Once Again: Oil

From a recent Yahoo News/Politico interview, (amongst other Iraqi issues) President Bush also said:

— The president said global warming has “been more clearly defined as a problem” during his eight years in office, and when asked if it is real, Bush said: “Yes, it is real; sure is.”

“I could have supported a lousy [Kyoto] treaty and everybody would have went, ‘Oh, man, what a wonderful-sounding fellow he is,’” Bush said. “But it just wouldn't have worked.

“I don't think you want your president trying to be the cool guy and not end up with policies that actually make a difference. So the policies I've outlined are policies that will actually make a difference: nuclear power for generating electricity, battery driven cars, ethanol.”

— Asked a question that was submitted online about skyrocketing gas prices, Bush said the problem doesn’t have “a quick answer.”

“It took us a while to get to where we are — very dependent on oil,” he said. “So my answer ... is that the best thing we can do is to increase supply and to drill for oil and gas in environmentally friendly ways at home and build more refineries.”

Let's examine this a little further.

As of Tuesday, 05-13, oil rose to $127 a barrel, and refined gas to $3.73.

But is it pipeline attacks in Nigeria? Mischief in Iran? Nasty hedge funds? The plunging overall value of the dollar?

Perhaps more importantly, what's the actual, realistic impact? I've re-thought this over the past few weeks and, frankly, I don't see much of one. Yes, of course, Prius sales are up. I happened to rent one not long ago when my 2007 Toyota RAV-4 was in the shop and -- gulp -- I actually liked it.

But in truth global demand hasn't significantly wavered, staying pretty much at 86 million barrels per day.

In the United States, politicians are still blocking development of our oil reserves off coastal waters, ANWR in Alaska, and the absolutely massive oil shale deposits available in Colorado.

I'll readily admit that, personally, I won't necessarily be much affected fiscally until gas gets to, say, $10 a gallon. I'm finally, at the late stage of my career, where my overhead is minimal, I pay less for my house than many pay for a studio apartment, I have one credit card, carry no credit over from one month to the next and don't purchase anything unless I can pay it off within one month. My credit card company hates me. But my credit score is 830. So I am very much the American exception and not the rule.

Despite this, the DOE hypothesized that fuel demand dropped by 200,000 barrels per day -- calculated to be less than 1% of the 20.7 million barrels per day total. The median age for US cars on the road is 9.2 years, up from 6.5 years in 1990. The national mpg of 22.4 is only 1 mpg better than 10 years ago. Why? Congressional demands for greater safety. Consumer demands for quieter cars with more options = heavier cars.

And our miles-per-year don't seem to be diminishing yet. In fact, with hybrid and purposely-purchased high mpg cars, it is theorized that these folks are spending just as much money on gas because the perceived efficiency allows them to rationalize driving, in truth, more miles.

Let's say gas is $3.50 a gallon. The US DOT estimates that, against taxes, registration, license, insurance, finance and depreciation (about $5,600 a year total), the yearly cost to drive 15,000 miles makes up just 29% of driving costs.

This also begs another question: why aren't oil companies going out-of -their-minds to drill?

Because oil executives have long memories and protect their profits. Oilfield capital costs have doubled since 2005. Shortages of people, machinery and steel have doubled the costs of some oil sands projects in Canada -- just ask AB Freedom about Alberta tar sands.

No big oil company is willing to bet that oil stays where it is. For example, British Petroleum (BP) still uses $60 per barrel oil as a reference for evaluating new projects.

And what about oil in the United States?

We're going to import more than $400 billion in crude and refined gas in 2008, up from $300 billion in 2007. And yet, some of the easiest and cheapest untapped fields are right under our US feet. A small oil company recently found a good amount in Colorado but couldn't get a pipeline. Because rates pipeline companies in the US can charge to move crude are capped by the FERC. So if a cap exists, why build pipelines? What's the point? Where's the incentive?

Royal Dutch Shell thinks that our waters of the outer continental shelf have 100 billion+ barrels of recoverable oil. Except: 85% of the US coastline is "off limits" by Congressional decree.

Shell thinks that 1.5 trillion barrels exist in oil shale within Utah, Colorado and Wyoming. Yet, last December, Congress passed a measure prohibiting spending to establish programs to lease oil shale on fed lands.

And those are just a few of the issues involved within the US.

What about diesels? Europe has created an entire generation of diesel automobiles, where fuel is $8 a gallon, and where 50% of passenger cars possess a diesel engine (as opposed to 3% in America). But wait; there's more. Yes, your mileage is better with a diesel engine. But what are American truckers paying now? Up to $4.50 a gallon for various localized "boutique" diesel blends -- up to a third more than regular unleaded? You see much savings? The average US consumer does not. And consider: diesel cars and trucks will cost $2,000 to $5,000 more per unit than gasoline versions -- and there may be additional costs to maintain the pollution equipment due to particulate matter.

Another clue about US diesels? The trucking trade Western Truck Paper is featuring 2006 Volvo tractors, for example, for roughly half the price of new units. Meaning: trucks ain't selling.

Ethanol? Ethanol is a scam and a ripoff, as I wrote some time ago. Already, much of the gas we commonly purchase can be, seasonally, 10% ethanol. I already predicted $100 oil in 2006.

Wonder why the global food shortages? A good deal of that comes from US farmers pushing other crops aside in order to grow corn/grain for ethanol. Except that: making ethanol burns up more carbon than it saves. It depletes groundwater, erodes soil and raises the cost of food for poor countries.

Except that Greenies, Leftists and Socialists would rather "feel good" than realize that their advocated policies are directly responsible for thousands of deaths and global violent strife over food stores deliberately minimized by their work.

Seen the video where the small-time inventor turns water into propulsion? If I knew how to post videos here, I'd place this video into a post. But even then, don't you think that, given exposure and time, Al Gore would accuse the US of reducing fresh water and oceanic sources?

In the meantime, how about some helpful internet sources:

1. Gaspricewatch.com

2. Gasbuddy.com

3. Gasprices.mapquest.com

4. AAA.com

BZ