Skip to comments.Former Shell Oil President: We Won’t Have Enough to Fill Gas Tanks No Matter the Price
Posted on 03/13/2012 10:42:03 AM PDT by Nachum
Former Shell Oil President John Hofmeister predicted that the U.S. wont have enough oil to fill gas tanks whatever the price and that high gas prices could lead to another recession, because people wont be able to buy things. The host of Washington Journal asked Hofmeister if he agreed with the head of ExxonMobil, Rex Tillerson, that the U.S. wont see $5 a gallon gas and that the rhetoric over Iran is responsible for driving up gas prices temporarily. Theres a lot of views out there, and Ive been articulating a $5 price.
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I was around during the Carter years. Once they totally fouled up the price AND availability of fuel, they claimed we were quickly running out of oil.
Sadly, whatever a speaker says, you have to compare against his or her agenda. I don’t know if there is such a thing as objective truth in the world today.
I am fearful that the American people are being so misserved by the political class in this country - and as I said, both Republicans and Democrats that something has got to be done, he said.
The American people have got to get a grip on the politicians who refuse to deal with the future needs for energy, because if its not $5 this summer, guess what. If we stay on the plan were on, which is no plan whatsoever, well be at $5 next summer or $5.50 the following summer, or well be standing in gas lines wondering whatever happened to this country, Hofmeister added.
If the oil producers want to export the oil we can find new producers that WON’T..
The oil in America belongs to Americans.. not the oil producers..
International oil producers need to git their minds right.. or who needs them..
Oil and Gas have become a commodity of National Security..
Like Newt says the Energy Dept. needs to be eliminated..
OIL is today used as a weapon... a weapon of mass blackmail..
Take that weapon out of foreign hands and the world will change..
Other producing nations will do the same..
It ALL STARTS with a serious look at the federal reserve..
International money scammers run that place.. AND OWN the multi national Oil Companys..
And then we have:
The price of oil has to come down because supply prospects are so positive, said Manouchehr Takin, an analyst at the Centre for Global Energy Studies. The rate of demand isnt going to grow as in the past as we use resources more efficiently.
We are a long, long way from being an oil exporter. We import significantly more oil the we produce ourselves.
This guy has been on local Houston radio talk shows several times. He is pretty sharp.
Yep, high gas prices had people fuming at Carter, but when you had to line up for alternate-day rationing they ran him out of town on a rail.
What should the price of gas be?
Only a communist government using command and control on the economy would think they have a right to decide.
Abut a month ago I heard some one on a conservative talk radio program saying he expected gas to hit $7 a gallon by the end of August. So far we’re on track for that if we keep increasing by .50¢ a month.
“Oh. So we ARE out of the previous recession, then?”
No, we are entering a double secret recession.
I’m actually ok with 7 dollar gas in August. Ill hunker down and eat beans and rice, and ride my bike for the next ten weeks. Anything to get this SOB out of the White House.
BUT are we importing much of the oil because we are exporting domestic supplys and production?..
That is the question and the meme that O’Really suggests on his show..
I agree; and gas rationing like we had in the Carter years would seal the deal. I'm in a carpool and can deal with it.
Agreed - I would gladly take that if it gets obama out of office.
I read somewhere that the new EPA regs that are causing the closing of coal power plants are also causing refineries to shut down...
Eventually, somebody is going to ask, “did any farmers bother to plant this year?”. All it’s going to take is one spring were the farmers cannot afford the fuel to plow and America becomes Ethiopia.
“We are a long, long way from being an oil exporter. We import significantly more oil the we produce ourselves.”
As of 2012 we are a net exporter of oil. Demand has really dropped and the excess production is going overseas.
It's obvious the remedies tried by Obama, Pelosi and Reid were the wrong prescription.
And my dogs are greyhounds, idiots of the dog world.
We export a tiny amount of oil, almost entirely to Canada where it is a function of the closest refinery or main pipeline. In return they send us over 450 times greater in total.
Now what has also happened is years of expanding and upgrading our refineries, combined with falling domestic demand, have finally given us a surplus of refinery capacity.
Now this combination has allowed us to be in the position to import a little more crude oil than we need, run it through our refineries and export a higher priced product like diesel, jet fuel, etc to help our trade balance and keep more jobs in the US. So when you look at refined products instead of crude oil, you see the following:
Now you will often see a higher value for the US total consumption of petroleum. I used the data for refined products. The total includes Natural Gas Liquids, produced mainly at Natural Gas Processing plants. When you include that number, I total usage is about 2.3 million barrels per day higher.
Click any graph here for the source, data set and further breakdown if desired.
Then why is US Gas, not oil, exports at record levels?? Fact.
Face it folks, oil companies do not want $2.50 per gallon gas regardless who is in office.
THEN Thack is the price so damned high?..
Keep it simple.. I’m more of a Beagle..
NO! We are a net exporter of refined products. We refine a bit more than we currently consume. We are exporting about a million per day of products but we are importing about 9 million barrels per day of oil.
Combined, we are still a major importer of Petroleum, crude and products together.
Our total net imports (taking credit for our exports) still exceeds our domestic oil production. We would have to more than double before we reached an point of no net imports.
We also sell refined products to countries that have a very high demand and do not have adequate refinery capacity themselves. That is why the price is going up when our actual national consumption is down. (Supply and Demand)
There was a recent surplus if distilled products left over from the last glut, which is why the actual price of crude was going up but Gas prices stayed low and even dropped. Now that the inventory has been sold and moved, prices are equalizing more in line with the volume and price of crude.
Why is gasoline high priced?
The same reason jewelry is high priced.
The stuff it is made out of (gold or crude oil) is very expensive these days.
Exporting it, or making a surplus locally isn’t going to change that base condition.
Some people seem to think if we stop exporting it, it would get cheaper. That is nuts. It is still a fungible commodity. We could shut down a few more refineries, loose a few more jobs if we banned the exports. That would be the only effect.
Anybody think that food, cars, computers etc are more expensive because we “allow” export?
You might get a temporary drop in price, like we see in Natural Gas today. But also look at how that Natural Gas drilling in “dry” fields is dropping fast. Many rigs that were drilling for gas have moved to oil in the last couple years. And most of the gas drilling is after “wet” fields that also produce significant Natural Gas liquids. In some areas, the gas is merely a by-product of the oil or condensates that are the primary drilling target.
But if we don’t allow Natural Gas exports, or find a way to quickly use more of it ourselves, we are going to see new drilling for dry gas nearly stop. Those shale wells loose production rates quickly due to the low porosity of formations. Our current cheap natural gas is going to change. Either the demand will go up or the supply is going down. The companies cannot afford to do differently.
The reason the drilling in places like North Dakota and Texas is booming IS the high price. Artificially force a position that lowers the price and that boom, the associated jobs for steel, cable, roads, housing, etc all end with it.
We need to grow more domestic production. We need to open more areas, encourage more drilling with reasonable regulations. That way we will continue to grow our resource and jobs base while gradually lowering price with a growing supply to the world market. Otherwise, we are just setting ourselves up for even greater punishment later.
That has changed more in the last year or two. Take a look at the following breakdown of petroleum exported over 6 months.
Ultra-Low Sulfur Diesel and Conventional Finished Motor Gasoline now exceed the volumes we ship out for residual oil and petroleum coke. We finally have a bit of excess refinery capacity again and it is helping our trade balance. Crude oil imported in, more expensive refined products shipped out.
Is that the time period when the watermelons were doing global freezing?
Said the *former* Shell Oil president.
Psst. Hey, you...yeah, you...wanna buy some algae?
Heard it put very simply on a local radio talk show that a drilling rig in west Texas is equal to a two million dollar construction project every two weeks. West Texas has over four hundred rigs running in the Permian Basin, each averaging a new well every two weeks. 26 new wells per year per rig is a lot of money, lots of damn good paying jobs, lots and lots of tax money, houses, new cars, clothing and medical care.
This country is the dumbest on the planet for not drilling everywhere there is a potential for a producing well. Just down right ignorant.
BTW, to save gas, I can always bum Mom’s Hyundai Sonata. B-) Sometimes I change cars each day, my co-workers probably think I’m schizoid. B-)
Stats I see show farmers intending to plant record corn acreage this year. That syncs with the guys I know here in Indiana who actually drive the tractors too.
Thank you sir for your wise posts.
An island of knowledge in a sea of emotion.
Don't be misled.
The U.S. is now exporting a modest amount of fuel (refined product) from the Gulf Coast.
There is a reason, however.
Normally, the excess production on the Gulf Coast would be sent to the Northeast for consumption.
However, there is insufficient pipeline capacity to handle the excess production. Why? Because the environmentalists have created a legal bottleneck on additional products pipleline capacity.
So, why isn't the excess refined product put on a tanker and shipped to the Northeast?
Because federal law requires that all shipments between U.S. ports employ U.S. flagged ships and fully unionized crews. Which are prohibitively expensive. p> As a consequence, the excess refinery production on the Gulf Coast is exported to Caribbean markets. And the Northeast's requirements are met by imports from Nigeria.
It's more efficient that way!
Environmentalists and the federal government are 99% of what's wrong with our energy situation today.
That sounded really fast to me so I did a little checking.
45,529 wells drilled last year.
We averaged just over 1,875 active rigs per day last year.
Dang, the whole country include a few big offshore rigs averaged over 24 wells a year per rig. I also read this week about rigs in the Bakken averaging a million dollars a week in operating expense, per rig.
[ U.S. ports employ U.S. flagged ships and fully unionized crews. ]
Santo and Willard are owned by the UNIONS..
You cannot get elected Mass.. or Penn.. without the Unions..
No Newt.... NO win...
I'm sorry but this is not true. If it was "normally done" how was it done?
If the Northeast isn't getting their gas domestically, then they would be importing more, lowering our net exports.
What has happen is total US demand is down, while our refinery capacity grew over the years with expansions and upgrades of the existing refineries.
Finally, they crossed and we now refine more than we consume. So instead of shutting down a couple more refineries, we import raw crude, keep the jobs in the US, refine it and export a bit.
The East coast imports of refined products is actually down, not up.
Your post is proof of the utter failure of goverment schooling. Every adult American should know the basics without the details you’ve provided. Our innumeracy and ignorance of classical economics (reality) allows politicians to pretend to pull rabbits out of hats and get 51% of the voting public to believe it. You cannot have socialism with an educated public.
thack, just a thumb nail calculation. Son is drilling engineer for independent and they run straight holes about every ten days and horizontals about every 14 days. That is with no fishing, LC, or bad cement jobs. 350 well program.
Is that only drilling time? Or is it the time from starting one hole to starting the next?
Thanks for the info!
Hole start time to hole start time. Of course it does not include completion and sometimes not including frac jobs. So much going on now that frac outfits put you on a monthly frac job allocation.
Was born in oilfield family 60 yrs. ago and have seen some booms and busts but nothing like this. It is crazy when Subway sandwich outfit gives a sign on bonus!!!!!!!
So much going on now that frac outfits put you on a monthly frac job allocation.
So many people want to think oil companies are just gaining all the price difference. The reality is a lot of supporting industry, steel mills, housing, freight, etc gain a lot of money at these times as well. I've read several times that the amount of sand used for hydraulic fracturing is becoming a significant train freight item.
OK, I understood what you said above but if we imported less and instead of exporting excess(wouldn’t be excess if we didn’t import as much) finished product out of the country, sold it here, wouldn’t that bring prices down?
Let me add to that. If prices came down wouldn’t demand go up, people would drive more, boat more etc? To the point they wouldn’t have to cut back on production.
IF we imported less crude (only to our domestic demand, no exporting of products), we would idle more refineries, lose more jobs.
If the local stocks went up and drove the margin of gasoline price above crude price down, it would only be temporary. We would not continue to refine more than we use. We would have to shut down more refineries. And settle back to a price position I believe would be higher prices with less competition making less gasoline.
So then when our economy recovers, our demand go up, we would have to import more products from other countries.
I cannot believe having excess refining capacity is a bad thing. This IS the position we want to be in.