I just want to share observations I made while watching coverage of Hurricane Ike. Friday afternoon, September 12, 2008, and Ike is still several hours offshore, but gas price rumors started flying today. I went online to check the veracity of the rumors, and the local news stations are doing live coverage from local gas stations. By 3 in the afternoon, gas was up 40 cents, from $3.47 to $3.77 all across the Jackson, MS area and they were showing some stations that had sold out and closed for the day. The story, both in rumor and in the news is that wholesale gas price has jumped by $1.00 because so much of the refining capacity is shutting down for the storm.
Hmm. What is wrong with this picture? Does anyone not remember that this happened with Katrina also? In 2005, Katrina and Rita disrupted some of the refining capacity and a large part of the drilling/pumping capacity of the northern Gulf Coast. For 3 years the public has complained, often loudly, about the price of gas, but none of the policymakers in Washington, either Republican or Democrat, made much of an effort even to talk about it. . . UNTIL AN ELECTION YEAR! Once they can make political hay from it and make empty promises, gas prices are the cause de jour!
As much as I would like to blame this on tree huggers, liberals, and democrats, I've got to admit, there has been little talk from either side until the election cyle kicked in. Oh, of course there were some on both sides that lamented how we were making ourselves slaves to the Middle Eastern oil barons and/or terrorists, and those who wanted to use the issue to push their global warming agenda, but they all are missing the point.
Now 3 years later, Ike is bearing down on Houston. The tragedy is going to be seen in the 60% of Galvestonians that refused to evacuate. I'm afraid the death toll, just from them, will be greater than with Katrina. But the Big News will overshadow the human tragedy. And that is that 17% of the refining capacity (according to at least one graphic on the Weather Channel) is located in the Houston area. The Christian Science Monitor says it is 13% in Houston and the Gulf Coast as a whole provides 24% of the oil & gas products of the US: <a href="http://features.csmonitor.com/breaking/2008/09/12/gas-prices-surge-as-ike-closes-in-on-texas/">Gas prices</a>.
“From an energy security standpoint, [Ike] is certainly fairly significant,” says Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University in Dallas. “We’ve got essentially one coast that is open for exploration at this point, and that’s the Gulf Coast, and it’s one of the most vulnerable from a weather standpoint.”
Hmm. Mr. Bullock makes my point before I can even finish stating it. The US energy policy is screwed up, and it has been since the '70s. No one president is to blame. No one party is totally to blame.
Why? Because they have all been cowed by the clamor of those who don't want "that in my backyard!" Whether it is environmentalists on the East or West coast who are more worried about fish and seals than about Human problems, or whether it is simply those who don't want their beachfront property values to drop, drilling and refining have been relegated to the Gulf Coast. If we had been drilling for the oil on the left and right continental shelves and under the Alaskan North Slope instead of relying on only the northwestern Gulf Coast, some of the weather-related supply and demand spikes that cause so much pain at the pump would be mitigated.
We have put all our eggs in one basket, people. How dumb is that? That is as bright as moving the US Congress, the President, the Vice President, and the Supreme Court into a single high-rise office building in a post-9/11 world. Not only is our basket almost totally dependent upon oil (we ARE addicted), for the most part, the basket is placed in the Gulf of Mexico in the gunsights of any hurricane that wants to take aim.
DUMB. DUMB! DUMB!!
Granted, we need different eggs in the basket -- more solar, wind, nuclear, etc. -- but in terms of driving to work in our mobile society, we need a more stable supply of oil until we can get the electric and hydrogen infrastructure in place. And that requires one of two options. One, buy more from foreign sources to cut our dependence on hurricane-prone Gulf of Mexico oil. . . OBVIOUSLY NOT THE ANSWER! Or, two, we can spread our oil/gas production around to other parts of the country, both inland and offshore. Sorry, California and Florida, that includes you! And sorry, enviro-nazis, that includes in the cute little polar bear habitat. By the way, if you think they are so cute and fuzzy, why don't you go hug a wild polar bear instead of a tree sometime!
We also need to build more refining capacity. That means refineries somewhere besides Houston, S. Louisiana, or Pascagoula, MS! How about inland somewhere and pump the oil there?
I have a hunch that a national stereotype/bias against backwards southern hicks in bare feet makes the rest of y'all think "Hey, let's put the refineries down there. They're to dumb to catch on!" Whatever the reason, if y'all don't want gas at $10.00 a gallon, you're just going to have to put on your big girl panties and deal with having drilling and refining in your neck of the woods, too.
It is WAY past time!
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Comments: 21
As for no new refineries built in the US, there is a new one being planned for Sioux Falls, SD and so far has passed all local hurdles. A new oil pipeline is being planned and permitted for it and further south. Not to mention many plants have had production expanded since Katrina. However, utilization rates have been down below 90% for a while now due to the worsening economy.
In the late 90's, I invested in Valero. I was impressed with the founder of the company and many of the things he had to say about the industry. I distinctly remember one rebuke he gave to the industry in one of his messages to stockholders where he chastised the major refiners for buying up companies to only shut them down. Understandable given the margins were so slim at the time that very few could recover costs. But, it also resulted in, according to his statement which I'll take at face value, removed almost 80% of the domestic refining capacity. Some of this would have occurred anyway with some plants as they were of such technology they couldn't be updated to meet new fuel standards. Which is another issue that helps keep fuel prices higher than they'd necessarily be.
Look at a list of the number of reformulated fuels required for different areas of the US. The last time I checked there were up to 15 different regional fuel standards that are in play part of the year to all year. In essence, we've balkanized our refined fuel supplies to the extent that the loss of 1 or 2 plants can greatly spike the prices in a region.
Which is it?
And I think that if you looked at this from the perspective of the gas station, they are risking their lives staying around selling you gas and bottled water, so you may want to stop whining. That said, there should be laws that limit price hikes in times of declared emergency, and that's the ONLY time.
Won't do any good if the Greenies won't allow more refineries to be built.
they are risking their lives staying around selling you gas
Here in TN, there's not risk to anyone's life (get out a map if you need to), but somewhere in the supply chain, somone is taking advantage of the situation in Houston. Prices are edging $5 and stores are out of gas.
I believe in free enterprise, but something is not right with this situation. Collusion and/or price gauging is apparent. Something needs to be done.
If you want something done, why not write your representatives and ask why we mainly only stockpile crude oil in the strategic reserve instead of refined fuels like Europe does in theirs to plan for emergencies.
Do you happen to know a source that shows where those pipelines originate, feed etc? I'd like to see if they really don't have any alternative sources built into the network for just such a situation. That's almost a national security problem, when you think about it.
I tend to believe that the Oil Companies are blowing smoke up our collective asses. I'll have to see how things play out over the next few days and weeks, though.
What annoys me the most is how there were anouncements on all the major news outlets of impending shortages, and because of all the people rushing out to fill their tanks, it became a self-fulfilling prophecy.
Too bad your tongue is in your cheek with that comment! Also, too bad your "solution" is not practical, but do you think it is practical to lump most of the drilling and refining capacity of the country in path of hurricanes? How 'bout, and I'm just thinking as I go here, you maybe SUGGEST A SOLUTION instead of just making snarky comments?!!??
You mean aside from S.3335, which democrats have tried to pass, which would have extended investment and production tax credits for renewables? You know, the bill that republicans have filibustered consistently, w. threatened to veto, and regarding which McCain failed to show up to vote?
"...there has been little talk from either side until the election cyle kicked in...."
Also, not true....
"If we had been drilling for the oil on the left and right continental shelves and under the Alaskan North Slope instead of relying on only the northwestern Gulf Coast, some of the weather-related supply and demand spikes that cause so much pain at the pump would be mitigated."
Nonsense!!!
"America is in a hole and it's getting deeper every day. We import 70% of our oil at a cost of $700 billion a year - four times the annual cost of the Iraq war. I've been an oil man all my life, but this is one emergency we can't drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil."
T. Boone Pickens (life-long republican, 2004 Kerry "swiftboater")
No and no. The solution isn't supply side - it is demand side. This is what a myopic perspective on this problem does. You should try reading Amory Lovins', Winning the Oil Endgame. It will open up all kinds of new ways for you to think about this problem.
The fact of the matter is that there is no short term solution to this problem other than decreasing use. That's what has made gas prices fall since record highs a month ago. Collectively, we reduced our miles-driven by millions. Driving less and increasing efficiency are the two best ways to lower gas prices - but even efficiency is not a short-term solution.
In one of his state of the union speeches, w. said, "America is addicted to oil." Too bad he didn't think "rehab" was too important. The fact is that we're experiencing "withdrawal symptoms." Obviously, there are demands for a "fix". That is exactly what your article is. You want a fix - regardless of the consequences. Paraphrasing the rest of your article - just gimme my gas!!! If you don't agree with me, you're sissies, or worse.
If we don't start looking at this issue the way Pickens (republican) and Gore (democrat) look at it, then we don't have a chance. That's the fact. I won't tell you to "put on your big girl panties" because I don't intend to demean you. But you, and everyone of the rest of us had better start looking at this thing squarely for what it is. Oil ain't gonna cut it for us any longer. We'd better start (soon) coming up with something else.
It'll never happen if the Republican money-grubbers retain the White House.
http://www.rextagstrategies.com/downloads
http://www.eia.doe.gov/basics/quickoil.html
Click on the more data link at the bottom of this basics page and you can dissect the statistics down to regions, states and so on. Also some good general info to be found as you roam around.