Can Obama be relected with $5+ gasoline?
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Knoxville-Horn
1,000+ Posts
Let's not forget the 2 billion loaned to Brazil so they can drill off their own shores. He followed this with a promise that the U.S. would be (one of) Brazil's biggest oil exporting clients.
Obama seems to be really selective as to when to act and what to do when it comes to energy. Apparently, if an alternate energy company supports his campaign, they get tons of taxpayer money regardless of the viability of said company's business model.
If a socialist country wants to drill off its own coast and destroy its own environment with - what I presume to be - far less environmental restrictions that the US and Canada currently have, then that's fine. Hell, we'll even pitch in.
If a country, right next door, wants to produce its own oil, help the US draw down its reliance upon oil in the M.E. AND create jobs at home, it's a no go.
Obama seems to be really selective as to when to act and what to do when it comes to energy. Apparently, if an alternate energy company supports his campaign, they get tons of taxpayer money regardless of the viability of said company's business model.
If a socialist country wants to drill off its own coast and destroy its own environment with - what I presume to be - far less environmental restrictions that the US and Canada currently have, then that's fine. Hell, we'll even pitch in.
If a country, right next door, wants to produce its own oil, help the US draw down its reliance upon oil in the M.E. AND create jobs at home, it's a no go.
H
Hu_Fan
Guest
I can live with any domestic issues including high energy prices as long as Obama holds steady to his policies in the Middle East. I'm much more concerned about longterm relations in the MIddle East with all the counties there. I think that will assist long-term stability in energy costs, because it will be based on a more just foreign policy that builds bridges instead of burning bridges. Lessen the intervention and encroachment, get along with all countries and regimes and show that the West is not trying to ram anything down anyone's throat, but is interested in good relations and fair trade with all (as I believe Thomas Jefferson would put it).
ProdigalHorn
10,000+ Posts
Listening to an API exec skewering the Obama talking points.
New drilling permits: He has dramatically slowed the process for issuing permits, and while he has certainly approved some, he has also slow-walked many more. He has stepped away from his discussions earlier on expanding - at this point, 85 percent of all federal lands are off limits to exploration, including the gulf. While other countries are exploring more and getting funding from us to do it, US companies are limited to the same areas in the gulf where they've been for years. He has increased the areas of offshore areas that are off limits.
Obama has bragged about the growth in production, but all the growth has been from drilling on private lands. Activity on federal land has dropped. The increase has been through development in technology that has allowed us to reach new reserves, new areas that we couldn't tap before.
She also made a point about his claims of having only 2 percent of the world's reserves, pointing out that there's a difference between the reserves he mentions and the resources that we have - much of which was not accessible until only in recent years due to technology improvements.
New drilling permits: He has dramatically slowed the process for issuing permits, and while he has certainly approved some, he has also slow-walked many more. He has stepped away from his discussions earlier on expanding - at this point, 85 percent of all federal lands are off limits to exploration, including the gulf. While other countries are exploring more and getting funding from us to do it, US companies are limited to the same areas in the gulf where they've been for years. He has increased the areas of offshore areas that are off limits.
Obama has bragged about the growth in production, but all the growth has been from drilling on private lands. Activity on federal land has dropped. The increase has been through development in technology that has allowed us to reach new reserves, new areas that we couldn't tap before.
She also made a point about his claims of having only 2 percent of the world's reserves, pointing out that there's a difference between the reserves he mentions and the resources that we have - much of which was not accessible until only in recent years due to technology improvements.
"This is incorrect. There is very little "supply and demand" going into the equation. We're currently producing more oil than at any time in the past 10 years and there are four times as many rigs as there were on the day Obama took office while, simultaneously, demand is way down.
What's driving oil prices is speculation."
This is not true. Oil prices are not being driven by speculation. We import over 9 million barrels of oil a day to keep the USA running. We produce approximately 5.7 MMBPD. Due to the current Iranian situation, Iran indicated they are not selling crude to several EU countries. That oil has to come from somewhere else, as Iran produces about 3.45 MMBPD of oil, retains approximately 1MMBPD. The majority of the exports are sold to Japan, China and India. The void for oil that would normally be sold to EU countries has to come from somewhere else. Saudi and the Strategic Petro. Reserve have not been able to deliver as anticipated, as demonstrated from the Libyan crises. That is what is causing rising oil prices. That and a drop in the value of the USD relative to other currencies since the start of 2011 is adding to the higher pricing in oil. It is a matter of supply and demand.
Rising gasoline prices are due to several factors including:
1.Geopolitical risk of supply disruption
2.Declining gasoline supplies
3.Refinery profit margins
4.Growing global supply/demand imbalances
"According to the Energy Information Administration, the U.S. currently produces 5.7 million barrels of crude oil per day, imports 9 million barrels of crude oil per day, and exports 50,000 barrels per day (less than 1% of our crude oil production). The fact that we import 9 million barrels of oil per day demonstrates that we do not have "plenty of oil and gas in the U.S.A." Where does the less than 1% of crude that is exported go? To Canada. And by the way, we import 2.3 million barrels of oil per day from Canada. But why do we export any oil at all? Oil that is exported to Canada is most likely produced in fields that have easier access to Canadian refineries than to U.S. refineries. Clearly, since we import over 50 times as much oil from Canada as we export to them, we aren't doing it because they need the oil worse than the U.S. does.
Now that we have cleared that up, let's examine O'Reilly's proposal:
O'Reilly: However, if the Obama administration wanted to, it could ask Congress to raise export taxes on the oil companies to encourage them to sell their products here. Think about it. The oil companies are regulated by the federal government. They can't drill on land nor in American waters without permission from the feds. Many Republicans want to drill baby drill but what's the point if all the oil goes to China? Increased production obviously doesn't mean lower prices for us.
Here is the reason his proposal would have zero impact on gas prices, and would in fact accelerate the closure of U.S. refineries. O'Reilly believes that U.S. oil companies are drilling for oil, producing gasoline, and shipping that overseas (or simply shipping the crude overseas). As shown above, net imports of crude oil are still 9 million barrels per day -- a number that has not changed much in the past few years. It is the finished products that are being exported -- not crude oil -- and these finished products are being made from imported oil. We have oil refiners like Valero -- who don't actually produce oil at all, but import oil from countries like Mexico and Brazil, refine it, and ship gasoline back to them. Between just Mexico and Brazil (and there are others), we are importing 1.5 million barrels of oil per day, and sending them back about a million barrels a day of finished products. (Some of the oil we get from them does stay in the U.S. as finished products). If you subtract our finished product exports from our oil imports, you still end up with net imports of crude oil and crude products of 8 million barrels per day. Hence, the U.S. still operates at a significant import deficit, which contradicts claims that we have plenty of oil and gas in the U.S.
So how might O'Reilly's proposal play out? It is easy enough to see what would happen. If you put a high export tariff on fuel and made it unattractive for U.S. oil companies to export their products, they simply would not import as much oil. So as gasoline demand continues to fall in the U.S., instead of continuing to import 9 million barrels per day and export 1 million barrels of finished products, we might only import 8 million barrels of oil per day and then export zero. It would not impact the balance of fuel supplies at all within the U.S., but it would lead to faster closures of U.S. refineries as their export markets dried up. So you would see the export problem "solved", and the consequences would be no change in U.S. gasoline prices (Brazil and Mexico would then source their gasoline from someone else who benefitted from the refining jobs) and there would be further loss of refining jobs in the U.S."
The Link
The Link
"The current spike according to Daniel Yergin of Cambridge Energy Research Associates is due to the West’s current confrontation with Iran and sanctions over that country’s nuclear program. In a recent CNBC interview, Yergin said “Right now the market focus is on a tightening of supply, because the whole direction of these policies is to do one thing, which is to reduce Iran’s ability to export oil.”
According to a recent IEA report, Iran currently produces about 3.45 mbd (million of barrels per day). It also consumes over 1 mbd internally, leaving only 2.6 left for export. Most of that export is to China, India, and Japan, which make up 42.5% of Iran’s exports globally. Replacing 2.6 mbd will not be that easy. Last year the loss of Libyan oil exports of 1.6 mbd drove oil prices to post recession records before they subsided. There also can be no comfort in our reliance on two big cushions to stem price increases: Saudi Arabia and the US strategic petroleum reserve.
In a recent press conference designed to calm markets, Saudi assurances were less than reassuring. As it turns out, Saudi spare capacity is far less robust than the market thought. “Of the 12.5 m barrels per day declared capacity, 700,000 falls outside the widely agreed definition of spare capacity - it won’t be available for three months. And if the kingdom is currently producing 10 mbd, the immediate available capacity might be a paltry 1.5 mbd, far less than the safety valve needed to convince markets that prices won’t rise.”[1]
There are other problems with the second big cushion: The U.S.’s Strategic Petroleum Reserve. The claim of being able to draw out 4.4 mbd is proving also to be elusive. During the Libyan crisis the U.S. was only able to release 500,000 bd (barrels per day) due to logistical changes in the way oil flows throughout the system. The latest data show the ability to withdraw less than 800,000 bd. Logistics require seaborne exports versus the original plan to pull inventory through a pipeline system. Port congestion impedes tanker loadings at SPR terminals limiting the withdrawal rate to one seventh of the planned rate into pipelines. The latest plan to bring Canadian oil to the Gulf Coast, the Keystone Pipeline was nixed by President Obama. Thus, a contributing factor for why prices are rising is that the markets have little faith that either Saudi Arabia or the SPR can speedily make up the difference in the loss of Iranian exports."
The U.S. has lost 700,000 barrels of refining capacity over the last three months due to the shutdown, or retiring of outmoded, and unprofitable refineries in the eastern U.S. and the Caribbean. This represents almost 5 percent of U.S. gasoline production which has gone offline. Sunoco, Conoco-Philips, and Hess Oil have all shuttered refineries which were uneconomic to retrofit to meet the requirements for removing sulfur from high sulfur crude.
Don’t blame the evil oil refiners. The refining business has become unprofitable. According to analyst Thomas Adolff at Credit Suisse, 31 uneconomic refineries have been shut down in recent years, with two dozen more on the chopping block. According to Adolff refiners earn an average profit of $11 for every barrel they process.[3] That equates to $0.26 a gallon, about the average profit over the past decade. Profit margins for big oil have averaged between 7-10 percent over the last decade. By comparison state and federal taxes average $0.39 per gallon. Now who is being greedy, the oil companies that do the work of refining oil or the governments that collect a tax?
Source: BP Statistical Review of World Energy June 2011, pg. 17
It should also be noted that OECD industry oil stocks have fallen to 2.611 mb according to the IEA. They remain below the five year average for a sixth consecutive month. Forward demand cover fell by 0.7 days to 57.2 days. January build shows a shallower-than-normal build of only 11.4 mb in OECD industry stocks.[4]
A third factor causing a spike in gasoline prices is that it has become more profitable for refiners to sell their refined products in the global market. Because the bulk of world energy demand is coming from the emerging world, oil, natural gas, and refined products can be sold overseas at higher prices. Because of the U.S. energy advantage from fracking and horizontal drilling the U.S is now exporting gasoline. The Keystone Pipeline would have given the U.S. even a better advantage but that is a topic for another day. Suffice to say that many unprofitable refineries are currently being shut down. This is reducing our gasoline stocks. This may come as a major surprise to Bill O’Reilly, but in a capitalistic system the objective of a company is to earn a profit for its owners or shareholders. It is a simple choice, sell more oil domestically at a lower margin or at a loss, or earn a higher profit by selling your product overseas. Seems like a no brainer to me.
No oil company or refiner would ever risk investing billions toward a new refinery or in retrofitting an existing facility with the prospect of losing money. The energy industry is a capital intensive business requiring vast amounts of capital to run. An energy company must earn a required return on its capital or it goes out of business. The reason why so many refineries are being shut down or mothballed is because they are losing money. As pointed out earlier, refiners earn $0.26 per gallon of gasoline refined. The government collects $0.39 per gallon produced in taxes. You can decide for yourself who is being greedy the oil company or the government?
The final factor driving gasoline prices is a persistent problem we have faced for well over a decade. The supply of energy is struggling to keep pace with demand. While demand has fallen in OECD countries it has grown steadily in non-OECD regions. (Source: BP Energy Outlook 2030, pg. 10)
The Link
What's driving oil prices is speculation."
This is not true. Oil prices are not being driven by speculation. We import over 9 million barrels of oil a day to keep the USA running. We produce approximately 5.7 MMBPD. Due to the current Iranian situation, Iran indicated they are not selling crude to several EU countries. That oil has to come from somewhere else, as Iran produces about 3.45 MMBPD of oil, retains approximately 1MMBPD. The majority of the exports are sold to Japan, China and India. The void for oil that would normally be sold to EU countries has to come from somewhere else. Saudi and the Strategic Petro. Reserve have not been able to deliver as anticipated, as demonstrated from the Libyan crises. That is what is causing rising oil prices. That and a drop in the value of the USD relative to other currencies since the start of 2011 is adding to the higher pricing in oil. It is a matter of supply and demand.
Rising gasoline prices are due to several factors including:
1.Geopolitical risk of supply disruption
2.Declining gasoline supplies
3.Refinery profit margins
4.Growing global supply/demand imbalances
"According to the Energy Information Administration, the U.S. currently produces 5.7 million barrels of crude oil per day, imports 9 million barrels of crude oil per day, and exports 50,000 barrels per day (less than 1% of our crude oil production). The fact that we import 9 million barrels of oil per day demonstrates that we do not have "plenty of oil and gas in the U.S.A." Where does the less than 1% of crude that is exported go? To Canada. And by the way, we import 2.3 million barrels of oil per day from Canada. But why do we export any oil at all? Oil that is exported to Canada is most likely produced in fields that have easier access to Canadian refineries than to U.S. refineries. Clearly, since we import over 50 times as much oil from Canada as we export to them, we aren't doing it because they need the oil worse than the U.S. does.
Now that we have cleared that up, let's examine O'Reilly's proposal:
O'Reilly: However, if the Obama administration wanted to, it could ask Congress to raise export taxes on the oil companies to encourage them to sell their products here. Think about it. The oil companies are regulated by the federal government. They can't drill on land nor in American waters without permission from the feds. Many Republicans want to drill baby drill but what's the point if all the oil goes to China? Increased production obviously doesn't mean lower prices for us.
Here is the reason his proposal would have zero impact on gas prices, and would in fact accelerate the closure of U.S. refineries. O'Reilly believes that U.S. oil companies are drilling for oil, producing gasoline, and shipping that overseas (or simply shipping the crude overseas). As shown above, net imports of crude oil are still 9 million barrels per day -- a number that has not changed much in the past few years. It is the finished products that are being exported -- not crude oil -- and these finished products are being made from imported oil. We have oil refiners like Valero -- who don't actually produce oil at all, but import oil from countries like Mexico and Brazil, refine it, and ship gasoline back to them. Between just Mexico and Brazil (and there are others), we are importing 1.5 million barrels of oil per day, and sending them back about a million barrels a day of finished products. (Some of the oil we get from them does stay in the U.S. as finished products). If you subtract our finished product exports from our oil imports, you still end up with net imports of crude oil and crude products of 8 million barrels per day. Hence, the U.S. still operates at a significant import deficit, which contradicts claims that we have plenty of oil and gas in the U.S.
So how might O'Reilly's proposal play out? It is easy enough to see what would happen. If you put a high export tariff on fuel and made it unattractive for U.S. oil companies to export their products, they simply would not import as much oil. So as gasoline demand continues to fall in the U.S., instead of continuing to import 9 million barrels per day and export 1 million barrels of finished products, we might only import 8 million barrels of oil per day and then export zero. It would not impact the balance of fuel supplies at all within the U.S., but it would lead to faster closures of U.S. refineries as their export markets dried up. So you would see the export problem "solved", and the consequences would be no change in U.S. gasoline prices (Brazil and Mexico would then source their gasoline from someone else who benefitted from the refining jobs) and there would be further loss of refining jobs in the U.S."
The Link
The Link
"The current spike according to Daniel Yergin of Cambridge Energy Research Associates is due to the West’s current confrontation with Iran and sanctions over that country’s nuclear program. In a recent CNBC interview, Yergin said “Right now the market focus is on a tightening of supply, because the whole direction of these policies is to do one thing, which is to reduce Iran’s ability to export oil.”
According to a recent IEA report, Iran currently produces about 3.45 mbd (million of barrels per day). It also consumes over 1 mbd internally, leaving only 2.6 left for export. Most of that export is to China, India, and Japan, which make up 42.5% of Iran’s exports globally. Replacing 2.6 mbd will not be that easy. Last year the loss of Libyan oil exports of 1.6 mbd drove oil prices to post recession records before they subsided. There also can be no comfort in our reliance on two big cushions to stem price increases: Saudi Arabia and the US strategic petroleum reserve.
In a recent press conference designed to calm markets, Saudi assurances were less than reassuring. As it turns out, Saudi spare capacity is far less robust than the market thought. “Of the 12.5 m barrels per day declared capacity, 700,000 falls outside the widely agreed definition of spare capacity - it won’t be available for three months. And if the kingdom is currently producing 10 mbd, the immediate available capacity might be a paltry 1.5 mbd, far less than the safety valve needed to convince markets that prices won’t rise.”[1]
There are other problems with the second big cushion: The U.S.’s Strategic Petroleum Reserve. The claim of being able to draw out 4.4 mbd is proving also to be elusive. During the Libyan crisis the U.S. was only able to release 500,000 bd (barrels per day) due to logistical changes in the way oil flows throughout the system. The latest data show the ability to withdraw less than 800,000 bd. Logistics require seaborne exports versus the original plan to pull inventory through a pipeline system. Port congestion impedes tanker loadings at SPR terminals limiting the withdrawal rate to one seventh of the planned rate into pipelines. The latest plan to bring Canadian oil to the Gulf Coast, the Keystone Pipeline was nixed by President Obama. Thus, a contributing factor for why prices are rising is that the markets have little faith that either Saudi Arabia or the SPR can speedily make up the difference in the loss of Iranian exports."
The U.S. has lost 700,000 barrels of refining capacity over the last three months due to the shutdown, or retiring of outmoded, and unprofitable refineries in the eastern U.S. and the Caribbean. This represents almost 5 percent of U.S. gasoline production which has gone offline. Sunoco, Conoco-Philips, and Hess Oil have all shuttered refineries which were uneconomic to retrofit to meet the requirements for removing sulfur from high sulfur crude.
Don’t blame the evil oil refiners. The refining business has become unprofitable. According to analyst Thomas Adolff at Credit Suisse, 31 uneconomic refineries have been shut down in recent years, with two dozen more on the chopping block. According to Adolff refiners earn an average profit of $11 for every barrel they process.[3] That equates to $0.26 a gallon, about the average profit over the past decade. Profit margins for big oil have averaged between 7-10 percent over the last decade. By comparison state and federal taxes average $0.39 per gallon. Now who is being greedy, the oil companies that do the work of refining oil or the governments that collect a tax?
Source: BP Statistical Review of World Energy June 2011, pg. 17
It should also be noted that OECD industry oil stocks have fallen to 2.611 mb according to the IEA. They remain below the five year average for a sixth consecutive month. Forward demand cover fell by 0.7 days to 57.2 days. January build shows a shallower-than-normal build of only 11.4 mb in OECD industry stocks.[4]
A third factor causing a spike in gasoline prices is that it has become more profitable for refiners to sell their refined products in the global market. Because the bulk of world energy demand is coming from the emerging world, oil, natural gas, and refined products can be sold overseas at higher prices. Because of the U.S. energy advantage from fracking and horizontal drilling the U.S is now exporting gasoline. The Keystone Pipeline would have given the U.S. even a better advantage but that is a topic for another day. Suffice to say that many unprofitable refineries are currently being shut down. This is reducing our gasoline stocks. This may come as a major surprise to Bill O’Reilly, but in a capitalistic system the objective of a company is to earn a profit for its owners or shareholders. It is a simple choice, sell more oil domestically at a lower margin or at a loss, or earn a higher profit by selling your product overseas. Seems like a no brainer to me.
No oil company or refiner would ever risk investing billions toward a new refinery or in retrofitting an existing facility with the prospect of losing money. The energy industry is a capital intensive business requiring vast amounts of capital to run. An energy company must earn a required return on its capital or it goes out of business. The reason why so many refineries are being shut down or mothballed is because they are losing money. As pointed out earlier, refiners earn $0.26 per gallon of gasoline refined. The government collects $0.39 per gallon produced in taxes. You can decide for yourself who is being greedy the oil company or the government?
The final factor driving gasoline prices is a persistent problem we have faced for well over a decade. The supply of energy is struggling to keep pace with demand. While demand has fallen in OECD countries it has grown steadily in non-OECD regions. (Source: BP Energy Outlook 2030, pg. 10)
The Link
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