OIL STATS

ECONOMICS

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OIL STATS

Oil, the Energy Crunch???

National Geographic, The End of Cheap Oil,6/04, p. 97

Oil, the Energy Crunch???

Gasoline taxes average 43¢/gal

US consumer 25% of the world’s supply, though it is 5% of the population, about 3 gals/person/day.

Production is ½ of 1970’s.

North Sea, North Slope of Alaska are in decline.

Consumption 02 (millions of barrels: US 7,191, Japan 1,935, China 1,935, Russia 985, Germany 949

3.2% increase 04, predicted 1.7 for 05

China added 2M cars in 03, up 70% from 02,

US consumption, 2/3 is for fuel.

Business SUV deduction of up to $10,000

In 1981 oil was above $70/barrel in 2004 dollars, by the mid 80s it dropped to less than $25/barrel.

The new deep-water Gulf filed has an estimated 25B barrels, another almost as large field is in the Artic National Wildlife Refuge in Alaska.

Canadian shale oil cover 15,000 sq miles, equals 1.6 trillion barrels, but yields only 1 barrel for every two town of deposit.

Gasoline costs $1.57/ gal = .43 tax, .75 crude oil, .24 refining, 15 distribution & marketing. Additional costs: $.80 traffic congestion (time and wasted fuel), pollution (effects upon respiratory health), .12 leaky oil from refineries & distribution centers. National Geographic, The End of Cheap Oil,6/04, p. 97.

$225 billion of the US economy flows overseas to pay for oil imports.

Profit margin up 80% in 04 from that of 99

Refiners made $0.228 in 99/gal of gasoline, in 04 $0.408

Increase in oil price from 03 costs the US economy over $100 billion per year.

US production down 13% from 03.

9% of GDP spent on oil.

MYSTERY TO BE UNFOLDED: What happened to the money from the privatization of USSR’s resources? If the resources were sold at fair market value and the funds were paid to the state, say over 20 year period, there would be no need for tax for at least the next 40 years. Where did the funds go??? What about the factories, state lands, stores, etc? Where did the funds go? If you have an article answering this mystery, contact California Skeptics @ *@skeptically.org

Personal effects of oil on JK’s finances

In January of 04, I became fully invested in the market. The economic upturn should have continued, for interest rates were low and the previous quarters growth in GDP was approximately 8% (the announced the final, adjusted figure months later can differ by as much as 2 percent). However, like a balloon the market deflated, only to regain it former position a month after Bush’s election. Oil pricked the balloon. Congress had some year before drafted an exception to the fuel economy law, they lumped SUVs with pickups as excluded. With 25% or so of the vehicles on the road getting half the mileage of my Honda, the consumption of oil rose by 3.2% in 04 (and is expected to go up another 1.7%). Much of that is do to the economic upturn. But if they only excluded vehicles with a commercial license our oil consumption would be down by around 10%. Since spending on oil doesn’t translate into jobs, with Americans having that much more pocket money, our stock markets would have broke the 02 high, and I would have over doubled my money—for I positioned myself for just such a move. By December 3^rd, I was down 10%; what a difference gas-guzzlers made.

Businessweek Online NOVEMBER 15, 2004 at businessweek.com

Crude Lessons About Oil
Low-quality $35-a-barrel oil is plentiful -- but refineries lack the capacity to handle it

All crude oil is not created equal. No one knows that better than the world's refiners. The markets generally track a type of oil referred to as "light, sweet" crude. But while this fast-flowing, low-sulfur variety is in tight supply and goes for roughly $50 a barrel, there's a veritable ocean of thicker, lower-quality crude being pumped out by Saudi Arabia, Mexico, and others that currently sells for as little as $35 a barrel.

The problem is that the world can't just switch from one to the other. "Heavy, sour" oil is more complex and costly to convert into useful products such as gasoline and heating oil. And much of the world's refining capacity, particularly in Asia, simply can't process it. "There's no shortage of crude oil today," says Thomas D. O'Malley, chairman of Premcor Inc. (PCO ), a refiner based in Old Greenwich, Conn. "There is a shortage of light sweet."

The result is that the price of oil -- and of products made from it -- is higher and more volatile than it might be if there were more capacity for handling the heavy, sour stuff. In the meantime, refiners that specialize in the cheaper grades -- such as Valero Energy, Premcor, and Frontier Oil (FTO ) -- are reaping rich rewards. Valero Energy Corp. (VLO ) figures that lower-cost oil, together with higher refining volumes, helped boost its third-quarter income by $480 million. "It's a way we can increase our profits, but it doesn't cost consumers a penny more," says Valero spokeswoman Mary Rose Brown.

These higher profit margins are beginning to cause refiners to switch over existing capacity to handle the growing flow of lower-cost crude. New oil coming to the market from such places as Saudi Arabia, Russia, and Canada is increasingly of this type. But upgrading existing refineries to handle low-grade crudes can cost hundreds of millions of dollars per facility and take several years. That's a tough sell in a historically low-margin, cyclical industry. Timothy M. Donohue, a principal at Booz Allen Hamilton Inc., figures the $8 to $10 per barrel discount for heavy crude would have to remain for up to seven years to justify a large-scale shift.

REFINED REFINERIES
Independent refiners such as Valero are willing to take risks. Unlike big integrated oil companies, such as Exxon Mobil Corp. (XON ), which control about one-third of U.S. refining capacity, independents don't have their own oil supplies. So while Valero already depends on heavy and sour grades for 70% of the oil it refines, the company wants to handle more. Last year the San Antonio-based company spent $340 million upgrading its Texas City refinery near Houston to allow it to handle greater volumes of the low-cost oil, thereby reducing the cost of its feedstocks, says Senior Vice-President Gene Edwards. Premcor is following suit by upping its capacity for low-grade crude by 30% with a $250 million investment in its Port Arthur (Tex.) plant.

Increasing refiners' ability to handle heavy, sour crude, while important, won't dramatically boost industrywide output. For that, industry experts say, what's needed is investment in brand- new refining capacity -- and few major additions are in the works. Even refiners' healthy profits of late don't justify the multibillion dollar costs of a new refinery, says analyst Jeffrey A. Dietert of Houston-based investment bank Simmons & Co. International. "In the long run," says William Hauschildt, vice-president of refining operations for ChevronTexaco Corp. (CVX ), "refining hasn't matched the return on capital employed compared to other industries."

As a result, analysts expect refining capacity to stay tight -- and margins healthy -- for the next few years. Analyst Jacques Rousseau of Friedman, Billings, Ramsey & Co. (FBR ) predicts that total U.S. refining capacity will grow by only 0.5% a year from 2004 through 2006. Meanwhile, U.S. demand for gas and other refined products will grow by 1% to 1.5% per year. Imports will take up the slack, but overseas refining capacity is expected to grow more slowly than demand, too. No matter how you look at it, heavy, sour crude won't offer consumers sweet relief from rising oil prices anytime soon.

this is why I love g. w. bushwack. It aint what we have but what we could have had. for more on gw go to

http://skeptically.org/curpol/id11.html

Don‘t Hold Your Breath for Hydrogen

If hydrogen is the fuel of the future, the future may be a long time coming. An American Physical Society panel reports that vast improvements in hydrogen production, storage, and use are needed to meet President Bush’s goal of having commercially viable hydrogen cars on the road by 2020. The key challenges:

Production. Hydrogen produced by converting coal or by splitting water with electricity costs four times as much as gasoline. The coal process will require better catalysts to

purity the hydrogen and technologies to capture the carbon dioxide released during processing. Electrolysis will require cheaper electricity and a more efficient way to separate hydrogen from water.

Storage. A practical hydrogen tank should power a vehicle for 300 miles and take less than 5 minutes to fill; current technology does not come close. Pressurized gas tanks do not hold enough fuel. Liquid tanks must be cooled to —450 degrees Fahrenheit, which eats

up energy; after a few days the hydrogen begins to evaporate. Solid tanks are still in the early stages of development.

Use. The cost of fuel cells must drop to at least one-fourth of their current price ($3,000 per kilowatt generated) to compete with gasoline internal-combustion engines. Cost reductions depend on finding an improved electricity generating membrane, one that runs efficiently and reliably and does not need the expensive platinum now used.

—Zach Zorich

Another major problem is that of the catalyst which is a major recurring expense. Tiny amounts of impurities will poison the catalyst; i.e., bond to the platinum and thus prevent stopping the reaction which liberates hydrogen.--jk

Bush requested a $75,000 SUV tax break in 03, and got a $!00,000 for the least fuel-efficient vehicles. If incentives had continued for oil efficiency, oil would still be under $40/ barrel. This not only means that Americans have less money for trinkets and medical treatments, but that the poorest nations have less for basic sanitation, medical clinics, and education, and their citizens have less for necessities.



Why there are so many pigs on the road: for the Union of Concerned Scientists’ article on the SUV tax break.

For the best account of the Federal Reserve (http://www.freedocumentaries.org/film.php?id=214). One cannot understand U.S. politics, U.S. foreign policy, or the world-wide economic crisis unless one understands the role of the Federal Reserve Bank and its role in the financialization phenomena. The same sort of national-banking relationships as in our country also exists in Japan and most of Europe.