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This little diddy jumped off the page at me: "Goldman Sachs (GS) predicts that by 2017 the U.S. will be the world’s biggest oil producer." How accurate is thi

This little diddy jumped off the page at me: "Goldman Sachs (GS) predicts that by 2017 the U.S. will be the world’s biggest oil producer." How accurate is this statement? Is the reason the gasoline prices here are so high ($3.89 here this weekend) is because we don't have enough refineries to convert oil into gas? *edited for grammar.

protomyth 14y ago
North Dakota's surge in production over the last couple of years is one part, but Texas just found the same type of reserve and will start fracking. Gasoline prices are high because of speculators, lack of refineries, and having multiple gas formulas for different regions of the US.
- protomyth 14y ago
  here is a pdf document talking about blends in 2004: http://www.gao.gov/new.items/d05421.pdf http://www.gao.gov/new.items/d05421.pdf "There were 12 distinct gasoline blends in use in the United States during the summer of 2004: 11 special gasoline blends and the conventional gasoline used everywhere a special blend is not used. When different grades of gasoline, special blends used in winter, and other factors are considered, the number of gasoline blends rises to at least 45. New ozone standards and other factors may further increase the number or the use of special gasoline blends in the future, in part because EPA must approve any state’s application to require use of a special gasoline blend as long as the proposed fuel meets EPA’s environmental standards." and a pdf map from Exxon: http://www.exxon.com/USA-English/GFM/Files/US_Gasoline_Map.pdf http://www.exxon.com/USA-English/GFM/Files/US_Gasoline_Map.p...
  - pilom 14y ago
    This information is awesome. I had no idea this was the case. Thanks!
kbeegle 14y ago
Goldman Sachs statement isn't that surprising when you think about it from the perspective of countries and country size. Of the major oil producing countries, the only one larger than the U.S. is Russia (Canada's reserves are mostly natural gas). In addition to this midwest boom, the U.S. also has large reserves in Alaska and in Gulf Coast and it makes sense to deploy newer more expensive technologies to extract new oil reserves because the consumption is happening so close to the source and a stable political environment makes it worthwhile to make long term investments. Also, the difference is not as big as I first thought it was: http://en.wikipedia.org/wiki/List_of_countries_by_oil_production http://en.wikipedia.org/wiki/List_of_countries_by_oil_produc.... On the pricing, I'm speculating a bit but I don't think the refineries issue is that major an issue for gas pricing. If you remember, during Hurricane Katrina, a number of refineries were shut down or damaged and prices did bump up a bit, but not dramatically so. I think the biggest factor is there's a lot more demand for oil on the world market. We typically hear about the growing number of cars in China and India as people's income rises and car costs drop but the same is happening all over the world. This week the BBC had a good article on the 180km traffic jams in Sao Paulo, Brazil. http://www.bbc.co.uk/news/magazine-19660765 http://www.bbc.co.uk/news/magazine-19660765. Oil is a global commodity and is fairly mobile so a demand increase in one part of the world raises prices everywhere. A sustained increase in demand all over the world raises prices a lot more.
- lifeisstillgood 14y ago
  I remember reading (source:?) that the US has had a (unofficial) policy since the 60s that they will import and buy oil internationally rather than rush to exploit internal oil reserves. The intention is to keep some in reserve for when the rest of the world runs out of oil. How true it is, and how well US has kept to that I do not know, but it does speak of a degree of control and strategy one does not normally associate with governments.
  - ImprovedSilence 14y ago
    I've actually heard the same thing. It kinda makes sense, no?
joezydeco 14y ago
Delta Airlines has purchased their own oil refinery to get out from under the thumb of speculators like GS and have more control over their own fuel prices. Bravo to them for thinking ahead: http://finance.fortune.cnn.com/2012/04/12/delta-oil-refinery/ http://finance.fortune.cnn.com/2012/04/12/delta-oil-refinery...
- refurb 14y ago
  But doesn't most of the speculation happen on the crude oil side? Delta still has to buy crude to feed their refinery.
  - pbhjpbhj 14y ago
    >Delta still has to buy crude to feed their refinery. // Or drill for it.
  - protomyth 14y ago
    Delta Air Lines to bring N.D. crude oil by train to its Trainer refinery http://articles.philly.com/2012-09-08/business/33678271_1_crude-trainer-refinery-barrels http://articles.philly.com/2012-09-08/business/33678271_1_cr...
tomwalker 14y ago
In the United Kingdom it is about $8.40 for a US gallon of petrol(gas)
- marvin 14y ago
  Norway, $9.23 on a good day. $9.80 on a bad day.
- nhebb 14y ago
  A lot of that cost is due to the import duty plus VAT: http://en.wikipedia.org/wiki/Fuel_tax#United_Kingdom http://en.wikipedia.org/wiki/Fuel_tax#United_Kingdom
  - gadders 14y ago
    Yep. Robbing government swine. I can remember when people were wondering if it would ever hit £3/gallon.
dalore 14y ago
US gasoline prices are amongst the cheapest in the world. Why do you conclude they are so high?
- mey 14y ago
  http://www.wolframalpha.com/input/?i=oil+price http://www.wolframalpha.com/input/?i=oil+price The cost of oil has gone through the roof, even compared to the 80's oil crisis where the middle east shut-off gas to the US. [edit] Removed some comments that referenced a different comment that I thought was the parent to this comment.
- showerst 14y ago
  They're high compared to historic US prices: http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_Inflation.asp http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_I...
- deleted 14y ago
  [deleted]
protomyth 14y ago
Here is an AP article / blog on the Natural Gas side http://bigstory.ap.org/article/next-cold-war-gas-drilling-boom-rattles-russia http://bigstory.ap.org/article/next-cold-war-gas-drilling-bo... it seems to be a little... dramatic for my tastes, but it is AP
brc 14y ago
Gasoline (and oil) prices in the USA feel high because the USD has declined in value. The oil/gold ratio (two hard commodities) has oscillated between 8 and 20 barrels / gold ounce for 30 years - with occasional spikes up or down. It's not the oil price that has risen - it's the bits of paper in your wallet that have fallen. Since 2000, the US money supply has increased from about $600 billion to about $2.6 trillion. That is a 300% increase in the amount of USD around - it's little wonder that a barrel of oil has tripled in value as well over the same period for that same currency. The truth is that gas prices, adjusted for inflation, are about the same as they were 30 years ago. It's just a shame that most people can't adjust their income to inflation easily, and so see their gasoline bill eating up more of their disposable income than they would like. So next time you shake your fist at the oil companies for gouging you, remember to shake the other fist at the Federal Reserve for devaluing your currency. They've both conspired in the ever-increasing prices.
- jacques_chester 14y ago
  Except that oil prices have risen for everyone, regardless of currency. Floating exchange rates tend to cancel out quantitative differences between currencies, so in fact some of the price rise you see is "real". Gold is not a sensible measure of value because gold is not a currency. It is a metal with multiple competing uses, only one of which is as a store of value.
  - brc 14y ago
    All currencies are 'managed' by central banks. All currencies have depreciated in value by central bank inflation. The only difference is the degree to which the currency has been devalued. Swiss Franc - not so much until recently (in repsonse to Euro devaluation). Argentinian Peso - lots. This is not really an argument - all Central banks have inflation as one of their core aims - it's just a matter of degree how much inflation they have created. We are in an era of competitive currency devaluations when even the Swiss are getting in on the act. The USD is different because it acts as the world reserve currency, and the one in which oil is priced. It used to have a quasi-link to gold until Nixon closed the Gold window, which, unsurprisingly dropped the value. >Gold is not a sensible measure of value because gold is not a currency. It is a metal with multiple competing uses, only one of which is as a store of value. It's more sensible than paper money as a store of value over the long term. The mean failure rate for paper currencies is 100% - it's just a matter of measuring the longevity. But you don't have to use Gold to compare. You can compare oil to any number of commodities (wheat, copper, cotton) and you'll see that historically they trade in a range, which is consistent with oil note becoming more expensive particularly faster than anything else.
to3m 14y ago
Insufficient refinery capacity? - sort of, perhaps: http://research.tdwaterhouse.ca/research/public/Markets/CommoditiesNews?documentKey=1314-L6E8L3EG4-1 http://research.tdwaterhouse.ca/research/public/Markets/Comm... The weekly status report has a section on refinery utilization: http://www.eia.gov/dnav/pet/pet_sum_sndw_a_(na)_yup_pct_w.htm http://www.eia.gov/dnav/pet/pet_sum_sndw_a_(na)_yup_pct_w.ht... I don't really follow that chart so I've no idea what the normal ranges are but it suggests that the current 85-90% utilization is not some kind of upper limit (e.g., for safety or process reasons), so there is actually spare capacity.

protomyth 14y ago

North Dakota's surge in production over the last couple of years is one part, but Texas just found the same type of reserve and will start fracking. Gasoline prices are high because of speculators, lack of refineries, and having multiple gas formulas for different regions of the US.

protomyth 14y ago
here is a pdf document talking about blends in 2004: http://www.gao.gov/new.items/d05421.pdf http://www.gao.gov/new.items/d05421.pdf "There were 12 distinct gasoline blends in use in the United States during the summer of 2004: 11 special gasoline blends and the conventional gasoline used everywhere a special blend is not used. When different grades of gasoline, special blends used in winter, and other factors are considered, the number of gasoline blends rises to at least 45. New ozone standards and other factors may further increase the number or the use of special gasoline blends in the future, in part because EPA must approve any state’s application to require use of a special gasoline blend as long as the proposed fuel meets EPA’s environmental standards." and a pdf map from Exxon: http://www.exxon.com/USA-English/GFM/Files/US_Gasoline_Map.pdf http://www.exxon.com/USA-English/GFM/Files/US_Gasoline_Map.p...
- pilom 14y ago
  This information is awesome. I had no idea this was the case. Thanks!

kbeegle 14y ago

Goldman Sachs statement isn't that surprising when you think about it from the perspective of countries and country size. Of the major oil producing countries, the only one larger than the U.S. is Russia (Canada's reserves are mostly natural gas). In addition to this midwest boom, the U.S. also has large reserves in Alaska and in Gulf Coast and it makes sense to deploy newer more expensive technologies to extract new oil reserves because the consumption is happening so close to the source and a stable political environment makes it worthwhile to make long term investments. Also, the difference is not as big as I first thought it was: http://en.wikipedia.org/wiki/List_of_countries_by_oil_production http://en.wikipedia.org/wiki/List_of_countries_by_oil_produc.... On the pricing, I'm speculating a bit but I don't think the refineries issue is that major an issue for gas pricing. If you remember, during Hurricane Katrina, a number of refineries were shut down or damaged and prices did bump up a bit, but not dramatically so. I think the biggest factor is there's a lot more demand for oil on the world market. We typically hear about the growing number of cars in China and India as people's income rises and car costs drop but the same is happening all over the world. This week the BBC had a good article on the 180km traffic jams in Sao Paulo, Brazil. http://www.bbc.co.uk/news/magazine-19660765 http://www.bbc.co.uk/news/magazine-19660765. Oil is a global commodity and is fairly mobile so a demand increase in one part of the world raises prices everywhere. A sustained increase in demand all over the world raises prices a lot more.

lifeisstillgood 14y ago
I remember reading (source:?) that the US has had a (unofficial) policy since the 60s that they will import and buy oil internationally rather than rush to exploit internal oil reserves. The intention is to keep some in reserve for when the rest of the world runs out of oil. How true it is, and how well US has kept to that I do not know, but it does speak of a degree of control and strategy one does not normally associate with governments.
- ImprovedSilence 14y ago
  I've actually heard the same thing. It kinda makes sense, no?

joezydeco 14y ago

Delta Airlines has purchased their own oil refinery to get out from under the thumb of speculators like GS and have more control over their own fuel prices. Bravo to them for thinking ahead: http://finance.fortune.cnn.com/2012/04/12/delta-oil-refinery/ http://finance.fortune.cnn.com/2012/04/12/delta-oil-refinery...

refurb 14y ago
But doesn't most of the speculation happen on the crude oil side? Delta still has to buy crude to feed their refinery.
- pbhjpbhj 14y ago
  >Delta still has to buy crude to feed their refinery. // Or drill for it.
- protomyth 14y ago
  Delta Air Lines to bring N.D. crude oil by train to its Trainer refinery http://articles.philly.com/2012-09-08/business/33678271_1_crude-trainer-refinery-barrels http://articles.philly.com/2012-09-08/business/33678271_1_cr...

tomwalker 14y ago

In the United Kingdom it is about $8.40 for a US gallon of petrol(gas)

marvin 14y ago
Norway, $9.23 on a good day. $9.80 on a bad day.
nhebb 14y ago
A lot of that cost is due to the import duty plus VAT: http://en.wikipedia.org/wiki/Fuel_tax#United_Kingdom http://en.wikipedia.org/wiki/Fuel_tax#United_Kingdom
- gadders 14y ago
  Yep. Robbing government swine. I can remember when people were wondering if it would ever hit £3/gallon.

dalore 14y ago

US gasoline prices are amongst the cheapest in the world. Why do you conclude they are so high?

mey 14y ago
http://www.wolframalpha.com/input/?i=oil+price http://www.wolframalpha.com/input/?i=oil+price The cost of oil has gone through the roof, even compared to the 80's oil crisis where the middle east shut-off gas to the US. [edit] Removed some comments that referenced a different comment that I thought was the parent to this comment.
showerst 14y ago
They're high compared to historic US prices: http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_Inflation.asp http://inflationdata.com/Inflation/Inflation_Rate/Gasoline_I...
deleted 14y ago
[deleted]

protomyth 14y ago

Here is an AP article / blog on the Natural Gas side http://bigstory.ap.org/article/next-cold-war-gas-drilling-boom-rattles-russia http://bigstory.ap.org/article/next-cold-war-gas-drilling-bo... it seems to be a little... dramatic for my tastes, but it is AP

brc 14y ago

Gasoline (and oil) prices in the USA feel high because the USD has declined in value. The oil/gold ratio (two hard commodities) has oscillated between 8 and 20 barrels / gold ounce for 30 years - with occasional spikes up or down. It's not the oil price that has risen - it's the bits of paper in your wallet that have fallen. Since 2000, the US money supply has increased from about $600 billion to about $2.6 trillion. That is a 300% increase in the amount of USD around - it's little wonder that a barrel of oil has tripled in value as well over the same period for that same currency. The truth is that gas prices, adjusted for inflation, are about the same as they were 30 years ago. It's just a shame that most people can't adjust their income to inflation easily, and so see their gasoline bill eating up more of their disposable income than they would like. So next time you shake your fist at the oil companies for gouging you, remember to shake the other fist at the Federal Reserve for devaluing your currency. They've both conspired in the ever-increasing prices.

jacques_chester 14y ago
Except that oil prices have risen for everyone, regardless of currency. Floating exchange rates tend to cancel out quantitative differences between currencies, so in fact some of the price rise you see is "real". Gold is not a sensible measure of value because gold is not a currency. It is a metal with multiple competing uses, only one of which is as a store of value.
- brc 14y ago
  All currencies are 'managed' by central banks. All currencies have depreciated in value by central bank inflation. The only difference is the degree to which the currency has been devalued. Swiss Franc - not so much until recently (in repsonse to Euro devaluation). Argentinian Peso - lots. This is not really an argument - all Central banks have inflation as one of their core aims - it's just a matter of degree how much inflation they have created. We are in an era of competitive currency devaluations when even the Swiss are getting in on the act. The USD is different because it acts as the world reserve currency, and the one in which oil is priced. It used to have a quasi-link to gold until Nixon closed the Gold window, which, unsurprisingly dropped the value. >Gold is not a sensible measure of value because gold is not a currency. It is a metal with multiple competing uses, only one of which is as a store of value. It's more sensible than paper money as a store of value over the long term. The mean failure rate for paper currencies is 100% - it's just a matter of measuring the longevity. But you don't have to use Gold to compare. You can compare oil to any number of commodities (wheat, copper, cotton) and you'll see that historically they trade in a range, which is consistent with oil note becoming more expensive particularly faster than anything else.

to3m 14y ago

Insufficient refinery capacity? - sort of, perhaps: http://research.tdwaterhouse.ca/research/public/Markets/CommoditiesNews?documentKey=1314-L6E8L3EG4-1 http://research.tdwaterhouse.ca/research/public/Markets/Comm... The weekly status report has a section on refinery utilization: http://www.eia.gov/dnav/pet/pet_sum_sndw_a_(na)_yup_pct_w.htm http://www.eia.gov/dnav/pet/pet_sum_sndw_a_(na)_yup_pct_w.ht... I don't really follow that chart so I've no idea what the normal ranges are but it suggests that the current 85-90% utilization is not some kind of upper limit (e.g., for safety or process reasons), so there is actually spare capacity.