Oil imports plummet
Lots of good news in this article. Some of it was surprising to me.
I believe the shift to natural gas by some sectors is around the corner. Power production and heavy trucks, I believe will shift, but I don't think cars will.
Still. Energy independence? Really?! Some believe, and here's their case.
Domestic oil production is at a fifteen-year high.
Foreign oil imports are down.
The U.S. has announced production records at two of its major shale deposits this month.
Is it possible we're finally on track for that elusive thing we call energy independence?
Let's back up and look at the numbers...
The EIA announced last week domestic oilfield production hit a high not seen since 1997: an average 6.509 million barrels per day.
On top of that, foreign oil imports fell to 7.55 million barrels per day — a drop of 2.25 million bpd.
Foreign oil imports have, for the most part, been declining year over year for a while now...
In 2006, we imported an average of 13.7 million bpd; by 2009 that figure had dropped to 11.69 million bpd; and last year we imported 11.5 million bpd. For the first six months of this year, average daily imports were at 10.86 million.
Last week's plummet was a sharp one.
As it turns out, domestic oil stockpiles dropped alongside imports (from 2.45 million barrels to 365.18 million barrels).
All of this sent the price of oil futures on the New York Mercantile Exchange below $90 a barrel...
But interestingly enough, demand has slowed.
What does it all mean?
Well, for one thing, it means we aren't as close to achieving energy independence as those numbers might have you believe. The drop in imports was deceptive because it was supplemented with a drop in the inventories.
But it also means we can cut back imports without being in any immediate danger, since demand dropped while domestic production increased.
Earlier this month, North Dakota announced its Bakken Shale Formation hit a new high for oil production. Wells pumped 609,580 barrels per day — up from 598,510 the previous month and a mere 360,820 the year before.
Roughly a week later, the Texas Railroad Commission announced the Eagle Ford Shale hit its own record in July, pumping out 310,370 barrels per day. A year ago the Eagle Ford was only pumping 120,532 barrels.
In the first half of 2012 the EIA reported the United States had already met 83% of its energy needs — and should this pace last through the end of the year, we will be at our most self-sufficient level in 19 years.
What do we make of this mixed bag of data?
Demand and prices are dropping, but so are imports — while domestic production continues to climb.
Domestic energy independence certainly isn't just around the corner. I'd say it was bad news, but there's just no way to ignore the potential...
A steady uptick in domestic production is here and growing as drillers in the Bakken allow us to continue to wean ourselves from foreign oil.
Add to that new and improved enhanced oil recovery technologies that can get us there even faster, as they provide oil producers methods to access oil left in wells after initial recovery.
We can't expect our domestic oil addiction, which has been slowly declining in the past years, to suddenly plummet. It just doesn't work that way.
But we can get those drops to be a little bigger each year.
We just have to rely on the technology at our disposal — and make the most of it.
So why is reg gasoline at $3.45 in Florida?
I suppose because oil is sold - as I'm sure you know - on an international market, and the price is $97.83 a barrel, which - as I'm sure you know - is for a 42 gallon barrel, which - as I'm sure you know - is $2.32 for just the raw oil.
Originally Posted by Novaheart
And that raw material - per barrel - yields only 19.8 gallons of gasoline, which is then modified according to the whims of the EPA. The rest is put to use for the hundreds of other products that are made from raw oil.
You may not know that the above price is for West Texas Intermediate (WTI); the stuff from the middle east is graded differently and priced differently. Brent Crude is one classification you may have heard of. It runs about 20$ a barrel higher than WTI
Natural Gas, on the other hand, is not traded on a large scale international market, so what we produce in the U S is priced in the U S.
There was only one line in your post, so forgive me if I try to read between it. :smile-new: Drilling more in the U S will not, I think, reduce the price of oil. What it will do is emasculate the Arab nut cases who believe they have the U S by the nuts, and reduce the huge transfer of wealth from our country, which has a myriad of industries, to their countries, which have about 2 industries one of which is explosive vests.:friendly_wink:
The import may go down. But until we stop selling to foreign countries, the prices will still be way too high. When you take into account the taxes, and profits for the oil companies and businesses that sell gas; there is no reason for gas to be above .90 cents a gallon.
Starbuck just told you (correctly) that oil is sold on an international trading market.......and the price for raw, unrefined crude is $2.32 per gallon at the wellhead.......how in the hell can you get to $0.90 for the refined product?????
Originally Posted by LukeEDay
Short answer: Never gonna happen.........crude would have to sell in the range of $10 - $15 per barrel to result in finished gasoline to be sold at that price. If crude prices dropped that low, all of our new domestic production methods (like Bakken and Eagle Ford, as well as most of the offshore rigs) would become too expensive to compete, and would be shut down......we'd be back in the import business.....
How did they get .90 cents before? The prices are going up because the speculators and opec are fixing the prices. Get them out and you will see the prices go back down. When I said .90, I was referring to where it ends after the government, the gas stations, and the oil companies get their share. Anything over that is gouging and more money in the pockets of the speculators and opec.
Originally Posted by TVDOC
You ARE aware that oil sands, shale oil and many offshore extraction methods require a minimum wellhead price of at least $50 -$60 per barrel to cover expenses right???
Originally Posted by LukeEDay
They got to .90 before by importing virtually ALL of our oil from the ME, even the "oil patch" in Texas shut down, ask any Texan if they remember those days??
As the OP alludes, international oil prices are not fixed (by OPEC or anyone else), but vary hour to hour, based on supply and demand projections, the simple fact is that emerging nations are increasing the worldwide consumption, so even as US consumption declines, prices remain high because the demand is constantly nearly outstripping worldwide production capability. The US is but a small part of this complex structure.
I dunno about 90 cents, but I can see a future where oil production will fall along with demand (price). God only knows where it will settle out.
There are huge facilities being built to convert natural gas into its liquid form, and not just in the U.S. Indonesia (of all places) leads the pack, then Algeria, and Malaysia. And none of these will supply the U S, which has its own supply.
The thing that sells me on natural gas is (A) its world wide abundance, and (B) the fact that it is easily processed to LNG and shipped. After all, if Exxon Valdez had been carrying LNG there would have been no story. And GE actually sells a microLNG plant, which may be installed nearly anywhere for the purpose of converting NG to LNG. Oil refineries are no longer being built and are no longer welcome.
Looking forward, I think it will change the world the way the world changed in 1868 when whale oil became too expensive to deal with. And I think the world will be a far, far better place. After all, if we didn't need 11 super carriers to continuously deal with a potential disruption in oil (because we wouldn't care), and we stopped this vast transfer of wealth from the U S to everyone else...........I mean, just imagine the possibilities.
And I think it will happen very suddenly, and very quickly. I'm saying in the next 10 years; maybe even 5.:smile-new:
Search it out and see for yourself: Locomotives, ships, garbage trucks, buses, and soon, 18 wheelers; they are all shifting.
You've hit some good ones here Luke but this is a big strike. Oil will never be 10-12 dollars a barrel again even if you killed every speculator and commander every oil field around the world. Drilling costs today are $28/bbl minimum at the cheapest (in Saudi Arabia) and many fields like the Eagle Ford and the Bakken it is closer to $60 on their best day. Any trouble and it can get to $70 real quick. The last time you saw $.90, several thousand folks lost their jobs within a few months and a return to that price would create the exact same scenario. I survived that one and all the others during my 40 plus years but I saw a lot of friends who were dumped out the door by security guards brought in from outside. Several folks at XOM were invited to lunch only to hear an announcement after the meal that there cards keys were now invalidated and they would have to make weekend arrangements with their supervisor to retrieve their personal belongings.
Originally Posted by LukeEDay
Low cost gasoline is a faint memory truly never to be hoped for again.
If anyone thinks XOM or CVX can do anything about it, check my post on just who is "Big Oil" in the Economics venue.
The company I pump for has to make 60.00 per barrel to break even, obviously it needs to be considerably higher than that for them to stay in business, It still kills me spending 3.70 per gallon on diesel but if the EPA would get off our backs that would be much cheaper.
Originally Posted by Retread