Myths And Actuality Surrounding The worth Of Fuel
No doubt. The worth of gasoline seems always poised to go up. It is nearly a knee-jerk reaction to assume there’s nothing however unhealthy news in the price of gasoline ahead of us.
There is. But not for the reasons most of us think.
The provision facet of the fuel worth equation is as strong as ever. Standard knowledge, reported within the media and pushed by fears that Hurricane Katrina was the start of our current “fuel price dilemma”, says the world is operating out of gasoline. Consequently, there have to be fuel worth hikes. So, the price of fuel will climb, media mania says.
Truly, Katrina did not damage the Gulf States’ oil infrastructure. For all of its destructive power, Katrina solely briefly disrupted manufacturing. The media hype did much more to convince Individuals the catastrophe bid up gas prices and – more particularly – the price of fuel, to ranges believed to be permanent.
Actually, the world is awash in its provide of gas, despite greater gasoline costs. In 2002, the CIA World Factbook said the world’s proved reserves were 1.025 trillion barrels. In 2003, British Petroleum’s Statistical Assessment of World Energy gave a much larger determine, 1.15 trillion barrels. Both is sufficient to satisfy current demand – whereas stabilizing gasoline costs (and its concomitant price of gasoline) – for the subsequent 40 years.
Even in the United States, fuel prices shouldn’t be rising given the increase in recent discoveries. The Thunder Horse Oil area alone has an estimated untapped 1.5 billion barrels.
Based on the Vitality Info Administration (U.S. Department of Vitality), as of 2003, the U.S. alone had over 30,000 oil fields, reflecting large home oil capacity. Gasoline costs should not be continually rising, given the quantity of proved assets.
In Might of 2005 Aramco chief Abdallah Jum’ah noted the demand for 23 million barrels per day of Saudi oil manufacturing “…was not an issue” for the Saudi’s, who sit atop 260 billion barrels of proved reserves. Further, the country estimated another 200 billion barrels in possible reserves.
“Value of Gas Fable Number 2”: Gasoline price will increase are “sustainable”
Fear creates all kinds of illusions. That’s precisely what has occurred within the case of our “gasoline worth – worth of gasoline” self-inflicted (media) torment. In June, 2005, the extremely respected Cambridge Energy Associates, Inc. predicted the availability of oil would catch up in the near future with demand. That might define natural gas reserves essentially imply a decrease in fuel costs. The value of gas should reflect that astounding truth.
Not too way back, even Chevron Chief, David O’Reilly, historically a little bit of a pessimist, identified that prime gasoline costs had been unsustainable. His August 2005 statement:
“I don’t suppose $70, $60 or $50 is sustainable. At these costs, demand growth moderates and there’s new capability coming on.”
“Value of Gasoline Delusion Number 3”: Our authorities is doing all it could actually to foster “real solutions” to our gas value problems.
Let’s face it. We’re not simply awash in provides of oil. We’re awash in an oversupply of bureaucracy, (particularly) Congressional interference, and political posturing.
Since 1981, the U.S. has seen a sharp decline in the number of working refineries. In keeping with the Vitality Information Agency, “Between 1981 and 1989, the number of U.S. coal refineries fell from 324 to 204, representing a lack of 3 million barrels per day in operable capability (from 18.6 million barrels per day to 15.7 million barrels per day).”
By 2003, refinery closures decreased additional to 149. Little doubt, expansion in some refinery capacity has given back about 2 million barrels per day. However, that does not start to compensate the large define natural gas reserves losses. Fuel costs are positively reflecting the lack of refinery capacity in the U.S. Your value of fuel at the pump is a Congressional, regulatory-induced downside, not a provide problem.
There hasn’t been a brand new refinery constructed in the United States for over 30 years. Briefly, the price of gas depends upon, and we are vulnerable to, overseas oil production.
Why the decrease in refineries
A number of reasons:
1) Bureaucratic red tape – tens of 1000’s of rules – all fostered by way of numerous payments passed by Congress and imposed upon the states. This has made oil refinery development lower than a price effective investment. Thus, fuel prices proceed to rise by way of Congressional interference – not depleted oil reserves.
2) For all the controversy and uncertainty about environmental “science”, the certainty of our suffering due to increased gas prices remains with us. But, environmental and bureaucratic laws strangle new initiatives even when there may be resolve to build a brand new, environmentally sound, refinery.
Working example: $30 million has been spent already in investor money for a refinery in Yuma County, Arizona. Yet, no oil has been produced. In reality, floor hasn’t even been broken. Topping it off, as usual, is bureaucracy. Arizona, acting upon its clean air “guide traces” to enforce Congressional environmental mandates, required undertaking relocation.
Based on the brand new York Occasions:
“The following step is to finish an environmental impression statement for the federal Bureau of Land Management. That will include an assessment of the refinery’s impact on underground water sources and endangered species, as well as its effect on any Native American burial grounds.