Updates
March 2, 2011: One of the points I was trying to make below was finally voiced in words that no one could misunderstand: Mississippi Governor Haley Barbour says the administration favors high oil prices. The second point: for those following the high speed railroad story, ask who will build the high-speed electric locomotives, and then ask who is the administration's White House economic adviser. Answer at bottom of the this post.
Original Post
I have to flesh this out later, but while I cogitate on this, you all may want to spend some time connecting the dots.
- WTI price of oil: jumps 9.2 percent in one day; approaching $100/barrel; follows news in Libya
- Libya: accounts for less than 1.5 million barrels of oil/day; all of it goes to Europe (Brent, not WTI)
- Libya: accounts for less than 3 percent of global production
- XOM: accounts for about 3 percent of global production
- Saudi Arabia: everyone says Saudi can easily make up the difference if Libya is down for the long term
- The Bakken: estimates are that North Dakota could produce 1 million barrels of oil/day by 2015
- Link to the top wind energy turbine companies worldwide
- Recent wind energy turbine sales: Norway and Sweden to get giant GE turbines; "giant" was their word, not mine
- The administration's new economic czar is the CEO of GE, Mr Jeffrey Immelt
- I seem to remember an old adage, "what's good for GM, is good for America."
- Follow the money
- Google it
*******
Answer to trivia question: it is my hunch that GE will make the electric locomotives for high-speed rail advocated by the administration. The administration's economic czar is the GE/CEO.
crude from libya is a light sweet crude( like the Bakken Crude).
ReplyDeleteThe Saudia crude is sour ( like the Red River formation ) crude.
the refining is somewhat different.
In the past ND crude has been discounted compared to wti, because of location, now would that not be ironic if a shortage of sweet crude, caused the price of the Bakken oil to be more closly aligned to the price of wti..
Oil is not the only source of energy. Right now it is the cheapest. How much longer that is the case remains to be seen. As does the what the emerging alternative are. "Hyping" the idea that any level of additional exploration (domestic, offshore or international) will yield a sustainable oil based economy is very dangerous. It is a sellers market for the oil market in the near term future. Consuming nations (US included) need to develop alternative sources to reduce dependancy on imports of oil or they will be crushed economically somewhere down the road.
ReplyDeleteNot entirely correct:
ReplyDelete1) "Oil is not the only source of energy." Correct.
2) "Right now it is the cheapest." Incorrect. Natural gas is 16:1 times cheaper. I believe that's the current ratio. Regardless, natural gas is incredibly cheap and we already have technology to run cars/trucks on natural gas.
Coal is cheaper yet, and will last centuries. Nuclear energy is cheaper, and will last centuries.
3) There is not enough land in the world to put up all the solar panels needed to make a dent in energy needs for the US; all analysts now agree solar will be a niche "player."
4) There is a place for wind but it, too, will be a niche player in the long run -- in fact, I think the fad will run its course 20 - 30 years from now when folks accept nuclear power (as France has). But all that is well beyond my investing lifetime.
5) I pretty much stick with the "here and now" -- I saw first hand what Americans learned from the first embargo (1973). Almost 40 years later, it's the same old thing. Oil. In fact, two years ago, when oil spiked to $150, there was yet another chance for Americans to change habits, and they didn't.
6. "Consuming nations need to develop alternative sources..." I agree: like nuclear, coal, natural gas. All of that is here and "shovel ready" as they say. Had we gone this route after 1973, we wouldn't be where we are today.
This person seems to discount price differences. Also, there is virtually no natural gas infrastructure to support vehicle traffic and no one seems poIsed to pay to put it in place. Mr Pickens may be on to something with the idea to off load some crude ol based traffic (I e trucks). could have some merit. It ng is also non renewable so unless you have a total short term outlook, then ng is at best a stopgap solution until alternative.As far as solar is concerned, you seem to be basing your view on little to no technology advancement going forward, at least not enough to move the needle in the right direction (sustainable , reliable supply at reasonable cost). Also the idea is to reduce oil imports not to replace oil demand overnight as you seem to imply. Short term thinking got us into the mess we are in and continues to dominate.
ReplyDeletehttp://seekingalpha.com/#article/95227-how-natural-gas-and-oil-prices-are-linked/
1. Regarding solar. As JRR Tolkien said, we all have our myths.
ReplyDelete2. You are correct: short term thinking got us where we are today. I start with the year 1973, the first OPEC oil embargo.
I don't know how long "short term" is -- that's in the eye of the beholder -- but 40 years seems a bit long for "short term."
I'm hoping that another 40 years doesn't constitute another round of "short term" thinking.
3. "Natural gas is short term." Oil will last decades; natural gas will last longer; coal will last centuries. I'm not sure how long we need to sustain the fossil fuel bridge to nuclear. Nuclear will last forever.
And it is a myth that solar will never be a significant component of world energy supply.
ReplyDeleteIf the status quo is never challenged, with the goal to mprove then "short term thinking" can last forever.
Coal is viable. Let's clean it up.
I agree we should use more nuke to make electricity.