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Re: E-M:/ Oil Indusrty Profits Soaring Through the Roof



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Enviro-Mich message from "Richard H. and Elsie Freye" <rhfreye@wmis.net>
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>From rhfreye@wmis.net
There's another angle to petroleum supply vs. demand  vs. price. Supply
depends not only on corporate machinations but on the extent and
availability of the earth's (remaining) deposits. U.S. production was .06
billion barrels in 1900, 1.4 billion in 1940. As deposits became more
difficult and expensive to extract, it reached its peak at 3.51 billion
barrels in about 1970, at which time the U.S. was also importing about 1.3
billion barrels and the U.S. balance of trade went from positive to
negative.
  U.S. Production dropped to 2.28 billion bbls in 1998 while consumption
rose to 6.9 billion bbls. In the spring of 1999 the U.S. trade deficit was a
record 80.7 billion dollars, including a big increase in foreign oil
imports.
   "Proven reserves" are deposits that are considered profitably available
at current prices and with current technique & equipment. Increased prices
increase the amount of oil that can be profitably extracted. As previously
mentioned, U.S. production reached its peak circa 1970.
    Higher prices make feasible the opening of the Arctic National Wildlife
Refuge to oil prospecting and increase the profits that would justify
slant-drilling under the Great Lakes. Oil under the Lakes wouldn't make a
dent in national usage. Alaska deposits are estimated to be between 5.7
billion barrels (about 84% of the U.S.'s 1997 consumption) and 16 billion
barrels (equal to about our last 5 years imports, 16.5 billion barrels).
It's estimated that actual production in Alaska would begin in 10 years if
exploration started soon. That is also when The World's production is
expected to peak, as the U.S. 's did in 1970. Only the near-east production
would be able to continue undiminished for a while but production world-wide
will drop. Not all demands will be met. Supplies might then be allocated not
according to need or use but according to the ability to pay. What will we
have to trade except Great Lakes water, which by then I suspect will also be
at a premium? (Will the rest of the world try to limit the U.S.'s share? How
much of an armed force will the U.S. have to maintain in the near east?)
   Saving what we can, such as deposits in Arctic National Wildlife Preserve
and under the Great Lakes and the Gulf of Mexico until we need it, would be
better for the country in the long run but not good for those who want $$$$
now!
----
From: Rane Curl <ranecurl@engin.umich.edu>
To: enviro-mich <enviro-mich@great-lakes.net>
Sent: Wednesday, April 25, 2001 2:58 AM
Subject: Re: E-M:/ Oil Indusrty Profits Soaring Through the Roof


> -------------------------------------------------------------------------
> Enviro-Mich message from Rane Curl <ranecurl@engin.umich.edu>
> -------------------------------------------------------------------------
>
>
> I don't know enough about the inner workings of the industry now to
> provide any answers, except to observe, from my experience in the oil
> industry (I worked for Shell at one time), matters are very complicated,
> are international, involve parallel vertically integrated monopolies that
> do connive - up to a point. In regard to just a couple of points in
> William Tobler's message:
>
> On Tue, 24 Apr 2001, William Tobler wrote:
>
> > 1) First of all, last year the big bubble in price increase occurred
later
> > in the year, more like June and July.  If it was tied to switching over,
I
> > would think that would be at the same time of year.
++++>
> We haven't finished seeing the top of the "big bubble". It may still
> occur in June and July, when summer travel compounds with the other
> factors.
>
> > 3) I don't believe that the laws of supply and demand are very effective
> > with regard to short term gasoline prices.  I don't have much
discretionary
> > consumption for tomorrow or next week, even if they double or triple the
> > price.  If there were true shortages, then gasoline stations would be
> > closed.  Last year, that was only for a matter of hours, or never, and
then
> > supposedly because of the pipeline break.
>
> I think the laws of supply and demand are *most* effective for short term
> gasoline prices. The system does not have much storage capacity compared
> to the consumption rate. If everyone quit buying gasoline for a week, the
> price would tumble, as then the glut would work back through the system
> and force the refineries to reduce processing, which is *very* expensive.
> The problem Bill describes is an inflexibility in demand, not in the
> sensitivity of the system to supply and demand. Demand is our fault.
>
> > 4) Reformulation supposedly costs only a few cents per gallon.  How does
> > this justify 40 to 60 cent increases that last for months?
>
> It costs only a few cents per gallon in production, but the change over
> interrupts processing. This causes a momentary drop in supply - and the
> system is very sensitive (as I am claiming) to that, because the demand is
> inflexible.
>
> > 5) I read today that the oil companies have huge increases in profits.
> > Don't get me wrong, I believe in capitalism, but I also believe in
calling
> > the shots the way they are.
>
> Reduce your demand and they'll come around.
>
> --Rane
>
>
>
>
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