[Vision2020] Conserve precious Oil

[Pat Kraut]

It is because of the mess in Florida and political unrest in Venezuela as
well.

---- Original Message ----- 
From: "B.C. Strand" <Bill at strand.bz>
To: <vision2020 at moscow.com>
Sent: Saturday, October 02, 2004 5:07 PM
Subject: [Vision2020] Conserve precious Oil


> The reason for the $50/barrel oil prices right now is not because of
> limited crude oil supply or competition with third world countries.. A
> large portion of the price is a “fear factor” that significant amounts
> of crude from the Middle East MAY be interrupted. It has been estimated
> that 40% of the present price ($20/barrel) is due to this.
>
> Over the past two years, the US has been increasing its strategic
> reserves to record levels. And until Hurricane Ivan interrupted
> shipments, active crude oil inventories were well within seasonal norms.
> So in reality, despite decreasing domestic production of oil, the US has
> had higher available crude oil (both active inventories and strategic
> reserve) than normal.
>
> The price of gas has been driven by four factors:
>
> - Price of oil (driven by the "fear factor")
> - Unexpected increase in US consumption starting in February (some
> people point at a warmer than usual 2003-2004 winter, so people started
> taking car trips/vacations earlier. Others point to an improvement in
> the US economy).
> - Limited refinery capacity – the present US refinery capacity is darn
> near maxed out.
> - New environmental regulations in California and New York that require
> a specialized summer blend. This limits imports (they have to import
> blending components rather than finished product). This puts more strain
> on the domestic refineries.
>
> Gas inventories were at incredibly low levels this spring and summer.
> The US refineries ran at record high production rates to get gas to the
> market this year. They “caught up” in the late summer so we didn’t get
> nailed with high Labor Day prices.
>
> The problem is, normally the refineries start switching over to heating
> oil and propane production in mid summer and this has NOT happened. A
> portion of the propane has been re-stocked through record levels of
> propane imports. However, if it is a cold, hard winter in the east,
> count on propane and heating oil prices to go through the roof.
> If we are getting nailed by development in other countries (primary
> China – same as they are affecting the steel industry) it is that they
> are sucking up refined products (gas, propane, etc…).
>
> Bottom line is that it is not presently the supply of oil that is the
> problem for gas prices. It is:
>
> - Fear of losing oil imports
> - Insufficient refining capacity in the US
> - Increased domestic consumption of gas
>
> If there is any single reason I consider voting Democrat this year is
> because the war in Iraq is largely responsible for that "fear factor"
> affecting oil prices. If there is a reason to vote Republican, it is
> because there is a better chance they will give tax breaks to putting in
> new refinery capacity. If there another reason to vote Democrat (etc,
> etc, etc…). But regardless of which candidate gets elected, unemployment
> tends to correlate with gas prices with a 8-12 month lag. January-May
> 2005 could be really suckey for the job market.
>
> Having said that, it won’t be long until we will be truly fighting for
> oil resources with China and other quickly developing nations. I’m
> hoping that we see the cottonwood plantations in the Columbia basin be
> used for bio-production of fuels (ala Germany in WWII). But this takes a
> strategic plan for dealing with energy rather than the tactical plans we
> have been dealing with. A strategic plan means monetary investment. I
> don't see either presidential candidate addressing this. Maybe we will
> see this in a later debate.
>
> Bill Strand
>
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