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THE Price of Crude pt 14

General discussions of the systemic, societal and civilisational effects of depletion.

Re: THE Price of Crude pt 14

Unread postby vtsnowedin » Mon 27 Aug 2018, 18:14:03

I doubt they have 7000 still in service ready to go as they have used hundreds of them over the years.
But I take your point that if the Iranian navy took on the USN their floating on the surface life expectancy would be measured in minutes not hours or days.
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Re: THE Price of Crude pt 14

Unread postby pstarr » Mon 27 Aug 2018, 21:09:38

ROCKMAN wrote:“A major shipping route located between Oman and Iran where nearly one-third of the world's sea-traded oil passes through daily may become a new flashpoint after a top Iranian Navy general said Monday that the country has taken full control of the Strait of Hormuz.”

So Iran accuses the US of psychological warfare and then puts out such BS as this. Save any arguments since I won’t waste time with them: the US could sink every Iranian vessel in the S of H without putting a single member of our military at risk. We have the capability:

Yes we can sink/stink the entire world. But that is dumb. So is bombing the strait.
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The shipping lane is rather shallow. Not hard to clog with random iranian flotsam/jetsam/miscellaneous debris/boats/nets/stuff
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Tue 28 Aug 2018, 04:48:50

Sanctions go through and the global economy is running well == $100+ oil again. But, of course, the greater risk is a hard-line takeover in Iran and war in the Middle East. What would be the price of oil then? We aren't too far from witnessing that and oil is fairly cheap still.
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Re: THE Price of Crude pt 14

Unread postby ROCKMAN » Fri 31 Aug 2018, 15:53:33

Goner – Scale, buddy, scale. The US Navy could sink every Iranian warship in the narrowest section and there would still e now problem for a constant stream of tankers to pass. A stream only one tanker wide: The largest tanker, the T1 class, has a beam of 223’. Allowing one ship gap between vessels 300 T1 class tankers could sail thru the narrowest section of the S of H side by side at the same time. Scale…SCALE. Remember: only need one at a time. LOL

And yes: our Navy could do this with Harpoon missiles launched way over the horizon far from any threat by Iranian weapons
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Re: THE Price of Crude pt 14

Unread postby TrueBeliever » Sun 02 Sep 2018, 22:21:05

A blast from the past:

http://www.theoildrum.com/node/8956

Tactics and Strategy at the Strait of Hormuz
Posted by Luis de Sousa on March 5, 2012 - 7:15pm
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Re: THE Price of Crude pt 14

Unread postby ROCKMAN » Mon 03 Sep 2018, 11:46:18

A very long and detailed article describing all of Iran’s military capabilities to disrupt shipping the S of H. All designed for relatively short range action. And not a single mention of the US capability to destroy every one of those assets by the US navy without putting a single member of our military in harm’s way. Search “Harpoon missile”: a weapon system launched from far over the horizon with the capability to destroy every Iranian warship and every onshore missile facility and every airfield. No Navy warship need approach the S of H closer then 1,500 miles to launch such attacks. The Navy has 7,000+ Harpoons in its inventory.

Given our weapon systems were designed to take on the Russians globally the Iranian forces should not be very difficult. The greater obstacle IMHO would be the potential hesitancy for the US govt to commit to such an action. Given the current leadership in the White House the POTUS may be praying for such a distraction in order to replace the current headlines.

Been done before.
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Re: THE Price of Crude pt 14

Unread postby EdwinSm » Tue 04 Sep 2018, 04:12:30

Granted that the US might be able to knock the stuffing out of the Iranian's conventional military capacity, what would be the effect in price of oil and delay in shipping if the Iranians hit (and set on fire) just one oil tanker?

I think the world would see a fast spike in oil prices and a delay in oil being shipped, but how long would American reaction last before tanker owners felt it was safe to send their ships through the Straits again?

Also if the area was mined, then long range (over the horizon) missiles would not be the appropriate means of dealing with them, and mine sweepers would have to go close in.


ps. the missiles are awe inspiring, but they are not the be all and end all of warfare.
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Re: THE Price of Crude pt 14

Unread postby misterno » Wed 19 Sep 2018, 14:18:42

It is impossible for oil price, production of electric cars and solar panel production to all go up at the same time. This is not possible. One of them has to lose in this competition. Judging from the last 20 years of progression and trend on electric car sales and solar panel usage, it is obvious that oil price will drop tremendously. It is not a matter of if, it is a matter of time. Simple as that.
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Re: THE Price of Crude pt 14

Unread postby kublikhan » Wed 19 Sep 2018, 20:32:02

Just because oil use in passenger vehicles peaks, doesn't mean overall oil use peaks. The consumption profile of oil can change. When the oil crisis in the 70s hit, we saw oil fall out of favor in the power and heating sectors in many countries because of oil's price spike and the fact that there were viable alternatives. As increasing fuel efficiency and/or EVs become more viable for passenger vehicles, we can expect the oil consumption profile to shift again. We will see more oil being consumed in other sectors like petrochemicals, heavy vehicles, aviation, etc where alternatives are less viable and/or anticipated efficiency gains much smaller than with passenger vehicles.

Image
• Global transportation demand grows about 25 percent from 2015-2040
• Personal mobility demands continue to increase, but more efficient vehicles lead to a peak and eventual decline in light-duty vehicle (LDV) energy demand
• Growth in economic activity and personal income drives increasing trade of goods and services, leading to higher energy demand in the commercial transportation sectors
• Heavy duty growth is the largest by volume, but marine and aviation grow the largest by percentage
2017 Outlook for Energy: A View to 2040

• Global liquids demand (oil, biofuels, and other liquid fuels) increases by around 15 Mb/d, to reach 110 Mb/d by 2035.
• Oil continues to grow (0.7% p.a.), although its pace of growth is expected to slow gradually.
•In contrast, growth in non-combusted fuel use, particularly as a feedstock in petrochemicals, remains relatively robust (2.1% p.a.) in part because of its limited scope for efficiency gains.
• As a result, despite accounting for only a small fraction (6%) of current final energy use, non-combusted fuel use becomes the largest source of fossil fuel demand growth towards the end of the Outlook. Oil accounts for around two thirds of non-combusted sector’s growth, with natural gas providing much of the remainder.
BP Energy Outlook

And as for solar panels, oil is not used much in the electricity sector anymore. Back in the 70s around 20% of global electricity production came from oil. The 70s oil crises saw this percentage fall sharply. Today, only around 3% of the world's electricity comes from oil. Oil lost the battle for market share in the electricity sector a long time ago.
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Mon 24 Sep 2018, 07:10:04

Looks like Brent is pegging it's highest price since October 2014 -- near $81. During the summer of 2014, it was near $110/barrel so we have quite a ways to go before oil retests those prices. Trump blames OPEC. Analysts look to US, Russian, and SA to fill in the gap that will be left when Iranian sanctions go into effect. Global demand looks strong, see what happens in Q4.
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Mon 24 Sep 2018, 12:19:00

GoghGoner wrote: Global demand looks strong

Since it's all supply and demand in the end, that says a lot.

If global production doesn't rise enough to meet increasing global demand, then prices will rise over time. Period.

Despite left wing claims that when the price gets high enough, it's all a "conspiracy" by oil producers. (Funny how they're never thanking the oil producers when the prices go way down). :roll:

The markets work -- we should let them.

What I'd like to see is prices go over $100 again, and THIS time, a massive move toward PHEV's, HEV's, and more of a move to BEV's, as consumers finally look around and wake up.

(That's a hope, not a forecast. It might take oil persistently at $150ish a BBL to do the job, but there will be a point, for many. I'd just love to see a big choice of HEV's on popular make car lots, just like we see for popular ICE models today).

If the average family used a car/cars (HEV) that got solidly over 40 mpg, even in the city, that alone would make a significant difference, and help buy us time to transition to a 90% or so BEV infrastructure / culture in the next few to several decades.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby ROCKMAN » Mon 24 Sep 2018, 12:31:23

k - "As increasing fuel efficiency and/or EVs become more viable for passenger vehicles, we can expect the oil consumption profile to shift again." Maybe...maybe not. While fuel economy might improve an increase in the number of new ICE's on the road might negate those gains. From 1995 to 2017 the number of ICE's sold almost doubled from 50 million/yr to 97 million/yr. In just the last 3 years of that period they increased almost 9%. Increased fuel economy and EV sales weren't enough to offset that increase.

https://en.wikipedia.org/wiki/List_of_c ... production
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Mon 24 Sep 2018, 12:41:40

ROCKMAN wrote:k - "As increasing fuel efficiency and/or EVs become more viable for passenger vehicles, we can expect the oil consumption profile to shift again." Maybe...maybe not. While fuel economy might improve an increase in the number of new ICE's on the road might negate those gains. From 1995 to 2017 the number of ICE's sold almost doubled from 50 million/yr to 97 million/yr. In just the last 3 years of that period they increased almost 9%. Increased fuel economy and EV sales weren't enough to offset that increase.

https://en.wikipedia.org/wiki/List_of_c ... production

Yes. It's aggregate global demand that matters in the end. As the third world consumers slowly (as a percentage) join the middle class, that is a huge increase in aggregate demand for cars.

Despite all the claims by the Cassandras of imminent bankruptcy, as you say, major economic powers like the US and China are also producing a hell of a lot of cars, especially in recent years. They wouldn't be doing that if there weren't demand for them.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby kublikhan » Mon 24 Sep 2018, 13:09:39

ROCKMAN wrote:k - "As increasing fuel efficiency and/or EVs become more viable for passenger vehicles, we can expect the oil consumption profile to shift again." Maybe...maybe not. While fuel economy might improve an increase in the number of new ICE's on the road might negate those gains. From 1995 to 2017 the number of ICE's sold almost doubled from 50 million/yr to 97 million/yr. In just the last 3 years of that period they increased almost 9%. Increased fuel economy and EV sales weren't enough to offset that increase.
In order for the consumption profile to shift, gasoline demand doesn't have to shrink. It just has to grow more slowly than other sources of oil demand.

Petrochemicals: a key driver of demand growth
The fastest-growing source of global oil demand growth are petrochemicals, particularly in the United States and China. The shale revolution in the United States has opened up a major source of cheap domestic feedstock. About 1.7 mb/d, or 25%, of our total demand growth to 2023 is taken up by ethane and naphtha. Global economic growth is lifting more people into the middle class in developing countries and higher incomes mean sharply rising demand for consumer goods and services. A large group of chemicals derived from oil and natural gas are crucial to the manufacture of many products that satisfy this rising demand.
Oil 2018

Diesel remains a strong source of oil demand growth
Overall, 2017 was a strong year for global oil demand growth, with diesel continuing to play a substantial role. Global oil demand in 2017 rose by 1.6 MMb/d (or 1.7%). Demand for diesel accounted for 430 Kb/d of the growth, with gasoline accounting for a significantly smaller 270 Kb/d.

We believe the overall outlook for total middle distillates (diesel, heating oil and jet/kero) demand in the medium term will continue to be favorable. This growth will be driven in part by a strong economic outlook globally. Demand in the shipping sector is also expected to boost overall gasoil demand when the International Maritime Organization’s MARPOL Annex VI regulations on sulfur content in bunker fuel is introduced in 2020. This will significantly reduce bunker demand for high sulfur fuel and raise demand for low sulfur marine gasoil either as a direct product or blended into 0.5% sulfur fuel oil.

Adding to this, demand for jet fuel will continue to see the strongest growth of any type of oil product, owing to both the strong linkage between air travel demand and economic growth, and the lack of any realistic fuel substitutes.

This contrasts with our outlook for gasoline demand, which we expect to see peaking in the medium term and then experiencing a long-term decline.

Implications for refiners
These trends provide a positive outlook for refiners who are able to focus on middle distillates production. In particular, this trend should favor:

* Distillate hydrotreating investment – The shift in bunker fuel demand to low sulfur marine gasoil and 0.5% sulfur fuel oil requiring low sulfur blendstocks should provide a strong incentive to continue expanding distillate hydrotreating capacity to satisfy demand
* Hydrocracker upgrading investment – The combination of a lower demand for heavy fuel oil and relatively strong demand for middle distillates over gasoline should favor incremental investment in hydrocracking, which produces both more and higher quality distillate than FCC upgrading
In general terms, the likely losers in this outlook are refiners that are heavily invested in more gasoline-oriented capacity (ie FCC/RCC) and located in mature markets that are most susceptible to changes in technology and consumer preferences (eg Europe).
Diesel demand: still growing globally despite Dieselgate
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Re: THE Price of Crude pt 14

Unread postby kublikhan » Mon 24 Sep 2018, 13:12:14

Trump says he wants lower oil prices but his sanctions are raising oil prices. His actions run contrary to his goals.

As OPEC oil ministers prepared to meet in Vienna later this week, President Trump fired another twitter-shot across their bows. But it is his decision to slap sanctions back on Iran that is the real driving force behind the rising price of oil.

It was less than two years ago that candidate Trump’s energy adviser Harold Hamm told Bloomberg Businessweek that OPEC was “irrelevant.” A little over a month later the same Harold Hamm said it was “high time” for the irrelevant OPEC to agree on a production freeze to raise prices.

Trump’s decision to pull out of the nuclear deal and re-impose sanctions will reduce the volume of crude available from the country by an unknown amount. The curbs will be more extensive than under President Obama — targeting Iran’s exports of condensates as well as crude oil — and waivers will be harder to come by. Tanker owners and insurers may already be reacting to the imposition of sanctions, even before they come into effect.

It is the fear that the world is about to lose as much a million barrels a day of Iranian crude oil exports by the end of the year, and possibly another 500,000 barrels from Venezuela, that has really driven oil prices higher — not OPEC.
It's Trump Sanctions, Not OPEC, That Are Boosting Oil

* President Donald Trump is blaming OPEC for rising oil prices, but analysts say his sanctions on Iran are largely fueling a rally in the crude market.

* Just days after OPEC agreed to increase output to tamp down prices, the State Department sent crude costs soaring by announcing a policy to wipe out much of Iran's exports by November.

* The policy threatens to leave the world short of oil and rob Americans of the gasoline price relief they usually get in the fall, just as they're preparing to vote in midterm elections.

President Donald Trump renewed his Twitter attack on OPEC this week, blaming the cartel for rising gasoline costs. But analysts say Trump's effort to punish Iran by swiftly cutting off the nation's energy exports is what's really driving oil and fuel prices higher.

Trump on Wednesday ordered OPEC, the 14-member oil cartel dominated by Saudi Arabia, to take steps to tame rising gasoline costs. He said the group is "driving prices higher," apparently referencing its 1½-year-old policy of capping production to shrink a global crude glut.

several analysts and banks say the catalyst for the most recent oil price rally is Trump's efforts to punish Iran, the world's fifth-biggest crude producer. Just days after OPEC agreed to increase output, the State Department sent oil prices soaring by announcing it aims to wipe out much of Iran's crude exports by November. Since then, U.S. crude oil has surged nearly 7 percent, and briefly rose above $75 a barrel for the first time since November 2014. "I think what has raised prices 10 bucks a barrel is more the administration's policy about getting [Iran's] exports completely cut off to the rest of the world, which they seem intent on."

That policy now threatens to leave the world with a shortage of crude and rob Americans of the gasoline price relief they usually get in the autumn. It may even leave drivers paying more at filling stations in the fall, just as they're preparing to cast their votes in elections that could hand Democrats control of Congress. Americans are already seeing their gas bills rise after enjoying years of low fuel costs thanks to a historic oil price crash. The national average for a gallon of regular gasoline is now nearly $2.87, compared with $2.23 a year ago. U.S. gasoline futures are up about 18.5 percent this year and have risen nearly 39 percent since Trump took office. Morgan Stanley on Monday raised its forecast for international benchmark Brent crude by $7.50 to $85 a barrel over the next six months. The bank pinned the revision on Trump's tougher-than-anticipated Iran policy.

Trump's Iran policy is 'risky'
OPEC, Russia and several other oil producers have partnered to limit their output since January 2017 to end an oil market downturn that sent prices to 12-year lows, bankrupted hundreds of U.S. energy companies and piled pressure on petrostates. That strategy put oil prices on a steady road to recovery, but the recovery accelerated ahead of Trump's decision in May to abandon the 2015 Iran nuclear deal and restore sanctions on the country. The cost of oil has surged more than 14 percent over the last three months, with Brent crude racking up its biggest quarterly gain in nearly six years.

That strategy is "very risky" because it leaves the oil market with few options in the event of supply disruptions. Venezuela's production is already on pace to fall by as much as 1 million bpd this year while surprise outages in Libya and Canada significantly reduced supplies last week. "We can't afford any more supply disruptions if we're going to be that aggressive in taking Iranian barrels off the market."

Trump orders OPEC to tame gas prices, but analysts blame his Iran sanctions for rising fuel costs
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Tue 25 Sep 2018, 00:53:23

kublikhan wrote:Trump says he wants lower oil prices but his sanctions are raising oil prices. His actions run contrary to his goals.



That's one factor. With the market already tight and projections for further demand growth quite concerning, it might well be THE deciding factor, re sentiment.

However, if the market weren't already tight, the Iranian sanctions wouldn't matter much. Blaming the whole issue on Trump is pretty stupid, and probably political.

And don't confuse me with some big Trump fan -- I just believe in discussions based on observable facts, when it comes to large, liquid, markets like crude oil. I think it's stupid for Trump to publicly ask OPEC to "tame" gas prices. As if they could. As if they WOULD, when their own self interest economically calls for higher prices, given their budgetary requirements for oil income in much of the Middle East.

If ANY POTUS really wanted lower oil prices, a focus on true energy independence by the US, utilizing and developing alternative energy sources in a major way would be a strategic imperative.

Aside from some CAFE standards, seldomly strictly enforced, it's been pretty much crickets (aside from empty platitudes) from BOTH parties re doing anything meaningful about US energy independence -- at least since the Carter era.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby kublikhan » Tue 25 Sep 2018, 02:52:35

Outcast_Searcher wrote:That's one factor. With the market already tight and projections for further demand growth quite concerning, it might well be THE deciding factor, re sentiment.

However, if the market weren't already tight, the Iranian sanctions wouldn't matter much. Blaming the whole issue on Trump is pretty stupid, and probably political.

And don't confuse me with some big Trump fan -- I just believe in discussions based on observable facts
I wasn't blaming the whole issue on Trump. What I said was:

kublikhan wrote:Trump says he wants lower oil prices but his sanctions are raising oil prices. His actions run contrary to his goals.
Trump wants lower oil prices. However his sanctions will take oil supply out of an already tight market. Thus tightening the market up even further. Which should cause prices to rise. I am not holding Trump accountable for the myriad issues that influence oil prices. I am simply pointing out that his actions are helping to push oil prices in the opposite direction he wants them to go.

Brent crude surged to the highest in almost four years after OPEC and its allies shrugged off President Donald Trump’s demand that the group act to control oil prices.

Futures in London jumped to the highest level since November 2014, after OPEC and its partners said they would boost output only if customers seek more cargoes. Brent could rise to $100 as the market braces for the loss of Iranian supplies due to U.S. sanctions, according to Mercuria Energy Group Ltd. and Trafigura Group.

“The market is starting to realize that strong global demand and the lack of spare production capacity is going to lead to one of the tightest markets we’ve seen in a long time,” said Phil Flynn, senior market analyst at Price Futures Group. “OPEC not raising production immediately has traders wondering about their ability to do so in the future.”

Oil has climbed since early August as speculation grew over whether OPEC and its allies will boost production, with sanctions on Iran’s exports set to take effect in November. Bank of America Merrill Lynch joined JPMorgan Chase & Co. in anticipating higher prices down the line -- the former expects crude to reach $95 a barrel in the first half of next year. Brent for November delivery rose $2.40 to settle at $81.20 a barrel on the ICE Futures Europe exchange.
Brent Oil Highest Since 2014 as OPEC Stops Short of Output Hike
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Re: THE Price of Crude pt 14

Unread postby Armageddon » Tue 25 Sep 2018, 07:46:16

Outcast_Searcher wrote:
kublikhan wrote:Trump says he wants lower oil prices but his sanctions are raising oil prices. His actions run contrary to his goals.



That's one factor. With the market already tight and projections for further demand growth quite concerning, it might well be THE deciding factor, re sentiment.

However, if the market weren't already tight, the Iranian sanctions wouldn't matter much. Blaming the whole issue on Trump is pretty stupid, and probably political.

And don't confuse me with some big Trump fan -- I just believe in discussions based on observable facts, when it comes to large, liquid, markets like crude oil. I think it's stupid for Trump to publicly ask OPEC to "tame" gas prices. As if they could. As if they WOULD, when their own self interest economically calls for higher prices, given their budgetary requirements for oil income in much of the Middle East.

If ANY POTUS really wanted lower oil prices, a focus on true energy independence by the US, utilizing and developing alternative energy sources in a major way would be a strategic imperative.

Aside from some CAFE standards, seldomly strictly enforced, it's been pretty much crickets (aside from empty platitudes) from BOTH parties re doing anything meaningful about US energy independence -- at least since the Carter era.




Energy independence by the US? LOL, thats funny. 20MBPD? Good luck with that
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Re: THE Price of Crude pt 14

Unread postby ROCKMAN » Wed 26 Sep 2018, 10:37:45

A - Not that I think we'll actually get there but we're not nearly as far off as you imply. First, we've hit 10.7 mm bopd domestic production. Amazes even me. But more important: US consumers are not buying 20 mm bopd...they don't buy oil, they buy refinery products. And US refineries are not selling to US consumers refinery products made from 20 mm bopd...it's closer to 15 mm bopd. The products made from almost 5 mm bopd are being sold to foreign consumers. US consumers don't need that 5 mm bopd. In fact, exporting those products only puts upward pressure on prices our consumers pay.

So the US consumers is ctually only importing about 4.3 mm bopd our consumers require. That's still a very big gap to fill. Probably too big IMHO. But not nearly as big as that "20 mm bopd" number you threw out. Also might be good to use "oil independence" instead on "energy independence" as you do. Two very different metrics.
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Re: THE Price of Crude pt 14

Unread postby vtsnowedin » Wed 26 Sep 2018, 18:47:57

I don't know about that Rock.
If gas and diesel got to say $10/gal at the pump I would not be surprised to see USA consumption drop below 10MBPd by people switching to every available alternative strategy available to them.
There is no clear alternative answer but at $10/gallon American consumers would be using or testing them all.
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