[[[Taken altogether, the total amount of fossil fuels produced from federal land hit 18.6 quadrillion British thermal units (Btu), lower than every year since 2003.]]]
So it appears energy production from federal lands actually peaked early in President Bush’s first administration and declined every remaining year in it despite a booming demand from a booming economy…
Likely due to the production tail-off on Alsakas north slope alone. Remember people wanting to drill ANWAR?
But the important thing is that Salazar said it so others can now say it as well and reference him as the source. Rand, ya just have to get with the program. Jim can explain it to ya… and give lot’s of his own examples.
Now Thomas, you seem to be suggesting something. Could it be that administration officials have been carrying out democrat policies even during republican administrations? That’s a very good point. One I’ve made several time in saying it’s not enough to elect a republican president. She also has to take on the difficult task of cleaning all the rats off the ship of state.
Could it be that administration officials have been carrying out democrat policies even during republican administrations? That’s a very good point.
If only there were more people making this point that are willing to organize and rally to bring this point home to others…
You left out the last step where Salazar will cite the same news services and blogs that are citing him as evidence for what he is saying. It is one vicious feedback loop.
Also from the linked article: ” He pointed out that oil producers decide where to produce and develop and emphasized that there are many approved permits that are not being utilized right now.” (Emphasis mine.)
1) Conventional oil supply peaked at 74 million barrels per day (mbpd) at the end of 2004. This year, we will need 90 mbpd.
2) To get that 90 mbpd, we’re tapping oil reserves like shale, replacing oil that cost $20 / barrel to extract with oil that costs $80 / barrel.
3) From 2005 through 2010, the growth in demand from China and India was double the demand lost in the U.S., and 1.14 times the combined demand loss of the U.S. and Europe.
In short, we are “drilling baby drilling” but we are not going to be able to drill our way to cheap oil.
What exactly is “cheap oil”? Would it result in gasoline below $2.50 per gallon? If so, what would the appropriate bumper sticker be?
Crude oil prices below today’s spot price of $105 / barrel? At 42 gallons per barrel, that’s $2.50 per gallon just for the crude oil. That doesn’t account for the cost to refine into gas, or the fact that 42 gallons of crude doesn’t refine out to 42 gallons of gas.
Actually, a quick Google tells me that typical refining yields 19 gallons of gas per barrel, which works out to $5.55 a gallon. I suspect that the 19 gallon figure is light, since I don’t think my corner gas station is selling at a loss.
So the appropriate bumper sticker is “Get a New Calculator, Newt – Your Old One is Broke!” (Yeah, not quite as catchy as the old one.)
The U.S. imports more oil than it produces domestically but then we in turn export more petroleum products than we use domestically. So, we are buying overseas oil, refining it into petroleum fuels and then selling it back overseas. Some refineries in the United States are so advanced that, through refining gain, can turn 42 gallons of crude into 45 gallons of petroleum products. I believe I read somewhere that its possible to turn one barrel of crude into nearly one barrel of gasoline but it requires about 1 barrels worth of energy to do so. Which probably explains why they stick to refining just about 49% of a barrel into gasoline. I don’t think the refineries turn much of a profit. In fact Valero is closing a refinery because they have been operating at a loss.
Chris, it sounds like $50 per barrel scares you. Which is what Bakken alone could be profitable at. Today. Seriously, if the government could convince you they could take over all of the oil companies and run them in a completely environmentally benign way, and as a result completely fund all entitlement programs indefinitely, but only if they agree to sell gas at $2.00 per gallon, would you be in favor?
$50 / barrel doesn’t scare me, and if anybody said they could run oil extraction benignly and sell gas at $2 / gallon I’d be all over it.
I just don’t think it’s possible.
$50 / barrel doesn’t scare me
Yeah, we know paying a bit more never bothers blue blooded Democrats.
many approved permits that are not being utilized
Sarah had that problem in Alaska. She fixed it.
we are “drilling baby drilling”
I don’t think it means what you think it means. If you are suggesting the govt. isn’t interfering there’s a word for that… wrong.
“there are many approved permits that are not being utilized right now.”
What are the roadblocks faced after a permit has been approved?
The oil is worth more in the ground so companies get the right to pump it and don’t.
He qualified his remarks. He said in recent ‘memory’. Maybe he had a problem accessing the memory, at that particular moment.
A Federal Lands Brain Fart so to speak. Which means more natural gas in the national reserves.
Chris G,
$20 a BBL? Where in the world (literally) is there $20 a BBL oil available in the 21st Century.
$20 a barrel isn’t what you’re charged, it’s what it costs to extract the oil. Saudi Arabian oil costs $20 a barrel to extract – basically, drill a hole, turn on a pump and maintain some metal pipe in a flat and dry area. (I simplify, but you get the picture)
I highly doubt it even costs $20/barrel to extract the oil. Saudi may need to charge more than that for the oil to support their economy, but I doubt their extraction cost reaches anywhere near that level.
Why? Coal, just as BTUs, not to convert it to liquid fuel, has always been cheap in relation to oil even at much lower oil prices. It is said that the railroad transportation in hopper cars is the biggest single cost component to coal-fired electricity. And coal is something you have to dig out of the ground, not simply pipe out of the ground like conventional oil.
Oil shale? Who, tell me is doing that on any commercial scale, apart from Estonia that uses it in utility boilers and district heating as a kind of low-BTU coal? There is some tar sands, some heavy oil, some tertiary recovery, but I am thinking one of the big growth is in liquids-from-stranded-natural gas — there are some technical reasons why this form of liquid conversion will be done before coal-to-liquids, even though the natural gas in converted to the same H2/CO feedstock as in coal-to-liquids.
That has always been the problem. The next tier of more expensive oil sources has always had to compete with Saudi oil with its rock bottom extraction price. Whenever oil prices crept up to where these other sources come on line, Saudi does the Lucy-with-the-football routine and floods the market and drives these guys out of business. This has made the next tier guys “fool me once, shame on you, fool me twice, shame on me” to be slow to develop in the face of the brutal-high oil prices, that along with Ken Salazar, Steve Chu, and Lisa Jackson.
Why is Saudi letting oil get so high and not yanking the football on the burgeoning alternatives? Maybe Ghawar is dying as they are jumping up and down gleefully to report at the Oil Drum — never seen so many happy people about bad news, suggesting the bad news needs to be viewed skeptically. Maybe Saudi needs to extract economic rent from their oil because of a burgeoning population who are not all Saudi princes and they simply need the money.
I asked because I used to work in the oil fields outside Bakersfield, so I understand the process. But questions like this always make me wonder what someone says a McD’s burger ‘costs’, when it still has horns and hooves and the wheat is in a silo.
To get it to the top of the well might ‘cost’ $20, but that’s after the exploration, drilling, setting the ump, etc> Just like knocking off the horns and hooves on a Big Mac, the costs go up along the route from end to end on the chain.
Besides considering all E&P costs, I think the concept of $20/bbl went away for good after QEI, II, and III.
We could replace every barrel of improted oil with Coal uing the Fischer-Tropsch process alone at over $40 per barrel. Western oil shale is recoverable in-situ(non-reort) now due to recent advancements at around $45 per barrel.
Naturla gas can be converted to liquid gasoilne at around $20 pwer barrel or more IIRC.
So drill baby drill is exactly right but not just conventional oil. Mine baby mine too.
Coal and/or natural gas can be converted to motor fuel. The problem is that this is an industrial process that requires a large fixed capital investment and is only economical at a certain price point. So, we’re not going to get large-scale conversion unless either oil prices appear to be stable at a high enough level or somebody (government) provides subsidies. Either way, you don’t get cheap fuel.
Don’t overlook the big picture. It’s all simple supply and demand. Fuel prices have more than doubled under Obama because his minions are doing his will.
The technical discussion is just minutia.
We can get cheap fuel, as we’ve had for decades, just by changing administration, policies and bureaucrats to encourage the market to produce such. Free markets work everywhere they’re tried regardless of what Marxists say.
So why was gas $4 a gallon and oil $110 a barrel in the summer of 2008? As I recall, that was six months before Obama took the oath of office. Do his minions have the ability to travel back in time?
I bet they wish they could now.
Do his minions have the ability to travel back in time?
Apparently so, there was a Democratic controlled Congress headed by Pelosi and Reid. But I’m sure like all of us, you’d be happy to forget they ever existed.
How exactly did the Democratic congress beat up Bush to make oil prices go up? Extra bonus points if you can explain why, as shown here, US oil production fell every year since the Republicans took Congress in 1994? Even more extra bonus points if you can explain why oil production went up in 2009, after Obama took office.
Here’s an alternative theory – oil production is driven by technology and markets, not politics.
It’s the EPA stupid. How many points do I get?
Here’s an alternative theory – oil production is driven by technology and markets, not politics.
So that Congressional investigation into oil company profits that occurred in 2008, where Maxine Waters threatened to nationalize oil companies; your claim is it had no impact?
Here’s an alternative theory – oil production is driven by technology and markets, not politics.
Here is even more to blow that BS theory out of water.
“So, we’re not going to get large-scale conversion unless either oil prices appear to be stable at a high enough level ”
So you are saying that there is a non-zero risk of oil prices decreasing dramatically from current levels?
So you are saying that there is a non-zero risk of oil prices decreasing dramatically from current levels? – well, in the short term a release of the strategic oil reserve or Ayatollah What’s-His-Face (Supreme Leader in Iran) having a fatal heart attack might knock the price down.
In the longer term, no, not really. But, much like private space flight, it’s not my opinion that matters – its what you can convince a group of investors.
Chris, you are just flat out wrong. Long term oil prices would come down dramatically if domestic supply was not constrained by govt. interference.
Competition does that and we’ve still got enough oil companies that competition still exists. Getting rid of competition is at the heart of what the government does (right or left.)
Which is why we need more tea party legislators who still believe in those wacky ideas like open competition, free enterprise and the so hard to control by the freaks thing called liberty.
When it’s cheaper to buy it from abroad than produce it at home, one would expect it would be bought from abroad. Do you really want to argue that the EPA hasn’t been increasing the regulatory costs that domestic producers must pay for decades?
Read the SCOTUS opinion Rand linked to today on the Sackett decision to get an idea of how the EPA operates in its own insulated reality completely separate from congressional action.
The EPA issues nearly 3,000 administrative compliance orders a year that call on alleged violators of environmental laws to stop what they’re doing and repair the harm they’ve caused.
What do you think that 3000 number was in 1984?
Do you really want to argue that both parties have been suppressing oil production for decades?
I seem to remember some politician from a party saying, “read my lips” just before he went back on a promise. Some say that cost him re-election. What again did he do?
So, I’ve been Googling and Binging about trying to find the cost breakdown of a barrel of oil. Man! Anything oil search related has a lot of FUD to wade through. The closest I’ve come to is this site:
Appears that extraction costs between $25-$30 roughly.
As far the price breakdown of a gallon of gas:
69 percent of the cost is the value of the crude oil, 13 percent is federal and state taxes, 7 percent is refining costs and profits and 12 percent is marketing and distribution costs.
Really it’s the central banks with a their belief that global economic recovery is starting to take hold that has the speculator pushing the price up. As economies recover their demand for oil usually corresponds. But this has speculators concerned about constrained oil at the moment in the face of increasing global demand. The loss of 1 million barrels a day over the last few months has them betting the price will continue to sharply go up. Reasons for a production loss: a pipeline in Sudan is down; problems with North Sea production; EU sanctions and payment disputes against Iran have caused them to drop off a bit; Saudi Arab is actually pumping almost total record amounts but they fell short of projections nonetheless; Unrest from the Arab spring has Libyan supplies cut way short; Federal U.S. lands are producing roughly 10% less than a few years ago.
My guess is that, despite approved yet un-utilized lease for drilling on federal land, is that the oil companies are worried about the strict emissions standards around drilling platforms implemented by the EPA recently. The oil companies probably feel that private land rights and state ownerships rights will impede courts from quickly yanking permits if emissions limits are found not to be met. Uncertainty breeds discontent…..
This is interesting….
[[[Taken altogether, the total amount of fossil fuels produced from federal land hit 18.6 quadrillion British thermal units (Btu), lower than every year since 2003.]]]
So it appears energy production from federal lands actually peaked early in President Bush’s first administration and declined every remaining year in it despite a booming demand from a booming economy…
Likely due to the production tail-off on Alsakas north slope alone. Remember people wanting to drill ANWAR?
But the important thing is that Salazar said it so others can now say it as well and reference him as the source. Rand, ya just have to get with the program. Jim can explain it to ya… and give lot’s of his own examples.
Now Thomas, you seem to be suggesting something. Could it be that administration officials have been carrying out democrat policies even during republican administrations? That’s a very good point. One I’ve made several time in saying it’s not enough to elect a republican president. She also has to take on the difficult task of cleaning all the rats off the ship of state.
Could it be that administration officials have been carrying out democrat policies even during republican administrations? That’s a very good point.
If only there were more people making this point that are willing to organize and rally to bring this point home to others…
You left out the last step where Salazar will cite the same news services and blogs that are citing him as evidence for what he is saying. It is one vicious feedback loop.
Also from the linked article: ” He pointed out that oil producers decide where to produce and develop and emphasized that there are many approved permits that are not being utilized right now.” (Emphasis mine.)
As this article notes:
1) Conventional oil supply peaked at 74 million barrels per day (mbpd) at the end of 2004. This year, we will need 90 mbpd.
2) To get that 90 mbpd, we’re tapping oil reserves like shale, replacing oil that cost $20 / barrel to extract with oil that costs $80 / barrel.
3) From 2005 through 2010, the growth in demand from China and India was double the demand lost in the U.S., and 1.14 times the combined demand loss of the U.S. and Europe.
In short, we are “drilling baby drilling” but we are not going to be able to drill our way to cheap oil.
What exactly is “cheap oil”? Would it result in gasoline below $2.50 per gallon? If so, what would the appropriate bumper sticker be?
Crude oil prices below today’s spot price of $105 / barrel? At 42 gallons per barrel, that’s $2.50 per gallon just for the crude oil. That doesn’t account for the cost to refine into gas, or the fact that 42 gallons of crude doesn’t refine out to 42 gallons of gas.
Actually, a quick Google tells me that typical refining yields 19 gallons of gas per barrel, which works out to $5.55 a gallon. I suspect that the 19 gallon figure is light, since I don’t think my corner gas station is selling at a loss.
So the appropriate bumper sticker is “Get a New Calculator, Newt – Your Old One is Broke!” (Yeah, not quite as catchy as the old one.)
The U.S. imports more oil than it produces domestically but then we in turn export more petroleum products than we use domestically. So, we are buying overseas oil, refining it into petroleum fuels and then selling it back overseas. Some refineries in the United States are so advanced that, through refining gain, can turn 42 gallons of crude into 45 gallons of petroleum products. I believe I read somewhere that its possible to turn one barrel of crude into nearly one barrel of gasoline but it requires about 1 barrels worth of energy to do so. Which probably explains why they stick to refining just about 49% of a barrel into gasoline. I don’t think the refineries turn much of a profit. In fact Valero is closing a refinery because they have been operating at a loss.
Chris, it sounds like $50 per barrel scares you. Which is what Bakken alone could be profitable at. Today. Seriously, if the government could convince you they could take over all of the oil companies and run them in a completely environmentally benign way, and as a result completely fund all entitlement programs indefinitely, but only if they agree to sell gas at $2.00 per gallon, would you be in favor?
$50 / barrel doesn’t scare me, and if anybody said they could run oil extraction benignly and sell gas at $2 / gallon I’d be all over it.
I just don’t think it’s possible.
$50 / barrel doesn’t scare me
Yeah, we know paying a bit more never bothers blue blooded Democrats.
many approved permits that are not being utilized
Sarah had that problem in Alaska. She fixed it.
we are “drilling baby drilling”
I don’t think it means what you think it means. If you are suggesting the govt. isn’t interfering there’s a word for that… wrong.
“there are many approved permits that are not being utilized right now.”
What are the roadblocks faced after a permit has been approved?
The oil is worth more in the ground so companies get the right to pump it and don’t.
He qualified his remarks. He said in recent ‘memory’. Maybe he had a problem accessing the memory, at that particular moment.
A Federal Lands Brain Fart so to speak. Which means more natural gas in the national reserves.
Chris G,
$20 a BBL? Where in the world (literally) is there $20 a BBL oil available in the 21st Century.
$20 a barrel isn’t what you’re charged, it’s what it costs to extract the oil. Saudi Arabian oil costs $20 a barrel to extract – basically, drill a hole, turn on a pump and maintain some metal pipe in a flat and dry area. (I simplify, but you get the picture)
I highly doubt it even costs $20/barrel to extract the oil. Saudi may need to charge more than that for the oil to support their economy, but I doubt their extraction cost reaches anywhere near that level.
Why? Coal, just as BTUs, not to convert it to liquid fuel, has always been cheap in relation to oil even at much lower oil prices. It is said that the railroad transportation in hopper cars is the biggest single cost component to coal-fired electricity. And coal is something you have to dig out of the ground, not simply pipe out of the ground like conventional oil.
Oil shale? Who, tell me is doing that on any commercial scale, apart from Estonia that uses it in utility boilers and district heating as a kind of low-BTU coal? There is some tar sands, some heavy oil, some tertiary recovery, but I am thinking one of the big growth is in liquids-from-stranded-natural gas — there are some technical reasons why this form of liquid conversion will be done before coal-to-liquids, even though the natural gas in converted to the same H2/CO feedstock as in coal-to-liquids.
That has always been the problem. The next tier of more expensive oil sources has always had to compete with Saudi oil with its rock bottom extraction price. Whenever oil prices crept up to where these other sources come on line, Saudi does the Lucy-with-the-football routine and floods the market and drives these guys out of business. This has made the next tier guys “fool me once, shame on you, fool me twice, shame on me” to be slow to develop in the face of the brutal-high oil prices, that along with Ken Salazar, Steve Chu, and Lisa Jackson.
Why is Saudi letting oil get so high and not yanking the football on the burgeoning alternatives? Maybe Ghawar is dying as they are jumping up and down gleefully to report at the Oil Drum — never seen so many happy people about bad news, suggesting the bad news needs to be viewed skeptically. Maybe Saudi needs to extract economic rent from their oil because of a burgeoning population who are not all Saudi princes and they simply need the money.
I asked because I used to work in the oil fields outside Bakersfield, so I understand the process. But questions like this always make me wonder what someone says a McD’s burger ‘costs’, when it still has horns and hooves and the wheat is in a silo.
To get it to the top of the well might ‘cost’ $20, but that’s after the exploration, drilling, setting the ump, etc> Just like knocking off the horns and hooves on a Big Mac, the costs go up along the route from end to end on the chain.
Besides considering all E&P costs, I think the concept of $20/bbl went away for good after QEI, II, and III.
We could replace every barrel of improted oil with Coal uing the Fischer-Tropsch process alone at over $40 per barrel. Western oil shale is recoverable in-situ(non-reort) now due to recent advancements at around $45 per barrel.
Naturla gas can be converted to liquid gasoilne at around $20 pwer barrel or more IIRC.
So drill baby drill is exactly right but not just conventional oil. Mine baby mine too.
Coal and/or natural gas can be converted to motor fuel. The problem is that this is an industrial process that requires a large fixed capital investment and is only economical at a certain price point. So, we’re not going to get large-scale conversion unless either oil prices appear to be stable at a high enough level or somebody (government) provides subsidies. Either way, you don’t get cheap fuel.
Don’t overlook the big picture. It’s all simple supply and demand. Fuel prices have more than doubled under Obama because his minions are doing his will.
The technical discussion is just minutia.
We can get cheap fuel, as we’ve had for decades, just by changing administration, policies and bureaucrats to encourage the market to produce such. Free markets work everywhere they’re tried regardless of what Marxists say.
So why was gas $4 a gallon and oil $110 a barrel in the summer of 2008? As I recall, that was six months before Obama took the oath of office. Do his minions have the ability to travel back in time?
I bet they wish they could now.
Do his minions have the ability to travel back in time?
Apparently so, there was a Democratic controlled Congress headed by Pelosi and Reid. But I’m sure like all of us, you’d be happy to forget they ever existed.
How exactly did the Democratic congress beat up Bush to make oil prices go up? Extra bonus points if you can explain why, as shown here, US oil production fell every year since the Republicans took Congress in 1994? Even more extra bonus points if you can explain why oil production went up in 2009, after Obama took office.
Here’s an alternative theory – oil production is driven by technology and markets, not politics.
It’s the EPA stupid. How many points do I get?
Here’s an alternative theory – oil production is driven by technology and markets, not politics.
So that Congressional investigation into oil company profits that occurred in 2008, where Maxine Waters threatened to nationalize oil companies; your claim is it had no impact?
Here’s an alternative theory – oil production is driven by technology and markets, not politics.
Here is even more to blow that BS theory out of water.
“So, we’re not going to get large-scale conversion unless either oil prices appear to be stable at a high enough level ”
So you are saying that there is a non-zero risk of oil prices decreasing dramatically from current levels?
So you are saying that there is a non-zero risk of oil prices decreasing dramatically from current levels? – well, in the short term a release of the strategic oil reserve or Ayatollah What’s-His-Face (Supreme Leader in Iran) having a fatal heart attack might knock the price down.
In the longer term, no, not really. But, much like private space flight, it’s not my opinion that matters – its what you can convince a group of investors.
Chris, you are just flat out wrong. Long term oil prices would come down dramatically if domestic supply was not constrained by govt. interference.
Competition does that and we’ve still got enough oil companies that competition still exists. Getting rid of competition is at the heart of what the government does (right or left.)
Which is why we need more tea party legislators who still believe in those wacky ideas like open competition, free enterprise and the so hard to control by the freaks thing called liberty.
US oil production has been trending down since Ronald Reagan’s second term. Do you really want to argue that both parties have been suppressing oil production for decades?
YES. Any more silly questions?
When it’s cheaper to buy it from abroad than produce it at home, one would expect it would be bought from abroad. Do you really want to argue that the EPA hasn’t been increasing the regulatory costs that domestic producers must pay for decades?
Read the SCOTUS opinion Rand linked to today on the Sackett decision to get an idea of how the EPA operates in its own insulated reality completely separate from congressional action.
The EPA issues nearly 3,000 administrative compliance orders a year that call on alleged violators of environmental laws to stop what they’re doing and repair the harm they’ve caused.
What do you think that 3000 number was in 1984?
Do you really want to argue that both parties have been suppressing oil production for decades?
I seem to remember some politician from a party saying, “read my lips” just before he went back on a promise. Some say that cost him re-election. What again did he do?
So, I’ve been Googling and Binging about trying to find the cost breakdown of a barrel of oil. Man! Anything oil search related has a lot of FUD to wade through. The closest I’ve come to is this site:
$104 Nov/2011
Windfall Profits (fear-factor) $41
Speculation/Hedging Activity $ 6
US $ Debasement $16
Inventory Draw $ 8
Lack of Surplus Capacity $ 8
Extraction Cost (weighted) $25
Appears that extraction costs between $25-$30 roughly.
As far the price breakdown of a gallon of gas:
69 percent of the cost is the value of the crude oil, 13 percent is federal and state taxes, 7 percent is refining costs and profits and 12 percent is marketing and distribution costs.
Read more: The Price of Unleaded Gas Vs. a Barrel of Oil | eHow.com http://www.ehow.com/about_6293333_price-gas-vs_-barrel-oil.html#ixzz1plOKyNSW
Josh,
Interesting Federal Reserve study the factors impacting oil prices.
http://www.huffingtonpost.com/2012/03/20/wall-street-speculation-oil-price_n_1367896.html?ref=business
Zach Carter
Oil Prices Spike Exacerbated By Wall Street Speculation, Federal Reserve Study Finds
Posted: 03/20/2012 3:53 pm Updated: 03/20/2012 6:06 pm
Really it’s the central banks with a their belief that global economic recovery is starting to take hold that has the speculator pushing the price up. As economies recover their demand for oil usually corresponds. But this has speculators concerned about constrained oil at the moment in the face of increasing global demand. The loss of 1 million barrels a day over the last few months has them betting the price will continue to sharply go up. Reasons for a production loss: a pipeline in Sudan is down; problems with North Sea production; EU sanctions and payment disputes against Iran have caused them to drop off a bit; Saudi Arab is actually pumping almost total record amounts but they fell short of projections nonetheless; Unrest from the Arab spring has Libyan supplies cut way short; Federal U.S. lands are producing roughly 10% less than a few years ago.
My guess is that, despite approved yet un-utilized lease for drilling on federal land, is that the oil companies are worried about the strict emissions standards around drilling platforms implemented by the EPA recently. The oil companies probably feel that private land rights and state ownerships rights will impede courts from quickly yanking permits if emissions limits are found not to be met. Uncertainty breeds discontent…..