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Bush's Release of Strategic Oil Reserves

kinghami3

Future Turbo Monkey
Jun 1, 2004
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I was kind of surprised that we had that reserve. I think it should be saved for a time of actual war though; our self confidence is getting a little carried away and we need it for defense. As for gas prices, we Americans need to thank God that we don't live in the rest of the world where gas is 2-4 times as much. Imagine paying £4 a gallon.
 

DRB

unemployed bum
Oct 24, 2002
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Just because its called strategic does not mean its for war. Its meant to cover short term distruptions in the supply chain which is what this is. The problem is that the refineries that can handle the crude stored there are for the most part offline due to the hurricane. Additionally the pipelines that move the gas from those refineries are also down due to the hurricane.
 

amateur

Turbo Monkey
Apr 18, 2002
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DRB said:
Just because its called strategic does not mean its for war. Its meant to cover short term distruptions in the supply chain which is what this is. The problem is that the refineries that can handle the crude stored there are for the most part offline due to the hurricane. Additionally the pipelines that move the gas from those refineries are also down due to the hurricane.
Strategic would imply that it might be used for a shortage...there is no shortage, just inflated prices. I must say, I think it's f'ing retarded.
 

DRB

unemployed bum
Oct 24, 2002
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amateur said:
Strategic would imply that it might be used for a shortage...there is no shortage, just inflated prices. I must say, I think it's f'ing retarded.
Strategic does not imply shortage, it implies that it exists to cover situations where a significant portion of the oil supply has been cut off. The Gulf provides a significant portion of the US's oil supply. It has been cut off. So the supply is opened up to cover that until such time that the gulf fields are reopened and pumping oil.

However, the problems extend further into the supply chain. Refinement and distribution have been distrupted as well. Neither of those are addressed by the release of oil. The easing of environmental restrictions helps a bit as it allows gas formulated for other areas of the country to be used in the south. However, that tightens supply for all areas of the country driving the price up.
 

Changleen

Paranoid Member
Jan 9, 2004
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I heard the gulf supplied 21% of your domestically produced supply, which I suppose is not to be sniffed at. Presumably there are equations and trigger points for releasing these reserves and it's not just done on a Political whim..
 

DRB

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Oct 24, 2002
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Changleen said:
I heard the gulf supplied 21% of your domestically produced supply, which I suppose is not to be sniffed at. Presumably there are equations and trigger points for releasing these reserves and it's not just done on a Political whim..
That number is fairly accurate from an overall perspective but when it comes to regionally sourced that number for the South (Maryland to Florida to Louisana) goes way up. The real issue though is the refineries being out of commission. That is the real problem. The good thing is that once those get back on line the supply will increase and the prices should go down. If you'll notice only a few oil companies are currently taking advantage of the offer of oil from the reserve. They don't have anywhere to refine it.

Well its pretty much a political whim but in my experience it really has not been used for what I would call a "political" purposes.
 

Changleen

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Jan 9, 2004
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I am disapointed by the willingness of Bush to relax environmental regulations as a fairly early step towards helping increase productivity. Time and time again, under pressure he shows near absolute disregard for the future of the planet. It's all about the $$$ to be made today.

DRB, Do you think Oil / Petrol is seriously going to be much cheaper ever again?
 

rooftest

Monkey
Jul 10, 2005
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Okay - how many of the people giving Bush crap for using these reserves are the same people who were joining Kerry a year ago asking him to do it just to lower prices? :think:
 

ohio

The Fresno Kid
Nov 26, 2001
6,649
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SF, CA
rooftest said:
Okay - how many of the people giving Bush crap for using these reserves are the same people who were joining Kerry a year ago asking him to do it just to lower prices? :think:
Uh, zero?
 

DRB

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Oct 24, 2002
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Changleen said:
I am disapointed by the willingness of Bush to relax environmental regulations as a fairly early step towards helping increase productivity. Time and time again, under pressure he shows near absolute disregard for the future of the planet. It's all about the $$$ to be made today.

DRB, Do you think Oil is seriously going to be much cheaper ever again?
No the reason to "relax" environmental regulations is that there is not one standard formulation for use in the United States. There are 18 different formulations required in the US. So most refineries are really limited in not only the types of oil they can refine but the types of gas they can refine that oil into. What the EPA as done is to waive those special requirements. So the minimum standards are met not just the specialized ones. And the absurdity of it is that the overall impact environmentally is almost the same between these formulations, its just that some states and regions think that restricting certain pollutants are more important than others. California's formulas being the only real stand out. In reality it allows gas from other portions of the country to be utilized nationwide. Its not a big impact.

The reality is that it should have happened years ago that there was one standard for the country.

If I was to tell you what I think about oil prices, I'd be it giving away trade secrets. People pay good money for that info.

It really depends on what you consider cheap..... $20 a barrel, no it will never be that cheap again. $50 a barrel possible however unlikely. Start getting above $55, then all of a sudden we are getting to numbers that make sense.

Oil is overpriced right now. Everyone knows it but it still trades too high any way. Its like the housing market or the stock market before the tech bubble. A correction needs to happen. There is too much emotion in the current price (Iraq, Islamic extremists, Chavez talking like Fidel jr. and now Katrina). OPEC knows it and are freaking. If they were to really have their way it wouldn't go above $40. That number is where it doesn't make sense for production to happen elsewhere or alternatives to be explored. Above that number it all of a sudden becomes cost effective to get oil places that makes demand for their oil to go down. Things like oil shale become economical. RD/Shell is doing some pretty cool things in Colorado in that regards, that are sidestepping many of the previous issues with it. And there is more oil shale than you can shake a stick at and at $60 a barrel money can be made.

One of the problems is the last time everyone freaked in the 70's about oil prices and peak oil, lots of investors got horribly burned in the 80's on their investments into these alternate oil technologies. And with this weird emotionally driven price of oil, smart investors (read the ones with big money) are leery to make those investments until things settle.
 

Changleen

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Jan 9, 2004
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rooftest said:
Okay - how many of the people giving Bush crap for using these reserves are the same people who were joining Kerry a year ago asking him to do it just to lower prices? :think:
Uh, I can't remember anyone asking for that at all...
 

Changleen

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Jan 9, 2004
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DRB said:
If they were to really have their way it wouldn't go above $40. That number is where it doesn't make sense for production to happen elsewhere or alternatives to be explored. Above that number it all of a sudden becomes cost effective to get oil places that makes demand for their oil to go down. Things like oil shale become economical. RD/Shell is doing some pretty cool things in Colorado in that regards, that are sidestepping many of the previous issues with it. And there is more oil shale than you can shake a stick at and at $60 a barrel money can be made.
Very interesting, thanks.
 

Changleen

Paranoid Member
Jan 9, 2004
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DRB said:
No the reason to "relax" environmental regulations is that there is not one standard formulation for use in the United States. There are 18 different formulations required in the US. So most refineries are really limited in not only the types of oil they can refine but the types of gas they can refine that oil into. What the EPA as done is to waive those special requirements. So the minimum standards are met not just the specialized ones. And the absurdity of it is that the overall impact environmentally is almost the same between these formulations, its just that some states and regions think that restricting certain pollutants are more important than others. California's formulas being the only real stand out. In reality it allows gas from other portions of the country to be utilized nationwide. Its not a big impact.
OK I know a bit about cracking hydrocarbons, I'm a Materials Engineer. Explain to me a bit more about these EPA Requirements in Cali? What exactly do they detail? Also how do the environmental requirements vary from one process to another? Most articles I've read paint this 'relaxation' as an exclusivley bad thing for the environment. As you'll have noticed, I pretty much have the environment as a top priority 'not to be ****ed with until we can be responsible about it'.

If I was to tell you what I think about oil prices, I'd be it giving away trade secrets. People pay good money for that info.
C'mon, it's the :monkey: !
 

DRB

unemployed bum
Oct 24, 2002
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Changleen said:
OK I know a bit about cracking hydrocarbons, I'm a Materials Engineer. Explain to me a bit more about these EPA Requirements in Cali? What exactly do they detail? Also how do the environmental requirements vary from one process to another? Most articles I've read paint this 'relaxation' as an exclusivley bad thing for the environment. As you'll have noticed, I pretty much have the environment as a top priority 'not to be ****ed with until we can be responsible about it'.
You really gotta be kidding. There is no way to explain it simply. Two shelves one wall of my office are collapsing under the weight of that info. And if you know about hydrocarbons then you can probably guess its not light reading. Let's see.... First its not so much the EPA as it is state and local environmental authorities that have these various requirements. The EPA maintains a standard but then other states "tweak" that standard due to local pollution levels. The EPA also makes requirements for specific regions as well with clean air standards are exceeded. Most have to do with the oxygentation of gas to allow for a more complete burn and less emissions. There are many methods in accomplishing that. MTBE being one of them but thats fallen out of spec for certain states being replaced with ethanol. The production of gas for ethanol blends leads to another set of issues. Others have to do with containments, with the big focus on sulfur.

And to even further complicate matters, not only can a region have one forumlation requirement it could have two. One for summer and one for winter due to violatitilty. These are slowing being phased out as more cars electronic systems can compensate for these changes.

Then you overlay this complex problem on top of the US refineries and it gets even more complex. Most refineries are set up to refine particular types of crude into particular types of gasoline, meant for particular additivies and changing that is inpractical or impossible. Then add environmental enforcement the whole thing turns into a practically indecipherable mess. In that many companies are hesitant to use gas meant for other areas eventhough it may be environmentally superior for fear of running afoul of local regulators.

Anyway the easing of restrictions is allowing gas formulated for other areas or times (winter formulations) to be sold into the South (edit:nationwide) now. Its not that he is rolling back the requirements to 1970 or even 2000. These are gas blends that are approved for use now.

It is unlikely that companies will actually take advantage of these restrictions as the movement of the gas is difficult and expensive if it doesn't follow its normal distribution paths. Its more of a consumer confidence thing to create an emotional plus in peoples' minds. Additionally the restrictions have only been eased until the 9/15.

Again if you are really interested there is enough reading to crush a blue whale.

Changleen said:
C'mon, it's the :monkey: !
Not even for the :monkey:. ;)
 

narlus

Eastcoast Softcore
Staff member
Nov 7, 2001
24,658
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behind the viewfinder
from my oil broker bro:

Gasoline, as has been alluded to in the prior posts, has different regional specifications. Excluding California and CARB (California Air Resources Board) gasoline, product can be broken down into what is known as in the "trade" as summer grade and winter grade. The difference between the two is the degree of RVP or vapor pressure---as a chemical engineer, you know the definition and context to which it applies. and oxygenates. The "poster" is correct in saying the EPA's action has nullified various state mandates, allowing product to be marketed and consumed freely. that being said, you'll probably find it difficult to sell northeast winter grade into Sacramento. The original poster who decried the willing disregard for the planet sounds like a Unocal shareholder--they hold the patent for CARB gasoline.

The waiver also allows heating oil to be blending into the diesel fuel if supply constraints warrant. Also, and most notable, though absent from view of most, was the indefinite waiver of the Jones Act, which prohibited foreign flag vessels from moving US origin product between US ports.

Oil as been cheap throughout our lifetime---be thankful for it. Oh, and oil shale is profitable over 60$/bbl---they just have not found a way to increase production capacity. When and if they do, you'll have some lovely pipelines through the Canadian wilderness! So why the f&^% not drill in Alaska in the meantime????
 

DRB

unemployed bum
Oct 24, 2002
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narlus said:
from my oil broker bro:
Canadian wilderness? The vast majority of known oil shale is under the continental US specifically Utah, Wyoming and Colorado in an area called the Green River formation specifially the Piceance basin. He might be thinking about tar sands which are common in Canada (Alberta).
 

ohio

The Fresno Kid
Nov 26, 2001
6,649
23
SF, CA
rooftest said:
C'mon - be honest.
honestly? I support using the reserves right now (edit: and didn't support the use of them last year... nor do I remember Kerry having much to do with that). I just think your statement was asinine.
 

rooftest

Monkey
Jul 10, 2005
611
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OC, CA
ohio said:
honestly? I support using the reserves right now (edit: and didn't support the use of them last year... nor do I remember Kerry having much to do with that). I just think your statement was asinine.
How could you not support them last year if you don't remember it coming up as an issue? If you're gonna use the "Ronald Reagan defense," you've gotta be committed!

Pulled this off of Wikipedia,

BP Gas station in Atlanta, price gouging at its finest.
Georgia's actually not gouging - the hurricane's knocked out the 2 pipelines that feed gasoline into Georgia, so they've gotta truck everything in - costs everyone (especially the gas station owner) more.
 

DRB

unemployed bum
Oct 24, 2002
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rooftest said:
How could you not support them last year if you don't remember it coming up as an issue? If you're gonna use the "Ronald Reagan defense," you've gotta be committed!

Georgia's actually not gouging - the hurricane's knocked out the 2 pipelines that feed gasoline into Georgia, so they've gotta truck everything in - costs everyone (especially the gas station owner) more.
Not gouging... come on now. Those kinds of price increases in a day that diverged from gas futures to the extent they did. $5.87 a gallon when in Charlotte the price was $3.29. Both cities served from the same pipelines with roughly the same terminal capacity per capita, less state tax..... don't be silly.
 

ohio

The Fresno Kid
Nov 26, 2001
6,649
23
SF, CA
rooftest said:
How could you not support them last year if you don't remember it coming up as an issue? If you're gonna use the "Ronald Reagan defense," you've gotta be committed!

Georgia's actually not gouging - the hurricane's knocked out the 2 pipelines that feed gasoline into Georgia, so they've gotta truck everything in - costs everyone (especially the gas station owner) more.
Three things:
1. I didn't say I didn't remember it coming up as an issue. I said I didn't remember it being Kerry's issue. I also said I was opposed to it.
2. You didn't address the content of my post, which was: your post is asinine; it makes assumption upon assumption, has almost zero relevance to the topic, and compares two completely different situations. The only commonality are the two words "oil reserves." When you feel like it, go ahead and make a real argument against those who are currently opposed to the release of oil (which, again, I'm not).

3. What does price gouging in Georgia have to do with my comment? Have you lost track of which arguments your losing and to whom?
 

BuddhaRoadkill

I suck at Tool
Feb 15, 2004
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Chintimini Bog
kinghami3 said:
As for gas prices, we Americans need to thank God that we don't live in the rest of the world where gas is 2-4 times as much. Imagine paying £4 a gallon.
I did some research on this once and found the prices to be misleading. Most countries pay fairly similar prices per barrel, it's the taxes imposed on petrol that account for the price variation. Interesting, no?
 

DRB

unemployed bum
Oct 24, 2002
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ohio said:
Three things:
1. I didn't say I didn't remember it coming up as an issue. I said I didn't remember it being Kerry's issue. I also said I was opposed to it.
2. You didn't address the content of my post, which was: your post is asinine; it makes assumption upon assumption, has almost zero relevance to the topic, and compares two completely different situations. The only commonality are the two words "oil reserves." When you feel like it, go ahead and make a real argument against those who are currently opposed to the release of oil (which, again, I'm not).

3. What does price gouging in Georgia have to do with my comment? Have you lost track of which arguments your losing and to whom?
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