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An interesting fact to consider is that the US stockpile (the Strategic Petroleum Reserve) is reported as the total of sour (high sulfur) and sweet (low sulfur)
by anigbrowl 3mo ago
An interesting fact to consider is that the US stockpile (the Strategic Petroleum Reserve) is reported as the total of sour (high sulfur) and sweet (low sulfur) crude oil. The sweet stock makes up about 1/3 of the reserve and hardly varies at all. This is because US refineries are virtually all configured for sour crude: due to a mistaken belief in the 1990s that sweet crude was running out, the industry bet the farm on sour crude refining, and if sour crude runs low, it's extremely economical to switch.
As a result, almost all the draw from the SPR is of sour crude (currently ~5 million barrels/week). However, you can't just use up all the reserve because as levels get lower brine must be pumped into the storage chambers to retain pumping pressure, and the more brine that is pumped, the more the output quality declines.
The weekly reports indicate a total in the SPR of about 300mbb, of which ~100 are sweet and 200 sour. But for the reasons above, output becomes unusable one the sour levels fall to ~140-150mbb, at which point there is almost certainly a severe diesel supply shock. At current drawdown rates, that would be sometime around October/November, right in the middle of harvest season when demand for diesel is highest.
There's more complexity to this than I want to type out in a HN comment, but not that much more. Draw your own conclusions.
- kccqzy 3mo ago> would be sometime around October/November, right in the middle of harvest season Right in the middle of election season.
- actionfromafar 3mo agoRight in the middle of "election" season. FTFY.
- neilellis 3mo agoYou guys still having elections?
- specproc 3mo agoThis could well be the last one for a while
- kashunstva 3mo agoOr the previous one may have been the last one for a while.
- veqq 3mo ago> virtually all configured for sour crude They have retooled them in the past 40 years for the actually accessible inputs and desired distillates.
- wombatpm 3mo agoConverting from sour to sweet is easier than sweet to sour. Because the sulfur in sour is the catalyst killer. You may have issues in the early processing steps because of lower viscosity, but you can do blending if necessary.
- zzzeek 3mo agoWell that's also election time so the timing could not be better
- cheschire 3mo agoRandom internet person says something that nobody is talking about. Gemini says random internet person is exaggerating the severity on most points. I guess I’ll wait and see if someone provides citations because this feels like a nothing burger.
- anigbrowl 3mo agoWe are talking about this, because we're discussing a model of oil price vs availability which includes modeling of national oil reserves. I'm pointing out that the popularly understood amount of US reserve levels somewhat overestimates the available cushion, and provided two different and easily verifiable reasons for considering it to be smaller than the headline number. I also specified that I was oversimplifying for the sake of brevity. I also indicated which assumptions and approximations were inputs in my heuristic. You could easily ask Gemini to critically appraise each of these steps and get the detail you feel you're lacking; I know this because I employed it over the last few months to research this topic, but did so in piecewise fashion. Apparently you opted for the easier 'ctrl-V is this true' type of inquiry, which reflected your natural skepticism back toward you.
- cheschire 3mo agoWhat you also provided was conjecture based on… oh right you didn’t provide what it’s based on. Citation needed. What I meant with nobody talking about it was that outside of your post your bullet points aren’t being brought up in any reliable sources.
- brokencipher 3mo agoIsn't this the reason why they specifically targeted Venezuela, to get their oil?
- petcat 3mo agoVenezuela and Iran are strategic targets to control China's supply of crude oil. That's pretty much it. USA can produce all the oil/energy it needs for itself. Everything else is about controlling the energy supply to adversaries.
- jsiepkes 3mo agoAs the parent comment explains, the US can't produce all the oil it needs, because it's refinery capacity isn't aligned with the type of oil it pumps from the ground.
- ColdStream 3mo agoI have seen a few slightly different figures but it is something like 40% of oil still needs to be imported to get the right mix for the current economic setup.
- SJC_Hacker 3mo agoIt can be if necessary. It’s just the US refineries can deal with the crappy oil produced by places like the tar sands in Canada, where few other countries currently can
- duzer65657 3mo agoThe Venezuelan oil is essentially the same, and Canadian bitumen is much cheaper on the world market to account for this.
- elzbardico 3mo agoBut it is a free market. If prices in the international market are at 2x the prices in the domestic market, nobody would sell oil in the domestic markets. The US would have to introduce export controls. But can the US do it? No, because it lacks refining capability for a lot of the kind of oil it produces and retrofitting existing refineries is a multi-year, very expensive project.
- eliotho 3mo agoThis is an interesting insight, as usable reserves < reported reserves the clocks in the model are optimistic
- scheme271 3mo agoI think the reserves have more complex dynamics. The law requires 250 million barrels to be kept but the pumping rate decreases as more is pumped. Also, there's various estimates that indicate that the storage areas will lose structural integrity and start to collapse at levels higher than 250M barrels. I'm not sure anyone really knows about the levels for sure and the best estimates are probably kept secret for security reasons.
- 3eb7988a1663 3mo agoNot that the administration is trustworthy, but they recently announced that the structural floor is ~70M barrels. Which is significantly lower than other public estimates. Which strikes me as an attempt to ease the market that there is significantly more breathing room.
- anigbrowl 3mo agoThat seems a bit optimistic to me. I'm no expert, but a relevant and recent examination of the physical SPR facilities (published just last month) is available at https://www.gao.gov/assets/gao-26-106918.pdf https://www.gao.gov/assets/gao-26-106918.pdf
- nxobject 3mo agoThis is incredibly superficial, but that’s the most thoughtfully laid out and typeset official report I’ve read in ages.
- deleted 3mo ago[deleted]
- anigbrowl 3mo agoShould have said 'extremely uneconomical to switch. Sorry for the confusion.
- pbkompasz 3mo agoI can't believe Joe Biden did that!