[Texgreen] Consumers warned not to hoard gasoline

[Roger Baker]

There are two bottlenecks now.

First is oil itself, which is being bid up to $65 per barrel to  
balance world demand. Brent is the sweet grade commonly marketed in  
Europe.

The second bottleneck is US refining capacity, which has been  
strained by the fact that more and more oil is heavy sour crude,  
which sells for maybe $5 below the sweet stuff, but takes special  
facilities to refine. The refineries have to be shut down  
periodically and they catch fire if you push them too hard.

The US refineries expand on site rather than build new. Like the  
Valero refinery near or in Port Arthur. But the refining industry in  
total is stressed and likely unable to keep up with summer demand. It  
takes a month or so to ship gasoline in from Europe, so we may run  
short during the summer.

There is also an offshore drilling rig bottleneck; the rigs are old  
and in short supply and the experienced oil workers themselves are in  
short supply.

Finally, we may have reached world peak oil already, but the data is  
so bad and subject to complex factors like Saudi policy that we can't  
know for sure until a year or so after the event. But even before the  
oil peak its easy for inflexible demand to increase faster than  
slowly increasing supply and cause big price increases.  One wild  
card is third world demand being outbid by rich countries like the  
USA.   -- Roger




On May 1, 2007, at 11:12 PM, David Pollard wrote:

> So basically, for few years - "Peak Oil" is a theoretical problem  
> that doesn't impact US consumers.
> On the otherhand "Peak Refining" is staring us in the face, and  
> while the oil corporation may
> whine about the Govt. being the reason they don't increase refining  
> capacity, under the assumption
> that "Peak Oil" is true, there is essentially no motivation for the  
> to build more capital infrastructure
> to refine oil that's about to go away.
>
> These "refining snags" could be a godsend *if* it gets the public  
> take energy conservation seriously.
>
> All the Best,
> David Pollard
> (Who now lives within 10 miles of where he works for the first time  
> in his life.)
>