Oil Is Not Well~KCSTAR HotFuel Rebuttal Guest Editorial 8/30/06

Guest Editorial by Robert Anderson published August 30, 2006 in the KC Star

Instead of getting hot under the collar about the dubious issue of ‘hot fuel’, it’s imperative to focus and react to the more substantial dire fuel and energy issues at hand. This country shouldn’t and won’t retrofit all retail gasoline dispensers for temperature compensation to the fuel consumer detriment of the entire northern half of the country where fuel temps average less than 60 degrees. We’d be fiddling with a net fuel pittance while our Romanesque energy policy burns.

We’ve been lulled into energy policy complacency by a faith in free market economics while unfolding Mideast oil wars, basic geologic depletion and a dearth of recent substantial oil discoveries are signaling dire consequences on the societal track ahead. In the past our bountiful lifestyle has been predicated on cheap energy, which in turn has contributed to the unprecedented post-WWII economic growth. But there are too many indications that this is changing. If we can’t grow energy supplies, can we continue to grow the economy? In turn, can we service all this societal debt? Are we underestimating the propensity for oil wars as growing economies scramble for what’s left?

U.S. oil production peaked in 1971. At that point we had consumed roughly half of our multi-million year hydrocarbon legacy, and we’ve since done a fatuous job of depleting much of the rest. In spite of the incentive of high oil prices, no government policy or advanced technologies will stop this domestic oil production slide.

So we now import close to two thirds of our oil from: 1) Canada, 2) Mexico, 3) Saudi Arabia, 4) Venezuela, 5) Nigeria, 6) Iraq, 7) Angola, 8 ) Algeria, 9) Ecuador, & 10) Russia. With the exception of the first one, are any of these reassuring? A majority of Mexico’s oil has come from their offshore field Cantarell. It’s now depleting at double digit rates. Saudi Arabia is about tapped out according to energy investment banker Matt Simmons (his book Twilight in the Desert is highly recommended). Then we have Venezuela, Nigeria and Iraq. Need I say more? If this isn’t disconcerting enough, consider the booming populations of nearly all countries on our oil import list. We’ve all heard the term ‘peak oil’ but ‘net exports’ are an even graver oil market fundamental. Current statistics (not projections) indicate global oil exports are falling 3 to 4 times faster than oil production -down 1.3% since the start of the year.

So the next time you’re lamenting the high cost of gasoline while you are fueling your SUV with non-temperature corrected fuel, my advice is get ready for much worse.

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About OilisNotWell

I'm a proud, happy 4th generation Kansas Citian. I've been employed in downstream petroleum and biofuels for over 30 years. After eight years as a Refinery Rep and Midcontinent Marketing Manager at Wichita-based Koch Refining, I subsequently set up shop at the KC Board of Trade just off the Country Club Plaza. Back in the old pre-internet days, I actually launched the first faxed newsletter on oil markets in the world. It was highly regarded with 350 subscribers who were oil distributors, traders and oil industry executives. Subscription cost was $760/ year. I also worked for the Hermes Group which was the first Russian company to buy a seat on a U.S. commodity exchange (NYMEX). I wrote their international business expansion plan and traveled extensively throughout Russia, Ukraine and Eastern Europe. I've also literally worked for dozens of ethanol and biodiesel firms in the U.S. I enjoy spending our winters in Uruguay and Argentina when I can swing it.

Posted on August 30, 2006, in Uncategorized. Bookmark the permalink. Leave a comment.

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