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.

[hosepipe]

[ 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...

[thackney]

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.

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.

[1010RD]

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.

[biff]

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.

[thackney]

and they run straight holes about every ten days and horizontals about every 14 days

Is that only drilling time? Or is it the time from starting one hole to starting the next?

Thanks for the info!

[biff]

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!!!!!!!

[thackney]

Hole start time to hole start time. Of course it does not include completion and sometimes not including frac jobs.

Thank you!

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.

[eastforker]

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?

[eastforker]

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.

[thackney]

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?

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.

[thackney]

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.

That is not an immediate demand increase. We would close refineries first.

What you need to realize is the margin on refining gasoline is tight now. Most of the refineries are buying oil at imported price, or buying coastal area domestic production at similar prices. The lower price of West Texas Intermediate to Cushing does not supply that many refineries.

[Fresh Wind]

Oh. So we ARE out of the previous recession, then?

Yes, but only because government spending is figured in as part of the GDP. And we all know what government spending has done under King Barry.

[thackney]

This is the price that gets quoted in the news.

But much oil, domestic and imported, is selling at a higher price. (Note: all are Dec 2011 prices at the end. I don't have more recent data for the ones below, so I wanted to compare apples to apples of high grade oils at the same time frame)

You can look at the WTI bottleneck and the associated price drop and want to do the same with gasoline.

But the reality is, that condition is not going to last. Canada finds out they cannot expand that flow capacity quickly enough in the US, so they start expanding pipelines and export to Asia. Pipelines from Texas Gulf Coast to Cushing are being reversed. I guarantee more oil drilling would be hitting the central part of our if those prices were not depressed, in the Kansas Mississippian limestone for example.

[Dogbert41]

Comforting news indeed! Sometimes I tend to let the negatives overrule.

[Pigsley]

I feel so badly for those that will suffer if gas goes to $7.00....And suffer lots will, when they can’t get to work. That said, I’ll be glad to take the hit if this gets the fraud out of the WH. This guy wants to take us down.