
If you Google names like Pelosi, Markey, Schumer, Wyden, Clinton, Obama in my blog -- you will find me calling the Democrats out many times. Just look at anything I have written on the SPR. People often complain that I seem to be more biased against Democrats than Republicans, so I find your insinuations somewhat amusing.
In any case, if your implication that my criticism of O'Reilly is based on mine or his political affiliation, you are way off the mark. It is a simple fact that Republicans get mad and think I am being political when I criticize Republicans, and Democrats think the same when I criticize them.
One more comment and I'll let this go:
People often complain that I seem to be more biased against Democrats than Republicans, so I find your insinuations somewhat amusing.
The fact that a proponent of an argument perceives himself criticized from different sides is utterly irrelevant to whether or not he has avoided Aristotelian fallacies and found the truth.
Last I heard 42% of Democrats thought Bush either let 911 happen or made it happen. I don't think that misinformation came from Orelle.
No but a few years after the Iraq invasion Bush/Cheney were still directly linking Saddam and 911 when talking to the press. I saw and heard it myself. The linkage by proximity I mentioned in the O'Reilly/Cheney the younger exchange was merely designed to keep that very popular myth intact...
In 2003 70% of Americans believed Saddam was behind 911...
Apparently that number dipped by 2004 but is rising back up again...
O'Reilly and others work to keep that trend up so it seems (likely not a very hard task)...I was taken aback when I heard, in the fall of 2011, the Fox News exchange I mentioned...but that just shows what I know...I don't have cable.
Eh, that 2003 story says "link" and later "involved", not "behind". When exactly did you know otherwise? The 9/11 Commission Report did not come out until 2004. By the way, "Cheney's kid" has a name, Elizabeth, who is an international attorney and former US State Dept official.
behind, involved yes there is a difference but the nuance would have been defined differently and not differentiated at all by a great many of the 70%.
No one besides Saddam and Al Qaeda has ever known otherwise. I've been on a jury or two. You rarely know what happened but you do conclude what was most likely the case.
By 2002 British Intelligence was putting a lot of distance between Saddam and Al Qaeda. The enmity between Saddam and Ansar al-Islam was common knowledge by that time for all who were paying attention. Those who had learned a thing or two about Saddam's regime in the past knew he was not a man that would be considered tolerant of competition. He was an ironfisted, paranoid despot and ruled with a reign of fear, but he had shown little inclination to get involved in events away from his neighborhood. I was aware of these things and used them in my weighting of the likelihood of an Al Qaeda/Saddam alliance in perpetrating 9/11.
In January 2003 the prewar intelligence report given to the Senate considered Saddam's involvement with Al Qaeda highly unlikely. That report was given to the administration in summer/fall of 2002 and parts of it did find their way into the public before the official release to the Senate. So in answer to when exactly did I know--it was month's before the Iraq war buildup that I considered it extremely unlikely Saddam had anything to do with 9/11. The fact that I am so physically distant from the tower site and that I had expected a much worse attack for a long time before it happened might have allowed me to weigh the evidence coming public (and it was hardly pushed hard by the media) differently than those who were closer to and more deeply affected by the attack.
You can call Cheney's kid whatever you want. I thought I was being respectful enough in not mentioning she was an attorney...credibility drops dramatically for anyone with that title hung around their neck.
Before we dismiss O'Reilly out of hand and do the oil industry's cheerleading for them gratis, consider this: What if you had a reverse auction in the US for oil products, the way some internet sites are doing for consumer goods? Among other things, we would stock up on heating oil out of season when it is cheap -- No more price gamingin autumn which raises the price of gasoline, diesel, and heating oil, permanently ratcheting up inflation with no reversal. Service stations can offer bulk discounts on gas purchases -- Who needs to buy 3 gallons at a time? Propane might be cheap and abundant enough to rapidly promote it where you don't expect. This might even help fracking. And we might get a more objective idea what the dollar is worth because there would be less speculation to game currency, more speculation to promote Say's law, in which supply creates its own demand. Right now the economy will boom on cheaper oil, which is the dollar's only salvation. Balance of trade including oil don't matter at all.
At worst, oil companies will buy their own product with winning bids. But we have entertained similar behavior as public remedies. Remember reimportation of US made drugs from Canada (Canada essentially either subsidizes the US, or makes profits on a US 'spot' market for drugs after negotiating favorable purchase rates). There was also an alternative to grain import quotas I would like to share. Ordinary quotas restrict supply and let purchase and resale prices float. But if quotas were specifically auctioned off, parties that subsidize grain and the dump it on US markets would effectively have to buy the right to dump, and subsidize Washington. This would cost them dollars, which would become relatively dearer, and depreciate local currency to unacceptable levels. End of dumping.
The market is a lot stranger than you think. And don't think the world isn't so loaded with energy price regulation that the O'Reilly proposal would be injurious.
And don't think the world isn't so loaded with energy price regulation that the O'Reilly proposal would be injurious.
At least exporting refined oil products gives a little relief to our trade deficit--but it doesn't come close to balancing out all the wealth we are shipping out to import 9 million barrels of crude a day.
Just how would selling less refined product benefit all those wage earners involved in the refining and oil transport industries? Or are you and O'Reilly trying to lower the price and ratchet up US oil consumption again? That helps us in the middle/long term how (see paragraph above)? Personally I favor a graduated fuel tax (in essence a complicated and refinable rationing vehicle)--slow or shut down Hormuz for a half a year and we will be doing something at least that radical.
I am so frustrated. I do not understand why people belive this Abotic Oil theory? There are so many holes and no evidence to support it. Now Gingrich is saying that we can become oil independent I guess now he is a scienctist now? I have come to the conclusion that the Americans are sciencfically illterate. Not only does everything in science show to the contray but everyone is believes we can live the same? I really appreciate your site I have learned alot and understand a great more than I did before. I have a bs in geology so I understand the basics but of course things are more complex than it seems.I wonder if people will get out of denial when gas is $6-8 a gallon and we have rolling blackouts in the US.
Great article. However, I would not have used the term "with all due respect".
There are certain people who do respect the guy, and that comment is aimed at them.
Newt Gingrich is going much farther than Bill O: blaming Obama for the rise in gas prices, promising to drive the price down to $2.50 a gallon, demanding that Steve Chu be fired for emphasizing the overall supply of energy rather than the price of gas. He asks why there can't be a big increase in the supply of oil, just as there was for natural gas.
http://www.youtube.com/watch?v=NWfhcWjvVdQ
If you watch the video, it is clear that Oreilly isn't talking about domestic or global Crude + condensate production vs. exports of same. The context with Dobbs interview makes that abundantly clear. He's talkingabout gasoline prices and crude + Crude Products exports/levels.
The author spends most of his time talking debunking Oreilly's use of "oil" as a synonym for C+C+CP. "mistakingly conflating" was the term. Rather, the author is mistakenly conflating. It's one thing to put words in someone's mouth, quite another to put them in and then show that they are wrong. Lookm it's perfecctly understandable that a layman, especially one who's trying to provoke a lay audience, would use "plenty of oil" in a very brief segment. BUt it was clear from context that the issue was C+CP export and gasoline prices. We/he are not talking about whether global prices are "pure" supply and demand determined or whether trading/peak fears, other fears, OPEC, etc. are involved. This is domestic. Kalimanku, high above, has it basically right.
Straw dowgs aside, what everyone here, Oreilly, Dobbs, Rapier etc agrees with are:
1) The price of gasloline is overwhelmingly determined by the price of oil. As Poster Stuart said, "75 cent of a gallon of gasoline is refiner's profit, plus sometimes, 50 cents or so more" This then, is about the 50cents. Rergrettably, this was not discussed.
2) Shortly after the US incentivized exporters through tarrif-free trade zones, products, mostly gasoline, began to soar at double digit CAGRs, from 100kbod to 600+kbod.
3) Stocks of C+CP are indeed plentyful. and freakishly high and growing higher since 2003, contrary to past behavior over 30 years (high inventory, low prices, and vice versa).
4) Building refinery capacity, increasingly becoming a processing center for other country's crude creates jobs, pollution, and lanf use issues. Here in Houston, there is a cresent from the north Woodlands down to the SW Sugar Land--as far away from refineries as possible. Increasing their size has consequences, which I personally don't give a crap about because I won't live by them. Truth be told, most oilmen, if they had to choose between living beside a nuke or a refinery, would hug the nuke. (think Bophal or Texas City, etc.)
5) Shutting in refinery capacity by govt action, would have the opposite effect of encouraging their incerased use: It would cost jobs. Temporarily, depending on timing, it might lower gasoline prices. The question is long term...?
6) Oreilly's proposal to reduce or eliminate the tarrif-free legislation pits oily and refinery interests and incomes against companies and individuals that consume transportation fuels and other products. Is there a net net benefit? To whom?
Basically, Oreilly and Kalimanku are echoeing Man on the Street (MOS). Lets assume he has a BA in communications from a tiny, crummy university, but he's no idiot.
MOS: "So let me get this right. US Crude n Crude Products inventories are plentiful, US production is up, gasoline demand is way down, so much so that refineries are shutting down because they are only ably to operate at 50% capacity. So why am I paying so much at the pump? I own a shoe store and the last time I had too many shoes, I did not raise prices. Are you kidding?
MOS: What? now you tell me that we are exporting a rapidly increasing amount of oil products, especially gasoline? Am I getting screwed or what?
Answer: Well you see MOS, Iran, peak oil, AMERICA, OPEC, exports to Canada, FREEDOM, supply and demand, GOD only made a finite amount. Understand?
MOS: I have a degree in communications, I know what obfuscation is, I know the buzzwords. You're not addressing my questions.
I've seen a lot of headlines about "Gasoline stock up/down" "Petroleum stock up/down" "Demand up/down". A friend of mine gets several newsletters. He trades. Apparently, these things matter a lot to them. Is the ability to export products creating not just an outlet let for too much supply, not just jobs for through iinceased imports of crude, but another way to manipulate prices?
Answer: Iran, peak oil, AMERICA, OPEC, exports to Canada, FREEDOM, supply and demand, GOD only made a finite amount. Understand?
MOS: OK, look, I'm guessing that I'm paying a quarter a gallon more, maybe 50 cents. Does anyone care give a spit? And by the way, who the hell is John Fredriksen? Farahead Holdings? Parnon Holdings? Arcadia? Do any of they guys own tankers? refineries? Hey, i'm just a guy with a shoe store. But I ran across the folowwing two charts, courtesy Oreilly, and I superimposed prices... What am I missing?
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTSTUS1&f=W
and
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=w_epm0f_eex_nu...
Answer: I don't think that you understand. Thank GOD I live in AMERICA where FREDDOM of the marketplace determines all. That's the explanation. Everything else is conspiracy theory. Supply and Demand and market fundemantals. That's all of it. If you look at what we were saying about those fundamantal things back in 1999, when prices were low, you'd realize just how we feel about those things.
MOS: OK, that's it. I've put my foot right in the middle of ideology. That explains it. I'm outta here.
Well, the problem is, that he *didn't* get that part right.
The refinieries that are shutting down - in the NE - don't have access to all the new US production from the Bakken, and they couldn't handle the heavy, sour oil even if they did. Those refineries are stuck importing light, sweet crude from N Sea, Libya, Nigeria, etc. And the price for that oil is quite expensive. Meanwhile, gasoline consumption is down a bit (not way down), and consumption of other refined products, like road asphalt and petrochemical feedstocks, IS way down. So those refineries are losing money, and not surprisingly, closing down. The option of retrofitting to handle heavy sour oil costs more than building a new refinery from scratch, and there is still the access issue...
It would be like the shoe store owner NOT having access to cheap shoes made in Asia, but only those made in the US or Europe - what would his shoe prices be like then?
As for the places that do have access to all this Bakken and Cdn oil, and the refineries that can handle it - the upper midwest, well, their gas prices are (somewhat) lower, as the GasBuddy.com website map shows. These places are paying the WTI (US midwest) price, not the Brent (world) price. If you want cheaper gas and are prepared to move to N Dakota for it, then power to you..
Why aren;t the prices cheaper still, like $2? Well, that is below the price of crude (WTI) price - who would sell something for less than what it cost to buy it?
Why are these refineries exporting? Well, to try and stay in business of course. Bringing in crude, and refining, and exporting products is a good business if you own a refinery. The alternative is to process less crude, just for the domestic market, and go broke - who would want to do that?
If a US shoemaker imports leather and makes shoes, should they not be allowed to export the finished product?
Welcome to the world of world trade. It;'s what makes your shoes, tv's and cellphones cheap and your gasoline expensive.
Meanwhile, gasoline consumption is down a bit (not way down), and consumption of other refined products, like road asphalt and petrochemical feedstocks, IS way down. So those refineries are losing money, and not surprisingly, closing down.
Well US gasoline consumption (i.e. domestic) is off 1.2 mbpd from its peak of ~9.6 billion bpd back in July 2007 (from 1990)
However, refinery output of gasoline (blended) has been going steadily up (from 1945).
We have to be careful with that first chart...
There is an annual dip in the spring, when the changeover from winter to summer grade gasoline happens. It looks like this year's dip is a big one - exacerbated by refinery closures. There may be drawing down of inventories - especially of winter grade - happening too
I think a more relevant measure will be what the peak is - which happens in July, and the annual total.
But yes, the refinery output has not declined nearly as much - with the difference being exports, of course.
The author spends most of his time talking debunking Oreilly's use of "oil" as a synonym for C+C+CP.
As I already explained to you by e-mail, this is not true. First, O'Reilly has conflated oil with product exports many times, as he does here: A decade ago, oil exports were not even among the top 25 exports. Most of the oil stayed here. What is the implication? That most of the oil is not staying here. That isn't true if we are talking about oil, and it isn't true if we are talking about net exports of oil and refined products. So, I spent one paragraph out of the entire essay showing that first of all, we aren't exporting oil. So that's cleared up. The rest is spent talking about net exports. It remains a mystery to me why you can't see this, but I think it's rather obvious to everyone else.
The author spends most of his time talking debunking Oreilly's use of "oil" as a synonym for C+C+CP.
It is also clear the impression he is leaving, because you see numerous people repeating the "fact" -- including many in the media -- that the U.S. is now an oil exporter. I certainly think that warrants a clear demonstration that this is not the case. But that was not -- and you continue to maintain -- a focus of the essay.
Shortly after the US incentivized exporters through tarrif-free trade zones, products, mostly gasoline, began to soar at double digit CAGRs, from 100kbod to 600+kbod.
Source please. I want to see a correlation between the date that this happened and an increase in exports. What you will find is a strong correlation between falling demand in the U.S. and increased exports. I maintain that the Tariff Free Zones have absolutely nothing to do with the issue. First, in which zones are we placing tariffs on exported gasoline? Anywhere? Second, even if we did have a tariff on the gasoline, the exports would fall but then so would the oil imports fall in turn. Refiners aren't just going to keep making all of that fuel and then dump it into the U.S. market. That is why O'Reilly's proposal will not work. It is not different than tapping the SPR for a brief spurt of supply. It could increase supplies briefly, but then inventories will be pulled down and prices will be right back up -- and more volatile because inventories were pulled down.
3) Stocks of C+CP are indeed plentyful. and freakishly high and growing higher since 2003, contrary to past behavior over 30 years (high inventory, low prices, and vice versa).
Per the EIA, we have a 27.7 day supply of gasoline in inventory. A year ago it was 26.4 days of supply. Distillate stocks are all lower than they were a year ago. All of the inventories are within the normal five-year band: http://www.eia.gov/oog/info/twip/twip.asp
TO RR:
"O'R: To make bigger profits, the oil companies are sending their refined products overseas?"
Dobbs: "Primarily jet fuel, diesel and gasoline, which normally would be in abundance right now [reference to earlier statement about warm winter/less demand], is being shipped overseas."
Seems pretty clear what kind of "oil" he was referring to.
As for rapid export growth coinciding with FTZ laws: I wuz wrong. Just said it in passing as a way to explain what O'R was saying: raise taxes/tariffs (easiest way is to change FTZ policy). I don't really know why the surge in refined exports about 6 years ago. Increased cheap imports from UK? Maybe you know? It's not really important to the O'R points though. One thing's been puzzling me: Why would Canada or any country not want to make the value-added money on refined products? I know some Canadians are pissed about it. And the Keystone has to have a seperate, bi-directional loop built alongside just to export the raw bitumen, which would not be needed if it were exporting syncrude. Alberta is puzzled too. Way too much sulfur (>5%) to stockpile in Canada? Environmental laws? Tax structure? All candidates. But for L.A., Mexico or wherever, the way of the world is to upgrade refineries such that 100 bbl in yeilds 104-108 out, rather than the other way around. Don't understand how the US, a high-labor, somewhat high-pollution-regs country (higher, lower than Canada?) can afford to do this. Again, not O'Rs point.
To Paul N.
"Refinieries shutting down in the NE don't have access to all the new US production from the Bakken, and they couldn't handle the heavy, sour oil even if they did."
Well, if in the past they operated at 50% capacity and stayed open, even when imported light sweet was $100 and more, then why not now? The answer is twofold: 1) demand is down (a lot, a bunch, a bit, the numbers look way down to me, but whatever) and 2) it's cheaper to import UK gasoline (Valero?) from desperate, badly misaligned UK refineries. They should have converted years ago to more diesel. I think that's why it's worse this time around.
"It would be like the shoe store owner NOT having access to cheap shoes made in Asia, but only those made in the US or Europe - what would his shoe prices be like then?" Analogies are never perfect, but MOS observes that prices are up when demand is down. And US production highest in 8 years, which is contrary to conventional notions of supply-demand-price. Shoes, Bakken, variability, not helping.
===========
Even more briefly, O'R just asked 3 simple Q's" I don't think that they were addressed:
1. O'R: Are U.S "reserves" up (again, abundantly clear that was referring to --the context was-- C+products)? Answer: yes
2. Are we exporting a lot of oily products overseas? Answer: yes, increasingly so.
3. O'Rs last words were (after the usual ramblings about Obama, greenies, space aliens): Are "they" manipulating prices? Hmm. Awful lot of court cases, prosecutions, academic papers, oil execs, etc. that say "yes." But they all deal with crude, not gasoline, storage or exports per se (I noticed that no one touched this final O'R question--it's a big topic).
Perhaps a better approach would be to show the studies that point to >95% of gasoline price is crude price. My simple calculation says that it's about 5 cents too high right now. Have no idea why pure refineries like Tesoro and Valero have had 90% or more equities price increases in the last 16 months, far above the DOW. They're doing something right, or different.
As for rapid export growth coinciding with FTZ laws: I wuz wrong. Just said it in passing as a way to explain what O'R was saying: raise taxes/tariffs (easiest way is to change FTZ policy). I don't really know why the surge in refined exports about 6 years ago. Increased cheap imports from UK? Maybe you know?
Yes, I do know, so instead of authoritatively (and wrongly) pontificating that it was the FTZ laws -- and therefore saying "See, O'Reilly has a point!" -- you could have asked. If you look at the graphs, you will see that gasoline exports began to climb once domestic demand fell. Hence, this is refiners looking for outlets for their products. Distillate exports began to rise sharply after 2005, when ultra-low-sulfer diesel standards began to kick in: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MDIEXUS2&f=A
I worked at a refinery at that time, and many refineries with marginal economics did not invest in the equipment required to meet the standards. They just began to export the high sulfur diesel.
It's not really important to the O'R points though.
Not important to his points? That's of course what I said; that it has nothing to do with anything. You, on the other hand, have used it as "evidence" that refiners are only doing this thing because of legal loopholes and such -- proving that O'Reilly has a point that by removing those loopholes the product would stay at home and consumers would feel relief. My whole point is to show that the reasons you and O'Reilly think exports are happening are in error, and thus so are your remedies.
One thing's been puzzling me: Why would Canada or any country not want to make the value-added money on refined products? I know some Canadians are pissed about it.
Some are, but the reason is simple: Refining is a pretty crappy business to be in most of the time. That's why proposals that would harm refiners based on false expectations annoy me; I would rather not see more of our refiners go out of business.
Are "they" manipulating prices? Hmm. Awful lot of court cases, prosecutions, academic papers, oil execs, etc. that say "yes."
How many times has the FTC looked into this, and how many times have they come back and said "The price is being primarily influence by supply and demand"?
Have no idea why pure refineries like Tesoro and Valero have had 90% or more equities price increases in the last 16 months, far above the DOW. They're doing something right, or different.
There is always another explanation: False expectations from investors, who don't understand that refiners usually operate in low single digit profit margins -- when they are profitable, and have single digit PE ratios. Would not be the first time stocks have been bid up on the basis of bad information. It is in fact pretty common. Here are their profit margins in recent years. (I don't know if 2011 is available yet). Look like a lucrative business to you?
Valero
2010: 1.1%
2009: -2.9%
2008: -1.0%
2007: 4.9%
Tesoro
2010: 0.1%
2009: -0.8%
2008: 1.0%
2007: 2.6%
"Refining is a pretty crappy business to be in most of the time. That's why proposals that would harm refiners based on false expectations annoy me; I would rather not see more of our refiners go out of business."
Time for re-regulation?
ben - What would re-reg do? Serious question...I don't know much about this end of the biz.
I'm not advocating this, that was mostly a joke for RR and an attempt to get him to say something on the subject. I have no real knowledge of the refining business. I do have some knowledge of utility regulation since I work for a cost-regulated electric utility.
Basically, if we decided that having certain regional refineries in the NE was in the public interest for one reason or another (even if the refinery operation itself were uneconomic on crack spread) we could pass the laws regulating Northeastern refineries as utilities, and establish or authorize a federal commission to regulate operation. Different sub-optimized operating options might be pursued (operate at highest reasonable continuous utilization rate, or operate at least net cost utilization rate with ability to shift to full utilization on demand, or supply X% of local demand, etc. And these might be adjusted repeatedly over time based on market conditions.)
Obviously, there is regional market pressure in the NE to close capacity at current crude and products prices and given existing installed capacity and technology. This means that they are losing money or at least making less return on investment than desired. This means that in order to stay open under regulation, some subsidy is required (which is justifiable if the public interest warrants for reasons not captured on refinery balance sheets). In this circumstance the commission might establish a balancing account mechanism, under which the refineries continue to buy crude on the open market and sell products on the open market, projecting a certain shortfall in revenue for each quarter after paying commission approved refinery operating costs and earning commission approved profits (based on detailed rate case provided to the commission for review and adjustment). The projected shortfall would then be collected by retailers in the region at the pump (in fashion similar to fuel taxes, but as a 'refinery utility charge') and returned to refiners' balancing accounts. If the shortfall were higher or lower than expected, the balancing account would be "trued-up" in the next period by adjusting the rate at which retailers collected the next projected period's shortfall so that the balancing account stayed within certain levels.
Well, if in the past they operated at 50% capacity and stayed open, even when imported light sweet was $100 and more, then why not now? The answer is twofold: 1) demand is down (a lot, a bunch, a bit, the numbers look way down to me, but whatever) and 2) it's cheaper to import UK gasoline (Valero?) from desperate, badly misaligned UK refineries. They should have converted years ago to more diesel. I think that's why it's worse this time around.
You are forgetting that these NE refiners are facing stiff competition from the mid-continent refiners. The MC have access to all the Bakken and Cdn oil, and the ability to process it. They then have product pipelines heading east (in addition to other distribution options, like road and rail.
So, the MC refineries can access cheaper WTI priced oil, and sell the products into the NE, and undercut the NE refiners, while still enjoying healthy profit margins. The NE refiners could export more of their products, but when you have to buy the most expensive crude there is - light sweet - how much money is there in that?
Add in the (somewhat) reduced domestic consumption of gasoline and other products, and you can see the NE refiners losing market share and volume fast.
Analogies are never perfect, but MOS observes that prices are up when demand is down. And US production highest in 8 years, which is contrary to conventional notions of supply-demand-price. Shoes, Bakken, variability, not helping.
What the MOS observes - gasoline prices - are up all over the world. Coincidentally, gasoline demand for the rest of the world is up, not down, so no contradiction there. What the MOS probably doesn't understand is that gasoline is a world market, with local variations.
For the US the "local variation" can be seen in the WTI- Brent spread. If we take Brent as the baseline, then the relative decline in WTI - a landlocked market - is because of increased landlocked production compared to (somewhat) shrinking landlocked demand. But once refined into products, the MC refiners have many more options for getting them out of that landlocked market, and that is exactly what they are doing.
So, continental US crude production is the highest in 8 years, and the discount of WTI to world prices is also the greatest (in history) - that seems consistent to me.
Of course, as we speak, crude producers from Canada through the midwest are desperately trying to find ways to get their oil outside of the WTI market. Why sell your shoes into a saturated market when the world awaits?
Mid continent crude is cheaper because it is landlocked, but once it becomes products, there is a world market and a world price. Since MOS doesn't buy crude, he has to pay the world price (or close to it) - it's that simple
If it wasn't for misinforming Americans, Bill O'Riley wouldn't have a show.
“So how might O'Reilly's proposal play out? It is easy enough to see what would happen. If you put a high export tariff on fuel and made it unattractive for U.S. oil companies to export their products, they simply would not import as much oil.”
Export tariff? This is unconstitutional, which is why there are no such things.
“No Tax or Duty shall be laid on Articles exported from any State.”
-- U.S. Constitution: Article I, Sec.9
The price of a troy ounce of silver is 34 dollars. A 90 percent silver dime is worth 3.40. Gas at 5 dollars per gallon has a silver based value of approximately 15 cents per gallon where 1 dollar equals one ounce of silver.
Gasoline is not expensive.
Aft a-Glet:
“No Tax or Duty shall be laid on Articles exported from any State.”
-- U.S. Constitution: Article I, Sec.9"
Most cogent, relevant comment here. One would think that the US gov't would have some way of taxing anything it wanted. But not here, in particular in the way that O'reilly suggests--to dampen oily products exports. The law has been tested several times of late, and while there are several ways that taxes could be applied, doing so for that purpose--constraining exports--is indeed unconstitutional.
Thx
So then we have established beyond any shadow of a doubt that the Free Trade Zones argument was a red herring?
Very interesting to listen to BO in these FOX segments from 2008 when FOX was saying that the president can't do anything to affect gas prices!
http://www.youtube.com/watch?feature=player_embedded&v=UzEnKdBAb_o
What about NPR? They have had about ten fluff stories about how we are a huge net exporter of oil....today is a perfect example of that.....if while you were getting ready to head to work you would have heard a story that says in ten years we will have so much oil...bull$#@#! It is not just the right swinging the propaganda...
Long time ago I decided I would not listen to the news in the morning. Something about the insidious voice inflections shaping the questionable choice of content that made me feel violated. I've been much happier ever since. Later in the day I must be thicker skinned.
NPR is the right. "Nice 'Publican Radio"
KPFK is the left. www.kpfk.org
KTLK sounds left, but is on Clear Channel... the right. It features absolutely content-free shows like Stephanie Miller.
There is no coherent picture of oil presented on any of them. There is no simple, coherent picture of oil to reference.