Tuesday, June 03, 2008

Want Cheaper Gas? Here Are 4 Solutions

To address rising oil and gas prices, there's not much we can do about rising global demand, but we can do a lot to increase supply. Cato Institute's Jerry Taylor outlines 4 ways to increase domestic supplies of oil and gas in today's NY Post:

1. Open up key areas for oil and gas exploration and development.

2. Open up the West to oil-shale development.

3. Empty out the Strategic Petroleum Reserve.

4. Suspend federal rules that force refiners to use only low-sulfur oil to make gasoline and diesel.

Thanks to Cafe Hayek for the pointer.


At 6/03/2008 10:05 AM, Anonymous Anonymous said...

I would be in favor of 1,2 and 4. Not a fan of depleting the SPR. I see the benefits short term, but I dont see the benefits long term and the SPR was not intended to be used to bring down the price of oil.

At 6/03/2008 10:25 AM, Anonymous Anonymous said...

5) and, and most important, direct the USDA to work through the LOCAL ag offices to get ethanol working in EVERY COUNTY in the U.S.

This would involve working with local farmers, and governments, to promote small/medium 30 Million Gallon/Yr refineries running off of waste, and approx. 6 mile square areas of switchgrass/sorghum/tropical maize, etc.

There's hardly a county in the U.S. that couldn't accomplish this (quite possibly none,) and it would solve our imported oil situation, almost completely.

At 6/03/2008 10:49 AM, Anonymous Anonymous said...

The reason that we don't do any of these things is that we do not have anyone with sufficient balls to challenge the environmentalists and the left wing fringe intent upon preventing any oil exploration or expansion of nuclear power.

With regard to ethanol, you are forgetting the tremendous water resources used for corn based ethanol to say nothing of the effect on food prices caused by diversion of a food crop to fuel. Corn is a very high nitrogen feeder making long term soil fertility and structure another challenge.

At 6/03/2008 12:20 PM, Anonymous oilman said...

#1. A lot of people talk about how no one in America saves money any more. I guess that applies to our exploitation of resources as well. If oil continues this course, wouldn't it make sense to maybe keep some of that nice sweet, easy crude in ANWR for future generations when oil is $500/barrel?

#2. Its not regulatory issues that are keeping shale oil down, its efficiency. In-situ is hard and expensive, and strip mining, well, go ask the Canadians how well that's working on their tar sands. Your trying to get oil from rocks; yes it works but you're using a lot of energy to do it.

#3. Well you must really be brain-dead if you want to empty the SPR as opposed to the less-disastrous but still bad idea Dennis Gartman proposed of a 1/7th sale. Why do you think the SPR starts with the word 'Strategic'? Its not for price manipulation.

#4. Refiners are still free to use high-sulfur crude, they just don't want to. The Federal mandate is on the content of sulfur that makes it into the END product, not what is in the crude source. The refiners face lower margins on high-sulfur crude, so they simply don't want it or can't handle it with their existing equipment and don't want to upgrade.

Besides, according to you (Dr.Perry), gas is actually a bargain right now and our economy is so efficient that it can handle expensive oil with no problem. Is that suddenly no longer true? Shouldn't we let the free market take its course?

At 6/03/2008 12:41 PM, Blogger K T Cat said...

In time all of these will happen. Also, over time, no matter what we do, we will run out of oil. It's not such a bad thing right now to restrain our use of oil and develop alternatives through the economic pressures brought about by suboptimal decisions like these.

At 6/03/2008 1:23 PM, Blogger Marko said...

"Shouldn't we let the free market take its course?"

Uh, yes, that is what we are asking for! But first, we need a market that is more free.

Look at all 4 of these points, they all deal with allowing the market to work. If you are for a free market, I guess you would like the US to sell oil rich lands to private companies to pump at their leisure? I didn't think so, comrade.

As has been pointed out, #5 should be massive investment in nuclear power, or even better allowing private industry to massively increase nuclear power by lowering the insanely high level of regulation that is actually designed to prevent building new nuclear power plants.

#6. Coal.

#7. Stop the states from having all these silly restrictions on gasoline. Regulating interstate trade is one of the few things the federal government is actually authorized to do. This is starting to look like the 13 colonies with their own currencies!

#8. Make it clear we are not going to participate in risky schemes to try to control the climate 100 years from now. Come on, you know that crap is pushing up the price.

At 6/03/2008 2:05 PM, Anonymous oilman said...

#5 Nukes. Well a lot of that is the public's problem about this crazy word called 'radiation'. Actually the NRC is doing some great things by approving standardized designs, but you also have to understand that unlike a coal plant that just trips, safety in a nuke is of a completely different level. Completely. You have to consider things like fault lines, airplane crashes, commando attacks (seriously, all of this stuff is planned for).

#6 Coal. What about it? We have tons of it, we have tons of power plants using it, and the costs of just removing the SOx and NOx (which we should ALL be able to agree are bad) are substantial. If you want to mess w/ the carbon seq. issue, coal becomes nearly as expensive as a combined-cycle. As for gasification, call me when the net energy return comes back decent. Yeah it works, but its still cheaper to buy nat.gas and better on a BTU per volume basis. Coal will always be a part of the gen stack, but IF there really is an issue with emitting as much carbon as we are, coal becomes much less attractive.

#8. This gets OT, the meteorologists I've talked to have said their community is pretty evenly split on the 'climate change' debate. They know way more about that than I, and if they are evenly split, than I can only conclude that there are merits to both sides, and that hopefully we'll get evidence to one way or another. Until that evidence and scientific opinion becomes overwhelming, its kind of up in the air.

All that said, virtually everyone agrees that NOx and SOx and mercury are all crap and we should not put them into the air to the extent we can avoid it.

At 6/03/2008 2:55 PM, Anonymous Anonymous said...


#2. Its not regulatory issues that are keeping shale oil down, its efficiency. In-situ is hard and expensive, and strip mining, well, go ask the Canadians how well that's working on their tar sands. Your trying to get oil from rocks; yes it works but you're using a lot of energy to do it.

This is working very well for the Alberta and Canada. In-Situ has brought a great amount of efficienes to Canadian oil sands development and better yet the technology that is being brought to market or in R&D is def. steps in the right direction.

Strip mining is brutal; however, In-situ development is not a big deal to the environment. Current technology uses alot of natural gas but that is being addressed.

At 6/03/2008 3:10 PM, Anonymous oilman said...

No there is no doubt that you can get oil from the shale, and certainly the tar sands development in Canada has come a long way; to the point where they are going to build a nuke to help run the process.

Working with shale as opposed to the tar sands is considerably harder. All that said, you end product is still an exceptionally heavy crude that must be pre-processed before any refiner will take it.

The easy-to-get light sweet crude is gone (or getting there). Yeah, there's tons of other stuff out there, maybe even light sweet in deepwater, but each one of these sources continues to be harder and harder to get to (ie. more and more energy is expended).

At 6/03/2008 6:40 PM, Anonymous Anonymous said...

Nice, but add the following:
5.) Add a measure that placates the public's desire to see business get hurt while at the same time doing 1-4. Make sure that said measure cannot be reflected back on consumers by any means. If you want to end the investigations for a long while, they need to "take one for the team".

6.) Approval of any international conflict in an oil producing region is contingent on a favorable(to us) oil deal with in the region.
This includes any deal that shuts out any of the "developing/Most Favored Nation" countries. We have no obligation to assist any other country at the greater peril of our own.

On another point - call a spade a spade by not using inflation figures or comparisons with (insert high priced country/region here). Prices are high, (proper) explanations are inexistent, and people are starting to get tired of the same excuse.

At 6/03/2008 8:22 PM, Anonymous Anonymous said...

A Very Important Future Mitigation.

We're replacing about 600,000 Barrels of Oil with this every day. That's more than significant.

At 6/03/2008 8:46 PM, Blogger David Appell said...

Sure, and let's plow over the whole damn country, all the Appalachian mountains, the midwestern hills, the Rocky Mountains, the wilderness of California. I mean, what does it matter, as long as we have a few more gallons of oil to drop in our car and pollute the atmosphere?

At 6/03/2008 10:12 PM, Anonymous Anonymous said...

Number of Arable Acres in the U.S. - One Billion, Two Hundred Million (1.2 Billion.)

Acres devoted to ethanol production - about 12 Million.

151 bu/acre / .6 (percent of cattle-feeding ability lost in conversion to ethanol - remember, the function of field corn is to put weight on cattle) X 2.8 gal/bu = 704 gal/acre

Divide the 8.7 Billion gal/yr by 704 gal/acre and, voila, 12 million acres - which, btw, is about 14% of our corn crop. On the other hand, we Exported about 26% of said crop.

I don't think you have to worry about plowing up Yosemite, yet.

At 6/04/2008 5:02 PM, Blogger Celal Birader said...

As simply a large storage pool that it is , the SPR is largely an irrelevance to the issue of cheaper gas.


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