Gee, they’ve been warning us for 50 years that the world’s oil supply is about to be depleted…

“The U.S. is on pace to leapfrog both Saudi Arabia and Russia and reclaim the title of the world's biggest oil producer for the first time since the 1970s…”

https://www.omaha.com/money/u-...c8-01f89f457273.html

And my daughter just started her first job on Monday... working at an oil refinery! Job security!

MAGA!!

More Winning......this is getting old...NOT !

Yeah, but wait 'til President Warren closes down all the pipelines to save the rest of the world.



Jus' kiddin'.

Excellent! So question...why then, am I paying $3.19 per gallon for mid-grade?

you are not alone, my friend.

diesel is also uncomfortable.

methinks a lot is being exported ?

Good, the sooner we can tell the Middle East to go fuck itself the better! They still account for 14% of our oil use. Would love to see this hit 0%, but OPEC

quote:

Originally posted by erj_pilot:
Excellent! So question...why then, am I paying $3.19 per gallon for mid-grade?

The trade in oil is world-wide, not just restricted to this country. When higher prices can be realized overseas, our oil will be sold there. Until it becomes more expensive to ship and sell our oil elsewhere than to sell it here, our prices will go up. That is the nature of a free market. We don't have to like it, but that's the way it works.

flashguy

I hope we don't invade ourselves...

quote:

Originally posted by erj_pilot:
Excellent! So question...why then, am I paying $3.19 per gallon for mid-grade?

How much of that $3.19 is tax?

quote:

Originally posted by roberth:

quote:

Originally posted by erj_pilot:
Excellent! So question...why then, am I paying $3.19 per gallon for mid-grade?

How much of that $3.19 is tax?

And building some new refineries might help.

quote:

Originally posted by flashguy:

quote:

Originally posted by erj_pilot:
Excellent! So question...why then, am I paying $3.19 per gallon for mid-grade?

The trade in oil is world-wide, not just restricted to this country. When higher prices can be realized overseas, our oil will be sold there. Until it becomes more expensive to ship and sell our oil elsewhere than to sell it here, our prices will go up. That is the nature of a free market. We don't have to like it, but that's the way it works.

flashguy

I believe there are additional factors at play here as well. From this Sept 2017 Forbes article Why The U.S. Exports Oil :


It comes down to the quality of the oil that is being produced, versus the kind of oil U.S. refineries are built to process.

Over the years, U.S. crude oil has gotten progressively heavier and sourer (meaning it contains larger hydrocarbon molecules as well as more sulfur.) Globally, heavy crude production increased in places like Canada, Venezuela and Nigeria. A wide price differential developed between heavy, sour crudes and light sweet crudes like WTI and Brent. Because crudes that are heavy and/or sour can produce about the same amount of finished products as lighter, sweeter crudes, refiners had a strong financial incentive to process the discounted crudes.

So U.S. refiners spent billions of dollars installing fluid catalytic crackers (FCCs), cokers, and hydrotreaters that are needed to process heavy sour crudes. After investing all of that money into processing the heavy crudes, the economics of running Bakken or Eagle Ford crudes in a heavy oil refinery are far less appealing than running a heavy Canadian or Venezuelan crude.

Heavy oil refiners would rather simply continue to import oil more suited to their needs, while the light, sweet crudes coming out of the U.S. shale plays are often a better fit for certain foreign refineries. Or, logistically it may simply be easier for Canada, for instance, to import U.S. crude for their East Coast refineries, while they export their heavy oil from Alberta to U.S. refineries that are equipped to process it.



It sounds to me like the refineries in the US were designed to process heavy crude (imported) and not the higher quality light sweet crude we've been pumping out of the ground.


Maybe I'm way off base, but I'd be curious to hear someone's take on this who is in the oil industry (tatortodd?).

quote:

Originally posted by Loaded Round:

quote:

Originally posted by roberth:

quote:

Originally posted by erj_pilot:
Excellent! So question...why then, am I paying $3.19 per gallon for mid-grade?

How much of that $3.19 is tax?

And building some new refineries might help.

I read some time ago that to build a new refinery it would take at least 10-12 years to get the permits and many millions of dollars before the first shovel hit the ground. Maybe Trump can change that. I'm sure it's being discussed.

Jim

quote:

Originally posted by ShouldBFishin:
It sounds to me like the refineries in the US were designed to process heavy crude (imported) and not the higher quality light sweet crude we've been pumping out of the ground.


Maybe I'm way off base, but I'd be curious to hear someone's take on this who is in the oil industry (tatortodd?).

Good article.

It's the free market at play. The heavy crudes (Venezuela, Mexico, California, Alaska, etc) were a big cost advantage for US refineries when I joined the industry in the early 90s and the US refineries and pipelines were switching to this model. The Canadian tar sands came on-line prior to the "fracking revolution" so Northern US refineries had another inexpensive heavy oil source with the added bonus that it was hurricane proof unlike the barrels coming via supertanker. The industry responded by building more pipelines and making the tar sands crude available in the Gulf Coast (i.e. the largest refinery cluster in North America).

Fracking took off and the amount of oil the US needed to import decreased. A lot of the areas in Texas that were oil fields in the early days became oil fields again plus all of the oil in Pennsylvania and the Dakotas.

Let's circle back to the 1970s when a government interference in the free market occurred when the oil deal was struck in Alaska which prevented oil from being exported. It benefited the West Coast refineries (Washington State and California), but it really screwed the people of Alaska as the pool of buyers for their crude oil loaded on tankers/supertankers was decreased. Between Alaska's lobbying and fracking that law was eliminated.

Now, we have a freer market. Refineries buy a crude oil slate that makes them the most efficient and producers sell their crude oil to the buyer it's worth the most. When I joined the industry, I never thought I'd see Brent selling for more than West Texas Intermediate (WTI is lighter), but for the past few years that has been the case (e.g. $4.47 spread today).

A remarkable thing is occurring in West Texas with the huge find of the Delaware basin beneath the mostly depleted Permian Basin. Producers are going after it with a gusto because they aren't beholden to Gulf Coast refiners crude slate (i.e. you can only blend so much light crude into the heavy crude and still have the heavy crude slate they're designed to process) and Gulf Coast refiners are using free market economics to decide whether to reconfigure their refinery for a lighter crude slate.

quote:

Originally posted by erj_pilot:
Excellent! So question...why then, am I paying $3.19 per gallon for mid-grade?

You need to blame the man in the mirror. I just checked Gas Buddy and midgrade is $2.70 to 2.90 per gallon in Cypress, TX (i.e. NW Houston) and premium is $2.95 to $3.35 per gallon.

quote:

Originally posted by Jimbo54:

quote:

Originally posted by Loaded Round:

quote:

Originally posted by roberth:

quote:

Originally posted by erj_pilot:
Excellent! So question...why then, am I paying $3.19 per gallon for mid-grade?

How much of that $3.19 is tax?

And building some new refineries might help.

I read some time ago that to build a new refinery it would take at least 10-12 years to get the permits and many millions of dollars before the first shovel hit the ground. Maybe Trump can change that. I'm sure it's being discussed.

Jim

By code, the NEPA regulations say that it should take 3 years, but that number climbed during Bush administration (GWOT was their main focus) and greatly climbed during the 0bama administration. The Trump administration could hold the lead federal agency's (e.g. EPA) feet to the fire and make them follow the NEPA timeline.

If another refinery is built, my vote is for Georgia. Florida, Georgia, South Carolina, North Carolina, and Virginia have a combined total of zero refineries (I'm not counting the asphalt plant in Georgia). In fact, the furthest south refinery in PADD 1 is in Delaware City, Delaware.

Thanks tatortodd!

Always good info.

quote:

Originally posted by tatortodd:
If another refinery is built, my vote is for Georgia. Florida, Georgia, South Carolina, North Carolina, and Virginia have a combined total of zero refineries

Yes, it would be very nice not to have to depend on one pipeline for a majority of our gasoline out here. That was no fun a few years ago when the contractors fixing that pipeline wound up putting it out of commission for a few weeks, twice in a short stretch of time.

First time the knuckleheads decided not to allow gas prices to rise so distributors could not afford to use tanker trucks to go get gas from other states that weren't dependent on that pipeline, and we had ridiculous lines. Second time, they let prices rise so it made business sense to truck in gas from the non-pipeline-bound locations to sell. People grumbled but stations had gas.

Better still would be having more options to get gasoline. Thus, a few more refineries would be a great thing.

Given our status as a major oil exporter, how about President Trump now insist the USA join O.P.E.C.?