Price of gasoline

Having refineries that work best with heavy crude oil;
And a boom in American drilling because of new techniques for tapping oil from shale that produces a ultralight oil.
= a glut of oil in the U.S. market
= lower oil prices

What is a CEO to do????????

One back door way to handle it is to hire a few lawyers; meet in a smoky room and give a private presentation to the Commerce Department so you can argue why you think the ban on exporting oil from the U.S. does not apply to you.

Then once you get your private approval that weren't coordinated with other parts of the administration; you sell your oil to South Korea.

And you thought gasoline prices were high today.... Just wait.....
U.S. Oil Exports Ready to Sail

Do you honestly expect us to believe that a billion dollar a year company has more pull with our legislators than we do? (Tongue in cheek) who knows though, may be for the best in the long run, not enough info to really form an accurate opinion.

Filled up in northwest Tennessee , unleaded regular 10%E for $299.9 first time in years under three dollars.

Enjoy it now. It won't last.

Ok, I'm having trouble following your logic:

How is a glut of oil that we can't process here going to cause lower oil prices in the US?

An ultra-conservative friend of mine claims that the oil companies only make a fixed amount off a barrel of oil regardless of what the market price of oil is. Supposedly they have no interest in what the market does.

All the oil companies care about is how much they sell, and if they have a bunch of light crude that's worthless in the US market, they have to sell it SOMEWHERE.

What we need are refineries that can process the oil here, but nobody, not even you, is willing to let an oil company build a refinery in their back yard.

I have to ask, who could possibly have enough clout to dictate and enforce that "the oil companies only make a fixed amount off a barrel of oil regardless of what the market price of oil is". They have some environmental regulations, but they are independent businesses, not closely regulated public utilities.

Was he talking about small individual service stations or the big oil companies? In some states, retail service stations are required to stay within a fixed range of markup on fuel.

I ran a petroleum research lab for years. Our function was to test the quality of the various petroleum fractions produced from crude oils around the world. We received barrels of crude and our pilot plants simulated all of the various refinery processes: be it distillation, reforming, catalytic cracking or whatever. Based on the testing results(called a criude assay) the major oil refiners would then decide how to best use the crude that they had on hand. Heavy crude was then and is still now , not real desireable. Light, sweet crudes are very desireable. There is no glut on the market from over production.
They are simply clearing out some momentary excess inventory.
I wouldn't get too excited about gasoline prices going back to years ago pricing and staying there.(fuelsandlubestechnologies.org)

(quoted from post at 06:35:49 08/07/14) I have to ask, who could possibly have enough clout to dictate and enforce that "the oil companies only make a fixed amount off a barrel of oil regardless of what the market price of oil is". They have some environmental regulations, but they are independent businesses, not closely regulated public utilities.

Click to expand...

It's not "dictated."

The fixed amount is what's left after the oil is sucked out of the ground and loaded on to a tanker.

When oil prices go up, fuel prices go up and the cost of drilling, pumping, and transporting the oil all go up, along with the cost of equipment repair and replacement.

If you run a farm you've faced similar issues here over the past several years. Sure corn is $8 a bushel but fuel is $4 a gallon and the price of everything else has gone way-way up. In the end you really don't have much more left over than you did when corn was $4 a bushel. Then corn goes back down to $4 and everything else stays high...

I just read yesterday that gas prices will dip into the $3.00 a gal by Early Dec. I guess we will have wait to see who is correct.
Walt

That still sounds like they are operating in a free market, neither costs nor selling prices are fixed, they are only limited by "what the market will bear".

They also stated there might be a slight up price between now and the middle of Sept. Could there possibly be a holiday in that period.

Around here, early December is usually when gas prices are the lowest the year. Demand for travel drops and the heating season is just beginning in populated regions.

The US used to be the number oil exporting nation in the world - that's part of what caused the Pacific War.

Where did you hear the US had a "GLUT" of oil? It was only recently that US imports dropped. The country is still importing 7,500,000 barrels a week while only exporting 295,000. With numbers like that the "GLUT" would dissappear in a week or two by simply lowering imports.

What you should be wondering is how the world market price for oil is still above $90 a barrel now that the number one importer has cut its imports in half.


http://www.eia.gov/dnav/pet/pet_move_wkly_dc_nus-z00_mbblpd_w.htm

(quoted from post at 08:06:53 08/07/14) The US used to be the number oil exporting nation in the world - that's part of what caused the Pacific War.

Where did you hear the US had a "GLUT" of oil? It was only recently that US imports dropped. The country is still importing 7,500,000 barrels a week while only exporting 295,000. With numbers like that the "GLUT" would dissappear in a week or two by simply lowering imports.

What you should be wondering is how the world market price for oil is still above $90 a barrel now that the number one importer has cut its imports in half.


http://www.eia.gov/dnav/pet/pet_move_wkly_dc_nus-z00_mbblpd_w.htm

Click to expand...

What really does not make sense is WHY are we even EXPORTING oil in the first place?

Exporting oil? depends some on what oil and where it is coming from, where the nearest refiner and market is. the classic example is the Alaskan crude oil that was supposed to go to the Los Angeles refineries when the
Alaskan pipeline was built to Southen Alaskan port area instead of to the Canadian refineries. Problem is when the pipeline was finished the city of Los Angeles politicians had blocked the building permits for the refineries to upgrade to meet newer pollution laws-SO, LA refineries can"t refine the oil now available at Alaskan port. shippers have a little problem- where to ship the oil? send it to Mexican refineries maybe? Mex refineries have their own source of oil from Mexican fields, won"t pay for the American crude oil at a profit. Take the distance to travel south to LA, draw a similar line to the east and there is the Japanese market refineries and South Korean market with strong currency and American bank accounts available, some of their own tankers that will pickup at end of pipeline and pay at pickup. The crude oil from Alaska is "Exported" to eastern countries, Mexican refined products are "Imported" to the Southern California markets. New Jersey refineries send some ultra low sulfur diesel to European markets- the tankers are shuttling back and forth between Rotterdam and New Jersey carrying European no lead gasoline base that they have a bit of surplus to US and taking back the ultra low sulfur diesel base that is used in many European power plants as required by recent emissions laws there. You now have some quantity of petro product "imported" to US and another product "exported". Some Canadian oil is sent from central provinces to midwest refineries in Minnesota - "Imported" while some New Jersey products go to Quebec- "Exported" Canadian Pipeline doesn"t get the east to west routing from central provinces to Eastern Canada for large amounts of product, great lakes tankers have the locks transport costs-- a New Jersey tanker has a relatively short trip to port of Quebec with load of fuel oil and some gasoline- so the product is "Exported" in eastern area sort of makes up for the "Import" in Midwest US--but the barrels of product figures show up plain as "Import", "Export" instead of "Swapped". RN

Usually it is a transportation issue. It's cheaper and easier to send it to a port for export than to try to ship across an area that doesn't have pipelines. The external_link plan to ship oil out of North Dakota to refineries in the South using Warren Buffets' trains is enourmously expensive.

Agreed.

On the Alaskan pipeline its cheaper to ship it out on tankers east than to send it one down to Mexico. Could you imagine getting the permits and crews to build a pipeline across southern California to Mexico? Freaking FEDERAL government won't even let the Keystone Pipeline come across Kansas much less trying it in the state of fruits, nuts and flakes.

If you put it on trucks or trains the transportation costs make the oil more expensive than just buying it as crude in Mexico.

Gas in cambridge mn 3.15 today Ill take that anyday

We are exporting this oil for the same reason we have a glut of oil.
Oil refineries were caught with their pants down because they did not see or take action on what happened.
Our refineries are built to process oil (heavy crude) from over seas because that is where most of our oil has come from in the past.
This oil we have a glut of is ultra light sweet crude because we do not have capacity to refine it as fast as they are getting it out the ground.
Hence they are finding ways to export it.

That's like they built a big tanker dock off the coast of Louisiana to unload imported natural gas. With the recent finds of mega natural gas here they are running around like a headless chicken trying to convert this import dock so it can be used as a export dock.