Posted on 08/09/2010 8:45:02 AM PDT by Red Badger
Then, in reality, although it would cost some pretty big bucks, it's more than doable to move more toward diesel production at American refineries.
If, over time, we were able to convert roughly half our passenger vehicle fleet to diesel, I think that’d save a million or more barrels of oil per day. Seems like a worthy goal to me.
sitetest
“They say the Bible says this in so many words.”
Who is “they”? Also, please provide book, chapter and verse to back this up.
I think it is past time for our government to open those federal lands up to commercial activity.
I am confident Americans can match the technical expertise to make this economically producible, since Estonia, Brazil and China have been do the same for many years.
Don't know for sure, could care less, other than I realize smart people did smart things way back when and before mind control sheep herding.
Most seeds have mucho oil, hemp is just easy to grow and useful for chordage, etc..
I had a hemp shirt long ago , it was real comfy and lasted a long time.
I don't know why it should be either/or. I'm not sure that there's any one thing we can do with our energy sector that solves all our problems.
Which raises the question, what are our energy problems to be solved?
I guess my own view is that we should have three national energy goals:
1. Produce as much energy domestically as possible, minimize the import of energy products, especially oil;
2. Assure a plentiful supply of energy in relationship to our energy needs (which means that if we do something that reduces our need for oil by a million barrels a day, that's not far off from producing an additional million barrels a day);
3. Within the context of the first two goals, produce energy (safely) as cheaply as possible.
The reasons for the first goal are two-fold. First, to my mind, it seems to have become a national security issue. Reliance on Russian mobsters, Muslim jihadists, Venezuelan dictators, Nigerian scam artists, or even Mexican oligarchs for our energy. I believe that we are limited in our foreign policy, including how hard we can fight the war on the jihadists, because of our dependence on these turds. We would be more secure if we produced nearly all our own energy, and what we imported came from normal countries like Canada, the UK, etc. As well, if we didn't import oil from these places, they would be less important and wouldn't require strategic protection, they'd be far less wealthy, and wouldn't have the same ability to finance things against our national self-interest.
Second, a large part of our trade deficit comes from paying $70 or $80 per barrel to all these putzes. It works out to over 2.5% of GDP.
As you know, I'd be more than happy to impose a tariff on imported energy (possibly excepting energy from places like Canada), and use the money collected in tariffs to reduce income taxes, or payroll taxes, or what-have-you. Just high enough to seriously advantage domestic producers of energy (especially stuff that can run our vehicle fleet).
As to the second goal, certainly, starting a long-term push toward diesel passenger vehicles is one way to accomplish it, as is drilling here, drilling now. Everywhere in the US. Shale oil, ANWR, get into all that natural gas that's being discovered practically everywhere (you once pointed out that we have literally tens of millions of potential “stations” for CNG fueling - all the homes that use natural gas for heating).
So, I'm all for producing lots and lots of stuff - DOMESTICALLY - but I'm not opposed to reasonably straightforward (if not exactly cheap or fast) things that help us to use our energy more efficiently.
sitetest
I am always impressed with your courtesy in posting. You raise the level of FreeRepublic and it encourages dialog.
It is a limitation of capital. I suspect from my experiences, more energy production would result from investing in the oil shale.
If I was building new, I would recommend more infrastructure based upon diesel. But the incremental gain versus cost of tearing out gasoline producing units for diesel, combined with the automotive infrastructure, should make the conversion to more diesel a slow process.
Thank you.
“It is a limitation of capital.”
I understand. Although I'd think that folks who invest in refineries want to do things to keep up their refineries. I guess the problem that I see is that there probably isn't much incentive for the refineries to do this. If refining companies decided to really try to push Americans toward diesel vehicles, in order to use the additional diesel that they would produce after retrofitting, they'd wind up selling less refined product after having made major capital improvements.
From my own view, I don't know how we might move more toward the use of diesel passenger vehicles without some government intervention. Something like a pretty sizable tax credit for purchasing a diesel passenger vehicle. I'd imagine most folks would be against that.
A long-term tax credit for the purchase of diesel passenger vehicles might significantly increase the percentage of diesel passenger vehicles over time, which would, as demand for diesel increased gradually over time, likely persuade refining companies to gradually do the necessary capital improvements to change the gasoline/diesel ratio over an extended period of time. I don't know what the depreciation schedule for this equipment is, or what the actual lifecycle is for this equipment, either. However, by causing demand for diesel to rise gradually, I imagine that some of the hit on capital investment would be ameliorated, since companies would have to invest in replacing/upgrading equipment anyway.
But it seems to me that without intervention from outside the market place, folks might not otherwise choose to move toward diesel, and certainly, the refining companies would gain no advantage in encouraging folks toward diesels.
As a side note, I have become, in the last few years, a diesel enthusiast. My son started at a local Catholic high school in September 2007, and I found I was filling my SUV twice a week. Yikes! In January 2008, I replaced my wife's gasoline-engined vehicle with a newer model of the same car, but diesel, and I gave her my SUV (she drives less than 7000 miles per year). Whereas my wife's old car got about 18 - 20 mpg, I've averaged about 30 mpg with the diesel for the past two and a half years. I'm sure that part of that is that there have been improvements overall in fuel economy from my wife's old car to my newer car.
But I think part of it is that because there's a lot of torque, and much of it is available at low speeds, the car is easier to drive more economically.
When we finally get my wife a new[er] vehicle, we'll probably get another diesel.
sitetest
Refining companies, like nearly all producing companies, invest dollars to make products that make profits. They are not social engineering organizations like governments that do not care about the dollars.
I don't know how we might move more toward the use of diesel passenger vehicles without some government intervention.
If it is cheaper, we will, baring government interference. If it isn't, I don't want to move that way.
I buy vehicles based upon dollars per mile, meeting my specifications of usage and safety. In 2007 I bought a new full size pickup for about $15,000, small gasoline engine.
A long-term tax credit...
Please, no more social engineering via tax dollars.
without intervention from outside the market place, folks might not otherwise choose to move toward diesel
And if so, that's okay.
“Refining companies, like nearly all producing companies, invest dollars to make products that make profits.”
Yes, I know. That's why I said immediately before the sentence fragment that you quote, “I guess the problem that I see is that there probably isn't much incentive for the refineries to do this.”
The lacking incentive, from my perspective, is “profit.” That's why the words that followed what you quoted were, “...in order to use the additional diesel that they would produce after retrofitting, they'd wind up selling less refined product after having made major capital improvements.”
Not a very effective use of capital for most companies.
“’I don't know how we might move more toward the use of diesel passenger vehicles without some government intervention.’
“If it is cheaper, we will, baring government interference. If it isn't, I don't want to move that way.”
Maybe. A large move toward diesel passenger vehicles might well result in significant societal savings, as folks would use less fuel, from longer engine life (although I spend modestly more for maintenance than I did on my wife's gas-powered model). And the reduction in the overall use of oil would reduce demand for oil, thus causing a little downward pressure on the general price of oil.
“I buy vehicles based upon dollars per mile, meeting my specifications of usage and safety.”
As you point out, price isn't your only consideration. There are those “specifications of usage and safety.”
A lot of folks with whom I've spoken have “usage” issues with diesel. Noise, dirty and smelly exhaust, lack of acceleration.
But these aren't really issues in modern diesel vehicles, and haven't been for some years.
An incremental reduction in costs may not be enough to overcome ingrained beliefs and behaviors.
“’A long-term tax credit...’
“Please, no more social engineering via tax dollars.”
Well, that's why I said, “Something like a pretty sizable tax credit for purchasing a diesel passenger vehicle. I'd imagine most folks would be against that.”
I understand your preference for free markets. I prefer them, too.
And obviously, it would be very nice if our government stopped sitting on the domestic energy production industry, preventing them from doing what they can actually do.
But, the problem is that the markets for energy products don't seem particularly free, especially those parts of the market that are made outside our borders.
Energy production takes a lot of capital. So, even if we were to free up our own markets in our own country, the folks who run these very capital-intensive companies must still deal with, plan for, anticipate and figure out how to make profits when dealing with producers who don't necessarily abide by free market principles, who don't even always put optimization of profit over the long-term as their No. 1 concern, and in fact, who don't even always think it's important to obey the rule of law, especially contract law.
I'm just an interested outsider in this field, making no claims to expertise. Nonetheless, I've watched for a long time, and I try to connect the dots. As an example, I've watched Shell with their shale oil projects out west for some years. Obviously, the primary current problem with their work right now is the near-outright ban on producing commercially-viable amounts of oil from the shale. * sigh * That's a tough one to overcome.
But even during the Bush years, Shell was very cautious about what they were doing out there. This was in great part because of the great technological difficulties associated with producing oil from shale. But I read a lot of documents from Shell, and an interelated - and very significant - factor was Shell's concern that they'd start producing a bunch of oil that was profitable at a specific price - say, $50 per barrel - and they'd find themselves in an environment with $30 per barrel oil again.
And, obviously, making money, and sufficient amounts of it, are very important to companies like Shell. I read an interesting analysis about various internal rates of return on investment at different world oil prices, and how that dramatically affected Shell's plans to ramp up production. Obviously, if they anticipated sustained high oil prices, their interest was to ramp up much more quickly (by a factor of two over 10 years) than if prices were somewhat lower.
But they were understandably very skittish to really move forward much at all if they determined we might have another relatively prolonged period of prices below something like $50 per barrel.
Perhaps my observations are incorrect, but it seems to me that the folks who make significant efforts to control, or at least significantly affect, market prices through cartelization, don't seem to object too much to an occasional swoon in prices, as it clears out all the folks producing oil at significantly higher prices.
Which then allows them to restrict their production again, and drive prices back up.
I imagine that oil would be a lot cheaper and more plentiful if folks like the Saudis, the Venezuelans, the Russians and the Nigerians permitted free markets, honored contracts, and didn't try to cartelize the market.
But those things aren't the case.
And our domestic producers, to the degree that they have any range of freedom to act, must respond to these unfree market forces in a way where they can still make money.
All of which has a negative impact on us, American consumers.
sitetest
I believe Shell’s issue in Oil Shale is not so much techical as it is economics, politics and social acceptance.
Estonia has used Oil Shale for fuel for decades.
Brazil has been in Commercial Operations since 1992, see Petrosix for more info.
China has been operating Oil Shale for some years as well.
These all use above ground retorting combined with mining the shale like coal.
Shell has been focused on the most return for in-situ operations, partly I believe for political and social acceptance. Most of the US shale reserve are on federal land. There are some thin, low value oil shale in the Midwest, but there economics would be challenging. Green River formation would have the best returns.
Gots a link?...........
Daimler Benz has done the research and has the products.....now
Their turbo diesels trounce American gas engines and run the trucks all over the world.
The article says the American problem is not the diesels but the refiners. If there were more fuel, there would be more engines.
Diclaimer...... I have one.
I’m not ready to go diesel and probably never will be, but I do see the advantages. Bio diesel looks like a far more viable alternative than ethanol in the place of gasoline.
We import more gasoline and gasoline components than we import of diesel. It is not an issue of what is available, but rather the government regulations of the fuels and their usage.
“I believe Shell’s issue in Oil Shale is not so much techical as it is economics, politics and social acceptance.”
That enhances my argument further.
I dwelt on the technical obstacles in order not to slight them as a reason for the slow progress and cautious approach by Shell. After all, technical obstacles are removed only as fast as the technology progresses, and technological progress isn't dictated by outside schedules.
But now you're saying that the technical issues are less of an obstacle than I thought.
If there are few, if any technical issues, then Shell's big obstacles are political - getting the government to let them do their thing, and economic - making sure that it's profitable.
Which returns us back to the caution that Shell has taken because they produce oil in an environment where oil prices are heavily influenced players who don't abide by free market rules.
It was a few years ago when I read this stuff, but it was eye-opening. As you pointed out, capital IS limited, and Shell was quite explicit in what I read about how that would affect their production of oil from shale. Even assuming world oil prices that allowed for them to produce the oil profitably, a modest difference in world oil prices accounted for a doubling of production.
In other words, if Shell assumed a price of around $50 (I think that was roughly the number), it meant that they would produce X amount of oil from the shale in Y years (I think it was the better part of a million barrels a day, but I'm working from memory). On the other hand, a sustained price level of something like $65 per barrel meant they would ramp up to 2X amount of oil in Y years (which was well over a million barrels per day).
In a free market, worldwide, we'd be happy with this sort of thing, because producers could make rational economic analyses, make their plans based on them, and the market would produce sufficient amounts of energy products, of the right sorts, in the right amounts, at competitive prices.
But because the world market for oil is largely unfree, the analyses on which these guys need to make their plans are inherently less reliable and a good deal more complicated. Because their analyses are less reliable, companies like Shell must act more cautiously. And that reduces what they might have otherwise produced, keeps supplies tighter, and keeps costs higher.
And that says nothing about the costs that aren't directly economic. It doesn't deal at all with the fact that the current market makes Saudi jihadists, Nigerian scammers and kleptocrats, and Venezuelan thugs geopolitically important folks with geopolitically important lands, and gives them the funds to seek starkly anti-American policies, and forces us to have to care what happens in places like Iraq or Iran or Saudi Arabia (and even peripherally, about non-oil states like Afganistan). It doesn't deal at all with the fact that our own policies are constrained by our continued need for hundreds of millions of dollars of their products daily, and our need, then, to give large sums of money daily and make nice to those who would just as soon cut our throats.
Obviously, reducing the obstacles set in place by our own government is critical to increasing domestic energy production.
But we're only a part of the worldwide market, and the government intervention and outright control of oil by oil-producing countries puts us at a disadvantage if the only thing we do is reduce the obstacles to domestic production set in place by our own government.
sitetest
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