With Bush going to Saudi Arabia to beg — again — for lower prices, the media is gaga over a confrontation that has about as much significance as a Rocky Balboa fight.
Even the venerable NYT just published an article, “Bush Rebuffed on Oil Plea in Saudi Arabia,” that opens, “With the price of oil hitting record highs, President Bush used a private visit with King Abdullah to make a second attempt to persuade the Saudis to increase oil production and was rejected yet again.”
Unlike the 1970s and 1980s and even much of the 1990s, neither OPEC nor the Saudis no longer control the price of oil.
If any country had a million barrels a day of (sellable) sparce oil capacity, they could make more than $100 million a day selling it, even if that much new oil dropped prices 20%, which it probably wouldn’t.
Who would sit on that kind of money? Yes, the Saudis are selling over 8 million barrels a day, so they don’t really need the money. But if they have any significant excess capacity, it is sour or high-sulfur crude (see the other experts on the full CNBC interview here). Such crude is not currently in demand: “Many refineries are not set up to process such crude because it is more difficult and expensive to refine into products.”
Even the WSJ, which published the figure on the right, headlined the October article, “OPEC’s Lever Loses Its Pull on Oil” (subs. req’d). As I wrote back then, “We cannot be far from $100+ oil.” Duh!
By the way, the Saudis are much slier than Bush, national security adviser Stephen J. Hadley, and, most of the press [okay, that's not saying much]. As the NYT and AP reported, Hadley told reporters:
“What they’re saying to us is” that “Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy.”
What a clever way of sounding to those not in the know [This means you -- Bush, Hadley, and the media] like they are sitting on extra capacity that they could sell, when in fact what they are really saying is that they have no customers for any extra capacity they have.
The situation is not going to get any better soon until the nation and the world develop and deploy at scale a high-volume, low-cost, carbon free alternative fuel:
We could solve this problem in the medium-term (i.e. by the 2020s) if the next Presdient were not John McCain and if he or she aggressively pursued the transition to electric-powered cars (see here and here) — but this would probably not be fast enough to avoid 50% to 100% higher oil and gasoline prices in the next decade.
Could we lower prices in the short term? That, I’m afraid, will have to be the subject of another, longer blog post.
Related Posts:
- Peak-a-boo: Goldman says oil ‘likely’ to hit $150-$200 by 2010. That means $5+ gasoline.
- Note to Bush, media: Opening ANWR cuts gas prices one penny in 2025
- Peak Oil? Bring it on!
- Thirsty oil-rich nations reduce exports
- Why I don’t agree with James Kunstler about peak oil and the “end of suburbia”
- IEA warns of impending oil and gas supply crunch
- My 1996 warnings and predictions: “MidEast Oil Forever?” — Part I: Drifting Toward Disaster
Previous in TP Climate Progress
Language Intelligence: Lessons on persuasion from Jesus, Shakespeare, Lincoln, and Lady Gaga
minor quibble –it is not about deploying a “high-volume, low-cost, carbon free alternative fuel” but rather moving to a plug-in hybrid model. That’s not fuel — it is new cars.
Amazing stat. Average brit drives about 9k miles a year, average american maybe 12K (could be off) but your average car in Virginia drives 17K. Moving even 1/4 of those miles to an electric base would be very powerful.
But even at $5 a gallon, it is going to be tough. What’s the price of diesel in the UK – $10 a gallon. I don’t think it is the daily price — it it what people are expecting prices to be in a few years. And remember, the major cost of car is still deprecation.
Finding some space in your wedges for people to realize tax saving based on depreciation if moving to a hyper-efficient solution, and rewarding drivers who drive less than 10K a year would also be helpful. Even at $10 a gallon, I can drive my BMW V8 around — but I have to limit how many city miles I use it for.
All this talk about cars and driving – we have to stop driving! Stop make cars! We have to get to 000000! CO2 emissions. A MUST read for all is this article on Grist about the current state of affairs:
http://gristmill.grist.org/story/2008/5/12/11340/0601
I had wondered about the carbon cost of moving to renewable – no one seems to have tackled this seriously yet. But it could be critical depending on where were at with CO2 levels. The article above touches on this.
I think that if we see a head of state go to a foreign government for something, it’s about some kind of public relations. These people can do all this stuff over the phone and with embassies. What is it that they want to show us? That Pres. Bush is doing all that he can to increase oil production and doing what he can for the American people I suppose.
People in Germany were upset and resigned to the 9 dollars a gallon gas equivalent. Diesel was at 1.40 Euros a liter. I do think our higher fuel prices is more of a story in our media than the higher fuel was in Germany’s media, but my perception on that could be wrong.
I thought this blog was about climate change. It seems to have turned into a peak oil site…
Plug in electric cars are a bit of a snare and a delusion. If we don’t find them attractive in the UK where petrol is taxed at 200% and domestic electricity at just 5% how are they going to catch on in the States?
From a CO2 viewpoint electric vehicles are a really bad idea if the electricity comes from coal fired power stations – which it will be if the only driver is high oil prices.
http://www.skeptic.com/the_magazine/featured_articles/v14n01_climate_of_belief.html
This is a blog about climate and energy. Peak oil is inseparable as an issue.
I’d just like to point out that plug-in cars require energy too. It takes just as much energy for me to drive to work using hydrocarbons or batteries. The electricity in the batteries isn’t free, nor are they 100% efficient. So any decrease in use of hydrocarbon fuels to power cars will be offset by the increased requirements for power plants to generate electricity using coal, gas, oil or nuclear – renewables just won’t supply enough. So all you’re doing is shifting the burden from point of use – the car – to a generating station and, in transmitting the power to your outlet, the utility loses about half of it to line resistance.
So I agree that plug-in cars aren’t a panacea. In fact, they could end up using more of a dirtier fuel than a conventional car burning hydrocarbons.
I wrote in an earlier that the reason for Pres Bush to go to Saudi Arabia and make a public plea for them to produce more oil was only to show the American people that he is doing all he can as President. The political reason is that in this upcoming campaign the Republicans will blame the high oil prices on not having access to ANWR in Alaska and off shore like oil companies would want.
I think that they should allow oil production in ANWR. It’s going to happen someday, when there are really high prices and oil shortages if we don’t create a non carbon energy system. The production wouldn’t be enough in volume or quickness to solve today’s problems, but they will be produced someday anyway.
I do also remember soon after Pres. Bush came into office and his brother was gov in Florida, that the US gov. and the state of Florida made an agreement to cut off offshore oil exploration if the US gov. gave Florida somewhere around 200 million dollars. There was some US gov. fund to compensate states who lose out on licensing those oil rigs. See if that gets into the main stream media.
Nosybear, why don’t you read some serious analysis of plug-ins before posting rubbish like that? Plug-ins have been extensively analyzed, and they are cleaner than gasoline vehicles on a well-to-wheels basis. The EPA fueleconomy.gov website gives the estimated cost and emissions to drive 15,000 miles of most vehicles on the road. Compare the 2002 Toyota RAV4-EV (a plug-in vehicle) to the 2002 Toyota RAV4 2WD Automatic (a gasoline vehicle). $362/year vs. $2427/year electric vs. gasoline, and 3.9 tons of greenhouse gas vs. 8.0 tons. Over 150,000 miles of the vehicles, the plug-in would save you $20,650 in fuel costs, and since gasoline is rising much faster the electricity, the savings are going to get larger. The air pollution score of the plug-in is 10 vs. 2 for the gasser.
Robert said, “Plug in electric cars are a bit of a snare and a delusion. If we don’t find them attractive in the UK where petrol is taxed at 200% and domestic electricity at just 5% how are they going to catch on in the States? From a CO2 viewpoint electric vehicles are a really bad idea if the electricity comes from coal fired power stations – which it will be if the only driver is high oil prices.”
Plug-in cars are not popular anywhere yet because automakers are not making them in any significant quantity. The demand for them is there, but there is no supply at the moment. That is about to change.
Your comment about CO2 emissions is rubbish. See the reply to Nosybear above.
Earl Killian — You can buy a snappy Zapcar from that California-based company. Right now.
Earl Killian – before you start rubbishing critisisms of EVs please engage brain department.
Around 90% of electricity in the US and UK is generated from coal fired power stations.
1. Coal generates 50% more CO2 than petrol per unit of energy
2. Due to fundamental thermodynamic limitations of the Carnot cycle power stations struggle to achieve 50% efficiency and in practice are much worse than this. Average for the US and UK is under 37% http://www.aie.org.au/melb/material/resource/pwr-eff.htm
3. Include transmission losses, battery charging losses and electric motor losses and what are we left with? Maybe 10% of the original energy in the coal gets used for powering your EV.
EV’s are only a potential solution if charged from renewable sources. Otherwise they will make the CO2 problem progressively worse. Peak oil offers some hope that vehicle use will be capped – EV’s undo that hope.
theres talk about solar charging packs for EVs.
Panic over. This, from Hansard (the official record of UK parliamentary proceedings):
http://www.publications.parliament.uk/pa/cm200708/cmhansrd/cm080512/text/80512w0002.htm#0805128000026
**************************************************************
Oil: Prices
Norman Baker: To ask the Secretary of State for Transport pursuant to the answer of 4 March 2008, Official Report, columns 2263-4W, on oil: prices, whether she plans to revise her projections for the future price of oil in (a) 2010, (b) 2015 and (c) 2020. [204668]
Jim Fitzpatrick [holding answer 9 May 2008]: The Department for Transport uses oil price projections from the Department for Business, Enterprise and Regulatory Reform (BERR) in its transport modelling. On 2 May 2008, BERR published revised oil price assumptions to (a) $65; (b) $68; and (c) $70 for the years requested. These are in 2007 prices and refer to their central scenario.
We are in the process of using these updated projections to make new road traffic and congestion forecasts. The new oil price projections will also be incorporated into the latest versions of Department guidance and software used in developing business cases for funding by promoters.
**************************************************************
Better start building more motorways and airports for all that extra traffic. $70 oil in 2020! In your dreams…
Joe
“This is a blog about climate and energy. Peak oil is inseparable as an issue.”
That’s not what it says here: http://climateprogress.org/about
“Climate Progress is dedicated to providing the progressive perspective on climate science, climate solutions, and climate politics.”
All too often the debate about climate change gets derailed into a debate about how to maintain the Happy Motoring Utopia, especially in these times of high energy prices and recession.
It isn’t what we don’t know that gives us trouble, it’s what we know that just ain’t so.
PHEV are beneficial, regardless of what is used to fuel the generating station.
http://climateprogress.org/2007/07/24/plug-in-hybrids-are-green-duh/
http://www.epri-reports.org/PHEV-ExecSum-vol1.pdf
So what’s going to happen to the 3 or 4 million bopd saved by 2050? Let me guess – someon else burns it… Doesn’t exactly fix the climate does it?