Reply With QuoteAll those refineries and California probably has the most expensive gas in the country. :(
Yeah, I think it's refinery location.
All those refineries and California probably has the most expensive gas in the country. :(
Well, they do have 12% of the population.
Apparently no new refineries have been built in the US since the 1970s. Probably because consumption hasn't increased all that much since then; the new ones are in developing countries with big energy consumption growth prospects.
But this is a reason to support something like the Keystone pipeline, because it helps secure a fuel source which is in an extremely stable region of the world. (Canada is pretty much as stable as it gets)Plus it's a political stability to risk to depend on imported oil.
Certainly, but that's why economic prosperity is something which must always be considered, because when a society is prosperous then they're willing to be more forward thinking regarding such things.yes it always is, until you are suddenly underwater or flattened by a hurricane. Then its suddenly a 'why the **** didn't we do something to stop this? concern'.
If you harm economic prosperity, you will inevitably harm any goals which require people to think beyond how they're going to put food on their table and shelter over their heads.
Ironically, Keystone was set to completely bypass Bakken until it became clear that, for political reasons, it would be suicide to do so. So clearly taking advantage of the Bakken fields was not the goal behind Keystone XL. Transcanada was/is looking to ship oil from the tar sands to US refineries and ports, primarily for export from the U.S. to elsewhere in the world.Originally Posted by Malathor
I'm the first to admit that I don't follow this terribly closely, but Keystone XL is not the answer to high gas prices (certainly not in the short term, and probably not in the longer term either). Since most of what is projected to be coming out of the tar sands via the Keystone isn't destined for U.S. domestic gasoline consumption, either, it's not going to be having a direct impact on U.S. pricing. IIRC, Valero is the only company that has made it public what they intend to do with the capacity they want to get out of Keystone, but their plans were/are primarily to refine it into diesel and jet fuel, neither one of which will significantly reduce the price of gasoline.
If you're looking for solutions to high gas prices, reducing global instability is the short term solution, and a combination of increased supply and reduced demand is the long term solution. It's not rocket science. Since oil prices vary wildly based primarily on political situations, the one thing the president could do in the short term to stabilize or reduce gas prices is to stabilize the political situation in the Middle East. Good luck with that...
Also, Mal, I'm not at all opposed to building Keystone XL (as long as they do it in such a way that it doesn't leak like a goddamn sieve). To look at it as a solution for high U.S. gas prices (or, for that matter, energy security) is simply ignoring what Transcanada and its customers have said they intend to do with the pipeline.
What Aleck said, especially regarding world stability.
The energy economists at MIT don't even think the high price of gas is all that relate-able to speculators. One of them mentioned a new law that now requires speculators to take delivery of some portion of the gasoline or oil that they're buying futures in as being a deterrent: "Where would you like us to deliver the 33,000 gallons of gas you just bought?"
At any rate, the tensions with Iran and their threats to shut the strait of Hormuz (US Navy says: they can definitely shut it for a "short time", but they have the ways and means to reopen it; USS Abraham Lincoln and Carl Vinson in a flotilla with British and French ships ready to move are in the Strait) are the big kicker on current gas prices. For years the Saudis have stepped in with more oil when stuff like Iran happened, but they stopped doing so in 2007, for whatever reason.
Glimmer of good news for the Church Of Fossil Fuels? Saudis say "Fine, we'll up our production from 10mbd to 12.5mbd. Happy?
For how long? Nowhere has an infintie supply of oil, as well as oil extraction rapidlty becoming uneconomic as the supplies run lower and the low hanging fruit is gone. Plus, countries consume oil first, and export it second. Canada isn't going to run short and suffer crushing oil prices so that US continues to get the cheap stuff, any mroe than the USA would do that for mexico.
Safeguarding your oil supplies now is like hoarding analog modems in the 1990s. As the supplies run low, you will find the rest of the world happy to license their green tech and energy systems to the USA for a healthy profit. Why let everyone else overtake you?
Even if climate change is a lie dreamed up by al gore, and the US wasn't importing any oil, reliance on any finite fuel source is short-term thinking.
Not to mention that whomever figures out an efficient way to transport humans and goods with the freedom and efficiency of cars, trucks, and ships we have now but in a way that does not involve fossil fuels is going to get filthy goddamned rich and probably stand astride this planet like a colossus.
Now is that something you'd be interested in? [/martinlandau]
I believe that the estimated reserves in the oil sands are pretty immense.
Yes? What exactly is your point here?Nowhere has an infintie supply of oil, as well as oil extraction rapidlty becoming uneconomic as the supplies run lower and the low hanging fruit is gone.
That oil will become expensive eventually, so we should try to make it expensive now?
You're absolutely right.... as supplies dwindle, and consumption increases, it will become more expensive. Which will result in it yielding to alternative fuels.
I'm not seeing how this matters at all to the decision of whether or not to build a pipeline.
Er... this doesn't really make any sense.Safeguarding your oil supplies now is like hoarding analog modems in the 1990s. As the supplies run low, you will find the rest of the world happy to license their green tech and energy systems to the USA for a healthy profit. Why let everyone else overtake you?
We use oil now, and will continue to do so for the foreseeable future.Even if climate change is a lie dreamed up by al gore, and the US wasn't importing any oil, reliance on any finite fuel source is short-term thinking.
Suggesting that we should artificially accelerate the reduction of oil reserves, so that we are better able to deal with the reduction of oil reserves, is nonsensical to the extreme.
I think the peak oil doomsday argument is that due to dwindling reserves and accelerating demand, we will run out of oil before an alternative is developed that can take up the slack. I am not saying that is happening, but if you beleived such a thing then yes it would be prudent to curtail use now so that there is enough power generation to transition (i.e. research, develop, and manufacture in sufficient quantity) onto whatever the alternative(s) are without having 90% of the planet descend into anarchy.
i.e. a little self-control now, an easier transition later.
Just to throw some figures into Timex's post, Wikipedia says the Canadian oil sands have 176.8 billion barrels. Current oil consumption is about 90 million barrels per day, according to the International Energy Agency. That translates to about 5.3 years worth of oil for the globe, assuming that current demand figures stay constant (which, if history is any guide, they won't). That's also assuming current estimates are correct.
Bottom line: Canadian oil sands have a lot of oil, but at most they probably buy about 5 years of time for us to figure out other energy strategies. The oil sands are significant, but they don't change the underlying problem re: petroleum dependency. Again, I don't know enough to know if they're part of the long term solution (the pollution damage vs. benefits of the energy), but I do know the oil sands aren't the solution by themselves.
Timex, you seem to be desperate to the be the one standing when the music stops. You want the USA to be the last country to base its economy on a finite and highly contested resource?
That just sounds strategically short termist. It reminds me of easter island. Why worry now!
Seriously guys, why should we go through pain now when we can instead go through pain later? It's called kicking the can down the road, and that's how we roll.
Ahh yes...the umpteenth zombie-like return of peak oil and the tired old narrative about fossil fuels running out anytime in the near future. The reality on the ground right now is quite the opposite. Fracking is doing to fossil fuels what Borlaug did to agriculture.
http://www.nytimes.com/2012/03/23/bu...ewanted=1&_r=1
We're not going to run out, but the Green Revolution isn't a very good comparision; that didn't radically increase prices like the new sources will.
Radically increase prices? No, just give it time. Natural Gas is already at 10 year lows, a fact which is hugely beneficial to a wide range of US based manufacturers. It's showing up in the jobs numbers. You Obama fans should be thankful for the frackers.
Last edited by Malathor; 03-23-2012 at 05:08 PM.
The only reason that's the case is that the externalities are not baked into the cost, which I vehemently oppose as someone who supports efficient, honest markets.
I want the true cost of gas and other fossil fuels to be reflected in the price so we get a nice efficient market.
http://en.wikipedia.org/wiki/Pigovian_tax
Over time the extraction per-unit costs have gone up. Shale and fracking cost significantly more to extract than getting free oil bubbling out of the ground. There may be a few big hits of cheap to extract oil left out there in rural China or something, but combined with ever-increased developing country demand it's not going to get cheaper.
A shorter version of this is "the only reason those alternative sources are viable extraction is that prices are sky-high." If prices don't stay high, then why would someone invest to extract it?
The evidence I can find points to the the 10 year low being due to the big boom in demand from developing countries, follwed by total economic collapse in 2008, like happened to most other commodities. Note big 2006-2008 25% two year price jump pre-recession followed by 46% decline in 2009, with it bouncing around since then. You can see the huge price jump in the 2000s clearly here.
This has production data. The overall growth in dry production was surprisingly constant across the Great Recession, about +700k a year. Shale was reported combined instead of separately before 2008, so that line item doesn't tell you much, only having data for 2008 and 2009.
Oddly regular old gas well production reversed its 2000s decline in 2010, jumping by an amazing 6 million, or double the entire last reported volume for shale.
Obviously any increase in production like fracking will reduce prices, but I haven't seen a useful estimate of how much it'd be. Given the above data it doesn't look like that much.
Last edited by Jason McCullough; 03-23-2012 at 06:44 PM.
But all other commodities have rebounded. Why hasn't natural gas? Why it is at a 13 year low? Maybe the increased supply has something to do with the price moves (as well as some demand reduction due to weather).
Anyway I think that EIA explains why shale gas is important.
As to the scale of shale gas the following image (from the above url) shows the magnitude:
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Shale gas production is substantial enough to have reduced prices, but 1) no one has yet to provide an estimate of how much, 2) it's not why we're at a ten year low - the GR did that, and 3) that projection doesn't agree with the 2010 production data I linked for some reason.
Given that other commodities have recovered that explanation does not hold water.
We don't have that technology? People can sometimes come up with models but they generally don't have a lot of predictive power. We do know that more supply generally means lower prices, though.
Gas and Oil are completely different commodities. Gas cannot be transported out of the US in any great quantity, so it's a captured local market. Gas could be $30/mcf in Russia and $3/mcf in America without there being a contradiction.
I've heard rumors, which is the extent of my knowledge, that LNG stations are being built to begin exporting gas that won't come online until 2014 at the earliest. Once the US gas market becomes tied to the global market, the price of gas could rise quickly. Europe especially would seem to be interested in an alternate source of LNG. There are almost no current US based LNG facilities meant for export.
At the end of the day, high oil prices are actually good for the long-term economy. It may damage short-term buying potential, but it drives innovation by making alternative energy sources viable. I'm not just talking about "green" energy; I'm talking about alternatives to traditional fuel exploitation methods.
http://www.economist.com/node/17959688
Take the examples of oil sands that is mentioned in this thread multiple times. As the above article points out, oil sands used to have a break-even point of $75 per barrel. It's been known for decades that these oil sands reserves existed, but it was not market viable to exploit them. But the run-up in oil prices over the last decade made a $75-cost-per-barrel production point worth exploiting. This lead to investment in the sector and the technology to harvest the oil sands. Now the break-even point is $50 per barrel for oil sands thanks to those investments.
The same can be said for natural gas, batteries, algae oil, biofuel, etc... without high oil prices, there is little reason to invest in these technologies.
So even though high oil prices ultimately causes overall cost to rise for the average family (fuel cost, food cost), it eventually leads to additional jobs and lower cost alternatives.
Solar and wind are a different matter. Those are competing against low coal and natural gas prices. Hard to justify, financially, building a solar farm when the cost per kwh is more expensive than a coal-fired plant.
Solar is competitive in areas of high solar resource in places US Southwest, right now, with NEW coal plants.
Really everything just needs an appropriate carbon tax.
We shut down our Nikiski LNG plant up here in Feb 2011 due to 'low export prices'.
Higher prices for the same product are always bad. Higher prices means more resources are required and that is always bad. The end.
Weird. When I started investing in the oil sands, back in 2004 the break even cost was $40/barrel. There has been a steady rise in break even costs, almost entirely due to rising labor costs in the area.
Although it is true that there have been innovations (in situ). Not sure that there is a causal line between prices and that innovation.
This is full of derp. I'm not sure where to start. I guess I'll start with the additional jobs. The economy is dynamic, what do you think those people would be doing in the world where prices did not go up?
The climate change externality around fossil fuel burning is pretty large, to put it mildly, so it's not obvious is high or low prices are better.
a) I disagree with the extent of the externality
b) higher prices for the same product are always bad. The end.
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