- Aug 7, 2004
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I posted this in OT with no response, maybe here it will fly....
After watching Oil Storm on FX, I had a few ideas.
Basically the movie based itself on a cascade effect.
A: Hurricane Disrupts Supply (Initial), international chaos to follow.
B: Port of Houston Shutdown - Supply Disruption Continues/Refining Capacity lost.
C: Civil rioting, national speed limit, chaos to follow.
D: Teamster strike, farmer strike, more civil rioting.
E: More Oil Imports
F: More Oil Terrorism - Supply Disruption/Refining Capacity loss
G: More Oil Imports
H: Oil goes to China (Who is on track to supercede US consumption by the way)
I: Oil comes back to US
In the end, all becomes well because refining capacity is restored and supply comes back because the US makes a deal with Russia.
Now, the chances of all those events happening specifically are not very high, but a few things are true.
Refining capacity IS at 100%. There is no refining capacity left. The last new refinery was built 30 years ago and increasing capacity is not something that happens overnight. You cant flip a switch and make things happen.
If the US has a loss of one refinery due to fire/whatever, there can be a loss of 1-3% of the entire national production.
The entire US economy is based on the concept of relatively inexpensive energy costs. If gas were to hit $5 a gallon, many industries would bankrupt themselves.
The SPR does have a capacity of over 700 million barrels. That can sustain the US for two months. HOWEVER - that is a calculation based on consumption of fuels, not the time it takes to initiate the drawdown, bidding, physical transportation of product and then refining.
if all hell broke loose and they needed to drain the SPR as fast as possible to ship crude to the refiners - and meet the "59 day import protection" status they would have to draw over 11 million barrels a day. I think that is physically IMPOSSIBLE to draw that kind of volume in 24 hours.
When Clinton released 30 million barrels from the SPR, that is based on 1 million barrels being released daily and then sold to the highest bidder.
Some things to think about...
How would you reduce US dependency on imported fuels?
I would explore three major options that are HIGHLY controversial.
In 2004, the US exported 2.3 billion worth of agricultural products to China. Soybeans to be specific. The US exported a total value of 6.6 billion in soybeans to the world in 2004. That's a lot of soybeans. I'm thinking that if we increase biodiesel research we can make Americas Breadbasket a tad more profitable.
Intitative 1: Increase biodiesel research as well as other renewable fuels.
1 bushel of soybeans yields 1.5 gallons of biodiesel. At a yield if nearly 35 bushels/acre that means that we can theoretically produce over 50 gallons of biodiesel per acre planted. The US has over 70 million acres of soybean crops, meaning that if we only utilize 10% of our current soybean crop as a renewable fuel source it will yield 350 million gallons or 10 million barrels of diesel fuel! It dosen't seem like much, but at this point it's a start. A utlilzation of 50% of current crops would be equivalent to nearly three day's total fossil fuel consumption.
Initiative 2: While researching alternative fuels, exploit current fuel sources like mad.
The US has an abundance of coal. Major electricity centers are powered by coal fired power plants, as it is a cheap and abundant source of fuel. Another major fuel is heavy fuel oil. A reduction in the use of oil fired plants would alleviate the burden on imports. My thinking is that we need to develop more coal fired power plants for the purposes of expanding our base load infrastructure.
Initiative 3: Demand is continually growing, supply is not. Curb demand by a price spike.
Refining capacity is at a maximum. There is no capacity left in the system. One of two things is going to give. 1: Expansion of current refiniers to meet demand. 2: Importation of refined product. As #2 is less economical, #1 is going to have to happen. Some hippies are going to complain, but something has to be done to provide for the future. To curb demand, increase the exise tax for all on road fuels. Use proceeds to fund Initiative 1.
That is all for now, discuss!
After watching Oil Storm on FX, I had a few ideas.
Basically the movie based itself on a cascade effect.
A: Hurricane Disrupts Supply (Initial), international chaos to follow.
B: Port of Houston Shutdown - Supply Disruption Continues/Refining Capacity lost.
C: Civil rioting, national speed limit, chaos to follow.
D: Teamster strike, farmer strike, more civil rioting.
E: More Oil Imports
F: More Oil Terrorism - Supply Disruption/Refining Capacity loss
G: More Oil Imports
H: Oil goes to China (Who is on track to supercede US consumption by the way)
I: Oil comes back to US
In the end, all becomes well because refining capacity is restored and supply comes back because the US makes a deal with Russia.
Now, the chances of all those events happening specifically are not very high, but a few things are true.
Refining capacity IS at 100%. There is no refining capacity left. The last new refinery was built 30 years ago and increasing capacity is not something that happens overnight. You cant flip a switch and make things happen.
If the US has a loss of one refinery due to fire/whatever, there can be a loss of 1-3% of the entire national production.
The entire US economy is based on the concept of relatively inexpensive energy costs. If gas were to hit $5 a gallon, many industries would bankrupt themselves.
The SPR does have a capacity of over 700 million barrels. That can sustain the US for two months. HOWEVER - that is a calculation based on consumption of fuels, not the time it takes to initiate the drawdown, bidding, physical transportation of product and then refining.
if all hell broke loose and they needed to drain the SPR as fast as possible to ship crude to the refiners - and meet the "59 day import protection" status they would have to draw over 11 million barrels a day. I think that is physically IMPOSSIBLE to draw that kind of volume in 24 hours.
When Clinton released 30 million barrels from the SPR, that is based on 1 million barrels being released daily and then sold to the highest bidder.
Some things to think about...
How would you reduce US dependency on imported fuels?
I would explore three major options that are HIGHLY controversial.
In 2004, the US exported 2.3 billion worth of agricultural products to China. Soybeans to be specific. The US exported a total value of 6.6 billion in soybeans to the world in 2004. That's a lot of soybeans. I'm thinking that if we increase biodiesel research we can make Americas Breadbasket a tad more profitable.
Intitative 1: Increase biodiesel research as well as other renewable fuels.
1 bushel of soybeans yields 1.5 gallons of biodiesel. At a yield if nearly 35 bushels/acre that means that we can theoretically produce over 50 gallons of biodiesel per acre planted. The US has over 70 million acres of soybean crops, meaning that if we only utilize 10% of our current soybean crop as a renewable fuel source it will yield 350 million gallons or 10 million barrels of diesel fuel! It dosen't seem like much, but at this point it's a start. A utlilzation of 50% of current crops would be equivalent to nearly three day's total fossil fuel consumption.
Initiative 2: While researching alternative fuels, exploit current fuel sources like mad.
The US has an abundance of coal. Major electricity centers are powered by coal fired power plants, as it is a cheap and abundant source of fuel. Another major fuel is heavy fuel oil. A reduction in the use of oil fired plants would alleviate the burden on imports. My thinking is that we need to develop more coal fired power plants for the purposes of expanding our base load infrastructure.
Initiative 3: Demand is continually growing, supply is not. Curb demand by a price spike.
Refining capacity is at a maximum. There is no capacity left in the system. One of two things is going to give. 1: Expansion of current refiniers to meet demand. 2: Importation of refined product. As #2 is less economical, #1 is going to have to happen. Some hippies are going to complain, but something has to be done to provide for the future. To curb demand, increase the exise tax for all on road fuels. Use proceeds to fund Initiative 1.
That is all for now, discuss!