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View Full Version : OK Evan, I capitulate - OT



uute
11-14-2007, 04:02 AM
in a thread last year I wrote:
>"mideast oil can require up to 7 barrels to deliver one"

Evan Wrote:
>???? I'm curious where that number comes from. The cost to deliver a barrel of >Saudi oil to North America is only a few dollars plus a couple of dollars to dig a >well and pump it.

Original thread here: http://bbs.homeshopmachinist.net/showthread.php?t=89&page=11&highlight=energy

Found this study from Japan: http://www.mizuho-ir.co.jp/english/knowledge/documents/wtwghg041130.pdf

Page 19 shows a cost of ~20% to get it there.

I eat my crow
uute

Evan
11-14-2007, 07:30 AM
How are you determining what page you are on in the report? Page 19 as numbered in the report shows a total overseas transportation efficiency of .988 for all fuels. At $100 per barrel that comes to $1.20 per barrel. End to end (well to tank) transportation efficiency for diesel is given as 0.916.

uute
11-14-2007, 12:37 PM
Looking at Conventional Gasoline in Table 2.1.2 - MJ/MJ takes 0.175 MJ af energy to deliver each MJ of energy to a vehicle in Japan.

Again in Table 2.1.4 - Total efficiency of fuel production for Conventional Gasoline is .839 or 84% -- in Japan.

I don't live in Japan. I know we in the US aren't as energy efficient as they are in Japan.

uute

Paul Alciatore
11-14-2007, 03:02 PM
Are you guys factoring the cost of the Gulf Wars into this thing?


Zinggggggggggggggggggggg!

Evan
11-14-2007, 04:20 PM
I said: "The cost to deliver a barrel of Saudi oil to North America is only a few dollars".

I overstated the facts. The cost of overseas transportation to Japan is .012 Mj/Mj according to table 2.1.2, which is less than a few dollars. In the context of the original discussion I was referring to the extra cost to deliver overseas oil vs "local" north American oil. Since all the other transportation factors will remain either the same or more expensive the overseas transportation cost is the only increment to the price of local oil. It's an insignificant part of the price, slightly more than one percent.

Paul,

The Gulf war will play little role in raising the price once this imminent recession in the US really gets going. Demand will fall drastically as will the price. Also, you have to distinguish between the reported "daily news" price and what the refiners are actually paying. There is more than one oil price. The most commonly traded barrel of oil is Brent Blend which is trading around $89 per barrel. The Saudi Arabia Arabian Light price is $83 and Canada Hardisty Heavy is $70. The Texas Sweet Light price that you hear on the news is a mostly mythical top grade price that is adjusted downward according to the actual type of crude traded.

uute
11-14-2007, 06:07 PM
I'll agree w/ principle but not degree of your second statement. Recession imminent -True. Demand will fall - True. Drastically? Maybe, I hope only modestly, though this recession may turn out to be a doosey. (We've earned it!)

However, I still think there is a good chance that international demand will remain strong (or at least weakly growing), giving support to oil prices. Time will tell.



In the original discussion, I was speaking of worst case production costs all along. This is not the study I was looking for during that discussion, never did find that one. This one covers similar material, >> in Averages. 17% off the top is still alot.

uute

Rustybolt
11-14-2007, 09:21 PM
uute. We(N. America) are still the largest market for crude oil. If there is a reccession(no guarantee) the price will fall for the short term. As I've said before a large part of what is paid at the pump is due to the lack of throughput. There is plenty of oil. There are a a limited number of refineries and they are working at capacity.

Evan
11-14-2007, 10:09 PM
The wild card now is China. They hold around 1/2 trillion in US cash reserves and are taking a huge haircut on the exchange rate drop. I have said before that the time is coming when they will be forced to decouple the Yuan from the US Dollar and it looks like that time is now. If they start to seriously dump their US currency holdings the US Dollar will fall much farther and faster than it already has. This isn't good for anybody. Canada and the US have the largest trading relationship in the world and when the disparity between the currencies reverses like it has already it throws everything out of balance. Just the other day the CDN Dollar closed at nearly $1.10 US. That's a 30% change over the last year or so and is really tough on our exporters. It makes our products that much more expensive in the US which hurts US consumers and cuts demand which hurts Canadian producers.

There is and old Chinese curse that goes: "May you live in interesting times". These times are that indeed.

dp
11-14-2007, 10:24 PM
Canadian prices hurt US consumers only if the only source for a particular product is Canada. What do you have that we don't have or that we have been purchasing from Canada because the Canadian dollar was worth less than it is today? We've artificially created shortages in energy here by policy but that can change. I haven't looked at Canadian imports in this light before so it is something I'm curious about.

I'd also wondered here some months ago about a bit of Chinese posturing on the currency issue and the fact that they have so much to lose by holding onto the US dollar and it's going to be interesting to see if they can find a way to shed the burden without precipitating a collapse. It may be in their best long term interest to help keep the value of the dollar high until they can purge their holdings.

uute
11-14-2007, 10:46 PM
dp:
Oil, nat. gas, timber and auto parts are some imports from up north.

It seems now that we can't keep up w/ Chinese manufacturing, but we can print paper money faster than they can wipe with it. Its a great way for the rich to not only steal back what we've paid out to the Chinese, but to steal all our retirement savings in the bargain.

Evan,

The sad thing for you now is we don't have much you want. Soon would come the time to buy a vacation condo in Florida. Something tells me that's prolly not on your Christmas list! :D :D :D

Oh the hardships of living in paradise. :D

Evan
11-14-2007, 10:51 PM
What do you have that we don't have or that we have been purchasing from Canada because the Canadian dollar was worth less than it is today?

Everything. Canada is the largest supplier to the US of oil, natural gas, electricity, lumber, steel, aluminum, copper and other metals of strategic value such as uranium, chromium, nickel and most others. Canada is also the largest supplier of refined petroleum products as well as a wide variety of agricultural products. Prices due to the exchange rate isn't the only consideration. In particular, with petroleum the lead time to delivery is less than a week. Venezuela is 3 weeks and everyone else is 2 months or more. Only Canada can make up for a sudden shortfall due to problems such as Katrina etc. The US can't do without Canada and Canada will be much poorer if the US market crashes.

dp
11-14-2007, 11:02 PM
But will that continue if Canadian prices sufficiently exceed US prices for those materials we can produce here? As mentioned we have plenty of energy in the ground by restrictive policy and if the price is right we'll tell the politicians to go to hell and pump it. It might even look advantageous to Canadians to buy it from us owing to the relative value of the two currencies and the flow in the gas pipes just might reverse direction :)

uute
11-14-2007, 11:10 PM
dp, the vast majority of our oil is in the air now, causing global warming.

dp
11-14-2007, 11:16 PM
And yet it's still snowing in Hawaii :eek:

http://mkwc.ifa.hawaii.edu/current/cams/index.cgi

Edit: Hey - that camera caught the sun setting and the moon high in the southern sky. In the morning here I watch the sun rise in Hawaii on this mountain. Sometimes the camera will catch stars, planes, meteors, and planets. I tried to see if any of them caught Comet Holmes over the last week but couldn't spot it.

uute
11-14-2007, 11:25 PM
Ya, but they're getting thirsty in Georgia.

and - Thankx for the camera link. : )

Evan
11-15-2007, 01:36 AM
The US isn't and can't become self sufficient in any of the commodities I listed, especially energy. The resources don't exist in a form that can be ramped into production any time soon no matter how much money is thrown at it. That would be money that someone will have to lend, too.

Conversely, if China drops the US dollar then prices on Made in China brand go up significantly both in the US and Canada. Want a new minilathe or mill? The Buy it Now price is the best you will see.

Your Old Dog
11-15-2007, 06:28 AM
Looking at Conventional Gasoline in Table 2.1.2 - MJ/MJ takes 0.175 MJ af energy to deliver each MJ of energy to a vehicle in Japan.

Again in Table 2.1.4 - Total efficiency of fuel production for Conventional Gasoline is .839 or 84% -- in Japan.

I don't live in Japan. I know we in the US aren't as energy efficient as they are in Japan.

uute

I did and R&R in Japan in the 67. I think they are more energy efficiant because the roads are so narrow they need smaller cars to navigate them! Generally speaking, less car, less fuel.

Evan
11-15-2007, 07:21 AM
Actually, the Japanese retail goods distribution system is likely the least efficient on earth. It is a relic from the feudal days with thousands of micro territories each with it's own "boss" and "turf". It is so difficult to deal with that it has served in the past as an effective trade barrier against the distribution of western imports in Japan.

uute
11-15-2007, 12:15 PM
Evan,

On currency and commodities I believe you are exactly correct.

Perhaps its time for your French fellows to occupy the White House again! Maybe straighten a few things out down here. :D :D :D

Your Old Dog,
I think the Japanese are much more energy efficient overall because they have very little domestic energy of their own.

uute