Former Shell Oil President: We Won’t Have Enough to Fill Gas Tanks No Matter the Price

CNS News ^ | 3/13/12 | Melanie Hunter

[Nachum]

Former Shell Oil President John Hofmeister predicted that the U.S. won’t have enough oil to fill gas tanks whatever the price and that high gas prices could lead to another recession, because people won’t 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. won’t see $5 a gallon gas and that the rhetoric over Iran is responsible for driving up gas prices temporarily. “There’s a lot of views out there, and I’ve been articulating a $5 price.

[newzjunkey]

Officially, and by strict definition, we are out of it and have been for months, maybe years. The recovery has been the most pathetic in 70 years and that's the problem. There just isn't the growth seen with prior recoveries in recent decades.

It's obvious the remedies tried by Obama, Pelosi and Reid were the wrong prescription.

[thackney]

Bill O’Reilly understand less about the oil industry than my dogs do.

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.

[trailhkr1]

Former Shell Oil President: We Won’t Have Enough to Fill Gas Tanks No Matter the Price

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.

[hosepipe]

THEN Thack is the price so damned high?..

Keep it simple.. I’m more of a Beagle..

[hosepipe]

correction... WHY?...

[thackney]

As of 2012 we are a net exporter of oil. Demand has really dropped and the excess production is going overseas.

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.

[PSYCHO-FREEP]

The “Exports” we send out to other countries, are mostly low grade products that do not meet the strict standards set by the EPA. (High Sulfur crude, Asphalt, etc,) In other words, we sell what cannot be used here.

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.

[thackney]

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.

[thackney]

The “Exports” we send out to other countries, are mostly low grade products that do not meet the strict standards set by the EPA.

That has changed more in the last year or two. Take a look at the following breakdown of petroleum exported over 6 months.

http://www.eia.gov/dnav/pet/pet_move_exp_dc_NUS-Z00_mbblpd_m.htm

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.

[hosepipe]

WooF!..

[SaraJohnson]

Is that the time period when the watermelons were doing global freezing?

[Gene Eric]

Said the *former* Shell Oil president.

[JPG]

Psst. Hey, you...yeah, you...wanna buy some algae?

[biff]

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.

[Nowhere Man]

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.

Yeah, my Blazer gets 10 MPG, but if that's what it takes.... BTW, love your tagline, swiped!

[Nowhere Man]

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-)

[nascarnation]

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.

[nascarnation]

Thank you sir for your wise posts.

An island of knowledge in a sea of emotion.

[okie01]

If the oil producers want to export the oil we can find new producers that WON’T..

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.

[thackney]

four hundred rigs running in the Permian Basin, each averaging a new well every two weeks. 26 new wells per year per rig

That sounded really fast to me so I did a little checking.

http://www.eia.gov/dnav/pet/pet_crd_wellend_s1_a.htm

45,529 wells drilled last year.

http://investor.shareholder.com/common/download/download.cfm?companyid=BHI&fileid=552028&filekey=9E1E3886-220B-479F-91BC-91D750D88111&filename=Rigs_by_State_030912.xls

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.