more gasoline price fun

After writing the last entry here about the current political noise festival about gasoline prices, I wanted to move on to talking about other things. It keeps dragging on. This isn’t a surprising course of events. It rolls right along, because we still have the same oil problems only a small minority of people want to face, with a small portion of the American population even aware of what’s involved.

Somebody I know as more or less an internet acquaintance sort of friend posted a comment as a “status” update, a short observation that there are people being pretty adamant about wanting the government to stay out of everything, but then complaining about gasoline prices and sayiing it’s the government’s fault. That prompted a string of comments.

I just posted a link to the last piece that addressed the subject of all the political chatter and gasoline prices, “do adjust your picture“. One obvious reason for just tossing in a link to that was simple enough. Little text boxes for comments on a Facebook page are not exactly what you would call a good medium for serious conversation. It’s made for little one sentence comments. More than two sentences starts to look like verbal overload. The larger scale problem is that these days, that’s about the same scale and depth as most of what passes for public communication that’s supposed to provide useful and relevant information to people.

From what I know of the man whose Facebook page hosted this bit of short form commentary, it’s pretty certain that he doesn’t have much tolerance for idiots and dipshits, so this was, presumably, a fairly bright crowd. I have no reason to think that I’m any smarter than the rest of the people there. And in a way, that’s what depresses me a little about this. In general summary, basically what we have here is a case where there were some people chiming in on this, people who seemed to be fairly bright characters, probably reasonably aware of the world around them, thinking, and with some education behind them, but for the most part, making thoughtful (albeit short) comments that made it apparent that they were pretty normal late 20th century, early 21st century Americans, in not quite really understanding what’s what in the petroleum situation department.

There’s part of our problem, and why I keep coming back to the same subject. As things stand now in early 2012 in the United States, unless you’re really actively trying to dig around and research a little and sort things out, if you’re like most people busy with plenty of other things trying to get on with life, then all you know, or think you know, about the oil circumstances of our time is likely to be badly flawed. What passes for information is likely coming from people who are ridiculously superficial about addressing the subject, a subject that does get complicated, or worse, people who really don’t know what the hell they’re talking about, or even just flat out deceptive. Given that, it’s hard to blame people for not understanding.

Nobody there said anything stupid. Yet as I read, the general sense was that it seemed that nobody really gets the picture of where we are in this. There were things written with some thought to them based in reality. The initial comment was right on; blaming the government for gasoline prices is just blind thrashing looking for an easy scapegoat, not based in reality.

Stepping away from the comments in the thread on that Facebook page, it’s a matter of course, in the politically based noise these days, that some people argue that the government is to blame for gasoline prices, because of one thing or another, based on the contention that the government interferes with us having all the oil we want and can, supposedly, have. There’s a lot of this, I’ve written about this very thing repeatedly, and it’s nonsense that’s just detached from reality.

Some of the comments I read there reflected some uninformed or badly misinformed notions that are too common.

Responding to the original comment, which pointed out that while there are taxes levied, the government doesn’t set the price of a gallon of gasoline, someone wrote:

“No, but they do restrict obtaining the raw supplies. What would the price of bread be if they restricted how much grain the nations farmers could grow?”

I hope that you get what’s wrong with this. The most basic thing it seems to be that this reflects a common fundamental problem. From what I observe, I think that, somehow, and I really can’t quite understand this, many people have some strange cognitive disconnect on this.

No matter how many times they’ve heard that oil and all other hydrocarbon fuel resources underground on planet Earth are finite resources, this manages to be suspended in people’s minds to enable them to think more convenient and pleasing thoughts, something you could kind of summarize in kind of paraphrased form of what seems to be an amazingly common attitude, something like, “I know it’s a finite resource… now why can’t we have as much as we want, and we want it cheap, and always as much as we want and always cheap?“. That’s a hypothetical paraphrasing, but I’ve heard and read piles of talk from people who basically go through something that boils down to the way I just phrased it, and I can never quite comprehend how people can not stop and realize “wait a minute, that’s absurd, what am I thinking?”.

The classic bit about wanting your cake and eating it too seems relevant. I think I’ve written before about reading a comment on another Facebook page, where there was some chatter about oil, and the comment said something like “we need to do whatever it takes to keep it plentiful and cheap”. As I said there, the time for that thought was probably about 60 years ago. That time passed long ago, now, we’re at the place where all we can do is conserve what’s left, and get damned serious about it right now. When you have a finite resource, that is a one time thing, and you know that it’s a finite item, it doesn’t take genius to understand something of the implications. The only way to even reasonably think in terms of “keeping it plentiful and cheap” is to decide early on that we’re not going to use it up. The time to be thinking in these terms of “keep it plentiful and cheap” was back around 60 years ago, at least. We already screwed the pooch on that one.

 

I’m reminded of something that other people have pointed out, and I agree, that the term “oil production” is kind of a misleading misnomer. You can’t actually produce petroleum. The Earth produced petroleum, over a very, very long period of time. We can produce a range of refined products from crude petroleum, but we can’t actually produce the crude. We can only extract it. This isn’t pedantic nitpicking about semantics. It’s a fundamental fact of reality.

More excerpts:

“When the there is sufficient supply with no concerns about future supply, the cost is lower. With ready access to stable supplies, like from Canada, north slope of Alaska, Gulf of Mexico, etc. to offset the uncertainty of Libya, Middle East, Africa, etc. the prices will tend to drop.”

There is a world of things to dig into, in this. It’s hard to figure where to start. I guess the easiest short form general thing to say is that when you stop and think about something like this it shows how common it is for people who are thinking about this stuff can unconsciously be operating under a whole batch of presumptions and assumptions.

I mean, for example, for any given person, what, in their mind, constitutes “stable” supply? That’s a subject of its own. Given a finite natural resource, how exactly do you have “no concerns about future supply”? What, exactly, is “sufficient”? When you think about all of this, does “sufficient” or “stable” apply to now, this instant, next week, a generation, the next century, the rest of the existence of the human race on Earth?

I think it’s not too presumptuous to say that there’s an attitude present in most of the American population that’s hard to shake, and really needs to be knocked over the head as soon as possible. That attitude, I think, is basically this.

Over about the first ¾ of a century of what we could call The Oil Age, the United States of America found itself with what appeared by virtually anyone’s viewpoint to be enormous deposits of petroleum, seeping out of the ground and collecting above ground in big stinky pools in some places, so much of it that people thought there was more than we could possibly figure out how to use. There’s an idea that has carried on through generations of Americans, that seems somehow permanently ingrained in many people, that the stuff is, somehow, without limits, despite, as I already mentioned, having the information that this is finite. Even with that knowledge, somehow there’s this phenomenon of denial, some vague notion like “oh, sure, I know, the oil won’t last forever, but, that’s something off sometime in the future“.

That just seems stuck in people’s psyche, even after United States oil discovery rates peaked around 1930 or so, and oil extraction rates peaked around 1970, four decades ago, followed by the shock of the OPEC Arab nations oil embargo of 1973.

That’s just touching on an overall impression. What needs a little more scrutiny is the part about “..ready access to stable supplies, like from Canada, north slope of Alaska, Gulf of Mexico, etc.”. That’s a whole chapter.

 

This takes us right back to the blatant fiction of Newton Gingrich and his “$2.50 gas” nonsense, and much else just like it. Here’s the basic problem.

Canada does pump out what we’ve always known as oil, petroleum crude in the kind of deposits we’ve been drawing from, but much of the talk about Canadian oil now actually revolves around tar sands. I’ve been over this before, but for anybody who hasn’t read it, there are a couple of basic facts to understand.

All the excited and delusionally cheerful chatter about tar sands and oil shale misses a couple of important facts. Neither tar sands nor oil shale hold crude oil, petroleum. They contain other hydrocarbon deposits.

Tar sands give you bitumen, thick goo (the name doesn’t come out of nowhere), that can eventually be turned into a petroleum substitute, with all kinds of demands and problems, involving what are basically strip mining processes that ravage the land, enormous amounts of water consumed, which then ends up as toxic waste pollution, and heat energy inputs, which, as I understand it, at this point involves burning another finite hydrocarbon fuel resource, natural gas.

Oil shale has its own massive problems with damage to the Earth, consumption of water, and inputs of energy from something else, with porous shale rock containing hydrocarbon liquids that are not petroleum, it’s kerogen, which is, essentially, liquid that would eventually become oil, that is basically petroleum that isn’t done cooking. That means more energy inputs to basically finish the cooking.

The Gulf of Mexico and the north shore of Alaska come next. We all know the story of the Deepwater Horizon rig disaster. That should not need more explanation. I’ve already written about the big push in Republican political circles to invade the Arctic National Wildlife Reserve, and the amount of oil that’s estimated to be there, and how that stacks up against the rate we consume the stuff, both in terms of how much the total quantity compares to the rate we use it (i.e., the total amount equalling a supply for X amount of time) and how much it would supply in real terms, at the extraction rate estimated for the region, as a portion of either US or worldwide consumption.

I’ll cut this short and not review all I’ve already written before (and you can research yourself), but here is the bottom line point in this context.

There are a couple of points, in fact. One is that in all of these things, we’re talking collectively about a variety of categories that tend to get simply classified and referred to under the heading “unconventional oil”, the misunderstood petroleum substitutes of tar sands and oil shale, drilling for petroleum crude deep under the ocean. There is a clue in all the attention given to these things, by people saying “we have no oil problems, see, look at this!”. It’s really simple. The fact is that we are now in circumstances that drive people to turn to these fairly extreme, difficult, complicated resources and processes, to keep up the flow to supply the gluttinous consumption. That gives people an obvious clue about what we have left, and what we don’t have left, because we’ve blown through the relatively easy and cheap good light sweet crude.

Even in the realm of what we know as “conventional” oil, light sweet crude, from wells drilled on land in reasonable circumstances, here in the US, having passed peak output forty years ago, what’s left is the lower quality crude in smaller pockets, less oil obtained from each well drilled. This means, more expensive to get. All the cheerleading chatter about “new technologies” to extract more difficult deposits, to extract crude from places that were not practical or even possible in the past, or extracting more from deposits that had been declared no longer workable, neglects the fact that all this is more expensive.

In other words, there’s a contradiction, a dilemma. All of these things I’ve just run though have a common factor. They’re all more expensive. Never mind all the other problems, just the cost. Those things will only be a workable resource if the price of oil is high enough that businesses can put all the money into them and be able to sell the output and not sell it at a loss. If those supposed wonder miracles, that somebody says will give us cheap plentiful oil, actually bring oil prices down, then guess what? Suddenly they’ll be operating at a loss, and that stuff will shut down until the price of oil is again high enough to make it financially feasable. Oil goes back up in price. Around and around.

This is a hint of part of what people are talking about when they talk about an oil peak not necessarily being a sharp clearly defined peak, but a “wobbly plateau” or “bumpy plateau”.

Even if you ignore all else and just look at the money aspect of all this, right here and now, you should now have a pretty good idea of why all the noise from people about “$2.50 a gallon gasoline if I’m president”, and all sorts of that general kind of promotional noise, is just absolutely deluded bullshit. Pure and simple.

There was another thing in the comments of this Facebook page about refinery capacity being a big factor. It isn’t, from what I’ve encountered, and this shows a good snapshot of the scene-

This doesn’t look like a scenario where refineries can’t keep up, which would then be restricting gasoline supply and driving up US gasoline prices.

This wasn’t the first time that somebody suggested that petroleum fuel problems in the US must be about some sort of lack of refinery capacity. This particular topic is probably a perfect example of how much of a problem we have in the petroleum department here in the US today. I think most people are just guessing about a lot of things based on uninformative news, loads of bullshit spread by a variety of people, and just plain guessing based on some sort of what they might think are reasonable assumptions, that are not.

That leads to something even worse in the misinformed confusion department. Just recently, in two different mediums, two different people with audiences who pay attention to them, Bill O’Reilly and Thom Hartmann, have weighed in with commentary about the current gasoline price saga. Both got it badly wrong. Thom Hartmann’s blog entry you can go to and read, and Bill O’Reilly’s televised chatter was addressed well by a piece on The Oil Drum site.

Both of these guys are operating under similar thinking that has it royally and spectacularly wrong. In basic form, both of them have had some sort of exposure to a particular item of fact about petroleum, and gone off into the weeds from there. The fact involved relates to not petroleum crude, but refined products of petroleum (e.g., gasoline, diesel, kerosine, etc.). For at least the past year of 2011, the volume of refined products exported from the United States has been just slightly higher than the volume of refined products imported by the United States. To be extra crystal clear: refined products, not the petroleum crude.

Both of these guys then took this information and just got it completely fucking wrong, making statements telling people, why, golly, there’s no shortage, we’re “awash” with gas and oil, so much so that we’re now an oil exporter!

No, we are not.

Both of these people got it badly, just inexusably wrong, and the nonsense they’re telling people is worse than useless, it badly, really fundamentally, confuses people. The people who know better are encountering this idiocy and probably reacting in a variety of ways from laughter to outrage, the people who don’t will be terribly misled by this bullshit.

You don’t have to be very informed about petroleum to understand what is a reasonable intuitive guess, that with all the refinery capability in the US, we probably are not usually importing a lot of refined petroleum products that can be refined here, with large markets for all the kinds of refined products that can be derived from crude.

Next, if the US refineries are managing to supply the refined products demand for gasoline and the rest, and still not maxed out at capacity, then it doesn’t seem all that weird that, especially, with two other countries as neighbors, there might be some amount of extra refined product exported. This doesn’t mean “we’re awash with gas and oil”. To do that, the US is importing over 10 million barrels a day of crude petroleum, to crank out that refined product.

As far as I know, there have not been any shortages of gasoline recently in the US.

The price of gasoline isn’t because of some supposed shortage of gasoline available for retail sales, the price of gasoline at a retail pump in the US is a function of the price of the crude oil it’s made from.

One extra twist is in that in the current madness of so many people simplistically dividing everything into some political neat category dualism, a lot of people would probably file away O’Reilly as “Right” and Hartmann as “Left”. There we have a pair of guys seriously confusing people who don’t understand that the people they’re trusting for information about the world.

I cringe to think about how many people are now out there in the US saying “hey, haven’t you heard? there’s no oil problem, why, we’ve got so much of the stuff, we’re now an oil exporter!”, with low probability of being able to convince them that this is pure fiction based in basic, serious, pretty much idiotic confusion (when you consider that these are people who are supposed to be making a full time job of being informed), and both of these two guys are just full of shit about this.

Even when you get into people who are at least slightly more based in actual reality, to some degree anyway, you get unfortunate circumstances like people paying serious attention (with lots of media exposure for them) to somebody like Daniel Yergin, who gets respect from many people as they’re regarded as a serious academic researcher, even as he’s actually a propaganda shill for the oil business. Even then, if people do some research and consider Yergin and what he tells people, you can realize that even as he essentially tries to spread a message of “oh, no worry, it’s all good”, if you look at the reality of the situation, if he were honest, you would realize that his actual message might be translated to a form something like “oh, we’re probably going to manage, but our children and grandchildren and everybody onward are well and truly fucked!”.

I caught a little bit of a CNN “Your Money” segment a couple of days ago, and not surprisingly, the gas prices meme was active. There was at least some glimmer of light, as one guest for just a minute or two was economist Jeff Rubin, who seems, from what I know of him, to maybe be that rarest of beasts, an economist who dwells in reality in understanding the petroleum situation, rather than one of the sorts of characters who thinks the wonders and miracles of The Free Market will cure all and supercede physical reality. That was ridiculously short and superficial, though, and as seems pretty normal in TV talking head world, somebody like this doesn’t really get much of a chance to get into anything that can’t be condensed into a couple of short sentences (often with some other obnoxious asshole shouting at the same time).

Other than that brief whiff of an aroma of somebody from reality, the rest that I caught, with the host and other guests, was pretty pointless.

There was something in there, though, that stood out as a clue, if only by being snuck in by the clueless accidentally. Someone mentioned a simple and significant fact that I point out to people myself. Even now, as Americans are paying what people are calling high gasoline prices, over in continental Europe and the British Isles, people are paying more than twice what we are for gasoline, when you convert units of volume and currency, and compare.

The answer to that from somebody in this little cluster of people talking on TV, I’ll paraphrase, went like “oh, people talk about that, but that’s Europe, that’s different, it’s not the same here in the US, we can’t have those kinds of prices, because we have different lifestyles…“, and so on. And the chatter skimmed right along past that.

Oh dear God. That’s the whole point!

It was a real “want to scream at the TV” moment. This is the 50 foot tall neon pink elephant in the room that almost nobody wants to acknowledge and talk about, at least among TV talking heads and politicians.

People on the east side of the Atlantic can deal with paying the equivalent of something like $8 to $10 per gallon for petroleum fuel without freaking out and the world falling apart, because, for example, they aren’t generally driving some giant behemoth of the light truck kind as solo personal transportation and driving such beasts between the place they work and the place they live 30 miles apart or something.

A large portion of the population doesn’t need to use a personal motor vehicle burning petroleum for much of their life activities.

They haven’t destroyed their cities in a blast of surburban outward expansion that require long distances to be travelled in individual petroleum fuelled vehicles for damned near anything where they have to leave home.

They have old cities that they have kept alive and functioning and vital where life gathers in the middle of the city, and many things you need to get to are walking distance. And when they are not, there are practical functioning public transportation systems, because people aren’t shrieking that such things are communist conspiracies to destroy freedom. If there’s a need to travel longer distances, between cities, there are fully functional and efficient rail systems.

When they do drive a car, it is, for a start, probably a car, not a light truck, and it’s most likely one that’s no heavier than it needs to be, and uses a minimal amount of fuel, not some massive barge.

It was a killer. Just maddening. It was a real kind of moment of just sort of throwing your arms in the air thinking “what the fuck?”. There it was, right there in the conversation, what should have smacked everybody in the face as a light bulb moment of consciousness. Somebody says, oh, well, over there, people can pay 8 or 10 dollars a gallon for fuel and not freak out and have it be a disaster on all levels of personal, family, business, and government finances, but that’s different, we can’t have prices for gasoline like that, because we do things different here.

That IS the whole problem is shortest form, and the only one where we can actually do anything realistic about it. How we do things here. That is our problem.

Instead of getting a grip on this bit of reality, and getting serious about addressing this huge and complex and difficult problem of changing to physical arrangements
and ways of doing things to suit this reality, of declining and more expensive and lower quality and difficult fuel supply in finite hydrocarbons, the general mass delusion public chatter of concensus is to cling to the unreal, of self and mutual delusions that we can just perpetually have infinite cheap petroleum, just because we want it, and demand it, dammit!

In a recent blog piece, somebody pointed out a story about professional pundit George Will on one of the TV talk shows, talking about comments from a sitting US congressman, Representative Allen West, who was criticizing President Barack Obama for gasoline prices. To his credit, Will was clear about how ridiculous this was, with a quote from him saying:

“Allen West from south Florida, a Republican, said he was outraged this week because it cost him $70 to fill his car,” Will pointed out. “He drives a Hummer. Newt Gingrich said the American people have a right to demand $2.50 gas. They have a right to demand to lobsters grow on trees. I mean, this is economic nonsense.”

A sitting member of the US House of Representatives speaks on the subject of petroleum by repeating the same sort of nonsense we’ve been hearing about how “high gas prices” are Obama’s fault (even as we have had it relatively easy), citing his complaint about how much money had to pay to fill the tank of his Hummer.

That might be the perfect exemplification of what, exactly, our “oil problems” here in the US really are.

That was where I wrap up here today, but to add on a small postscript, I should point you to today’s installment online from James Kunstler, which is entirely relevant.

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