It’s the mother of all boners. Barack Obama gambled the future of the US oil supply on Brazil.
He lost. China kicked his butt.
In March Barack Obama put on his best groveling suit (you know, the same one he wore when genuflecting to the Saudi King) and went off to Brazil looking for foreign oil. The schtick was thick:
Obama started by saying that being in Brazil was a great joy, and thanking his hosts on behalf of his wife Michelle and family for the warm welcome they received.
The US president said it was a pity that he had to come only days after the Carnival but: “my only regret is that we missed the party by coming a few weeks after Carnival. Maybe that’s the best — since I’m not sure I would have had the same level of productivity from my staff”.
While emphasizing US weaknesses, he promised the US would be Brazil’s best customer:
Obama also spoke about energy. “The oil you recently discovered off the shores of Brazil could amount to twice the reserves we have in the United States”, he said, adding that the US want to help Brazil with the technology needed to extract it and, when Brazil is ready to begin selling the commodity, “we want to be one of your best customers”.
That is not to be. Brazil blew off Obama for China instead:
BUENOS AIRES — Off the coast of Rio de Janeiro — below a mile of water and two miles of shifting rock, sand and salt — is an ultradeep sea of oil that could turn Brazil into the world’s fourth-largest oil producer, behind Russia, Saudi Arabia and the United States.
The country’s state-controlled oil company, Petrobras, expects to pump 4.9 million barrels a day from the country’s oil fields by 2020, with 40 percent of that coming from the seabed. One and a half million barrels will be bound for export markets.
The United States wants it, but China is getting it.
Less than a month after President Obama visited Brazil in March to make a pitch for oil, Brazilian President Dilma Rousseff was off to Beijing to sign oil contracts with two huge state-owned Chinese companies.
The deals are part of a growing oil relationship between the two countries that, thanks to a series of billion-dollar agreements, is giving China greater influence over Brazil’s oil frontier.
Apparently deciding that the US needed neither the oil nor the jobs, Barack Obama rejected the Keystone Pipeline.
President Barack Obama’s decision yesterday to reject a permit for TransCanada Corp.’s Keystone XL oil pipeline may prompt Canada to turn to China for oil exports.
Prime Minister Stephen Harper, in a telephone call yesterday, told Obama “Canada will continue to work to diversify its energy exports,” according to details provided by Harper’s office. Canadian Natural Resource Minister Joe Oliver said relying less on the U.S. would help strengthen the country’s “financial security.”
The “decision by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market,” Oliver told reporters in Ottawa.
Once more, China will be the beneficiary.
Obama is strangling domestic oil exploration with bans and moratoriums pretty much everywhere in the US and at the same time is pouring billions of US tax dollars down the toilet on failed “green energy” projects for his top donors. Then in liquidation Obama made sure his donors got their money before us taxpayers.
No energy, no jobs, no oil. Barack Obama does seem determined to lead the United States into becoming a third world nation while making certain China prospers.
Change is….absolutely necessary.
DrJohn has been a health care professional for more than 30 years. In addition to clinical practice he has done extensive research and has published widely with over 70 original articles and abstracts in the peer-reviewed literature. DrJohn is well known in his field and has lectured on every continent except for Antarctica. He has been married to the same wonderful lady for over 30 years and has three kids- two sons, both of whom are attorneys and one daughter on her way into the field of education.
DrJohn was brought up with the concept that one can do well if one is prepared to work hard but nothing in life is guaranteed.
Except for liberals being foolish.
So is oil fungible worldwide or not? The XL pipeline decision is an atrocity (probably designed to line Warren Buffet’s pockets, the environmental aspects are just a fig leaf). But so far as the Chinese buying Brazilian oil… isn’t that oil they would have been buying on the world market anyway? I.e. if they buy more Brazilian oil, then we just buy more from the Saudis? Genuinely curious; it may well be that there is *not* actually a genuine free market for oil worldwide and I am somehow missing part of the picture.
The United States wants it, but China is getting it.
Less than a month after President Obama visited Brazil in March to make a pitch for oil, Brazilian President Dilma Rousseff was off to Beijing to sign oil contracts with two huge state-owned Chinese companies.
So what? We live in the “Global Economy” with “Free Markets”. So the globalist/neocons can’t stand the fact that someone out-bid them?
Sorry Free Traitors, step up and take a nice, big bite out of your shi& sandwich. You bought it, you eat it.
@Ivan
There is no “free trade” in oil when we cannot pursue our own supply.
DrJohn – now you’re just being irritating. ‘Free trade’ means that oil goes to the highest bidder; if it’s ‘our own supply’ that would mean that it’s somehow off limits to others for whatever reason, i.e. it’s not free trade (and our domestic oil is actually in this category, but because we’re a big net importer it’s moot). You seem to want to have your cake and eat it too, using the rhetoric of free trade while actually advocating for something else. Can you spell out in a little more detail what should happen with the Brazilian oil?
@bbartlog
What should happen to it is that we shouldn’t need it.
1. The drilling moratorium in the Gulf, continued de facto even after an injunction against it was issued, caused numerous deep water drilling rigs to pull up stakes and travel to Brazil. The cannot sit idle or their owners will go bankrupt.
2. Brazil received 2 billion dollars in U.S. stimulus funding to support oil drilling.
3. George Soros is a large stakeholder in Brazilian oil operations.
4. New U.S. domestic sources of fossil fuels such as new-technology-derived shale gas and petroleum, have been subjected to contrived regulatory attacks by the U.S. government regulatory agencies.
5. Billions of dollars in Federal money have flowed to doomed wind and solar cell projects owned by Obama campaign bundlers. These projects are in direct competetion with fossil fuel. The more expensive fossil fuel gets, the better the economic justification for “green energy.”
6. There is no example of a green energy project continuing after government subsidy was removed.
7. The official U.S. government position on climate change remains that of the UN – that anthropgenic global warming is a real and immediate danger, and that fossil fuel use must be curtailed by government action.
8. The Chinese government does not just “buy resources on the open market.” They lock them up with special exclusive arrangements that are restraints of trade. And make no mistake – Chinese oil companies are arms of the Chinese government. They have no problem for example paying enormous bribes to local officials, which U.S. law makes illegal for U.S. firms. For the Chinese, locking up the oil or other vital resources is not just to ensure availability for themselves. No, there is a strategic economic and military purpose in denying it to their competitors, for which they are willing to incur substantial expenses that a private company would not. Look for example at their cornering of the vital rare earth metals market, and how weak has been our response.
———————————————————————————————————–
So Ivan, does that look like a free market to you?
As far as your hysterical accusations of hypocrisy and collusion, you can shove them. Crank.
In classic Kleptocracies the dictator serves up as much of the wealth of his nation to himself and his friends and family.
Obama is dismantling America’s ability to sustain itself (not an uncommon thing in a kleptocracy) while enriching his donors and friends.
One thing in America’s favor that is NOT common among other kleptocracies is our representative demoncracy with its Electoral College.
Note the attacks on the Electoral College?*
That’s not by accident.
*The Popular Vote Compact has been signed into law in nine states, for a total of 132 of the 270 electoral votes needed to win the presidency. The bill enjoyed a major boost from the state of California, which signed it into law Aug. 8 and has 55 electoral votes, the most in the nation. The law will go into effect once the electoral votes of the states that have signed it equal or exceed 270.
Doesn’t Soros own a large stake in Petrobas?
Oops, sorry, didn’t see Wm T Sherman’s post before posting my question/
I previously posted the following on another thread:
http://www.washingtonpost.com/opinions/five-myths-about-the-keystone-xl-pipeline/2011/12/19/gIQApUAX8P_story_1.html
If we don’t build the pipeline and buy their oil, the Canadians will sell it to China.
So what? World oil prices depend on how much oil is produced — not who sells what to whom. Whether the United States or China buys oil at the world price from Canada or Brazil or Saudi Arabia or Nigeria won’t affect U.S. economic fortunes. Some argue that buying oil from Canada rather than elsewhere would shrink the yawning U.S. trade deficit, since Canadians are more likely than others to spend their petro-profits in the United States. But Canada gets richer no matter whether it sells its oil to American or Chinese consumers, and its newfound wealth spills over to the U.S. economy regardless. What ultimately matters to our economy is not whether the United States or China buys oil from Canada — it’s whether Canada produces and sells that oil at all.
The fate of the Keystone XL pipeline will be of limited consequence to either long-term U.S. energy security or climate change (though its rejection will probably be ugly for U.S.-Canada relations). The Keystone decision ultimately became far more about symbolism than substance. It’s a shame that so much attention was diverted from things that matter more.
– Larry Weisenthal/Huntington Beach CA
Larry, I thought you live in So Cal.
Were you totally unaware of the large percent of our local pollution that travels cxross the Pacific Ocean from FILTHY China and into our air?
It comes to a substantial proportion of our air pollution.
Hey Larry tell it to the 20,000 people who are out of a job.
Well Larry,
As I recall, you’ve represented yourself as a businessman here before. So, you’re telling us that supply chain length and complexity do not directly effect the cost of goods? Really?
Those on the left routinely whine, and howl about our military involvement in the middle east, a military involvement based on the strategic importance of the middle east, yet simultaneously reinforce that strategic importance by denying the use of natural resources within our own hemisphere.
It’s a shame the left so often diverts attention from fulfilling the energy needs of the US with politically correct nonsense.
Hi Nan. I agree with you about China contributing to California air pollution; more importantly, so does science: in one study, 29% of the air pollution in the San Francisco area came from Asia:
http://pubs.acs.org/doi/abs/10.1021/es101450t
Of course, the air in So Cal is worse than in Nor Cal; so the relative contribution of Asian air pollution would be less. But this is a world problem. The Canadian oil is relatively dirty; it’s going to get burned up somewhere. Where ever it gets burned up, it’s going to degrade the world’s air. I don’t offer it as an argument against doing it. Just trying to improve the level of understanding regarding this debate.
Hi Sherlock: The GOP gave Obama an entirely arbitrary ultimatum. “We demand an answer today.” Obama gave the classic response to such a demand: “If you have to have your answer today, the answer is no.”
A lot of people in Nebraska didn’t want their water supply threatened. What’s going to happen is that the pipeline will be re-routed to avoid the water supply and the project will eventually be approved.
Hi JustAl: On this blog, we’ve previously discussed oil transport costs, as a function of price of gasoline at the pump. I don’t recall the precise percentage, but it’s entirely trivial.
– Larry Weisenthal/Huntington Beach CA
I agree JustAl! If we ever get into a long war where energy targets get top priority, we want all our energy sources as close to home as possible. A pipeline from Canada is certainly a much more secure source then tankers from the middle east.
Just Al:
Larry has represented himself as an M.D. He displays all the characteristic common sense and humility of the breed, and then some.
It’s not an open market when a mercantilist country like China is involved. They look at this differently than we do, and we ignore that at our peril.
It’s not an open market when the OPEC cartel controls so much of the world market.
And has been pointed out, during time of confilict petroleum shipped over the ocean is more vulnerable to interdiction than a pipleine on the same continent.
You remember what precipitated Japan’s attack on us in 1941? We cut off our petroleum exports to them for strategic and political reasons – specifically over their agression in Manchuria. They would have attacked us eventually anyway, but they had to hurry up and seize the Indoneisan oilfields or their military would have been crippled within 90 days or so.
This is not subtle stuff. All you guys claiming that petroleum is sold worldwide on an open market really should stop and think about this. It’s almost as if you really know better, and want our nation to be weakened.
There is no “free trade” in oil when we cannot pursue our own supply.
You’re kidding, right? What is the point in “securing our own supply” when the oil companies just refine it and ship it to England or South America where the oil companies can get higher profits?
Oh, you didn’t know that is why US fuel prices are so high despite demand continuing to fall, did you?
Go on, admit it. You didn’t know that.
Typical free trader.
Amended Title:
“Barack Obama: no jobs, no oil, no energy, NO CLUE!”
The man has an absolute disdain for America, its ideals and worse of all its workers. He will not be happy until we are a third world Socialist dump! I firmly believe this. Every argument, every fact if one will just open one’s mind points to the downfall of this country led by a president that does not give one DAMN about this country or its people!
Bottom line in this case! Loss of jobs, higher fuel prices and in the end a reversal back into the low end of the recession that is really a depression and which this country has not gotten out of!
Hi Wm T:
It’s not an open market when the OPEC cartel controls so much of the world market.
And has been pointed out, during time of confilict petroleum shipped over the ocean is more vulnerable to interdiction than a pipleine on the same continent.
OK; but you are thinking of a doomsday scenario — a 100% OPEC oil embargo. This won’t happen. The OPEC countries are much more dependent on selling oil to the USA than the USA is dependent on purchasing oil from OPEC. Given a 100% OPEC embargo, we’d survive. They wouldn’t. Rather, we’d survive long enough to make them reverse their policy.
In terms of cost to US consumers, US produced oil has always been sold at world market prices. Canadian oil will always be sold at world market prices. To my knowledge, the only time US oil has ever been sold at less than world prices is when Nixon imposed price controls. So it doesn’t matter from where it’s pumped: West Texas/Brazil/Venezuela/Saudi Arabia/Russia/Canada. We are going to pay the exact same price at the pump.
– Larry Weisenthal/Huntington Beach CA
Oh, you didn’t know that is why US fuel prices are so high despite demand continuing to fall, did you?
Not quite so simple. In the long run, nothing brings down prices more than oversupply. Maybe a few more refineries would help, but Obama seeks to close them all instead.
Not quite so simple. In the long run, nothing brings down prices more than oversupply. Maybe a few more refineries would help, but Obama seeks to close them all instead.
What? Obviously, you don’t pay attention to the US oil market or you wouldn’t speak so ignorantly. Here, let me help you:
Why are gas/diesel prices at all-time high levels in the US when US consumer demand keeps falling from their 2008 highs? Doesn’t that seem to go against the law of supply and demand????
So we have oversupply, yet the price doesn’t fall.
DUH. I mean honestly, it’s like talking to a brick wall DJ.
Larry said,
In terms of cost to US consumers, US produced oil has always been sold at world market prices.
WRONG. Why make up this shit? Honestly? Are you ignorant or a liar?
DJ said:
Maybe a few more refineries would help,
You’re kidding, right? Since gas/diesel demand is DECLINING due to an excess of refined product, why would we want/need MORE refined product since there isn’t a market in the US for it???
You take econ 101?
Hi Ivan. Here’s what I said, qualifying my statement:
To my knowledge, the only time US oil has ever been sold at less than world prices is when Nixon imposed price controls.
If you care to correct the above statement, please do so.
Here’s a well balanced, thorough explanation.
– Larry Weisenthal/Huntington Beach CA
Larry, thanks for replying,:Of course, the air in So Cal is worse than in Nor Cal; so the relative contribution of Asian air pollution would be less. But this is a world problem. The Canadian oil is relatively dirty; it’s going to get burned up somewhere. Where ever it gets burned up, it’s going to degrade the world’s air. I don’t offer it as an argument against doing it. Just trying to improve the level of understanding regarding this debate.
IF the USA refined all that ”dirty Canadian oil” it would use cleaner methods than China will.
That was MY point.
China will get crude from Canada and let the chips fall where they may pollution-wise.
We would never have done that no matter whether a Republican or a Democrat were in office.
Why are gas/diesel prices at all-time high levels in the US when US consumer demand keeps falling from their 2008 highs? Doesn’t that seem to go against the law of supply and demand????
We talkin’ US demand, Willis?
And I presume you figure Obama to be re-elected and the economy to die and demand to drop even further.
Hi Nan (#25): I did miss the point that you were making. I agree; US refineries are probably quite a bit more environmentally conscious than are Chinese refineries. – LW/HB
Since gas/diesel demand is DECLINING due to an excess of refined product
Say what?
Larry – there was also the recent price gap between WTI and Brent crude, due to logistical bottlenecks. That’s a quibble though. Mostly I agree with you, and find it weird to have almost every commenter so far either not understanding basic economic ideas like supply, demand and fungibility, or else offering bogus criticisms of same. Or advocating oil autarky.
@WmTSherman: ‘It’s not an open market when a mercantilist country like China is involved. They look at this differently than we do, and we ignore that at our peril. It’s not an open market when the OPEC cartel controls so much of the world market.’
Well, it’s an interesting point. OPEC doesn’t matter as much as they used to. It is true that China has negotiated for oil exports from Brazil- fixed quantities over an extended timeframe – but won’t they still be paying market price? I can’t see their negotiations as some sort of hostile act. They offered loans and made a deal. Seems fair. No one is morally obligated to sell us oil.
bbart:
You are exactly right about Buffet. He is one of the major owners of BNRR (Burlington Northern Railway) which is the carrier for the oil coming out of the Baaken fields – the US side of the Canadian oil fields. If there were a pipeline to the refineries, you wouldn’t have to pay the shipping cost over the rails. Of course that is also the reason he wrote a “check” to help pay down the debt. Nothing like the payoffs of crony capitalism. While he plays the good guy, he has years worth of huge profits from the shipping costs of the oil.
And the unions got their way in the end since Bamie appointed two union goons to the NLRB that will enforce the rules that say unions can force more people to “join” whether they want it or not. Another win/win for unions/Bamie.
@Ivan21: ‘Why are gas/diesel prices at all-time high levels in the US when US consumer demand keeps falling from their 2008 highs? Doesn’t that seem to go against the law of supply and demand????’
No. You’ve confused consumption and demand, you fail econ 101. High prices have resulted in reduced consumption. Showing lower demand would require less consumption at the same or lower price (and anyway demand unlike consumption is not strictly a scalar quantity, there is a reason the supply versus demand graph shows two curves).
‘Since gas/diesel demand is DECLINING due to an excess of refined product’
Supply doesn’t affect demand, it affects price (and hence consumption). However, you are right that building more refineries does nothing about the current situation. Refinery capacity is more than adequate to process all the gas and diesel that will be consumed at current market prices, and given that the supply of oil will continue to either fall or increase only very slowly, it seems likely that gas prices will also remain high enough that no additional refinery capacity will be needed.
There is a substantial price differential among the various crude oils, based partly upon how much refining must be done after getting it.
For instance, today, light, sweet crude oil for March delivery on the New York Mercantile Exchange settled higher, at $99.58 a barrel.
ICE North Sea Brent crude settled up 72 cents at $110.58 a barrel.
Ok I’ll be upfront I am a college student and I don’t know a whole lot about this stuff yet though i am in a few economics classes… and that I have read a quite a few different articles on this topic on other sites. So its of my understanding that for some time now the US has been exporting more oil than they import… and clearly we are experiencing high gas prices (though there are MANY things that play into the cost its not just a one answer solution)
I feel like if we’re exporting more than we are importing and we’re having issues meeting demand than the logic is wrong somewhere..
Here’s an analogy to explain my thought process on this:
A farmer for example produces X amount of a given product… He has an abundant harvest, and it is more than enough to sustain his family through the year, BUT he sells the entire harvest at the farmers market, and leaves minimal if any of the harvest for his family at all. THEN he has to go to the store and buy for his family when he could have had it at no monetary cost. Granite nothing is free, by keeping product for himself he would be loosing out on profit but would it not save on travel expense to the store, time shopping when he has already put in time to render the crop… does it not give off a bad image to the customer buying his product… “here we bought watermelons (or whatever) from you, yet here you are the same after noon buying them at Wal mart… are your watermelons (or whatever) no good?” It absolutely goes against all common since! You take care of your own first, not everyone else.
Ok so it was mentioned over and over that oil is the same price no matter where it is derived from b/c of the world market… but Brazil imports 0% of there oil, everything that is used by consumers there, was drilled there, I read that on atleast three other sites, and I apologize for not referencing them I didn’t think to right them down, but you can find them in google if you search “Brazil oil trade with US” well if Oil is truly the same price regardless… then why is Brazil not importing oil too… why is this choice working in there favor. I believe someone had stated that free trade means that it goes to the highest bidder and if we had our own supply it would be off limits… does supplying ourselves with our own gas and preventing ourselves from paying the price of what others are bidding gas up too REALLY hurt us? I think that preventing ourselves from getting caught in the mumbo jumbo of having to be one of the ones standing in line to bid would put us at a benefit and allow us to be stress free thinking only of being able to make money when its our turn to auction off the gas we bring to market…
Also I read Obama’s full speech from when he went to Brazil… I do agree that through the entire speech he belittled America and made us seem inferior to Brazil somehow by telling them how great they are, and how far they’ve come and playing down America. Now I have also found that America is ranked 4th for oil production currently and Brazil is ranked 7th. So how does trading oil with Brazil give us jobs. Wouldn’t it just put more Jobs into Brazil and money in the pockets of Brazil… And Obama offered Technological support to them to fuel this… How again does that help America overall, it may give a few engineers a temporary Job through the government, but it won’t help everyone else, all we would have been employing is technological support, and furthermore what are we getting for giving them this service? the ability to be there best customer. And if gas is based on trade than how can we be someone’s best customer w/o always outbidding another country? I feel like that just goes against all levels of common since. I would never walk into a business deal and say I’m going to give you all this money to fuel YOUR wallet, and then I’m going to purchase your products, which will inturn fuel YOUR wallet, and is Obama or any country able to make deals on fuel trade, I mean if the trade is done by business, then what bartering rights does the government have in this in this in the first place, wouldn’t ALL of it be conducted through the businesses trading oil for production, and gasoline for sail? How can Obama turn down Canada or set up agreements with Brazil when he doesn’t own the oil?
And a side note on stupidity… we purchase oil from manufactures in Saudi Arabia, Yet we owe out the wazzoo to Saudi Arabia in bonds… So again… we have stupidity personified… For two reasons. First, we’re going into a country and proposing to help them fund something when you owe another country money…. WHO DOES THAT? That would be like owing your buddy 1,000 dollars and not having him fully paid off then borrowing another 1,000 from him again, and again and still not paying him back then using his money that he lent you (to help you) to go help someone else who doesn’t even need or want your help. Second, if we have enough fuel to ward off OPEC and we owe Saudi Arabia all this money then why not use the gas we produce in this country, FOR THIS COUNTRY, then use the money we’re not spending buying oil from them… to I DON’T KNOW…… PAY THEM BACK! But then again I’m not sure how much of oil trade is regulated by the government vs by individuals and corporations b/c if it has No regulation from the government at all then this is all related to businesses making the best choice for their company that will yield them the most profit, but if that is the case then how is Obama able to make the decision with Canada or Brazil, and who is Importing the oil? What benefit is the business getting by selling there oil on the market and then buying back at a higher price then what it cost them to produce it so that they can sell it here in America? b/c even that is ridiculous. And even if say its Company A that drills it and sells it as crude oil on the market and Company B is buying it to refine and Comapny C is buying it refined to sell at the gas station wouldn’t it still be cheaper to sell with in your own country to save on transportation cost. like I said earlier I really don’t know a lot about the oil market. I’m still learning about economics, and how everything affects one another; I’m taking my third economics class this semester I’m actually a Business major and in the Pre-Law program, but I find the way all this works very intriguing and I love learning about it, and I’m trying to wrap my mind around how this all coincides together to not add up to stupidity. Or is it just that we have a large number of people making financial decisions with absolutely ZERO common since, and found ourselves in a situation where we realize the truth in the adage “don’t underestimate the power of stupid people in large numbers!”
Seems as though the ”REPLY” feature no longer works.
But some are bringing up the point that we have excess production of finished oil product and thus export some.
We are, however, ten years away from putting a new (modern, cleaner) refinery on line.
We have none in the pipeline and it takes ~ 10 years.
So, are we PLANNING on stagnating?
Are we planning on shrinking our entire economy?
OR, are we hoping to grow?
We need to think about that.
Ten years is not that long a time.
For a couple of years, because of lawsuits by greenies and frozen plans for building refineries, we actually had to import 17% of our gasoline.
Thankfully, those days are past.
We should never plan to go back to that.
Most Keystone jobs were not for Americans and were temporary while they built a pipeline which would carry toxic sludge over the largest aquifer in the county. Good riddance!
@liberalmann
Temporary jobs?Maybe you heard of the stimulus? Nothing BUT temporary jobs. The difference is that these jobs wouldn’t cost the taxpayer.
No wonder you hate the idea.
No energy, no jobs, no oil. No clue Barack Obama . When I read a post that has the words global warming in the text, I stop reading and label it as nonsense. When I see a response that is 157+ lines long, I stop reading it and consider it a cut and paste rant. Other than that I’m OK with dissent.
Dr. J,
Tell me, if it costs less to “refine” Diesel, why is Diesel consistently more expensive than almost all grades of gasoline in the US?
Apparently a few are missing the diesel/price increase connections. Since 2004, the US has required low sulphur diesel, which increases the refining costs. And demand for diesel on the world wide market is increasing not only in the US, but in Europe and China. So the supply/demand does indeed factor in to diesel prices.
But wait… there’s *more*… LOL
Federal excise and state taxes are higher on diesel than regular gasolene. Now when you factor in cars using regular fuels are getting better mileage, lower taxes on regular fuel, and people driving less because of the volatile cost of regular gasolene, not only has diesel prices shot past regular fuel, but it’s enhanced by the increased production costs and increased demand compared to regular.
Which again brings me to Larry, who feels that the delivery costs from crude source to refineries is “trivial”, and seems to disagree that more abundance of crude on the world market will not affect price. It’s about three things, Larry.
1: That even what you consider “trivial” costs add up as consumption demands increase
2: Mexico, one of our biggest suppliers, is producing and exporting less and
3: That the US is not beholding to hostile foreign nations, but to those that are long time allies.
Now why any self-described enviro conscience person (ahem, Larry….) who wouldn’t want to consider it far more expedient fiscally (even if “trivial” in your opinion) to transport crude via methods that are cleaner than superships, and considerably safer for the environment, from a US friendly nation just to our north is simply mind boggling.
And anyone who still refuses to believe that an abundant supply of crude, not under the control of OPEC, will not affect world prices in a more affordable fashion, is going to have a hard time convincing anyone that he is, indeed, as economically savvy as he thinks.
I agree that Obama will ultimately approve the interstate and international permits for Keystone… but not before he milks it for his enviromental base in an election year. To hold a struggling economy and jobs hostage for his own political advantage is more like a petulant child than a leader concerned with the nation’s fiscal health. But then, considering the temporary denizen in the WH, it’s not surprising.
And BTW, INRE this comment:
Yes, there’s an example of a mature leader. Keystone wants to build. The US wants the jobs. Nebraska and Keystone already worked out an acceptable alternate route, but Transcanada doesn’t want to spin their wheels until Obama is good and ready to give the nod of approval to an energy plant that even Steven Chu supports.
Again, more proof that the man is more concerned with his own career than the nation’s fiscal health. It should have been a no brainer, and the GOP should never have *HAD* put to such a condition in a bill to prod a POTUS into what is a wise course for our energy, and our national security.
I guess libdud is unaware that not only had Nebraska worked out an acceptable alternative, but that the Keystone pipeline would have been one of only many pipelines also going thru the same area.
It’s all politics, twisted to appeal to the uncurious minds, such as the gullible libdud.
Gasoline and diesel prices are determined by price and quality of the petroleum raw material, availability of refinery capacity in a particular area, demand, and storage/transportation capacity; no single thing. Refined petroleum prices are among the highest in the nation in San Diego, for example, because none of it is manufactured here and transport/storage capacity is low. Gasoline and diesel are delivered by ship, and by a pipleline over the desert from Arizona, to the minimal available storage. None of it is made anywhere near here. Refinery capacity has been a bottleneck in many regions of the country because of hostility to refinery construction. Diesel used to be cheaper than gasoline. Now it’s more expensive. Speaking of fungible, the same distillate is used for home heating oil, diesel engines, and with additional processing, jet fuel. Increases in demand in any of the uses affects all uses. The only major difference between diesel for engines and for home heating is the legal designation, and the very high tax that must be paid on the product when it is classified as diesel.
This idea that Canadian bitumen will burn dirtier than any other source when it is put into engines or home furnaces is incorrect. It is called dirty because of the mining footprint and the higher energy cost of bringing it to specification. The final products have to meet emissions standards like products from any other petroleum source. If there is sulfur it will be reduced to acceptable levels.
We are currently importing 800,000 barrels per day of the even heavier Venuzuelan super-heavy bitumen. The Keystone extension would move 700,000 bbl.day of the somewhat lighter Canadian product. Canada is a friend, at least for now; a 2nd Obama term may change that. Venzuela is hostile and an OPEC member.
There are considerations beyond simple market forces for strategic materials. Always have been, always will be. Telling us that halting this project at the last moment, insulting our neighbor Canada, and sending the oil to China, that none of these things matter, is ridiculous sophistry. Short secure internal logistics matter. Staying on good terms with our allies matters. Projecting strength instead of weakness matters. Jesus Christ. You must know better than you say.
This is in response to meaghan’s post, but is for all. I recently commented on a post by Greg on another topic about his linked article that the US exports more oil than it imports. Greg had a reading comprehension failure on that article. It was only about the products of crude oil, and not about oil in general. Currently, we import roughly 8-9 million barrels of crude daily, while producing roughly that same amount domestically, and exporting virtually none of it. In the finished products category of oil, that includes finished gasoline, diesel, motor oils, propylene, etc., we export roughly 3 million barrels of the stuff, while still importing nearly that much finished product. In all, we are still a net importer of all oil, meaning combined crude and finished product, and by a very, very large margin. That isn’t set to change anytime soon.
For what it’s worth, it isn’t a surprise that people misunderstand this, as the articles I’ve seen written on it are either vague, or outright dishonest in their facts, or written with terrible word usage.
Thank you, John and Mata
Obama allowed the use of $2 billion in taxpayer dollars to help Petrobas and George Soros find oil to sell to China.
And Larry and Lib seem to think that’s great.
What Obama and his shadow government does to America, or rather the middle class is done with pure MALICE! There is no other reason – hishatred for anything american should be clear to all who observe him!
I don’t agree, cali. Mix together some self-absorption, some incompetence, some incurious corruption, and a pile of helpers and advisers with agendas of their own… and you can end up with someone like Obama, who may well appear to be malicious but is really just weak and out of touch. Genuinely sinister people are rare.
Guess who benefits from the pipeline being blocked?
http://weaselzippers.us/2012/01/24/warren-buffett-stands-to-make-huge-profit-from-obamas-rejection-of-keystone-pipeline/
Apparently a few are missing the diesel/price increase connections. Since 2004, the US has required low sulphur diesel, which increases the refining costs. And demand for diesel on the world wide market is increasing not only in the US, but in Europe and China. So the supply/demand does indeed factor in to diesel prices.
1. Are you saying that it costs more to refine diesel? Sure sounds like you’re saying that.
2. Your second point just makes my argument: we are shipping refined diesel from the US to foreign markets since the oil companies can get more profit on each gallon than they can in the US.
Free trade, again, screws the US citizens.