Gashostage.com

Scientists have criticised a major review of the world’s remaining oil reserves, warning that the end of oil is coming sooner than governments and oil companies are prepared to admit.

BP’s Statistical Review of World Energy, published yesterday, appears to show that the world still has enough “proven” reserves to provide 40 years of consumption at current rates. The assessment, based on officially reported figures, has once again pushed back the estimate of when the world will run dry.

However, scientists led by the London-based Oil Depletion Analysis Centre, say that global production of oil is set to peak in the next four years before entering a steepening decline which will have massive consequences for the world economy and the way that we live our lives.

According to “peak oil” theory our consumption of oil will catch, then outstrip our discovery of new reserves and we will begin to deplete known reserves.

Colin Campbell, the head of the depletion centre, said: “It’s quite a simple theory and one that any beer drinker understands. The glass starts full and ends empty and the faster you drink it the quicker it’s gone.”

Dr Campbell, is a former chief geologist and vice-president at a string of oil majors including BP, Shell, Fina, Exxon and ChevronTexaco. He explains that the peak of regular oil – the cheap and easy to extract stuff – has already come and gone in 2005. Even when you factor in the more difficult to extract heavy oil, deep sea reserves, polar regions and liquid taken from gas, the peak will come as soon as 2011, he says.

This scenario is flatly denied by BP, whose chief economist Peter Davies has dismissed the arguments of “peak oil” theorists.

“We don’t believe there is an absolute resource constraint. When peak oil comes, it is just as likely to come from consumption peaking, perhaps because of climate change policies as from production peaking.”

In recent years the once-considerable gap between demand and supply has narrowed. Last year that gap all but disappeared. The consequences of a shortfall would be immense. If consumption begins to exceed production by even the smallest amount, the price of oil could soar above $100 a barrel. A global recession would follow.

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In energy on Monday June 11th

Crude oil prices bounced back from Friday’s drop as light, sweet crude picked up 77 cents to $65.53 a barrel on the New York Mercantile Exchange. Gasoline futures ticked higher, as well.

I am actually surprised that oil prices have actually fallen this summer, it is not so surprising that fuel prices have not followed the same course.  Gas prices have not risen as dramatically as we all may have suspected it would, but it is still early and if the crisis in the Middle East continues to heat up, we might just get that oil price increase as well.

Why are ordinary citizens asked to pay more at the pumps?  Why should people like you and me, who commute everyday to work in economical vehicles have to pay more at the pumps to save the planet?  Look I agree that Global Warming is a concern but why tax everybody the same.  Why not add an insurance tax where people with the big bucks, who decide to get that H3 Hummer or the Corvette that drink the fuel with no practical reason other than “Status”.  These are the people that really need to pay.  Imagine taxing a single mom with three kids an addtional .12 cents a liter when she is barely making it as it is.  Tax on gas is not the solution.  Taxing people for spending too much money on “Status” type vehicles makes way more sense.  How many people who are driving those big Super Duty 4X4 pickups actually need them?  I bet less than half of those vehicles are actually needed for more than just status.

So here is my vote… tax the people that can afford it.  Tax the premium fuels, tax the big vehicles but stay away from the single mom or the family that is just squeaking by as it is.

Read the article here.

The Green party wants Canadian drivers to pay an extra 12 cents a litre at the gas pumps as the price of averting environmental “catastrophe.”

Leader Elizabeth May is boasting that her party is the only one politically brave enough to call for carbon taxes that would discourage automobile use and finance other tax cuts that would allow consumers to make smarter environmental choices.

“Right now, the Green Party of Canada is the only Canadian political party prepared to state this obvious reality,” May said yesterday. “We will use those carbon taxes to reduce taxes elsewhere.”

May rolled out her party’s environmental plan yesterday in part to coincide with the G-8 meeting starting today in Germany, where Canada’s action on this issue – or lack of it – is a major story.

The Green leader had harsh words for Prime Minister Stephen Harper and his announced intentions to be a “bridge” between countries that have signed on to the Kyoto air quality accord and the United States, which hasn’t.

“If we stop being with the rest of the world and start siding with George Bush, we are global saboteurs and that’s what Mr. Harper is doing right now in Germany,” May said.

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Gas prices are spiking again — to an average of $3.22 a gallon, and close to $4 a gallon in many areas.

And some oil executives are now warning that the current shortages of fuel could become a long-term problem, leading to stubbornly higher prices at the pump.

They point to a surprising culprit: uncertainty created by the government’s push to increase the supply of biofuels like ethanol in coming years.

In his State of the Union address in January, President Bush called for a sharp increase in the use of biofuels, along with some improvement in automobile fuel efficiency to reduce America’s use of gasoline by 20 percent within 10 years. Congress is considering legislation calling for a nearly fivefold increase in the use of ethanol.

That has forced many oil companies to reconsider or scale back their plans for constructing new refinery capacity.

In hearings before Congress last year, oil executives outlined plans to increase fuel production by expanding existing refineries. Those plans would add capacity of 1.6 million to 1.8 million barrels a day over the next five years, for an increase of 10 percent, according to the National Petrochemical and Refiners Association.

But those plans have since been scaled back to more than one million barrels a day, according to the Energy Information Administration, an arm of the federal government.

“If the national policy of the country is to push for dramatic increases in the biofuels industry, this is a disincentive for those making investment decisions on expanding capacity in oil products and refining,” said John D. Hofmeister, the president of the Shell Oil Company. “Industrywide, this will have an impact.”

The concerns were echoed in a recent report by Barclays Capital, which said the uncertainty about the ethanol growth “will do little to accelerate desperately needed investment in complex United States refining units.”

“Indeed, it is likely to deter and further delay investment, if not rule out many refinery investments completely.”

Even so, the current cost of gas — which in real terms is approaching the old peak of $1.42 a gallon in March 1981, or $3.31 adjusted for inflation — has renewed suspicions that the oil industry is looking for ways to keep profits high by delaying much-needed investments. Senator Charles E. Schumer, Democrat of New York, began hearings yesterday on the topic “Is Market Concentration in the U.S. Petroleum Industry Harming Consumers?”

And the House voted yesterday by a narrow margin to penalize any oil companies, traders or retailers found to be charging “unconscionably excessive” prices for gasoline and other fuels. President Bush will probably veto the measure because the White House has said such legislation would amount to price controls.

Experts point to many short-term reasons the United States is running low on gasoline, causing prices to rise: many oil companies are doing maintenance work on refineries; new federal rules make fuels cleaner but costlier; and a string of delays, fires and accidents in the industry have reduced supplies just when drivers are starting to hit the road for summer vacations. Many analysts predict prices will keep rising, then soften later in the summer as demand trails off.

Energy executives dismissed any suggestions that they were intentionally keeping gasoline off the market.

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As gas prices hit another record last Friday, Jeff Curro couldn’t take it anymore.

After owning the Shell gas station at 3075 N. 124th St. in Brookfield for 20 years, Jeff Curro has stopped selling gas. As gas prices rose, his profit margin dropped.

He wasn’t a motorist at the pump fed up by the blur of numbers spinning higher as he filled his tank.

Curro is a gas station owner who has stopped selling gas to his own customers.

After selling gas at N. 124th and W. Burleigh streets for 20 years, Curro turned off his pumps at his Shell station in Brookfield when the price he was being asked to pay was just too much.

Including the wholesale cost of gas and other taxes and charges, he was being asked to pay $3.44 a gallon Friday, a day when the competing stations down the street were selling gasoline for $3.47.

“Three cents a gallon doesn’t cut it,” Curro said. “It doesn’t pay the bills.”

Add to that the money he loses every time a motorist uses a credit card at the pump, and there was no reason to keep selling gas, Curro said.

Credit card companies and banks get an average of 2.75% on every gallon of gas sold, and credit card processing fees now rank as the second-biggest expense for gas station operators, according to the National Association of Convenience Stores.

“The way I see it is, I’m doing all the work of providing the labor, the wages, the electricity, the lighting, the maintenance of the pumps, the repairs and the insurance, which is quite substantial,” Curro said. “I’m doing all the work, and somebody else is getting fat on me.”

Curro isn’t alone in deciding to not sell gas anymore. Casey O’Gorman did the same thing. In business for 25 years near State Fair Park, his West Allis service station is now doing business exclusively as Auto Analyzers. The Shell name came down a few months back.

“I finally had to just pull the plug on it and say, ‘I can’t afford to do it anymore,’ ” O’Gorman said.

High wholesale prices
Curro and O’Gorman are leaving a relatively small and disappearing group of service station owners who both sell gas and repair cars.

Independent auto-repair shops face competition from car dealerships and quick-lube repair shops, and in the sale of gasoline, they compete against full-line convenience stores.

Most gas stations today double as convenience stores, and although they generate more than two-thirds of sales from gas, two-thirds of profit comes from in-store sales of cigarettes, drinks and food, according to the convenience store association.

When drivers are paying more, they think that means higher profits for the filling station, said Bob Bartlett, executive vice president of the Wisconsin Petroleum Marketers & Convenience Stores Association.

The case of the two Shell stations stopping sales of gas illustrates the challenges faced by independent station owners across the state, Bartlett said. Nine of 10 stations in the state are independently owned and run, he said.

Between Feb. 1 and Monday, Bartlett said, the average wholesale price paid by service stations in Milwaukee to buy gasoline rose from $1.66 to $2.94. Add in taxes paid to the federal and state governments, as well as transportation costs, and the average service station had to cover $3.47 on Monday, without charging any profit. On that day, stations were charging their customers $3.47 on average in Milwaukee, according to AAA’s Daily Fuel Gauge Report.

“People are upset about oil and gas prices, but it’s not this guy right here,” Bartlett said of the independent gas station owner. “He’s not OPEC. He’s not refining it. He’s buying it kind of like I am, right at the end of the line here.”

Sales up, profit down
Curro has been thinking about shutting down his gas pumps for about a year, and he has complained to his supplier about prices.

When he shut down his pumps, he was charging $3.59 a gallon, 12 cents higher than the competing stations nearby.

“Even at $3.59, I was making 15 cents, but I was still giving 10 of those cents to MasterCard,” he said.

Nationally, the Association of Convenience Stores estimates that sales rose 12% but profit fell 23% industrywide last year, and for the first time, credit card fees were higher than the industry’s profit.

Lower margins on the sale of fuel and credit card fees were the two main factors behind the drop in profit, the association said, as profit margins on the sale of fuel dipped to their lowest point since 1983.

Until January, O’Gorman and the predecessors at S. 84th St. and W. Greenfield Ave. sold gasoline on that corner since 1938.

He says he never made much money selling gas but started seeing margins nosedive last year when gas prices rose.

“More and more, it was crowding out my real form of income,” O’Gorman said, referring to car repairs.

“Then you listen to the public, and they say we’re gouging them. Who needs to listen to that? I’d need to have my head examined.”

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The House yesterday passed a bill that would make price gouging by gas stations and oil companies a federal crime as prices at the pump surpassed a 1981 record reached at the height of the Iranian oil crisis. The White House, which has threatened to veto the bill, warned the legislation amounts to price controls and would lead to gas shortages and lines like in the 1970s.
 
The cross over the threshold of $3.23 a gallon reported by GasBuddy.com equals the inflation-adjusted record high for gas prices and heralds a new era of high energy prices and scarcity of fuel as growing demand in China, India and the U.S. collides with scarce new sources of oil and sluggish increases in gasoline production worldwide. Economists say the House bill will not help to ease those shortages or bring down high prices.

Business groups said the bill would be difficult to enforce and would set a dangerous precedent by opening the floodgates to frivolous lawsuits, further driving away any hopes of increased energy production that would take the pressure off prices.

“This is a first step in addressing the outrageous prices we are seeing at the gas pump,” said bill sponsor Rep. Bart Stupak, Michigan Democrat. Prices in recent years have peaked at about the Memorial Day start of the summer driving season, but they could climb higher this year if hurricanes or conflicts in the Middle East or Nigeria disrupt supplies.

“This bill is all bark and no bite, and will do nothing to lower gas prices,” said House Minority Leader John A. Boehner, Ohio Republican. “No American likes paying high prices at the pump. … This bill could make the pain felt by consumers at the pump considerably worse.”

The supply pressures that have driven up gas prices this year eased somewhat yesterday as the Energy Information Administration reported an increase in output at U.S. refineries and a 1.5 million-barrel increase in gasoline stocks, which are about 7 percent below average for this time of year. That helped to reduce wholesale gas prices, though demand for gas remained strong, growing at a 1.2 percent pace.

In coming years, Americans face sharply higher prices for energy as they compete with burgeoning demand for gasoline to power cars in emerging giants such as China, India and Russia. A separate report from the energy agency Monday said energy demand worldwide will soar 57 percent by 2030. To keep pace with that demand, production of oil would have to grow more than 40 percent to 118 million barrels a day.

But because of dwindling reserves and production of petroleum, the report projects that other liquid fuels such as biodiesel and liquefied coal will meet about one-quarter of the increased demand. Economists say oil and gasoline prices will have to rise significantly higher for that to happen, since expensive technologies are needed to tap into the alternative fuel sources and make mass production possible.

The sobering outlook for energy resources was not discussed much yesterday as the House entertained a perennial favorite among lawmakers and the public: legislation enabling the Federal Trade Commission and Justice Department to impose on oil companies, traders and retail operators jail sentences and fines of up to $150 million a day for charging “unconscionably excessive” prices or taking “unfair advantage” of consumers.

The bill’s enforcement provisions would be triggered if the president declared an energy emergency such as might occur if hurricanes disabled Gulf Coast oil fields and refineries as they did in 2005 after Hurricanes Katrina and Rita. The bill could be enforced by state attorneys general and class-action lawsuits.

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Does this story remind anyone else of the California Enron scandal when power plants were shut down for routine maintenance to raise energy prices? 

BP Shuts 100,000 Barrels of Output in Prudhoe Bay for a ‘Few Days’ Due to Water Pipeline Leak

BP said Tuesday it will shut down 100,000 barrels, or one quarter, of its Alaskan oil production for a “few days” after discovering a water pipeline leak.
Analysts said the temporary loss of output at Prudhoe Bay should not have a dramatic impact on world oil markets, but with supplies already tight and crude futures trading near $66 a barrel, any snag in the industry tends to make energy traders jittery.

Light sweet crude for June delivery fell 32 cents to $65.95 a barrel in electronic trading on the New York Mercantile Exchange.

London-based BP said the leak was discovered Monday in a 12-inch pipe that collects water separated from the oil and gas it produces.

“We’re putting together inspection and repair plans to return the facility to normal operations,” BP spokesman Neil Chapman in Houston said.

Alaron Trading Corp. analyst Phil Flynn downplayed the significance of the event for U.S. energy consumers.

“It’s not that (this lost production) can’t be made up elsewhere in the world,” he said, “but we would like to get production here rather than elsewhere.”

U.S. refiners convert more than 15 million barrels a day of crude oil into gasoline, diesel and other liquid fuels — and about two-thirds of that oil comes from abroad. The country imports an additional 2.6.

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Toyota’s commitment to hybrid automobiles was on full display Thursday when it unveiled its most expensive gasoline-electric vehicle yet—the $124,000 luxury sedan Lexus LS.

Executives at Japan’s No. 1 automaker are fully convinced that hybrid cars are the way of the future. And they’re betting that growing consumer concern about the environment—and higher gas prices—will lure even wealthy buyers to the new model, which went on sale Thursday in Japan for 15 million yen and will arrive later elsewhere.

Executive Vice President Masatami Takimoto denied hybrids were “a transitional technology” that will be replaced by more advanced ecological technology in the future.

“As long as cars exist, the need for hybrid technology will remain,” Takimoto said.

Toyota Motor Corp., which introduced its first hybrid, the Prius, 10 years ago, sold about 300,000 hybrids worldwide last year, and it plans to sell a million hybrids a year sometime after 2010.

Although all the world’s automakers are working on hybrids, Japan’s No. 1 automaker has dozens of patents on the technology and has sold more hybrids than any other automaker.

The most common hybrids today switch between a gas engine and electric motor to deliver better mileage and reduce emissions that cause global warming.

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President George W. Bush was set Monday to flesh out a plan to slash US “addiction” to foreign oil by cutting gasoline usage by 20 percent in the next 10 years, the White House said.

“The president will make an announcement about his directing the administration to take action to implement his ’20 in 10′ plan to reduce the nation’s addiction to oil,” White House spokesman Tony Snow said.

“He will announce his latest efforts to ensure that the nation is taking aggressive steps to reduce gasoline consumption,” he told reporters.

The announcement due at 1725 GMT will flesh out administrative and regulatory steps to achieving a reduction in oil consumption, while urging Congress to pass legislation to help meet the target, Snow said.

Bush set out the goal in his State of the Union speech in January, seeking to slash US oil imports from the restive Middle East by three-quarters with a view to boosting the security of the world’s top energy-consuming nation.

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Bush signed an executive order directing federal agencies to craft regulations that will “cut gasoline consumption and greenhouse gas emissions from motor vehicles.” He ordered the agencies – the departments of Transportation, Agriculture and Energy and the Environmental Protection Agency – to have the rules in place by the end of 2008.

The announcement came as gasoline prices hit a new record. The average national price of a gallon of gas reached $3.07 on Monday, above the previous peak of $3.06 set soon after Hurricane Katrina hit at the end of August 2005.

“When it comes to energy and the environment, the American people expect common sense and they expect action,” the president said in a Rose Garden appearance before reporters. “We’re taking action by taking the first steps toward rules that will make our economy stronger, our environment cleaner and our nation more secure for generations to come.”
 
What those rules would look like was anything but clear.

White House press secretary Tony Snow said the president’s position opposing mandatory emissions caps has not changed. While recognizing that greenhouse gases are a serious contributor to climate change, Bush has said that anything other than a voluntary approach would unduly harm the nation’s economy.

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