The Oil Drum: Europe

In the last year, the price of gasoline has risen by 38%. The prices of other fuels have risen much more--diesel has risen by 64% and jet fuel has risen by 91%, and the price of West Texas Intermediate (WTI) crude oil has risen by 100%. Why aren't gasoline prices rising more than they are? Some will recognize this as the "crack spread" issue.

I see several possible explanations, including a long term shift in prices valuing diesel (or "distillate") more highly than gasoline; political pressure to keep gasoline prices low; and integrated oil companies not really needing a high gasoline pricing margin to keep overall profits at an acceptable level. I do not see ethanol as playing a significant role at this time. Regardless of the explanation, refineries and gasoline stations that are not part of oil conglomerates may find this a difficult storm to weather.

Figure 1 shows that the differential between the retail price of gasoline and the per-gallon cost of crude oil has recently dropped dramatically, leaving a much smaller margin to cover expenses and profit. It is this shift that I am discussing in this article.

Figure 1. Average gasoline price minus WTI crude price; average diesel price minus WTI crude price; and average jet fuel price minus WTI crude price. (Averages are for full years, except 2008 which is for 6 months; crude prices have been converted to a per gallon basis.)

http://www.foxnews.com/urgent_queue/index.html#a54ef44,2008-06-18 (hat tip: Drudge front page)

My impression of that report was that this was a group of House Democrats standing at a podium talking about the days' events in the House. For Rep. Hinchey to say what he did when he did could be taken as representing the opinions of the group of speakers, which may have been representing the Democratic Party at the time--and he was not corrected by the others speaking. We would need to know more in what capacity Rep. Hinchey was speaking, etc., etc.

Rep. Maurice Hinchey (D-NY), member of the House Appropriations Committee and one of the most-ardent opponents of off-shore drilling (at 1115 said): "We (the government) should own the refineries. Then we can control how much gets out into the market."

{...} House Democrats responded to President's Bush's call for Congress to lift the moratorium on offshore drilling. This was at an on-camera press conference fed back live.

{...} Among other things, the Democrats called for the government to own refineries so it could better control the flow of the oil supply.

Make sure to check out our Grangemouth/Forties poll--use this thread as the comment thread for it.

Latest:
• Grangemouth oil refinery is shutdown.
• The Forties Pipeline is shutdown
• Over 60 North Sea oil and gas fields are shutdown.
• About 700,000 bpd oil production lost costing £40 million / day @ $110 per barrel
• About 70 million cubic meters natural gas production lost per day costing £42 million / day @ 60 p / therm
• BP, Shell, Exxon-Mobil, BG Group, Conoco-Philips, Chevron-Texaco, Total, Marathon, Tallisman, Nexen, Venture, Dana and many more companies affected
• Global energy prices rise
• Rural Scottish economy hit hardest by fuel shortages
• Risk level is raised throughout the system
• Worker's grievance is unresolved
• Population calm, politicians panic, fuel rationing looms?

[update 5 by Euan, 23 April]

Latest from the BBC (Wednesday evening)

BBC Scotland understands operators Ineos and the Unite union have failed to agree a halt to an impending strike by workers at the Grangemouth plant.

It therefore looks like Ineos will have to proceed with closing the plant which they say will take 4 weeks to restart. We'll be back with a fresh thread in a couple of hours.

[update 4 by Euan, 23 April]

Latest from the BBC (Wednesday pm) with a fine video:

As the hours tick by the likelihood of widespread disruption looks increasingly likely

In this article, I provide Peak Oil science curriculum suitable for introductory college science classes, advanced high school classes, and adult seminars. The material requires a little background in high school chemistry, but otherwise does not have any pre-requisites. There is sufficient material for a two to four session unit on peak oil.

The written material is divided into Part 1: The Science of Oil and Peak Oil (in this article) and Part 2: Oil as a Liquid Fuel and Expected Peak Oil Impacts (found at this link). There are also discussion questions at the end of Parts 1 and 2, and numerous links to other references. A PDF version which contains both Part 1 and Part 2 can be found at this link.

Last week, I posted an earlier version of proposed peak oil curriculum. Many of the comments related to things I had left out or hadn't explained adequately. After considering the comments, I decided that folks were right, and added some more material. Since the post was already fairly long, I broke it into two parts. I also reorganized sections to make a more logical flow. The earlier version can be found at this link.

The current version incorporates changes based both on comments to this post, and on comments to the previous post. On a rapidly changing topic such as peak oil, there is no real consensus on some issues. I have tried to pick a reasonable interpretation. If readers have questions or comments, I can be reached at gailtverberg (at) comcast (dot) net.

Please Note: Based on feedback from readers, a revised version of this post has been prepared in two separate posts. See Part 1 and Part 2.

A university near where I live plans to add a short unit on "Petroleum and Peak Oil" to their Science 1101 course for freshman who are not science majors. They asked me to put together material for the unit - reading material, PowerPoint presentations, links to additional material, discussion questions, and suggested test questions. At this point, I am in the process of finalizing what will go into the reading material. I sent my contact a first draft, and he asked that I add sections on a number of other topics as well. This is my second draft, which includes the additional sections requested. I have not yet turned it in.

The focus is to a significant extent their choice. They wanted background information on a variety of petroleum-related topics, and not too much focus on precisely when peak oil would occur, or what dire results might happen. They recognize that corn ethanol is a very bad idea. The audience is expected to be 19 to 23 year olds, so the material needs to be suitable for this age group.

The university wants me to develop material others can use as well, so is willing to let me share what I develop with others. Thus, I don't see any problem with sharing this draft here. At this point, I can still make changes.

I would appreciate any input or comments TOD folks might have.

As you may have noticed President Bush commented this past week on his (and apparently their) doubts that Saudi Arabia could significantly increase crude oil production. While this comes as no great surprise to those of you that have been reading Stuart and Euan’s excellent articles, I thought I would try and summarize the situation as I see it, and expand a little beyond the short summary paragraphs that Leanan is providing, to give more of an overall picture.

To begin you should know that when the Kingdom of Saudi Arabia (KSA) talks about the size of their oilfields, they refer to the amount of oil that was there at the beginning, rather than that which is left. You can do this calculation for yourself, but I exemplified it with a small calculation on the amount of oil that originally existed in the Abqaiq field , by making some simple assumptions.

One of the things I really like about The Oil Drum is that I learn something new here almost every day. So, I thought I would return the favor by explaining in a bit more detail something you may not know.

Every year in late summer, you will start hearing references in the media about the conversion to winter gasoline, such as the following (originally in the Bradenton Herald, but the link is long dead):

Motorists can thank a mild hurricane season in the Atlantic for the lower gas prices, according to the American Automobile Association.

Other factors include the end of the summer driving season and a cheaper winter fuel mix.

Gas stations sell a special, more expensive fuel blend during the summer to cut down on smog during hot months. Stations nationwide will start selling a less-expensive winter fuel blend Friday, which could lead to even lower prices, analysts said.

So what does this mean, and why does it make winter gasoline less expensive?

Drilling jobs scene bleak

Thousands of rig hands in Western Canada are waiting for callbacks from their drilling-company employers, but industry observers say the high Canadian dollar and a crash in the royalty trust and junior part of the oilpatch mean they could be idle for a long time.

While the drilling industry, which for years worked to build up its labour pool, is reluctant to talk in terms of outright layoffs because of the seasonal nature of its work, it's expected there will be almost 3,500 fewer roughneck positions this summer relative to last year, as the number of active rigs drops to 376, from 512 in 2006.

Green election talk heats up

The Conservative government has drawn an election battle line after opposition parties massively overhauled its Clean Air Act.

A special Commons committee that finished studying the act yesterday included a provision to punish industrial polluters with heavy fines, and Tory MP Mark Warawa said that could lead to "billions of dollars of new taxes."

The House of Commons adjourns today for a two-week Easter break, and when it returns a vote on the bill amended by the committee dominated by opposition party MPs could spark an election. There is speculation that an election could be called in mid-April for either May 28 or June 4.