Gasoline price thread (merged)

[Cloud9]

1. Light sweet crude peaked.
2. The fed has a jammed print button.

[Serial_Worrier]

The real fun begins when gas hits $6/gallon.

[kublikhan]

I think the US should invest in negabarrels. Best return on investment. We are the Saudi Arabia of negabarrels!

Amory Lovins shuttles around the world carrying a small suitcase that contains, he says, the equivalent of 200 large power plants plus all the oil that runs through the trans-Alaska pipeline. What it really contains is energy-saving lightbulbs, motors, showerheads, and other devices. They help Amory get across the most basic points about energy, namely:

1). No one WANTS energy. No one is pining to have a kilowatt-hour of electricity or a barrel of oil for its own sake. What people want are energy SERVICES: hot showers, cold beer, the ability to travel at reasonable speed and in relative comfort.

2). Energy is not a benefit, but a COST of getting energy services. The less energy we have to spend to heat the shower or cool the beer, the better off we are.

These are simple enough points, but the policy of nearly every country ignores them. Nations pride themselves on energy production, not energy efficiency. They search the wilderness for oil, pump it from the bowels of the earth, fight wars over it, invest billions in electricity plants. Oil companies and electric utilities think of themselves as selling energy, rather than selling energy services at the lowest possible cost.

Amory and his colleagues at Rocky Mountain Institute are trying to get across the idea that more efficiency can produce the same results as more energy, for less money, with less environmental damage. If we can turn a motor, light a bulb, or cool a room with fewer watts or barrels, that's just as good as discovering new barrels -- better, actually, because a discovered barrel can be burned only once, while an insulated house or more efficient car goes on saving barrels over its whole lifetime.

As Amory puts it: "In the lower 49 states are two supergiant oilfields, each bigger than the largest in Saudi Arabia; each able to produce sustainably (not just to extract once) almost 5 million barrels per day for less than seven dollars a barrel; each capable of ELIMINATING U.S. oil imports before a new synfuel plant or power plant or frontier oilfield could produce any energy whatever, and at about a tenth of its cost. They are the 'accelerated-scrappage-of-gas-guzzlers oilfield' under Detroit and the 'weatherization oilfield' in the nation's attics."

Energy efficiency is the cheapest option. Some smart investors are recognizing that. Despite national policies that subsidize supply rather than efficiency, the U. S. now uses 38 percent less oil to produce a dollar of GNP than it did in 1973. The 1973-86 improvement in the car fleet mileage (from 13.3 to 18.3 miles per gallon) saved in 1986 more than twice as much oil as we imported from the Persian Gulf that year. From 1979-86 the U.S. got fifteen times as much new energy from savings as from increases in nuclear plants and fossil fuels. And we have just begun to tap the possibilities for efficiency.

A Negabarrel Saved is a Barrel Earned

[Kristen]

Doesn't more efficiency mean more consumption? Nevertheless I agree with you.

[dissident]

What's Behind Rising Gas Prices?

Last November, the United Nations declared that Iran was clearly developing nuclear-weapons capabilities.

The WSJ hack piece lost all credibility right there. Some rehash of existing data is not a declaration of anything other than political games at the IAEA. The UN *did not* declare what the WSJ claims because there is no unanimity.

We are going to be fed such tripe regularly because to acknowledge peak oil means to bring about a new policy era where real action is necessary and people will have to accept that their lifestyles are going to change. No, pretending there is no real problem and that only some political incidents are the whole of reality is so much easier. The system is geared to sustaining BAU, so why would these paid WSJ propagandists give you the truth?

[Pops]

Parse down past the hand-waving about geopolitics and Murdockian knee-jerk spiel about regulations and "(the so-called peak oil crisis)" and what you're left with is:

...a world oil market... with no more than 2.5 million barrels of spare capacity.

It ain't like we aren't trying...

Westexas:

The net increase in average US crude oil production in 2010 was 0.1 mbpd, or about 170 bpd per drilling rig.

The net increase in average US crude oil production in 2011 was 0.1 mbpd (through, October). If this number holds, the net increase per drilling rig would be about 100 bpd per rig.

and


http://www.theoildrum.com/node/8905

(the so-called peak oil crisis)

.

[vision-master]

What's Behind Rising Gas Prices? -> TPTB are intentionally manipulating gas prices in order to crash the World economies. This is being done through Middle East politics aka fake terrorism.

[pstarr]

Westexas, Jeffrey Brown, is the PO Pundit. What he says.

[Loki]

This WSJ op-ed is just more spew by Yergin, the MSM's go-to guy when it comes to comfortable lies about energy.

Of course, Yergin has a point (as far as it goes) about unrest in various Muslim countries causing a rise in oil prices. I find it ironic that right-wingers like the Newster are moaning about Obama not allowing enough drilling (another oft-repeated lie) while at the same time said right-wingers are beating the war drum against Iran, which has more effect on short-term oil prices than Obama's drilling policies.

[AgentR11]

I think the US should invest in negabarrels. Best return on investment.

There is a problem that I just personally had to deal with related to this. And that is, if you invest in efficiency, but neglect the grid and supply, such that periods of unavailability occur; huge gains in efficiency are rendered moot as investment instantly gets rerouted to ways to prevent the unavailability at the end node. Case in point; we're shutting down a bunch of coal fired generation plants in Texas; but NG plants have not been built to replace that load. This has lead to warnings about rolling blackouts.

The likelihood of rolling blackouts forced my hand on a good sized generator purchase. The generator itself represents more energy in its construction, than'll I'll ever save from the new energy efficient central air and laundry put in. Its emissions are far worse, and waste a far more precious fuel (gasoline as opposed to NG/Coal); not to mention a much lower efficiency in producing the electricity itself; simply because the grid will come up slightly short, because investments in supply were not made.

If you don't do both; all the gains in efficiency can be wiped out in just a sequence of miscalculations. Do we really want neighborhoods with every house depending on its own generator for power?

[kublikhan]

Doesn't more efficiency mean more consumption?

Not if the cost of the energy is rising too. We are facing a supply side squeeze which is causing prices to rise. If efficiency gains increase so much that they overwhelm the supply side squeeze and cause prices to fall, you can compensate by levying energy taxes, like what happened in Europe.

[kublikhan]

There is a problem that I just personally had to deal with related to this. And that is, if you invest in efficiency, but neglect the grid and supply, such that periods of unavailability occur; huge gains in efficiency are rendered moot as investment instantly gets rerouted to ways to prevent the unavailability at the end node. Case in point; we're shutting down a bunch of coal fired generation plants in Texas; but NG plants have not been built to replace that load. This has lead to warnings about rolling blackouts.

The likelihood of rolling blackouts forced my hand on a good sized generator purchase. The generator itself represents more energy in its construction, than'll I'll ever save from the new energy efficient central air and laundry put in. Its emissions are far worse, and waste a far more precious fuel (gasoline as opposed to NG/Coal); not to mention a much lower efficiency in producing the electricity itself; simply because the grid will come up slightly short, because investments in supply were not made.

If you don't do both; all the gains in efficiency can be wiped out in just a sequence of miscalculations. Do we really want neighborhoods with every house depending on its own generator for power?

Of course you don't want to turn every power consumer into a power producer. The grid can produce power more cheaply and efficiently with a few large power generators than consumers can with millions of independent generators. The situation you describe is not an increase in efficiency, it's a decrease of efficiency.

Texas electricity consumption hit new records last year. The exact opposite of what you would expect from investments in negawatts. You can't have 1 person invest in negawatts while the rest of the state increases their consumption and expect to decrease energy use. I am not talking here about 1 person installing insulation and high efficiency appliances(although I recently did this as well). I am talking about a large scale national(or state wide) effort to reduce energy consumption and increase efficiency.

At the same time, it is very important for the grid to be able to handle demand. Our grid is aging and is not the best suited for shifting large amounts of power from where it is produced to where it is needed. Texas in particular is lagging in it's ability to import/export electricity. We need a truly national power grid with large capacity lines than can shift large amounts of power around the country. This is going to become more important as renewables such as wind start making up larger percentages of the grid. If the wind suddenly stops blowing in one part of the country, we need to be able to route power there from another part of the country. The grid is just one more area of infrastructure in this country that needs a massive investment of capital.

[SeaGypsy]

In Australia the government had to legislate against candescent bulbs to get rid of them. In poor countries demand for the old bulbs disappeared as soon as the compact flourescents came on the market, despite being 300% the price. Folks worked out the long term efficiency equation and switched 10 years before countries like mine banned the old tech because people were still using it, saying they 'prefer the light'. Since banning, I haven't heard anyone whining about missing them.

It's a similar story with efficiency in transport in the developing world. Western governments struggle to legislate efficiency, while poor people figure out for themselves the cheapest way to get about. We whine about the dangers of light vehicles, riding in rain, snow, ice or heat without air-con and the eveer increasing cost of our preference.

[Graeme]

Whilst I don't always agree with what wsj or Engdahl says, it's worth airing their views because the discussion it provokes sometimes produces surprising responses.

Why The Huge Spike in Oil Prices? "Peak Oil" or Wall Street Speculation?

Since around October last year, the price of crude oil on world futures markets has exploded. Different people have different explanations. The most common one is the belief in financial markets that a war between either Israel and Iran or the USA and Iran or all three is imminent. Another camp argues that the price is rising unavoidably because the world has passed what they call “Peak Oil”—the point on an imaginary Gaussian Bell Curve (see graph above) at which half of all world known oil reserves have been depleted and the remaining oil will decline in quantity at an accelerating pace with rising price.


Both the war danger and peak oil explanations are off base. As in the astronomic price run-up in the Summer of 2008 when oil in futures markets briefly hit $147 a barrel, oil today is rising because of the speculative pressure on oil futures markets from hedge funds and major banks such as Citigroup, JP Morgan Chase and most notably, Goldman Sachs, the bank always present when there are big bucks to be won for little effort betting on a sure thing. They’re getting a generous assist from the US Government agency entrusted with regulating financial derivatives, the Commodity Futures Trading Corporation (CFTC).

Since the beginning of October 2011, some six months ago, the price of Brent Crude Oil Futures on the ICE Futures exchange has risen from just below $100 a barrel to over $126 per barrel, a rise of more than 25%. Back in 2009 oil was $30.


Yet demand for crude oil worldwide is not rising, but rather is declining in the same period. The International Energy Agency (IEA) reports that the world oil supply rose by 1.3 million barrels a day in the last three months of 2011 while world demand increased by just over half that during that same time period.Gasoline usage is down in the US by 8%, Europe by 22% and even in China. Recession across much of the European Union, a deepening recession/depression in the United States and slowdown in Japan have reduced global oil demand while new discoveries are coming online daily and countries like Iraq are increasing supply after years of war. A brief spike in China’s oil purchases in January and February had to do with a decision last December to build their Strategic Petroleum Reserve and is expected to return to more normal import levels by the end of this month.


Why then the huge spike in oil prices?


Playing with ‘paper oil’

globalresearch

[Pops]

Come on Greame, Engdahl believes abiotic oil is the reason russia is an oil exporter for cripes sake, unicorns too maybe. LOL

Yes, record high prices are killing some demand yet oil stocks (supplies) around the world are declining for I believe the 7th month straight, al Naimi said a couple days ago that "one country" (presumably KSA) can't be expected to ensure market stability and the IEA OMR downgraded KSA capacity to 11.88 and says overall spare capacity is - coincidentally enough - less than 3mbd - right where it was when the run up in '08 was perpetrated by the "evil speculators".

Obviously that oil isn't magically forming fast enough, soon we may all need to ride unicorns to work.

Say anything and everything, just don't say there isn't enough oil.

[kublikhan]

Yet demand for crude oil worldwide is not rising, but rather is declining in the same period. The International Energy Agency (IEA) reports that the world oil supply rose by 1.3 million barrels a day in the last three months of 2011 while world demand increased by just over half that during that same time period.Gasoline usage is down in the US by 8%, Europe by 22% and even in China. Recession across much of the European Union, a deepening recession/depression in the United States and slowdown in Japan have reduced global oil demand while new discoveries are coming online daily and countries like Iraq are increasing supply after years of war. A brief spike in China’s oil purchases in January and February had to do with a decision last December to build their Strategic Petroleum Reserve and is expected to return to more normal import levels by the end of this month.

Wrong wrong wrong. worldwide oil demand is not declining. worldwide oil demand is rising. I don't understand why people would post facts that are easily proven false.

Crude oil prices remain elevated because of a tight supply-demand balance. Let’s look at the supply and demand sides of the equation.

Some investors still ask me why oil prices remain high even though demand is weak. This question assumes that sluggish growth in the US and other developed economies necessarily vitiates oil demand.

In 2010 the world consumed about 88.2 million barrels of oil per day--2.7 million barrels per day more than in 2009. Whether you look at the incremental increase in demand or the percentage gain, oil demand in 2010 increased at the second-fastest pace in 30 years. Much of this rebound stemmed from the snap-back in consumption that followed the severe 2008-09 recession. But the magnitude of this recovery took many analysts and industry participants by surprise.

Investors should also remember that although US oil demand remains well under its 2004-05 high, global oil demand hit a new peak in 2010. Demand growth in 2011 won’t match up with last year’s resurgence. However, the International Energy Agency’s (IEA) forecast still calls for global oil demand to grow by more than 1 million barrels per day to 89.3 million barrels per day. This uptick in consumption hardly qualifies as weak; oil demand has grown at an average annual rate of 1.05 million barrels per day since 1990.

Crude Realities And The Price Of Oil

Asia is expected to dominate global oil-demand growth in 2012 due to more resilient regional economies and strong imports by China, the International Energy Agency said Wednesday in its monthly oil markets report.

Global oil demand in 2012 is expected to grow by 800,000 barrels to 89.9 million barrels a day, with Asian countries contributing 700,000 barrels to this expansion, the IEA said. Chinese-demand growth is forecast to accelerate through 2012, as the economic outlook is expected to improve as the year progresses," the IEA said.

IEA Says Asia To Drive Oil Demand Growth In 2012

It’s perhaps with this in mind that the IEA’s chief economist Fatih Birol (pictured, above) has been repeating the phrase the era of cheap oil is over at numerous interviews recently. He told German TV on August 10 that:

“The era of cheap oil is over. Each barrel oil that will come to market in the future will be much more difficult to produce and therefore more expensive. We all - governments, industry and consumers - should carefully choose the type of car we want to buy in the future and should be prepared for oil prices being much higher than several years ago.”

IEA: ‘Cheap oil is over’ as demand approaches new record

Listen to the IEA on this one. The era of cheap oil is over. Not because of paper barrels. But because the margin cost of oil continues to increase. If you are expecting oil to fall to $30 a barrel and this time stay that low, you are living in fantasy land. Sustained oil prices that low will kill many oil projects, shutting in supply.

[basil_hayden]

18 previous posts of basically complete malarky.

Gasoline prices are rising because crude refined in the US is shipped out of country to those who will pay the price, driving up the US gasoline prices. Capitalism, Period.

[Graeme]

Pops & K. Exactly. Reuters summed it up here with two words. Supply woes but we have another name for it.

[SeaGypsy]

18 previous posts of basically complete malarky.

Gasoline prices are rising because crude refined in the US is shipped out of country to those who will pay the price, driving up the US gasoline prices. Capitalism, Period.

Get out of bed on the wrong side again Basil? Another way of saying the same 'malarky' as most of the previous 18 posts.

[pstarr]

gotta agree. posts on this thread (and others on the same subject out there in blog'o'land) are getting downright bizarre. I think we may be hitting that inflection point. People's denial is taking a turn to anger.