This is spooky

Thursday, April 13, 2006
Well not spooky exactly, maybe unnerving is a better word. Sometimes I wonder why it is that so much of the world's oil is in countries controlled by autocratic cry babies and crazy men but then again if they did not have all that oil maybe they would not attract so many crazy men in the first place. It seems the oil has given them a power and importance they would never otherwise achieve. I suppose this is what the experts mean by "strategic".

According to this article oil stocks are up and gas reserves are down:

Crude for May delivery was down 52 cents at $68.10 per barrel on the New York Mercantile Exchange. In London, May Brent crude was down 47 cents at $69.39 per barrel.

NYMEX wholesale gasoline for May fell 2.13 cents to $2.0698 per gallon, with May heating oil down 1.86 cents at $1.956 per gallon.

"We're being bounced around as robust crude supplies take the cream off a market driven up by geopolitical concerns," said Justin Smirk, senior economist at Westpac in Sydney.


The U.S. Energy Information Administration said Wednesday that domestic crude in commercial storage increased by a larger-than-expected 3.2 million barrels to 346 million barrels last week, the highest since May 1998.

But continued refinery maintenance work caused gasoline stocks to fall by 3.9 million barrels to 207.9 million barrels, the lowest since Dec. 30. Distillate stocks, which include heating oil and diesel fuel, slid by 4.2 million barrels to 117.4 million barrels, the lowest since July 1, 2005.

But with forward contracts for crude delivery later in the year trading near records above $71, the market remained underpinned by the nuclear dispute between the West and Iran and by worries about the adequacy of U.S. gasoline stocks before the summer driving season as refiners switch from additive MTBE to ethanol.


In a small town about 20 miles from me a new plant is going up, its purpose will be turning coal into gas. Up by Colverdale In a new plant is being built that will produce bio fuel. The problem is the first plant won't be online for about 6 more years and the other plant will take at least two more years to complete.

I wonder sometimes how the United States managed to shift over to war time production so quickly and efficiently in WW2. Today it seems to take years just to get the planning done. We need to drill in ANWR, build new refineries and nuclear plants and the sooner the better..but as for the underlying problem of high priced oil it seems at least some of the blame goes to fear. Fear of what Iran will do, of what Nigeria will do, of what Chavez will do. Needless to say right now Iran is top of the list.

Sometimes I wonder if all these people are crazy like a fox. I wonder if they are really this unstable or if they have figured out that an oil market driven by fear and uncertainty works for them. Well, they should be careful, they might outsmart themselves. Someday the rest of the world might get fed up with being held hostage by a bunch of wackos sitting on top of oil reserves and we might find a way to free ourselves. I know I would love to see some of these folks drown in their oil. Exxon can fend for itself.

11 comments:

Skookumchuk said...

terrye:

I wonder sometimes how the United States managed to shift over to war time production so quickly and efficiently in WW2. Today it seems to take years just to get the planning done.

This handicaps us in several ways, not only in energy. The mere act of trying to put displaced persons in a trailer park after a hurricane is complicated by all the hidden local bureaucratic efforts to stymie the process.

If ever we do manage to do something quickly while under stress - build a border fence, develop coal deposits in the West, drill for oil offshore, build new reactors, quickly house people after a catastrophe - it will mean that at the same time we will have succeeded in radically changing the political structure of the country.

Barry Dauphin said...

I think that the entire country does not believe we are at war. In WWII basically everyone understood that was a war. Also the country was coming out of a depression, and many of our resources were dedicated to the war effort (and by resources I include people of all skill levels). Currently, we have a booming economy and tremendous competition for jobs. I say this to supplement what Skook has written, which is also another huge factor.

Skookumchuk said...

Someday I will have to do an in-depth post on this.

In BTU, U.S. coal reserves are equivalent to four times the oil of Saudi Arabia, 1.3 times the oil of OPEC and equal to all the world's proved oil reserves. And we, along with the Canucks and Aussies, have made great strides in making coal "environmentally friendly" and in developing new technologies to use it in new forms.

Just the Wyodak formation in the Powder River Basin of Wyoming and Montana alone currently produces enough coal to fill over 29,000 unit trains in 2005. We've only scratched the surface.

Note the countries with the reserves; these are the US, Canada, and Austrailia. An Anglospheric OPEC should it choose to be, waiting in the wings. Waiting for the political winds to change.

Skookumchuk said...

I hasten to add - it's not just the reserves themselves, but the reserves in combination with the technology and the infrastructure to get the stuff out of the ground, to transport it where it needs to go, and to make it clean. A big qualifier, that. The world is full of unextractable resources and the tables and graphs normally don't show that.

China and India are two more biggies purely in terms of reserves, anyway, though lagging in infrastructure. See here. But globally, there is more than enough to knock OPEC down a peg or two if we want to.

David Thomson said...

“Sometimes I wonder why it is that so much of the world's oil is in countries controlled by autocratic cry babies and crazy men..”

It is because few of them earned their great wealth. Their families were merely in the right place at the right time. They essentially have a lot in common with your typical lottery winner. Think of spoiled brats who care only about the daily pursuit of their selfish desires.

chuck said...

I wonder sometimes how the United States managed to shift over to war time production so quickly and efficiently in WW2. Today it seems to take years just to get the planning done.

Well, many things were simpler and less ambitious -- compare a P51 to an F22 -- and I expect that a greater percentage of engineers were involved in civil, power, mining, and chemical engineering. Folks also worked harder and were less concerned about the little nicities of saving the snail darter or whatever. I suspect that many came off the farm and weren't particularly infected by the cute animal virus. Folks knew how to *do* things.

And don't forget that preparation for the war began in 1940. Time consuming tasks, such as making tools and dies, was already well underway by the time Pearl Harbor rolled around.

Rick Ballard said...

Chuck,

Look back at the big WPA projects completed during the '30's. The skills to gear up and get a large project or series of projects going were honed from '35 onward.

The skill sets and companies that can utilize them still exist. If you want something big built quickly there's a little shop in SF that can do it. They don't fool around much in the US because of the combination of hard bid and EIS or EIR requirements but they can do it if the money is right.

If I could just garner significant support for my Soylent Green Gas project, this could be licked within five years. I think the marketing slogan is great: 'Goregas - he's gone but you're still going'.

Skookumchuk said...

It is devilishly hard to quote a number and have it mean anything, but coal liquefaction starts to make sense in North America when the long term price of crude stays north of about $35/barrel.

Meanwhile, others with a more strategic cast of mind aren't standing still.

chuck:

Hmm. Was a P-51, for its day, more complex than an F-22 is now? I certainly agree about the engineers then and now, though, as well as the societal willingness to do things.

I mean, in 1930 voters put their properties up for collateral to support a 35 million dollar bond issue to finance the Golden Gate Bridge. Imagine the citizens of San Francisco and Marin County doing that today.

Rick:

Yes, you can see the world and they pay good, too.

Rick Ballard said...

Skook,

You'll like this site.

I live about 20 miles from where the bridge is being constructed and 30 miles from where it is being built. I used to live in a condo which faced the Golden Gate and spent some time marveling at what that construction must have been like. The minimal loss of life in comparison to the dam projects is really something to think about.

CF said...

Here's how it works. When oil prices go up, people start to put time and consideration into alternate domestic energy production, but then (as usually has been the rule) the oil prices or supply crisis lessens and people prefer to use the cheaper oil so those projects stall or lose money and go out of business.The oilocrats pay attention and try to keep prices at a point where competitive fuels are not cost effective.

And then there is the NIMBY and greenie contingent and laws which give every opportunity to halt or delay construction of new facilities. (No new US refineries in 30 years comes to mind.)

terrye said...

cf:

Yes, this is true. If the US had just dedicated itself to alternative energy production after the Oil shock of the 70's we might have broken the oil gangsters and the rest of us from this cycle. But we got distracted, happens every time.