Gasoline price thread (merged)

[GASMON]

What is seldom mentioned is the future method of paying for oil. Increasingly the Ponzi Dollar, Pound & Euro is devaluing. Middle East & other oil producers will want to trade oil for items of worth - Gold etc. Allready mentioned & started between Iran & India / China etc.

http://www.businessinsider.com/iran-bul ... old-2012-3

http://rt.com/news/iran-india-gold-oil-543/

The only way soon for the west to get middle east oil will be to steal it, by means of war, as we all know.

Gas

[dolanbaker]

What is seldom mentioned is the future method of paying for oil. Increasingly the Ponzi Dollar, Pound & Euro is devaluing. Middle East & other oil producers will want to trade oil for items of worth - Gold etc. Allready mentioned & started between Iran & India / China etc.

http://www.businessinsider.com/iran-bul ... old-2012-3

http://rt.com/news/iran-india-gold-oil-543/

The only way soon for the west to get middle east oil will be to steal it, by means of war, as we all know.

Gas

Which squares quite well with the notion that others will always be able to outbid the "west" for oil in the future.

[AgentR11]

The only way soon for the west to get middle east oil will be to steal it, by means of war, as we all know.

Something we are exceptionally gifted at.

[Tanada]

Well, as reported on TOD by westexas oil had doubled in price twice since 2000, two more doublings in the next decade will see it around USD500 by 2020, with inflation hard on it's heels.

This means that the affect on consumers will not be as bad as it first appears, instead of needing to work, say 10 minutes for a litre of fuel you'll need to work 15-20 minutes for the same amount meaning there will be less for other things or a more efficient vehicle will be needed.

You and many others are ignoring the feedback effect, it isn't just about the price it costs the consumer to drive to the market, it is the cost of everything at the market which is transported via fossil fuels, grown with fossil fuel, planted/harvested/fertilized with fossil fuel. When you double the price of fuel you substantially increase every step in the process of bringing food or consumer goods to market.

[dolanbaker]

Well, as reported on TOD by westexas oil had doubled in price twice since 2000, two more doublings in the next decade will see it around USD500 by 2020, with inflation hard on it's heels.

This means that the affect on consumers will not be as bad as it first appears, instead of needing to work, say 10 minutes for a litre of fuel you'll need to work 15-20 minutes for the same amount meaning there will be less for other things or a more efficient vehicle will be needed.

You and many others are ignoring the feedback effect, it isn't just about the price it costs the consumer to drive to the market, it is the cost of everything at the market which is transported via fossil fuels, grown with fossil fuel, planted/harvested/fertilized with fossil fuel. When you double the price of fuel you substantially increase every step in the process of bringing food or consumer goods to market.

Reread what I’ve posted, I have already taken inflation into account and with that the relative cost of fuel will be still higher than what it is in today's money.

I'm not ignoring the knock-on effects of higher (relative) fuel prices, just didn't mention it as this thread is about higher fuel prices, not higher transportation costs in general.

[Graeme]

Everything You Need to Know About Gas Prices in One Quick Presentation

By now, you've probably read more than you ever wanted to read about gas prices, and what causes them to rise and fall (hint: not Obama). But just in case you need one more refresher, or a succinct rebuttal to forward to your Fox News-watching friends, this presentation from the Climate Desk will do nicely:

treehugger

[shortonoil]

Well, as reported on TOD by westexas oil had doubled in price twice since 2000, two more doublings in the next decade will see it around USD500 by 2020, with inflation hard on it's heels.

The price of oil is now doubling in a little over eight years. The second doubling will occur in less than seven years (the relationship is not linear). This will place oil at about $200/b by 2020 and $400/b by 2027 - 28. $430/b is the maximum theoretical price that the consumer can pay for a barrel of crude. It is the price at which the energy contribution to the end consumer from a unit of oil is no longer sufficient to generate the work (that is, ft-lbf or economic activity) needed to procure the oil. It is the point where the average barrel of crude changes from being an energy source into becoming an energy sink.

Not all fields, of course, have the same ERoEI profile. It is, however, a definable distribution, and when the average field has fallen to a level where the price can no longer be supported, 38% of the world's fields will have an ERoEI that will be too low to justify their continued operation. It will be the point where the higher ERoEI fields can no longer subsidize the lower ERoEI fields. The remaining higher ERoEI fields will soon follow the shut-in of the lower energy fields as they continually dip below that critical point. Going forward from there, few if any, new fields will be able to be brought on online.

The world is now consuming more oil every 4.3 years than it did in totality for the 60 years between 1900 and 1960 - 120.3 billion barrels. Prior to 1960 oil extraction had a very minor impact on world reserves. That is no longer the case. The day when the well runs dry is an expected and predictable phenomenon with calculable and acceptable error margins. Its eventuality is well understood. The impact it will have on society is far less discernible - but certainly, it will be one of the major events of human history.

The Hill's Group

[radon]

It is the point where the average barrel of crude changes from being an energy source into becoming an energy sink.

Hypothetically, it may still make sense to extract oil at negative ERoEI as long as this oil is better than the alternatives in its role of a transportation fuel. Was this taken into account?

Basically, you do not need to draw the ERoEI subsidy solely from the high return oil wells, - the subsidy can also be drawn from substitutes like coal, natural gas, renewables etc.

[kublikhan]

88% of all the oil that has ever been extracted has been pumped since 1960. The world is now consuming more oil every 4.3 years than it did in totality for the 60 years between 1900 and 1960 - 120.3 billion barrels. Prior to 1960 oil extraction had a very minor impact on world reserves

Hubbert made a similar point way back in the day. He said humanity will consume about 80% of all the oil we will ever consume between 1960 and 2025. Possibly pushing that back 10 years if OPEC curtails production.

Hubbert 1976

Hypothetically, it may still make sense to extract oil at negative ERoEI as long as this oil is better than the alternatives in its role of a transportation fuel. Was this taken into account?

Basically, you do not need to draw the ERoEI subsidy solely from the high return oil wells, - the subsidy can also be drawn from substitutes like coal, natural gas, renewables etc.

This applies to other liquid transportation fuels as well, such as ethanol. So even though the EROEI of corn ethanol is very poor, it can still unfortunately be sold at a profit thanks to the fact that it is creating a premium liquid fuel.

Corn ethanol is energy efficient, as indicated by an energy ratio of 1.34; that is, for every Btu dedicated to producing ethanol there is a 34-percent energy gain. Furthermore, producing ethanol from domestic corn stocks achieves a net gain in a more desirable form of energy, which helps the United States to reduce its dependence on imported oil. Ethanol production utilizes abundant domestic energy feedstocks, such as coal and natural gas, to convert corn into a premium liquid fuel. Only about 17 percent of the energy used to produce ethanol comes from liquid fuels, such as gasoline and diesel fuel. For every 1 Btu of liquid fuel used to produce ethanol, there is a 6.34 Btu gain.

The Energy Balance Of Corn Ethanol

[Graeme]

Higher gas prices cause less public anger this time

Gas prices have soared about 15% in the last six months, hitting $3.94 a gallon on average nationwide, and $4.29 in California.

The mood of motorists? Meh.

Partisan finger-pointing aside, polls suggest that most people aren't as worked up over gas prices as they were four years ago, when a gallon of regular hit a national average of $4.11 a gallon. Nor has there been as much clamor for drastic measures, such as tapping the Strategic Petroleum Reserve in Texas and Louisiana.

"I think we all have adjusted," said Lara Clayton of Los Alamitos as she spent nearly $60 recently to fill up her 2008 Lincoln Town Car at a Seal Beach 76 station. "We just don't drive as much and we are careful to combine errands."


Another factor is that more people are driving fuel-efficient cars, as older gas-guzzlers are gradually replaced with new vehicles that get better mileage.

latimes

[dolanbaker]

Higher gas prices cause less public anger this time

Gas prices have soared about 15% in the last six months, hitting $3.94 a gallon on average nationwide, and $4.29 in California.

The mood of motorists? Meh.

Partisan finger-pointing aside, polls suggest that most people aren't as worked up over gas prices as they were four years ago, when a gallon of regular hit a national average of $4.11 a gallon. Nor has there been as much clamor for drastic measures, such as tapping the Strategic Petroleum Reserve in Texas and Louisiana.

"I think we all have adjusted," said Lara Clayton of Los Alamitos as she spent nearly $60 recently to fill up her 2008 Lincoln Town Car at a Seal Beach 76 station. "We just don't drive as much and we are careful to combine errands."


Another factor is that more people are driving fuel-efficient cars, as older gas-guzzlers are gradually replaced with new vehicles that get better mileage.

latimes

I think "punch drunk" is the appropriate phrase!
People are adapting simply because to continue on the previous route was too painful (too many punches).

[Tanada]

The complete absence of the media drumbeat on the issue does have an effect. The mass media, where most people still hear the news and form their opinions of the world around them, is nearly silent on fuel prices compared to the constant refrain of 2008. In 2008 you couldn't listen to radio or watch TV or pick up a newspaper without multiple statements about high prices being present. Now it is kept as an afterthought for the most part, not up front above the fold like it was in 2008.

Most people in the USA are not media savvy, they take what the 'news' says at face value and never give it a deeper thought. If the media isn't emphasizing it then maybe it isn't as important to everyone else as it is to themselves...

[shortonoil]

radon said:

Hypothetically, it may still make sense to extract oil at negative ERoEI as long as this oil is better than the alternatives in its role of a transportation fuel. Was this taken into account?

ERoEI is a ratio; Energy Returned/Energy Invested. The only way to get a negative ERoEI would be to have negative energy. Hollywood has a copyright on that idea, and will only share it with people who are willing to hang around with Trekies.

[radon]

radon said:

Hypothetically, it may still make sense to extract oil at negative ERoEI as long as this oil is better than the alternatives in its role of a transportation fuel. Was this taken into account?

ERoEI is a ratio; Energy Returned/Energy Invested. The only way to get a negative ERoEI would be to have negative energy. Hollywood has a copyright on that idea, and will only share it with people who are willing to hang around with Trekies.

You are being too formalistic here: what is meant under "negative" ERoEI is that Energy returned is lower than Energy invested, - and this is pretty obvious, i.e. ERoEI < 1. Please kindly advise for future use a term better than "ERoEI" negative" to designate ERoEI<1. Maybe "Net Energy-negative"?

Actually, the same terminology is used in finance: when people say that they get negative return on investment (ROI), this means that they get return lower than their investment, not that they get negative money. So the entire point is insubstantial.

[Graeme]

The economic impact of high oil prices

AS THE developed-world economy tries to gain momentum, it faces a persistent headwind. The oil price remains stubbornly over $100 a barrel, acting like a tax on Western consumers. Some blame the high price on evil speculators—Barack Obama unveiled plans to increase penalties for market manipulation on April 17th. But there is a simpler explanation: that supply is inadequate to keep up with rising demand.

The concept of peak oil—the idea that global crude production may be at, or close to, its limit—is far from universally accepted. One leading asset manager talked recently of the world being “awash with energy” because of the exploitation of American shale gas. Nevertheless, oil is still the main fuel for cars and trucks. And crude output (as opposed to alternatives such as biofuels and liquids made from gas) has been flat since 2005.


This has left the oil market very vulnerable to temporary supply disruptions, such as the war in Libya. Speaking at a conference in Dublin this week, organised by the Institute of International and European Affairs and the Association for the Study of Peak Oil and Gas, Chris Skrebowski, a consulting editor of Petroleum Review, argued that spare capacity in the oil market could be eroded by 2015.

The peak-oil concept was devised by the late M. King Hubbert, who correctly predicted in 1956 that oil output in the lower 48 states of America would peak by around 1970. At the conference Michael Kumhof, an economist at the International Monetary Fund, presented the findings of a forthcoming working paper which showed that adding the idea of a “Hubbert peak” to energy production greatly improved the ability of a model to forecast oil prices. Based on an expected 0.9% annual increase in production over the next decade, the model predicts that real oil prices will nearly double over the same period.

The economic damage caused by such a rise is predicted to be modest, perhaps 0.2% of global GDP a year. In the past changes in oil prices have had a limited long-term impact, since any losses to oil importers are matched by gains by oil exporters.


“What is the minimum EROI that a modern industrial society must have for its energy system for that society to survive?” ask Carey King and Charles Hall in a recent paper*. The academics’ answer: “Complex societies need a high EROI built on a large primary energy base.”

economist

[Graeme]

Signs of cheaper gas could brighten Obama campaign

New signs of lower U.S. gas prices could give a boost to President Barack Obama's re-election hopes and blunt a potent weapon that Republicans have used to attack him.

News on Monday of a month long delay in the planned closure of the largest refinery on the U.S. East Coast was the latest sign rocketing gasoline prices may have peaked.

Government data later showed national U.S. gasoline prices have fallen for three straight weeks after surging earlier in the year, cooling fears they might hit $5 a gallon this summer.

Industry experts say keeping Sunoco's Philadelphia refinery open will ease supply concerns and help underpin a gradual decline in gasoline prices.

That, in turn, would ease a burden on the U.S. economy that Republicans have seized upon as one of their best bets of thwarting Democrat Obama's bid for re-election.

reuters

[ralfy]

"Running Dry"

http://www.economist.com/node/21519035

[Graeme]

Global Crude Oil Prices: Why Volatility Is Likely To Endure

Crude oil, albeit in decreasing proportions, will likely remain significant in the global energy utilization mix for the next few years. The impact of the commodity's price on the global economy is therefore palpable. The issue of peak oil is resurgent and there are current concerns - even if somewhat mitigated - about an oil price shock.

Speculations were also rife in 2009 - amid the global economic decline - about an imminent crude oil price shock. The argument then was that the extant, low-price regimes constituted a disincentive to upstream capital expenditure (capex) and that when the global economy began to rebound, oil demand growth would vastly outstrip supply capacity. The International Energy Agency, IEA, even boldly projected a price shock by the year 2012, to wit, this year.

Four points then are noteworthy:

Fundamentals

First, current crude oil prices though high, do not derive from such fundamental imbalance. In a 2009 post, Oil Price Shocks and Market Fundamentals, l argued that even if there were an oil price shock in 2012, it would most likely hold no fundamental support. The IEA reports that oil stocks rose by about 1.2 million barrels per day, bpd, through 1Q 2012 even as supply by Organization of the Petroleum Exporting Countries, OPEC, went ahead of demand. Oil consumption by member-countries of the Organization for Economic Cooperation and Development, OECD, has been declining since 2005 (Figure 1) and growth is projected to remain largely flat through 2030.

seekingalpha

[pstarr]

Actually, the same terminology is used in finance: when people say that they get negative return on investment (ROI), this means that they get return lower than their investment, not that they get negative money. So the entire point is insubstantial.

you are absolutely correct. He is confusing conversion-efficiency, the ratio of energy lost going from one energy source (or storage media) to another. This will never go below zero.

Eroei is different. It is an accounting of the effort (measured in energy units) required to gather stored energy materials, the total fuel gathering system. So for example if you use 100 gallons of diesel to dig out 1 gallon of shale oil the energy returned of one gallon required ninety-nine gallons to dig. So the eroei is 1/99 or sucky.

[Repent]

I saw this news story today:

Traffic on the airport road was backed up for nearly a mile this afternoon because of gasoline shortages. Egyptians on Twitter reported shortages in other neighbourhoods, including Heliopolis, Nasr City and Ma’adi, and on the desert highway that connects Cairo to Alexandria.

Why is Egypt running out of gasoline? Depends on who you ask. Some energy officials say they’re still supplying the same amount of gasoline, and they chalk the shortages up to panic buying and hoarding.

Others told the state-owned Al Ahram today that they’re running out of cash to buy gas (which is heavily subsidised by the Egyptian government). They blame the finance ministry.

http://blogs.aljazeera.com/blog/middle- ... cairo-halt

The first Domino to fall???