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Old 03-09-2012, 09:57 AM   #43
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Originally Posted by buckeyes View Post
If you increase supply, via the pipeline, prices will go done.[sic]
I don't think so. Here are some questions you need to ask:

1) What incentives do domestic producers have to force oil prices down?

Answer: None. Domestic producers benefit from high prices. Remember, oil produced here belongs to the companies who produce it. They sell it at the highest price the market will allow. Currently these prices are manipulated by oil cartels outside our jurisdiction.

2) Suppose we abandon our free-market ideals, and allow the government to require them to maximize production. Could they produce enough oil to overcome the cartels manipulation of the world market?

Answer: No. We cannot overcome the OPEC hand on the spigot. If we double our production, we are still only producing 1/3 of OPECs current output. They have a lot more production capacity than we will ever have.

3) Are we willing to allow the government seize domestic oil for exclusive domestic use in order to drive domestic prices down?

Answer: No. This is America, not Venezuela. That's not how we do things, nor is it how things SHOULD be done. This is a free-market capitalist system.

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Why would anyone block a pipeline that would reduce our dependance on Middle Eastern oil, it they didn't have ties to the Middle East? hmmm?
Conspiracy theories not withstanding, the pipeline will not reduce our dependance on Middle Eastern Oil. The only thing that can reduce our dependance on foreign oil is a reduction in our demand for that oil.
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Old 03-09-2012, 10:06 AM   #44
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Want to reduce the demand for oil?........here is the savior.......CNG! We have Natural Gas in great abundance, it's cleaner and cheaper than gas/diesel........and it's OUR's. Rook
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Old 03-09-2012, 10:06 AM   #45
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Conspiracy theories not withstanding, the pipeline will not reduce our dependance on Middle Eastern Oil. The only thing that can reduce our dependance on foreign oil is a reduction in our demand for that oil.
The actual sources of the crude oil imported by the United States can be found HERE (source - U.S. Government Department of Energy, Energy Information Agency). Unfortunately, tables don't import into vBulletin and maintain their original margins, so they're effectively unreadable if copied and pasted here.

If more oil can be imported from Canada, then less oil will have to come from other sources.


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Old 03-09-2012, 10:15 AM   #46
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You have it 100% correct Rusty. We are being forced into an unwanted energy source.
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Old 03-09-2012, 10:19 AM   #47
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Interesting that news sources would have us believe we get most of our crude oil from Saudi Arabia. Canada exports appx 2 to1 to the US compared to SA.
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Old 03-09-2012, 10:34 AM   #48
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The actual sources of the crude oil imported by the United States can be found HERE (source - U.S. Government Department of Energy, Energy Information Agency). Unfortunately, tables don't import into vBulletin and maintain their original margins, so they're effectively unreadable if copied and pasted here.

If more oil can be imported from Canada, then less oil will have to come from other sources.


Rusty
Maybe so. But according to those charts, the demand for foreign oil is on the steady increase. I am apparently unclear about the purpose of the pipeline. I have not heard that it will allow more oil to be imported from Canada for OUR use, or to specifically reduce our imports from the middle east. I was under the impression that it's purpose is to get more Canadian oil to our refineries for Canada to export to the world market. Which I have no problem with, but doesn't help us with regards to foreign oil dependance.

Regardless, in a blatent attempt to salvage my stance, foreign oil is foreign oil. Only a reduction in our demand will reduce our dependance. Granted, most Canadians don't want to kill us, and so increased dependance on THEM for energy is a step in the right direction, but no matter what we do, the price is the price. Only isolation from the world market would allow us to control prices, and that means abandoning our ideals.
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Old 03-09-2012, 10:41 AM   #49
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Want to reduce the demand for oil?........here is the savior.......CNG! We have Natural Gas in great abundance, it's cleaner and cheaper than gas/diesel........and it's OUR's. Rook
I have to agree. I don't know that 'savior' is the word I'd use, but it's definately a step in the right direction. I imagine that once a large-scale conversion to CNG was implemented, it would track along-side of gas and diesel, from a price perspective. We would still be subject to world-market demand and supply, and eventually all the other things that plague us in the current oil economy.
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Old 03-09-2012, 11:12 AM   #50
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Letters to WSJ

Two letters to the WSJ in response to their editorial "Boone-Doggle" Rook

Government Should Encourage Natural Gas for Trucks


Very few things in life (or in Washington, D.C.) are black and white. One of them is the need to reduce our dependence on OPEC oil and replace it with domestic natural gas. Your editorial "Boone-Doggle" (Feb. 28) fails to understand the need to do that.
We have well over a 100-year supply of natural gas using tested, safe and easily available technology. Natural gas is the most widely distributed natural resource (with the exception of water) in the U.S. With gasoline prices racing toward $4 per gallon at the pump and the economic hardship that will cause to millions of Americans, we should be looking for every conceivable opportunity to reduce demand and thereby reduce the price.
The Nat Gas Act—which the editorial points out has bipartisan support in the House and Senate—provides tax incentives for owners to transition their fleets from largely imported gasoline or diesel to domestic natural gas.
The editorial neglects a crucial element in S. 1863: It's fully paid for—and by the very organizations that will benefit through a per-gallon surcharge. Think of it as a toll road. The government invests in building the road and people who benefit, the drivers who travel on that road, pay for it. So the Nat Gas Act will not cost the taxpayers a dime.
We are spending $1 billion per day to pay for imported oil. Much of that is for oil we buy from Canada and Mexico, which is important for the economy of the Americas. But far too much of it comes from countries that are unfriendly, unstable or both.
There are about eight million heavy trucks in the U.S. If we moved all of them from burning diesel to running on natural gas tomorrow, we would reduce imports by three million barrels a day. At $105 per barrel, that's $315 million per day we can recycle into the U.S. economy rather than sending it to Venezuela and Saudi Arabia.
That won't happen in a day, but in the early 1970s the trucking industry realized that diesel was cheaper than gasoline, and the entire industry transitioned in about six years. We can do that again from diesel to natural gas. With the Nat Gas Act we can kick-start the process and see real savings in a matter of months.
American taxpayers are paying a huge premium for oil from OPEC, especially from the Middle East. There are 12 aircraft carriers in the world and the U.S. Navy has 11 of them. The Chinese have one. Five U.S. carriers are in or near the Middle East with a mission to protect the oil. At about $4.5 billion a copy, there is $22.5 billion worth of hardware afloat in the Middle East to protect a resource we can reduce by 60%. And that number doesn't include the aircraft, operating costs and personnel.
Utilizing our domestic natural gas resources will help insulate us from the kind of price spikes we are seeing now. Tribal warfare in Nigeria or saber-rattling in Iran would have far less impact on our economy if we were smart and used our own resources. We already have the cheapest natural gas in the world and for that matter the cheapest oil, but American drivers are paying the costs of Middle Eastern royal families buying off their citizens to keep themselves in power.
There are only two ways to move an 18-wheeler: imported diesel or domestic natural gas. Ethanol won't do it, neither will batteries. Either we move quickly to get on our own resources or we are for the status quo: spending America's money to buy oil from countries that don't like us at prices they control.
Domestic natural gas is cleaner than diesel or gasoline. It is cheaper. It is abundant. And it is ours. The Nat Gas Act is an excellent investment in America's security and economic growth.
T. Boone Pickens
Dallas


I agree that the cost of natural gas is already so low that it does not need a 50-cent-per-gallon tax credit. That is why our bill has dropped the tax credit. We do provide a credit for the purchase of heavy trucks and fleet vehicles that use natural gas, as they are significantly more expensive than vehicles that run on traditional fuel. The reason for this is tied to the overarching goal of the bill which is to jump-start the purchase of natural-gas commercial vehicles and spur the development of infrastructure to accommodate them.
An important detail that is overlooked in the editorial is that this is entirely paid for by the very industry that is benefitting from it in the form of temporary user fees on the fuel. Yes, the ones who benefit are the ones who pay for it, not the American taxpayers.
With traditional fuel prices on the rise and approaching $4 per gallon, the president blocking construction of projects like the Keystone XL pipeline and dangerous unrest in the Middle East, it makes sense to do what we can to transition these large vehicles to a cheaper, more stable, American-made energy source. This bill represents something we can do right now to improve our energy security and decrease our dependence on foreign oil.
Sen. Richard Burr (R., N.C.)
Washington
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Old 03-09-2012, 11:12 AM   #51
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Fuel for the fire. The price of gas here in Doha, Qatar is $0.89 a gallon and has not fluctuated. Not a "European price" and not "$12 a gallon". I often see written and hear people say, "we could be paying the high prices like they do overseas". Energy cost in the middle east are "CHEAP". It has been my experience that most "overseas" fuel cost are dirt cheap.
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Old 03-09-2012, 11:18 AM   #52
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Maybe so. But according to those charts, the demand for foreign oil is on the steady increase. I am apparently unclear about the purpose of the pipeline.
Apparently a lot of people are. A number of Gulf Coast refineries are set up to process heavy, sour crude oils such as that coming from Venezuela's Orinoco Tar Sands. This crude is very similar to the Tar Sands oil that would travel to the Gulf Coast via the Keystone XL pipeline.

In simple terms, one sends the oil to the refineries that can handle it, and very few are set up to handle the volume and type of crude that would be coming from the Canadian Tar Sands. You can't send it to a refinery that is set up to process light, sweet crude oils - they can't do anything with it.

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Old 03-09-2012, 11:21 AM   #53
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Fuel for the fire. The price of gas here in Doha, Qatar is $0.89 a gallon and has not fluctuated. Not a "European price" and not "$12 a gallon". I often see written and hear people say, "we could be paying the high prices like they do overseas". Energy cost in the middle east are "CHEAP". It has been my experience that most "overseas" fuel cost are dirt cheap.
Most of those artificially low fuel costs are due to government subsidies that are in place to keep a woefully underpaid population quiet and at least somewhat happy. Think Venezuela - if Chavez removed the price subsidies, the populace would take up the torches and pitchforks. He would have a revolution on his hands.

A government-controlled oil company such as PdVSA (Petroleos de Venezuela, S.A.) will sell their refined products locally for any price the government dictates; those prices have nothing to do with world market prices.

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Old 03-09-2012, 12:15 PM   #54
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Apparently a lot of people are. A number of Gulf Coast refineries are set up to process heavy, sour crude oils such as that coming from Venezuela's Orinoco Tar Sands. This crude is very similar to the Tar Sands oil that would travel to the Gulf Coast via the Keystone XL pipeline.

In simple terms, one sends the oil to the refineries that can handle it, and very few are set up to handle the volume and type of crude that would be coming from the Canadian Tar Sands. You can't send it to a refinery that is set up to process light, sweet crude oils - they can't do anything with it.

Rusty
And so, I guess my question is: Will the completion of the pipeline cause U.S. imports of middle eastern oil to decline or disappear? Or does it just give Canadians an avenue to refine and export their goods?

In the context of the thread topic, none of this affects prices at the pump anyway. To me, prices at the pump are secondary to energy independence. I'd happily agree to $5/gallon if it came from friendly sources that we didn't have to send our kids to be killed to secure.
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Old 03-09-2012, 12:16 PM   #55
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1) What incentives do domestic producers have to force oil prices down?

Answer: None. Domestic producers benefit from high prices. Remember, oil produced here belongs to the companies who produce it. They sell it at the highest price the market will allow. Currently these prices are manipulated by oil cartels outside our jurisdiction.



As you can see from the chart above, the oil industry operates on a "boom and bust" cycle. If prices become excessive, they force world economies into recession at which point demand drops and prices drop precipitously!! Calendar year 2008 is a prime example - crude oil fell from a high of $130.28/bbl (it actually broke $150.00/bbl on the daily spot markets) to a little over $30.00/bbl within months. No producer or oil company or oil company supplier benefits from this price cyclicity (although an astute energy trader certainly could!!) The major oil company capital project planners I work with state repeatedly that they would much rather see stable oil prices of $60.00/bbl to $70.00/bbl than these wild gyrations in prices that make major capital investments into expensive projects that may have to be shut down extremely risky.

If you listen to OPEC, the more rational members recognize this as well. Saudi Arabia has historically been a moderating force with enough reserves to increase production when other OPEC members get greedy and try to run up world prices by withholding production or pushing for reduced production quotas. The Saudis are looking for long term oil price stability, not the wild spikes that we see on the graph above.

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Old 03-09-2012, 02:40 PM   #56
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And so, I guess my question is: Will the completion of the pipeline cause U.S. imports of middle eastern oil to decline or disappear? Or does it just give Canadians an avenue to refine and export their goods?

In the context of the thread topic, none of this affects prices at the pump anyway. To me, prices at the pump are secondary to energy independence. I'd happily agree to $5/gallon if it came from friendly sources that we didn't have to send our kids to be killed to secure.
I'll attempt to address your main questions in the order you presented them:

Question: Will the completion of the pipeline cause U.S. imports of middle eastern oil to decline or disappear?

Answer: Decline - yes, most likely. Disappear - no.

Question: Or does it just give Canadians an avenue to refine and export their goods?

Answer: Once the oil hits the refinery fence, the Canadians most likely won't own it. Typically, pipeline companies are paid $x/bbl to transport the crude oil, then the refiners buy it at the refinery fence as feedstock.

Let's talk about refined product imports and exports. Europe has swung heavily to diesel fuel for its passenger car use. Some sources state that >50% of the new passenger cars sold in Europe are diesels, while obviously that percentage in the U.S. is in the single digits. Therefore, Europe has a shortage of diesel fuel, while the U.S. has a shortage of gasoline. Since the "splits" from each barrel of crude oil are relatively fixed, refiners may produce an excess of either diesel fuel or gasoline. Today, we send tankers from the U.S. Gulf Coast to Europe loaded with diesel fuel, and they return loaded with gasoline from the European refiners who don't have a local market demand for their product. This is aside from the emerging economies such as China and India where demand for diesel fuel to power construction equipment, trucks, locomotives and power plants has skyrocketed.

Question: To me, prices at the pump are secondary to energy independence. I'd happily agree to $5/gallon if it came from friendly sources that we didn't have to send our kids to be killed to secure.

Answer: The more oil we source from friendly countries such as Canada and Mexico (and the latter has declining production problems caused by mismanagement of their reserves and lack of exploration as well as secondary and tertiary enhanced production technology by the state-owned oil company, Pemex - Petroleos Mexicanos), the less we have to rely on politically volatile Middle Eastern sources.

Rusty
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