President Obama goes out of his way to Raise the Price of Gasoline

Posted by PITHOCRATES - September 14th, 2013

Week in Review

Why is gasoline so expensive?  Because of President Obama.  He has shut down drilling wherever he can.  Reducing the American supply of oil (and increasing its cost) to refine into gasoline.  And he has been depreciating the dollar with his quantitative easing.  The Federal Reserve’s stimulus that is doing nothing to stimulate the economy.  But because oil is priced in U.S. dollars per barrel this devaluation of the dollar results in higher oil prices.  Because it takes more of a devalued dollar to pay for the same amount of oil those dollars once bought.  And then there’s this (see Valero Asks Obama Administration to Waive Ethanol Mandate by Mario Parker posted 9/10/2013 on Bloomberg).

Valero Energy Corp. (VLO), the world’s largest independent refining company, called on the Obama administration to waive the country’s biofuel target immediately, saying the cost to reach it has skyrocketed…

Refiners are required by law to use 13.8 billion gallons of ethanol in 2013. Renewable Identification Numbers are attached to each gallon of ethanol to track compliance. Once the additive is blended into gasoline, refiners can retain the certificate to show compliance or trade it to another party. RINs prices have risen more than eight-fold so far this year.

RINs have increased because of falling gasoline demand and higher biofuel consumption targets, Klesse said in the letter.

Gasoline demand will drop 0.5 percent next year, according to a forecast today from the Energy Information Administration, the Energy Department’s statistical arm. The Renewable Fuels Standard, set in 2007, calls for 14.4 billion gallons of ethanol to be used in 2014, up 4.3 percent from this year. The target increased 4.5 percent this year from 13.2 billion in 2012…

Ethanol is typically blended in a formula of as much as 10 percent in gasoline. While the EPA has approved blends of 15 percent, refiners haven’t adopted the higher concentration, citing engine damage concerns.

They only blend ethanol with gas so the percentage of ethanol in the gas doesn’t exceed 10-15%.  Because putting more into the gas could damage the engine.  So for every 10 gallons of gasoline they only need one gallon of ethanol.  For if they bought more than one gallon per every 10 gallons of gas they would have more ethanol than they could use.  With a fixed amount of ethanol required (14.4 billion gallons) instead of a percentage these refineries have a problem.  Because they need to buy 600,000 gallons more of ethanol in 2014 (a 4.3% increase over 2013) while gasoline demand will fall 0.5% in 2014.  Because of President Obama’s horrible economy.  Which means they will be blending less ethanol with gasoline in 2014.  Despite having to buy 600,000 gallons more.

They can’t use this extra ethanol.  And they sure don’t want to buy it just so they can store it someplace.  So instead they want to buy these Renewable Identification Numbers (RINs).  That certifies a gallon of ethanol has been blended with gasoline as required.  Even if it has not.  Which becomes a pretty handy thing to have (these RINs).  As you can avoid buying ethanol that you can’t use to meet the new higher requirement.  For people are buying less gas because of President Obama’s horrible economy.

These government regulations are greatly distorting the free market.  Increasing the costs of the refineries.  Who pass it on to the consumer in higher gas prices.  Which hurts Americans because they have to put more of their paycheck into their gas tank instead of using it on food or clothing for their children.  Pulling more money out of the economy.  Which helps to make President Obama’s economy so bad.  So why doesn’t he lower the number of gallons required when the number exceeds the amount the refineries need to blend with gasoline?  Because he doesn’t care about the cost of gasoline.  The higher the better for him as fewer people will be driving.  Which will create a greater demand for mass transportation.  Which will create more union jobs filled by people who will vote Democrat.  Also, the higher the price of gasoline the greater the tax revenue the governments collect at the state and federal level.  Which is what’s really important to governments.  Not food and clothing for children.

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FT138: “High gas prices mean high food prices.” —Old Pithy

Posted by PITHOCRATES - October 5th, 2012

Fundamental Truth

We use Diesel Fuel in our Ships, Trains and Trucks to move Food from the Farm to the Grocery Store

People don’t like high gas prices.  When the price at the pump goes up more of our paycheck goes into the gas tank.  Or, more precisely, in everyone’s gas tanks.  For even if you don’t drive a car when gas prices go up you’re putting more of your paycheck into the gas tanks of others.  Thanks to oil being the lifeblood of our economy.  And unless you’re completely self-sufficient (growing your own food, making your own clothes, etc.) everything you buy consumed some petroleum oil somewhere before reaching you.

Gas prices go up for a variety of reasons.  The purely economic reason is the market forces of supply and demand.  When gas prices rise it’s because demand for gasoline is greater than the supply of gasoline.  Which means our refineries aren’t producing enough gasoline to meet demand.  And the purely economic reason for that is that they are not refining enough crude oil.  Meaning the low supply of gasoline is due to the low supply of crude oil.  Which brings us to how high gasoline prices consume more of our paychecks even if we don’t drive.  The reason being that we just don’t make gasoline out of crude oil.  We also make diesel fuel.

Diesel fuel is a remarkable refined product.  It just has so much energy in it.  And we can compress an air-fuel mixture of it to a very small volume.  Put the two together and you get a long and powerful power stroke.  Making the diesel engine the engine of choice for our heavy moving.  We use it in the ships that cross the ocean.  In the trains that cross our continents.  And in the trucks that bring everything to where we can buy them.  To the grocery stores.  The department stores.  To the restaurants.  Everything in the economy that we don’t make for ourselves travels on diesel fuel.  Which is why when gas prices go up diesel fuel prices go up.  Because of the low supply of oil going to our refineries to refine these products.

Oil is at a Disadvantage when it comes to Inflation because you just can’t Hide the Affects of Inflation in the Price of Oil

And there are other things that raise the price of gasoline.  That aren’t purely economical.  But more political.  Such as restrictions on domestic oil drilling.  Which reduces domestic supplies of crude oil.  Political opposition to new pipelines.  Which reduces Canadian supplies of crude oil.  Special ‘summer’ blends of gasoline to reduce emissions that tax a refinery’s production capacity.  As well as our pipeline distribution network.  Higher gasoline taxes.  To pay for roads and bridges.  And to battle emissions.  The ethanol mandate to use corn for fuel instead of food.  Again, to battle emissions.  All of which makes it more difficult to bring more crude oil to our refineries.  And more difficult for our refineries to make gasoline.  Which all go to adding costs into the system.  Raising the price at the pump.  Consuming more of our paychecks.  No matter who is buying it.

Then there is another factor increasing the price at the pump.  Inflation.  When the government tries to stimulate economic activity by lowering interest rates they do that by expanding the money supply.  So money is cheaper to borrow because there is so much more of it to borrow.  Hence the lower interest rates.  However, expanding the money supply also causes inflation.  And devalues the dollar.  As more dollars are now chasing the same amount of goods and services in the economy.  So it takes more of them to buy the same things they once did.  One of the harder hit commodities is oil.  Because we price oil on the world market in U.S. dollars.  So when you devalue the dollar it takes more of them to buy the same amount of oil they once bought.

Oil is at a particular disadvantage when it comes to inflation.  Because you just can’t hide the affects of inflation in the price of oil.  Or the gas we make from it.  Unlike you can with laundry detergent, potato chips, cereal, candy bars, toilet paper, etc.  Where the manufacturer can reduce the packaging or portion size.  Allowing them not to raise prices to reflect the full impact inflation.  They still increase the unit price to reflect the rise in the general price level.  But by selling smaller quantities and portions their prices still look affordable.  This is a privilege the oil industry just doesn’t have.  They price crude oil by a fixed quantity (barrel).  And sell gasoline by a fixed quantity (gallon).  So they have no choice but to reflect the full impact of inflation in these prices.  Which is why there is more anger about high gas prices than almost any other commodity.

Perhaps we can lay the Greatest Blame for the Current Economic Malaise on the Government’s Inflationary Monetary Policies

Current gas prices are hitting record highs.  And this during the worse economic recovery following the worst recession since the Great Depression.  Gas prices and the unemployment rate are typically inversely related to each other.  When there is high unemployment people are buying less gasoline.  This excess gasoline supply results in lower gas prices.  When there is low unemployment people are buying more gasoline.  This excess demand for gasoline results in higher gas prices.  These are the normal affects of supply and demand.  So the current high gas prices have little to do to with normal economic forces.  Which leaves government policies to explain why gas prices are so high.

Environmental concerns have greatly increased regulatory policy.  Increasing regulatory compliance costs.  Which has greatly discouraged the building of new refineries.  And making it very difficult to build new pipelines.  Which tax current pipeline and refinery capacities.  A problem mitigated only with their restriction on domestic oil production.  The current administration has pretty much shut down oil exploration and production on all federal lands.  Reducing crude oil supplies to refineries.  These environmental policies would send gas prices soaring if the economy was booming.  But the economy is not booming.  In fact the U-6 unemployment rate (which counts everyone who can’t find a full time job) held steady at 14.7% in September.  So an overheated economy is not the reason we have high gas prices.  But the high gas prices may be part of the reason we have such high unemployment.

Perhaps we can lay the greatest blame for the current economic malaise on the government’s inflationary monetary policies.  Inflation increases prices.  Especially those things sold in fixed quantities priced in dollars.  Like oil.  And gasoline.  The price inflation in refined oil products is like a virus that spreads throughout the economy.  Because everyone uses energy.  Especially the food industry.  From the farmers driving their tractor to work their fields.  To the trucks that take grain to rail terminals.  To the trains that transport this grain to food processing plants.  To the trucks that deliver these food products to our grocery stores.  From the moment farmers first turn over their soil in spring to the truck backing into to a grocery store’s loading dock to consumers bringing home groceries in their car to put food on the table fuel is consumed everywhere.  Which is why when gasoline prices go up food prices go up.  Because we refine gasoline from the same crude oil we refine diesel fuel from.  Oil.  Creating a direct link between our energy policy and the price of food.

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Crude Oil, Separators, Pipelines, Cathode Protection System, Pump Stations, Tank Farms, Refineries, Distribution Centers and Gas Stations

Posted by PITHOCRATES - September 26th, 2012

Technology 101

Pipelines Crisscross the Country carrying Raw Crude Oil to Refineries and Refined Petroleum Products Out

Do you know what the most fascinating thing about the gasoline you burn in your car?  Only a few weeks earlier it was raw crude oil in the pores of rock deep underground.  The oil business is a remarkably efficient business.  Remarkable machines, pipelines and refineries have made getting gasoline into our cars a fast and speedy process.  But it hasn’t come cheap.  Those machines, pipelines and refineries are incredibly expensive.  Which is a power incentive to move and process that crude oil quickly.  From oil underground to gasoline in you gas tank.

And that process begins at the wellhead.  Because what comes out of that well is not pure crude oil.  What comes up the well is a frothy mixture of oil, gas and salt water.  They have separators located at or near the wellheads to separate this mixture into its components.  Getting the gas out of the oil is easier than getting the water out.  This often requires additional processing.  They can ‘dry’ the oil by cooking the water out.  Heating the oil (by burning some of the previously separated gas) in a container sends the oil to the top where it floats on the water.  The water pulled out of the well and separated from the oil is not clean enough to pour into a river or stream.  So they pump it back from whence it came.  Into another well.  Where it can help force more oil up to the surface.

They pipe the oil mixture from the wells in an oil field to these separators.  Pipelines from the separators carry the processed oil (and natural gas) to pipeline terminals.  Where they feed into a main pipeline that carries the oil to a refinery.  (Natural gas does not need refining and simply enters the pipeline system that distributes natural gas to end users).  Pipelines crisscross the country carrying raw crude oil to refineries.  And refined petroleum products out.  Sending jet fuel to airports.  Diesel fuel to railroad fueling yards.  And gasoline and diesel to the distribution centers that feed our local gas stations.

The Trans-Alaska Pipeline holds about 9 Million Barrels of Oil inside the Pipeline at any Given Time

There is a lot of political opposition to pipelines.  They say they are an environmental disaster waiting to happen.  In truth there have been few pipeline disasters.  For two reasons.  It takes an enormous investment to get oil out of the ground.  So any leaks in a pipeline would greatly reduce the return on their investment.  Secondly, oil is flammable.  Any pipeline leak could light the fuse to a powerful explosion.  Which would reduce their return on investment far more than just a leak.  So they make these pipelines out of high-strength steel with welded joints.  They even x-ray the welds to detect any defects.  Because any lost oil is lost profit.  Which means any accident that hurts the environment will hurt them in the pocketbook.  So they will protect the environment because that is the best way to protect their investment.

Steel corrodes.  Especially when in contact with the earth.  In fact, the chemical interaction of the elements in the soil with the steel in the pipeline acts like a battery.  Creating small electric currents that can accelerate the corrosion process.  So they cover these steel pipelines in layers of tar-like material and an insulation wrapping.  In addition to this they install a cathode protection system.  Where another more corrosive material is placed in contact with the pipeline so it corrodes instead of the pipeline.  Or they install an active system where they bury anodes underground along the pipeline and attach a DC power source.  They connect the positive terminal of the power source to the anode system.  And the negative terminal to the pipeline (the cathode).  This current can prevent the galvanic action that can accelerate the corrosive process.

Oil is thick and viscous.  It doesn’t flow easily.  So they need big (diameter) pipelines.  And lots of pumps to push this oil to a refinery.  Even under high pressures this oil moves leisurely along at about 3-5 miles per hour.  But it doesn’t have to move fast.  Not once we fill these pipelines with oil.  Because new oil pumped into the pipeline at one end pushes out oil at the other end.  And when it does it pushes out a lot of oil.  In fact, our pipelines hold far more oil than all our storage tanks at all our refineries.  The pipeline that crosses Alaska (the Trans-Alaska Pipeline) is about 4 feet in diameter and 800 miles long.  If you do the math that comes to about 9 million barrels of oil inside the pipeline at any given time.  By comparison a modern large oil tanker can carry up to 2 million barrels of oil.

We burn Gasoline in our Cars that mere Weeks Earlier was still Underground in the Porous Matrix of Rock Formations

There are pump stations about every 60-100 miles along a pipeline.  These pumps suck a lot of energy to pump that viscous fluid.  But it is still more cost efficient than shipping that oil by truck or rail.  These pumps usually have a roof over them.  But no walls.  To prevent any buildup of explosive vapors from accumulating.  Which is one of the drawbacks of dealing with petroleum oil and its products.  Especially the stuff we eventually pump into our gas tanks.

At pipeline terminals, refineries and tanker ports there is a backup of oil waiting to enter a pipeline.  Or to be refined.  So we have to store it.  In tank farms.  Where tidy rows of squat round tanks with floating roofs (to prevent any buildup of explosive vapors) hold enormous amounts of oil until the next stage in the oil processing system is ready for it.  But not for long.  These tank farms at our refineries hold maybe 2 weeks worth of oil.  Not much.  But enough.  You see, oil doesn’t sit still for long.  For it takes about two weeks for oil on average to travel from the wells through the pipelines to the tank farms at our refineries.  So as the refineries draw down this oil in the storage tanks new oil arrives to replace it.  In a continuous, wondrous process.  That ends at the gas station.

Refined petroleum products leave the refineries pretty much the way they arrived.  In a pipeline.  The refined products are thinner and less viscous.  So the outbound pipelines are smaller in diameter.  After refining they pump gasoline into another tank farm.  These tanks feed another pipeline network.  These pipelines eventually terminate at distribution centers.  It is here where tanker trucks fill up to replenish the underground tanks at our local gas stations.  The gas entering these distribution centers is the same.  The different gas stations will add their own additives at this point to differentiate their gas from their competitors.  Then we pump it into our car.  And then enjoy the American experience of travelling the open road.  Burning gasoline that mere weeks earlier was still underground in the porous matrix of rock formations.

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The Socialist Utopia of Oil-Rich Venezuela is Rationing Gasoline

Posted by PITHOCRATES - July 22nd, 2012

Week in Review

Venezuela is a lot like Iran in a way.  They have lots of crude oil.  But little refining capacity.  Which is a problem because nothing really runs on raw crude oil.  It’s what we refine from it that we use in our cars, trucks, buses and power plants.  Causing a bit of a problem in Venezuela.  Because in their socialist utopia they virtually give their gas away.  Which was one thing when they refined it.  But another when they have to buy it (see Chavez’s gasoline rationing plan causes uproar by FABIOLA SANCHEZ, Associated Press, posted 7/20/2012 on Yahoo! News).

As home to the world’s cheapest gasoline, Venezuela has long had to contend with the hemorrhaging of supplies as smugglers haul gas across the border to cash in where the fuel costs far more.

In neighboring Colombia, drivers pay 40 times as much as Venezuelans to tank up — $1.25 a liter ($4.73 a gallon), compared to 3 U.S. cents a liter (11 cents a gallon).

So much gasoline is being taken out of Venezuela illegally that President Hugo Chavez’s socialist government imposed rationing on motorists in one state bordering Colombia last year, and now it’s touched off a furor in a second border state by announcing it will ration gasoline there, too…

Venezuela is a major oil exporter but its refining capacity is limited, so the government buys gasoline from the United States, losing money by then selling it at home for almost nothing. Those imports have been steadily rising since 2009…

Ramon Espinasa, a Georgetown University economist, blames “operational problems” at some Venezuelan refineries as well as rising demand from power plants built in the past two years that burn gasoline and diesel fuel.

“They’re not producing specialized (petroleum) products and must import finished products,” Espinasa said…

“It’s not rationing,” [Hugo Chavez] said. “It’s a means of control, to give everyone gasoline, because the gasoline here is practically free, so the idea is to give everyone what they need.”

One of the problems of socialism is that there is no incentive to risk capital.  Because if you invest and build a refinery the state will just take it away.  So that leaves the state to build their refineries.  And based on their refinery capacity shortfall that’s something the state just doesn’t know how to do.  Or else they would have done it.  And not have gasoline rationing.

Another problem with socialism is the whole ‘from those according to ability to those according to need’ nonsense.  Something that requires some people to work hard so others can have more.  Never a great inducement to get people to work hard.  So they don’t.  In socialism those who show the most need get the most.  And if they show no ability they don’t have to work hard to learn and acquire skills that will advance the economy.  So what can happen is that a chemical engineer with a college degree but no children may earn the wages of a janitor while a janitor with no college degree but with lots of kids can get the wages of a chemical engineer.  From those according to ability.  To those according to need.  You know what this gets you in the long run?  Gasoline rationing.

So socialism requires everyone to sacrifice for the greater good.  And based on the very large black market for gasoline that isn’t happening.  Which is why socialism fails as an economic system.  For people always look after their own interests.  Not the greater good.  Even in the socialist utopia of Venezuela.

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Gas Prices Stay High along the Environmentalist West Coast due to a Lack of Refinery Capacity

Posted by PITHOCRATES - May 20th, 2012

Week in Review

Take a look at an electoral map.  Say from the 2008 national election.  What do you see?  Blue (i.e., Democrat) on the coasts.  Red (i.e., Republican) in the middle.  And blue in the union Midwest.  Okay, now what else do you associate with the blue on the coasts?  That’s where there are high concentrations of liberals.  (The blue in the Midwest is more organized labor than liberal).  And what is one of the biggest issues with liberals?  That’s right.  The environment.  (I’ll just assume you said the environment).  Especially in California.  Where they have tougher emission standards than the federal government has. 

They take their environmentalism serious on the coasts. So much so that they punish the use of fossil fuels through high taxes and excessive regulations.  It is for these reasons you don’t see them building many new refineries in these regions.  For there are few things they hate more than petroleum oil.  From drilling it out of the ground.  To transporting it.  To refining it.  Their basic attitude towards the oil industry is, “Sure, you’re welcomed to do business here.  But you will pay.  And pay.  And pay.”  So with that in mind here’s a little story about high gas prices on the West Coast (see Unlike the East, gas prices stay stubbornly high out West by William M. Welch posted 5/18/2012 on USA Today).

“We are seeing a tale of two coasts,” says Michael Green, spokesman for AAA, which monitors pump prices. “On the West Coast, gas prices are rising steadily, while on the East Coast they are steadily decreasing.”

Oil analysts blame a refinery slowdown in western states for sending retail prices in the opposite direction of wholesale costs.

In California and Oregon, the average price of regular gas has increased 20 cents a gallon so far in May, AAA reports. Average pump prices were down 19 cents in Florida and 18 cents in Virginia…

Tupper Hull, spokesman for Western States Petroleum Association, blamed unexpected maintenance and other problems at refineries…

“Our concern is a lack of competition at the refinery level in California,” says Charles Langley, gasoline analyst at Utility Consumers’ Action Network in San Diego. “We’re not saying there’s a conspiracy. It’s just that with this few competitors, it’s very easy to game prices by turning off capacity.”

Bob van der Valk, petroleum analyst in Terry, Mont., said gasoline inventories are at a 20-year low in California for May. Supplies will return to normal, he said, but perhaps not in time for upcoming holiday travel.

The high prices on the West Coast are of their own making.  Prices have fallen on the southern half of the East Coast.  Because they aren’t as blue as they used to be.  They love their environment there.  Which is why they live there.  But they know they need petroleum oil and gasoline to live.  And they know that there is a direct correlation between anti-oil policies and the price at the pump.  Something they apparently don’t know on the West Coast.  For they hate oil.  Don’t want anything to do with oil in their state.  And yet almost everyone drives a car in California. 

If they want lower gas prices they have to make it easier to do petroleum business there.  That means they need to make it easier to refine gasoline in California.  Which means backing off on the taxes.  And the excessive environmental regulations.  They can do that.  Bring the price at the pump down.  And still have a beautiful environment.  Like they do on the southern half of the East Coast.

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Carbon, Carbon Cycle, Crude Oil, Petroleum, Hydrocarbons, Oil Refinery, Cracking, Sweet Crude, Sour Crude, Gasoline and Diesel Engines

Posted by PITHOCRATES - April 25th, 2012

Technology 101

Crude Oil is made from Long Chains of Carbon Atoms Bonded Together with a lot of Hydrogen Atoms Attached Along the Way

Carbon.  It’s everywhere.  And in everything.  Like all matter it cannot be created.  Or destroyed.  It just changes.  As it creates the circle of life.  The carbon cycle.  Plants and trees absorb carbon out of the atmosphere.  And converts it into biomass.  Into wood.  And into animal food.  Where the digestive system converts it into carbon-based living flesh and blood.  That exhales carbon.  Plants absorb carbon and release oxygen.  Plants can’t grow without carbon.  And we can’t breathe without plants growing.  Carbon is constantly changing.  But never created.  Or destroyed.  From diamonds to pencils.  From sugar to carbonated soda.  From plastics to human beings.  It’s everywhere.  And everything.  Why, it’s life itself.

Carbon is a time traveler.  Carbon that once traveled through the atmosphere disappeared millions of years ago.  Buried underneath the surface of the earth.  Under intense heat and pressure.  Plankton and algae and other biomasses decayed until there was almost nothing left but carbon atoms.  Long chains of carbon atoms.  Forming great, restless pools of black goo beneath the surface.   Waiting for the modern world to arrive.  Waiting for the internal combustion engine.  The jet engine.  And plastics.  When they could be reborn.  And see the light of day again.

Crude oil.  Petroleum.  Black gold.  Texas tea.  Hydrocarbons.  Long chains of carbon atoms bonded together with a lot of hydrogen atoms attached along the way.  In the ground they’re mostly long chains.  When we get them above ground we can break those chains into different lengths.  And create many different things.  C16H34 (hexadecane).  C9H20 (nonane).  C8H18 (octane).  C7H16 (heptane).  C5H12 (pentane).  C4H10 (butane).  C6H6 (benzene).  CH4 (methane).  Some of these you may be familiar with.  Some you may not.  Methane is a flammable gas.  Hydrocarbon chains from pentane to octane make gasoline.  Hydrocarbon chains from nonane to hexadecane make diesel fuel, kerosene and jet fuel.  Chains with more carbon atoms make lubricants.  Chains with even more carbon atoms make asphalt.  While chains with 4 carbon atoms or less make gases.  All these things made from the same black goo.  A true marvel of Mother Nature.  Or God.  Depending on your inclination.

Older Coastal Refineries make more Expensive Gasoline than the Newer Refineries due to the Availability of Sweet versus Sour Crude

Another great carbon-based product it bourbon.  Made from a corn sour mash.  We heat this and the alcohol in it boils off.  That is, we distill it.  We run this gas through a coiling coil and it condenses back into a liquid.  And after a few more steps we get delicious bourbon whiskey.  Distilleries give tours.  If you get a chance you should take one.  You won’t get to sample any of the distilled spirits (insurance reasons).  But you will get a feel for what an oil refinery is.

An oil refinery works on the same principles.  Boil and condense.  And cracking.  Cracking those long hydrocarbon chains apart into all those different chains.  Long and small.  Into liquids and gases.  Even solid lubricants and asphalt.  All made possible because of their different boiling points.  The gases having lower boiling points.  The solids having higher boiling points.  And the liquids having boiling points somewhere in between.

Refineries are complex processing plants.  Not only because of all those different hydrocarbon chains.  But because of the crude oil introduced to these plants.  For there is light sweet crude.  And heavier sour crude.  The difference being the additional stuff that we need to remove.  Such as sulfur.  An environmental problem.  So we have to remove as much of it as possible during the refining process to meet EPA standards.  The sweet crudes are lower in sulfur.  Making them the crude of choice.  But this has also been the most popular crude through the years.  So its resources are dwindling.  Making it more expensive.  As are all the products refined from it.  Especially gasoline.  The more sour crudes have higher sulfur content.  And require more refining steps to remove that sulfur.  Which means additional refinery equipment.  So the older refineries that were refining the light sweet crude can’t refine the heavier sour crudes.  Which is why the refineries along the coasts make more expensive gasoline than the newer ones in the interior refining the heavier sour crudes.  Due to the availability of sweet crude versus sour crude.

The Modern World is brought to us by a Complex Economy which is brought to us by Petroleum

One of the main uses of refined crude oil is fuel for internal combustion engines.  In particular, gasoline engines and diesel engines.  Which are very similar.  The difference being the mode of ignition.  And, of course, the fuel.  Gasoline engines compress an air-fuel mixture in the cylinder.  At the top of the compression stroke a spark plug ignites this highly compressed and heated mixture.  Sending the piston down.  If the combustion occurs too early it could place undo stresses on the piston connecting rods and the crank shaft.  By trying to send the piston down when it was coming up.  Causing a knocking sound.  Which is a bad sound to hear.  And if you hear it you should probably make sure you’re using the right gasoline.  If you are you need to have you car serviced.  Because continued knocking may break something.  And if it does your engine will work no more.  So this is where octane comes in the blending of gasoline.  It’s expensive.  But the more of it in gasoline the higher the compression you can have.  And the less knocking.  Which is its only purpose.  It doesn’t give you any more power.  The higher compression does.  Which the higher octane allows.  Using the higher octane gas in a standard compression engine won’t do anything but waste your hard earned money.

And speaking of higher compression engines, that brings us to diesel engines.  Which are similar to gasoline engines only they operate under a higher compression.  And don’t use spark plugs.  These engines compress air only.  Which allows the higher compression without pre-ignition.  At the top of their compression stroke a fuel injector squirts diesel fuel into the hot compressed air where it combusts on contact.  Diesel fuel has a higher energy content than gasoline.  Meaning for the same volume of fuel diesel can take you further than gasoline.  Which is why trucks, locomotives and ships use diesel.  But diesel tends to pollute more.  The smell and the soot kept diesel out of our cars for a long time.  As well as the difficulty of starting in cold climates.  Advanced computer controlled systems have helped, though, and we’re seeing more diesel used in cars now.

The modern world is brought to us by a complex economy.  Where goods and raw materials traverse the globe.  To feed our industries.  And to ship our finished goods.  Which we put on trucks, trains, ships and airplanes.  None of which would be possible without a portable, stable, energy-dense fuel.  That only refined petroleum can give us.  It’s better than animal power.  Water power.  Wind power.  Or steam power.  For there is nothing that we can use in our trucks, trains, ships and airplanes other than refined petroleum products today that wouldn’t be a step backwards in our modern world.  Nothing.  Making petroleum truly a marvel of Mother Nature.  Or God.  Depending on your inclination.

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High Gasoline Prices blamed on Wall Street instead of Where it Belongs – Environmentalism

Posted by PITHOCRATES - April 15th, 2012

Week in Review

Is Wall Street to blame for high gasoline prices?  Or are governmental environmental policies.  Most like to blame Wall Street.  Because they have no understanding of the oil business.  Even though it’s pretty straight forward.  And follows all the rules of supply and demand.  Where most of the current price pressures are coming on the supply side of the equation.  But Wall Street isn’t to blame for that.  We are.  For our collective attacks on the oil industry.  And our acquiescence of the environmental movement (see If the U.S. is now an oil exporter, why $4 gas? by Leah McGrath Goodman posted 4/11/2012 CNNMoney).

The U.S. is now selling more petroleum products than it is buying for the first time in more than six decades. Yet Americans are paying around $4 or more for a gallon of gas, even as demand slumps to historic lows. What gives..?

Americans have been told for years that if only we drilled more oil, we would see a drop in gasoline prices. (Speaking to voters last month, Newt Gingrich made the curious assurance that more oil drilling could drive down gasoline prices to $2.50 a gallon, prompting the White House to accuse him of “lying.”)

But more drilling is happening now, and prices are still going up. That’s because Wall Street has changed the formula for pricing gasoline.

Until this time last year, gas prices hinged on the price of U.S. crude oil, set daily in a small town in Cushing, Oklahoma – the largest oil-storage hub in the country. Today, gasoline prices instead track the price of a type of oil found in the North Sea called Brent crude. And Brent crude, it so happens, trades at a premium to U.S. oil by around $20 a barrel.

So, even as we drill for more oil in the U.S., the price benchmark has dodged the markdown bullet by taking cues from the more expensive oil. As always, we must compete with the rest of the world for petroleum – including our own…

To put it more literally, if a Wall Street trader or a major oil company can get a higher price for oil from an overseas buyer, rather than an American one, the overseas buyer wins. Just because an oil company drills inside U.S. borders doesn’t mean it has to sell to a U.S. buyer. There is patriotism and then there is profit motive. This is why Americans should carefully consider the sacrifice of wildlife preservation areas before designating them for oil drilling. The harsh reality is that we may never see a drop of oil that comes from some of our most precious lands.

It’s not Wall Street.  It’s the crude oil.  The refineries.  And the fact some refineries can only refine the Brent sweet crude oil.

The stuff we import, Brent sweet crude, is a higher quality crude.  It’s cleaner.  And easier to refine.  But it’s more expensive.  Which is a problem for the refineries on the east coast.  And on the Gulf Coast.  Because that’s the crude they can refine.  Because their crude costs are higher their refined gasoline costs are higher.  Therefore, these refineries lose money when selling at the prevailing market price.  So they export their gasoline where they can sell it at a higher price that covers their costs.  Or they shut down refineries.  Which they have done.  Shutting done some 5% of refinery capacity within the last 6 months.  Bringing total online capacity to about 60%.

The stuff we get from Canada, North Dakota and the Gulf of Mexico is West Texas Intermediate.  Which is a heavier, dirtier crude oil.  The refineries that can refine this oil are located in Oklahoma, Kansas and outside Chicago.  And because the gasoline they sell starts with a crude oil priced about $20 less a barrel than their east and Gulf Coast rivals they can sell at prevailing market prices and make a profit that recovers all of their costs.  Which is why these refineries are operating at about 95% of capacity.  Which explains why gasoline is cheaper in Midwest than on the coasts.  Well that, and California’s own emission standards that require an even more costly blend of gasoline than your typical summer blend (to reduce the polluting affects of gasoline at higher temperatures).

(You can read more about refining costs in a February Bloomberg article.  And more about gasoline blends in an Energy Policy Research Foundation article.)

So, no, it’s not Wall Street causing the high gas prices.  It’s environmental policy.  Which requires costly blends of gasoline to reduce emissions.  And makes any expansion of the refinery infrastructure cost prohibitive.  Environmental impact studies alone can take years to complete.  And cost hundreds of millions of dollars.  So the aging infrastructure strains at the seams.  Whereas if those policies weren’t so cost prohibitive we could build new refineries along the east and Gulf Coast to replace those underutilized and shuttered facilities.  And flood them with domestically produced West Texas Intermediate.  Which would make gas prices fall.  At least it would lower the east and Gulf Coast prices to that enjoyed in the Midwest.  But not in California.  Who will forever have the highest gasoline prices thanks to their emission standards

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FT110: “You can’t blame our dependence on foreign oil for high gas prices AND say that producing more domestic oil won’t lower gas prices.” -Old Pithy

Posted by PITHOCRATES - March 23rd, 2012

Fundamental Truth

The Combination of Low Demand and High Supply caused Oil Prices to Fall over 70% by 1986

The Organization of the Petroleum Exporting Countries (OPEC) is a cartel.  Made up currently of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.  Their purpose is to set oil quotas for their oil-producing members.  To limit the amount of oil they bring to market.  To reduce supply.  And increase oil prices.  At least that’s the idea.  It’s been hard to keep the individual OPEC members from cheating, though.  And a lot do.  Often selling more than their quota.  Because when oil prices are high selling a few percentages above their quota can be very profitable.  Unless everyone else does so as well.  Which they usually do.  For their choice is either not to cheat and not share in any of those ‘excess’ profits (beyond their agreed to quota).  Or cheat, too.  Thereby increasing supply.  And lowering oil prices.  Not something any oil producer wants to do.  But it’s the only way to share in any of those ‘excess’ profits.

But that’s not the only problem OPEC has.  There are a lot of oil producers who aren’t members of OPEC.  Who can bring oil to market in any quantity they choose.  Especially when they see the high price OPEC is charging.  OPEC’s high price allows non-OPEC suppliers to sell a lot of oil at a slightly lower price and reap huge profits.  Which puts pressure on the OPEC target price.  Forcing them to lower their target price.  For if they don’t lower their price they will lose oil sales to those non-OPEC producers.  Which is exactly what happened in the late Seventies.  While OPEC was cutting back on production (to raise prices) the non-OPEC nations were increasing production.  And taking over market share with their lower prices.  Causing OPEC to reverse policy and increase production during the mid-Eighties.  Giving us the 1980s oil glut.

Of course, this rise in non-OPEC production was a direct result of the 1973 Oil Crisis.  Many of the OPEC members are Muslim nations.  Who don’t like the state of Israel.  In response to the West’s support of Israel in the Yom Kippur War (1973) OPEC announced an oil embargo on those nations who helped Israel.  Giving us the 1973 oil crisis.  Where this sudden reduction in supply caused the price of oil to soar.  Making the oil business a very profitable business.  Causing those non-OPEC producers to enter the market.  Then the Iranian Revolution (1979) disrupted Iranian crude production.  Keeping Iranian oil off the market.  This reduction in demand caused oil prices to rise.  Then Jimmy Carter broke off diplomatic relations with the Iranian state.  And boycotted their oil when it returned to the market.  Further encouraging the non-OPEC producers to bring more oil to market.  Meanwhile U.S. demand fell because of those high prices.  And our switch to smaller, 4-cyclinder, front wheel drive cars.  Saying goodbye to our beloved muscle cars of the Sixties and Seventies.  And the V-8 engine.  The combination of low demand and high supply caused oil prices to fall over 70% by 1986.  Giving us the oil glut of the 1980s.  When gasoline was cheap.  Enticing the V-8 engine back into the market.

Improved Fuel Economy AND Increased Oil Supplies can Reduce the Price at the Pump

So, yes, Virginia.  The amount of oil entering the market matters.  The more of it there is the cheaper it will be.  As history has shown.  When less oil entered the market prices rose.  When more oil entered the market prices fell.  And anything that can affect the supply of oil making it to market will affect the price of oil.  (And everything downstream of oil.  Jet fuel.  Diesel.  And gasoline.)  Wars.  Regional instability.  And governmental regulation. 

So what are things that will bring more oil to market?  Well there’s the obvious.  You drill for more oil.  This is so obvious but a lot of people refuse to accept this economic principle.  As supply increases prices fall.  The 1980s oil glut proved this.  Even John Maynard Keynes has graphs showing this in his Keynesian economics.  The economics of choice for governments everywhere.   Yet there are Keynesian politicians who avert their eyes to this economic principle.  So there’s that.  More drilling.  You can also make the permitting process easier to drill for oil.  You can open up federal lands currently closed to drilling.  And once you find oil you bring it to market.  As quickly as you can.  And few things are quicker than pipelines.  From the oil fields.  To the oil refineries.  (And then jet fuel, diesel and gasoline pipelines from the refineries to dispensing centers).  So before oil fields are ready to produce you start building pipelines from those fields to the refineries.  Or you build new refineries.

Improving fuel economy did help reduce our demand for imported oil in the Eighties.  As well as lowered the price for that imported oil.  But it wasn’t fuel economy alone.  The non-OPEC nations were increasing production from the mid-Seventies through the mid-Eighties.  Without that oil flooding the market oil prices wouldn’t have fallen 70%.  And they won’t fall again if we ONLY try to reduce our demand for foreign oil.  For reducing demand is marginal at best in reducing oil prices. 

Only if we Drill and Build Pipelines can we Reduce the Price at the Pump

For there are no electric airplanes.  The cost to electrify all railroad tracks is too prohibitive to consider.  The capital costs to build that electrical infrastructure.  The maintenance costs to maintain it.  And the electricity costs from the increased demand for electrical power while supply remains the same.  Or falls.  Because excessive regulation inhibits the building of new power plants.  And speeds up the shutdown of older plants.  Especially coal-fired because they pollute too much.  And hydro power.  Because of the environmental impact of dams.  Severely straining our electric grids.  And moving into electric cars will stress our electric grids even further.  Leading to brown outs.  And rolling blackouts.   Or worse.  Causing wires to overheat and sag, coming into contact with trees.  Shorting out.  Causing cascading blackouts as power plants disconnect from the grid to prevent damage from the resulting current surges.  Like they did in the Northeast Blackout of 2003.

You can’t replace oil with electricity.  In some cases there is just no electric equivalent.  Such as the airplane.  Or the cost of moving from oil to electricity is just prohibitive.  Such as updating the nation’s electrical infrastructure to meet an exploding demand.  Which leaves oil.  We need it.  And will keep using it.  Because there is no better alternative.  Yet.  So we need to produce it.  And do everything we can to help bring that oil to market.  Not fight against it.  And it all starts with drilling. 

We must drill.  Bring that oil up from under the ground.  Put it into a pipeline.  And pump it to a refinery.  If we do this enough we will be less dependent on foreign oil.  And have more control over the price at the pump.

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There’s a Direct Link between the Type of Crude refined and the Price at the Pump

Posted by PITHOCRATES - February 26th, 2012

Week in Review

Oil is not oil.  There is Brent sweet crude.  And West Texas Intermediate (WTI).  We import the Brent.  While a lot of the WTI comes from wells closer to home.  The U.S.  Canada.  The Gulf of Mexico.  And there is a correlation between gas prices and the type of crude (see Angry About High Gas Prices? Blame Shuttered Oil Refineries by Matthew Philips posted 5/24/2012 on Yahoo! Finance).

The U.S. refining industry is being split in two. On one hand are the older refineries, mostly on the East and Gulf Coasts, that are set up to handle only the higher quality Brent “sweet” crude—the stuff that comes from the Middle East and the North Sea. Brent is easier to refine, though it’s gotten considerably more expensive recently. (Certainly another reason for higher gas prices.)

Then there are the plants able to refine the heavier, dirtier West Texas Intermediate (WTI)—the stuff that comes from Canadian tar sands, the deep water of the Gulf of Mexico, and the newer outposts in North Dakota, which just passed Ecuador in oil production. These refineries tend to be clustered in the Midwest—places such as Oklahoma, Kansas, and outside Chicago. While the price of Brent crude has closed at over $120 a barrel in recent days, WTI is trading at closer to $106. That simple differential is the reason older refineries that can handle only Brent are hemorrhaging cash and shutting down, while refineries that can handle WTI are flourishing.

“The U.S. refining industry is undergoing a huge, regional transformation,” says Ben Brockwell, a director at Oil Price Information Services. “If you look at refinery utilization rates in the Midwest and Great Lakes areas, they’re running at close to 95 percent capacity, and on the East Coast it’s more like 60 percent,” he says.

How about that?  Economic reasons for the high price of gasoline.  The cost of Brent sweet crude makes it impossible to sell in America at a profit.  So the refineries are selling it overseas at prices that can keep them from operating at a loss.  Or they’re shutting down refineries.  To reduce the surplus of gas they can’t sell at a profit.  Making the gas stations supplied by these refineries sell at record high gas prices.  Whereas those stations supplied by the WTI refineries are able to sell gas at more affordable prices.

The lesson here?  The amount of oil brought to market matters.  The more the oil supplied the lower the price.  And the lower the price of gasoline made from that oil.  There’s not much we can do about the price of Brent sweet but there is something we can do about WTI.  Drill more.  Build more refinery capacity for it.  And build more pipelines to move that precious cargo all over the United States.  Creating lots and lots of jobs.  And letting people enjoy hitting the highway again in cars they like that may also happen to be gas guzzlers.  Which will also reduce the price at the pump.  Because demand for gasoline will rise to sustain this economic buildup.  Allowing prices to fall due to economies of scale.

And it’s all there for the taking.  All we have to do is to take this future.  Instead of the one we’re working on now where driving has become a four-letter word.

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Iran and al Qaeda hate America and Anyone who Associates with America or Sells them Oil

Posted by PITHOCRATES - September 28th, 2011

In 2001 al Qaeda was by far More Evil than Iran but the Evil Race is Still On

Iranian president Ahmadinejad denies the Holocaust.  And that al Qaeda brought down the Twin Towers.  Which is really pissing off al Qaeda (see Al Qaeda to Iran: Stop Spreading 9/11 Conspiracy Theory by Lee Ferran posted 9/27/2011 on ABC News).

“The Iranian government has professed on the tongue of its president Ahmadinejad that it does not believe that al Qaeda was behind 9/11 but rather, the U.S. government,” an article reads. “So we may ask the question: why would Iran ascribe to such a ridiculous belief that stands in the face of all logic and evidence?”

Though Iran was the first of the two to use the “Great Satan” as a synonym for the U.S., the author claims that Iran sees itself as a rival for al Qaeda when it comes to anti-Americanism and was jealous of the 9/11 attacks.

“For them, al Qaeda was a competitor for the hearts and minds of the disenfranchised Muslims around the world,” the article says. “Al Qaeda… succeeded in what Iran couldn’t. Therefore it was necessary for the Iranians to discredit 9/11 and what better way to do so? Conspiracy theories.”

Reminds me a little of that Austin Powers movie where Dr. Evil laments that his son is not evil enough.

In your face, Iran, says al Qaeda.  Yes, in 2001, al Qaeda was by far more evil than Iran.  Sadly, the evil competition hasn’t ended.  And we should worry about escalation in the evil race.  Especially when one of these evil competitors may already have a nuclear bomb.

I wonder how the 9/11 deniers will take this?  All those George W. Bush haters who said Bush imploded the Twin Towers.  So he could invade the Middle East.  Most everyone else blamed al Qaeda.  Something al Qaeda, incidentally, never denied.  And claims responsibility for to this day.  Even after punishing retribution.  And the death of their glorious leader.  Osama bin Laden.

And what about those saying that our only enemy is al Qaeda?  That Iran’s nuclear program is only for peaceful purposes.  And their meddling in the Middle East is nothing to worry about.  Sure they support Hezbollah.  And they support Hamas.  And support these groups in their goal of removing American ally Israel from the world map.  But there’s nothing to worry about.  For I’m sure their territorial ambitions will end with Israel.  Much like Hitler‘s did with the Sudetenland.  Besides, who else says they have an anti-American agenda?  Other than the big bad of anti-Americanism?  Al Qaeda.

The Wahhabis don’t like the House of Saud or their Coziness with the U.S

So, yes, Virginia, radical Islamists want to hurt Americans.  Despite the last 2+ years of de-Bushifying the nation.  Despite the Cairo speech.  Nothing has changed.  The bad guys are still gunning for Americans.  Wherever they can find Americans (see US warns of possible kidnap plot in Saudi Arabia posted 9/28/2011 on CBS News).

The U.S. Embassy in Saudi Arabia warned Americans on Wednesday that a terrorist group may be planning to abduct Westerners in the capital of Riyadh…

Saudi Arabia has waged a heavy crackdown on Islamist militants since al Qaeda’s Saudi branch launched a wave of attacks in the country in 2003, including suicide bombings and shootings that killed dozens of Saudis and foreigners. At least 11 Americans were among the dead.

Saudi Arabia is an important U.S. ally in the Middle East.  And friend.   Which is why they get a lot of this kind of stuff in their kingdom.  And their actions in 2003 prove this.  For everyone talks about the Saudi money that financed bin Laden.  But it wasn’t the House of Saud.  It was the Wahhabi Muslim sect residing within their kingdom.  From whence bin Laden came.

The Wahhabis don’t like the House of Saud.  Or their coziness with the U.S.  So the Saudis walk a fine line.  Staying friendly with the U.S.  Without being too friendly with the U.S.  To keep the peace in their kingdom.  And to maintain stability in the Middle East.

And all the while they’re dealing with this threat from within they have to deal with the threat from without.  Iran.  Who may have a hand in these Arab uprisings.  Especially where there are Shiite majorities.  To expand Iranian hegemony into the Middle East.  Especially in the Sunni areas of the Middle East.

On Monday, the former chief of Saudi intelligence services said the kingdom’s sizable oil installations were safe despite the growing threat of terrorist attacks in the region.

Prince Turki al-Faisal said the unrest in the Arab world would not spill over into Saudi Arabia.

“While the general picture of Saudi Arabia’s surroundings is predominated by this great turmoil, at the center of these many storms sits our Kingdom, which, I am glad to report, remains stable and secure,” he said.

Which is good.  Because next to Canada, Saudi Arabia is the second largest source of U.S. oil imports.  Even expanded their production to compensate for the loss of Libyan crude.  Again, Saudi Arabia is an important ally.  And friend.

The Loss of Refinery Capacity Now will make Gas Prices Soar During any Economic Recovery

Oil is the lifeblood of a modern economy.  Advanced nations consume oil with a voracious appetite.  That’s why Saudi crude is so important.  Both to the West.  And the enemies of the West.  Because if they can disrupt it they can disrupt the Western economies.  So any threat to Saudi Arabia is a national security interest.  Especially when it’s against Americans in the kingdom.

So oil is important.  As is the price of oil.  When it falls it’s for one of two reasons.  Either we’ve increased supply.  Or people just aren’t buying it (see Crude Oil Set for Second Straight Quarterly Decline on Europe Debt Crisis by Mark Shenk posted 9/28/2011 on Bloomberg).

Crude oil fell in New York, heading for the biggest quarterly drop since 2008, on concern that Europe’s debt crisis will linger and on rising U.S. stockpiles…

Crude stockpiles advanced as imports rose and refineries reduced operating rates…

Gasoline stockpiles rose 791,000 barrels to 214.9 million in the week ended Sept. 23, the report showed. Supplies of distillate fuel, a category that includes heating oil and diesel, increased 72,000 barrels to 157.7 million.

Sadly, this fall in price is due to people not buying it.

What?  Oil prices are falling?  That’s good news, yes?  Sadly, no.  Not in this case.  Because they are falling for a bad reason.  Weak demand.  From an economy on the precipice of another recession.  (The economy is so bad that people just aren’t buying gasoline).  Though some will argue we’ve never emerged from the Great Recession.  And it gets worse.

“The crude market is also under pressure because of the announcement of yet another possible shutdown of an East Coast refinery,” said Carl Larry, director of energy derivatives and research at Blue Ocean Brokerage LLC in New York. “At some point we’ll be able to count on both hands the number of operable refineries on the East Coast.”

Refineries are shutting down because of this extraordinary weak demand.  Which will not be good on the far side of this recession.  When the economy picks up.  For with the loss of this refinery capacity, when demand picks up gas prices will soar.  And it gets worse.

As economies heat up so will demand for oil.  Making oil prices soar.  Making high gasoline prices even higher.  Dampening any economic recovery.  Perhaps even throwing us back into recession.

A Big Oil Shock could Take any Bustling Economy and Thrown it into Recession

So the post-recession oil supply is not looking good.  Is there anything else to worry about?  Of course there is (see Double-dip ahead? Posted 9/28/2011 on The Economist).

Unfortunately, the economy has been battered for most of the year: by lousy weather, a seismic disaster in Japan, soaring oil prices, a major intensification of the European crisis, the end of QE2, and a down-to-the-wire blow-up over the debt ceiling among other things. There was good reason to think that the economy might have grown at 4% this year, but actual performance is largely governed by two big factors: what shocks occur and how policymakers respond to them.

Shocks, eh?  There could be a big oil shock in the pipeline.  Thanks to a bad economy that is closing down refinery capacity.  And an Arab Spring that is going to no one knows where yet.  And there are those who have eyes on Saudi Arabia.  People who don’t like America.  So, yeah, there could be a big oil shock coming our way.  Which could take any bustling economy and throw it into recession.

What Happens in the Middle East Matters to the Price of Gasoline and to American Security

There is a race between Iran and al Qaeda to see who can do America more harm.  We have made some progress against al Qaeda.  But we haven’t done much on the Iranian front.  And they’re about to acquire nuclear weapons.  Or already has them.

If our archenemy says that Iran is their rival in anti-Americanism, then Iran is probably anti-American.  And we should probably act accordingly.  Like the Saudis have against al Qaeda.  Despite the great risks that brought to their kingdom.  From the al Qaeda-sympathetic Wahhabi population.

When George W. Bush invaded Iraq many called it blood for oil.  They were adamantly against that.  Almost as much as they were against $4/gallon gasoline.  For they want their cheap gasoline.  And believe they should be able to get it no matter what happens in the Middle East.

But what happens in the Middle East matters.  To the price of gasoline.  And to American security.  They are linked.  And if given the chance, our enemies will use one.  To get to the other.  Us.  Because oil is the lifeblood of a modern economy.  And if they can’t defeat us in military arms.  They can shut us down by controlling the oil in the Middle East.

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