HIGH FUEL PRICES - REASON

[fredethomas]

A Peter Huber and Mark Mills of The Wall Street Journal wrote of a real "paradox" about crude prices.  It is in direct contrast to the well known "Supply and Demand" theroy of pricing.  Their article, or a summary of it appears in February 11th edition of The Week. It goes like this: 
1. The cost to pump crude from Saudi oil fields it $5 a barrel.
2. The cost to extract from the sands of Alberta, Canada is $15 a barrel.
3. The clay of the Orinoco basin in Venezula and the tar sands of Athabasce, Alberta contain 3.5 TRILLION barrels of oil.
4. This is about one centuries worth.

Now the paradox.  "The price of oil remains high only because the cost of oil remains LOW."  Seems that OPEC could bankrupt any attempt by companies to recover and refine those oil stocks.  By a wave of the hand "a second cousin of Osama bin Laden can knock off $20 per barrel" making the development of recovery infrastructures risky.  These two writers note that "one company will eventually take the risk and leave the world with a plentiful supply of oil.  Then prices will sink to a level that reflects the worlds vast supply."

 

[Ron]

Fred,

Lets hope the price of oil comes down.  I hadn't seen this before.

 

[Ron from Big D]

A Peter Huber and Mark Mills of The Wall Street Journal wrote of a real "paradox" about crude prices.? It is in direct contrast to the well known "Supply and Demand" theroy of pricing.? Their article, or a summary of it appears in February 11th edition of The Week. It goes like this:?
1. The cost to pump crude from Saudi oil fields it $5 a barrel.
2. The cost to extract from the sands of Alberta, Canada is $15 a barrel.
3. The clay of the Orinoco basin in Venezula and the tar sands of Athabasce, Alberta contain 3.5 TRILLION barrels of oil.
4. This is about one centuries worth.

Now the paradox.? "The price of oil remains high only because the cost of oil remains LOW."? Seems that OPEC could bankrupt any attempt by companies to recover and refine those oil stocks.? By a wave of the hand "a second cousin of Osama bin Laden can knock off $20 per barrel" making the development of recovery infrastructures risky.? These two writers note that "one company will eventually take the risk and leave the world with a plentiful supply of oil.? Then prices will sink to a level that reflects the worlds vast supply."

Fred:  I'll bet the lack of oil refineries has a great deal to do with the high price.  You can pump all you want, but if it can't be processed, supply and demand comes back into the picture.  Get the Left Coast to get out of the way and more will be developed.

 

[Ron]

Maybe we should look into fuel only being distributed at reasonble cost to states that have operating refineries. ;D ;D

 

[Karl]

Fred,
Kind of sounds like what DeBeers is doing with diamonds; not rare at all, but their stranglehold on the supply to the outside market is what keeps their prices (not value) up.

 

[Gary RV_Wizard]

A lot more oil sources will come online if prices stay above $35-40 per barrel, but it will be years before the investment in expanded production is complete and the increased volume  reaches the market. And as was said, the risk that the price will drop back under $30 again is always there.

 

[cochisewingers]

Gee, I made a conscience decision to purchase a diesel puller for my 5th wheeler instead of a gas guzzler. Although I realize an oil burner will outlast most gas burners, I'm not so sure I made the right decision with regards to diesel fuel prices.

Hopefully, this is only a temporary situation with fuel pricing.

 

[Gary RV_Wizard]

Hopefully, this is only a temporary situation with fuel pricing.

We all hope so, but the odds are not good.  Prices may come down somewhat from last summer's highs, but I'm afraid the days of cheap fuel in the USA are gone forever.  And there are many places in the world who still think the US has incredibly cheap fuel and would love to be in our shoes.

 

[cochisewingers]

Yet the Iraqi's are bemoaning that they're paying "upwards" of $4 - 7 US dollars to fill their vehicles up too. But if it's anything like the Mexican PEMEX swill, I'll keep our refined stuff here thank you. LOL.

 

[blueblood]

We all hope so, but the odds are not good.? Prices may come down somewhat from last summer's highs, but I'm afraid the days of cheap fuel in the USA are gone forever.? And there are many places in the world who still think the US has incredibly cheap fuel and would love to be in our shoes.

There is going to be a major shutdown of refiners for long overdue serious maintenace and changeover to summer special blends starting soon and lasting until May; Prices are going to climb higher during this period.

 

[cochisewingers]

Hmmm...I wonder how my F-450 7.3 Powerstroker would run on Bio-Diesel or used fast food deep-fryer oil?? We have an abundance of them in this one-horse town.

Other than the obvious question - "Would you like to biggie size that order sir?" Has anyone used or have pros/cons or comments regarding using fryer oil in it??

 

[Gary RV_Wizard]

Last I heard Ford says no bio-diesel - will void warranty if used.  Not because it is necessarily bad, but they have not tested it and don't know if the engine holds up or if it meets federal pollution specs when burning something other than #2 diesel.  I assume the same applies to vegetable oils.

 

[cochisewingers]

I can see FOMOCO or any major automaker making that statement regarding warranty issues.? I was just wondering if anyone here has any experience with utilizing Veggie oil or Bio-Diesel for RV apps. Thanks Gary.

See you all in QZ late 26th or very early 27th.

 

[blueblood]

I can see FOMOCO or any major automaker making that statement regarding warranty issues.? I was just wondering if anyone here has any experience with utilizing Veggie oil or Bio-Diesel for RV apps. Thanks Gary.

See you all in QZ late 26th or very early 27th.

Cummins advises only use B5 which is 5% biodiesel. Here is their statement,

Biodiesel blends up to B5 are
approved for use in all Cummins engines for both on-highway and off-highway
engines. B5 is a blend of 5 percent pure biodiesel and 95 percent standard
petroleum diesel. Cummins believes that blends greater than B5 are possible
and appropriate. The industry standard known as ASTM D6751 defines the
specifications for B100. However, this standard currently lacks a
specification for stability. Without a specification for stability, the
quality of fuel in blends greater than B5 could degrade to a point which
could be damaging to engines.

 

[cochisewingers]

Leo,

Wow...thank you sir. That was informative.?

 

[2006F350]

Follow the link to Ford's thoughts on Bio-Diesel

https://www.fleet.ford.com/showroom/environmental_vehicles/BiodieselTechnology.asp

The bullet that is the most convincing me to to go that route is:

It is an effective solvent, and can act as a paint stripper, whilst it will tend to loosen deposits in the bottom of fuel tanks of vehicles previously run on mineral diesel

I will settle for my 12MPG with the trailer, know that I'm not doing anything that may possibly void my warrenty, hate the oil companies, and have a ball on vacations.

Larry P

2006 F350 DRW Crew Cab KR
13,000 GVW / 26,000 GCWR
6.0L PSD / TorqueShift Auto
Tow Command / Tow Boss 2006 (4:30LS Rear End)
Everest 364Q - 13,200 Dry / 2580 Pin Weight

 

[Okotoks Camper]

I work in the oil patch in Alberta, Canada. There was an article in our news summary today that the Oil Sands projects are proceeding because the oild companies don't believe that oil will go down much and the Oil Sands in N. Alberta require sustained pricing above $30/barrel to be viable. Also, it was noted in another article recently that Saudi oil is getting both more expensive to produce and is heavier, with more sulphur. A familiar quote in the local oil patch is that we're not running out of oil, we're running out of "cheap" oil.

Also, in Canada (probably the same in U.S. based on responses so far) the cost of fuel is rising because:

• refinery capacity is being strained. No new refineries have been built for over 20 years cause they wouldn't be profitable. I'm seeing some plans for new ones now with higher prices.
• We are moving to a much lower sulphur content requirement in diesel, due this June 30. This is one of the reasons diesel is more expensive currently since production is being taken offline to accomodate facility upgrading
• Oil Sands bitumen must be upgraded in order for refineries to handle it. Lots of plans for this, but very little finished yet. So promise is there, but it will be 2010 before we see much volume out of the oil sands in my view.

Cheers,
John B.

 

[cochisewingers]

I need to find a pair of non-sulphuric gerbils to push my truck down the road then...

 

[motojavaphil]

I am in the Turbo-Diesel Registry and they were saying Dodge/Cummins did not recommend bio-diesel.  It would be nice to pull up to a KFC and clean out their grease pit, strain it and use it.  Then again going to the gas station and pumping the fuel seems easier.  In any case tech bulletins are released by cummins routinely and my info may be old.

 

[BernieD]

I am in the Turbo-Diesel Registry and they were saying Dodge/Cummins did not recommend bio-diesel.

Phil

The last Cummins engine seminar I attended indicated a 95% diesel/5% biodiesel mixture was OK.