High fuel prices explained! - Page 4 - PeachParts Mercedes-Benz Forum

Pooka · #46 05-06-2011, 12:42 PM

One problem with supply and demand in the US is that more supply is coming in than can make it to a market.

Oil stored in Cushing, OK, is the supply and the tanks there are almost full. But because of the way the pipelines are set up oil can go into storage faster than it can go out to a refinery.

So if you look at the figures of how much oil is in storage, which is the current practice, you will not get the full picture. How much oil is being refined is the true supply.

And please note that refinery capacity has doubled in the US over the last 20 years. The bottleneck is in the pipeline system.

The only solution is to expand the capacity of existing pipelines. Then you run into the problem of every city along the existing route thinking they can stop the project until they are paid off and in fact this is true.

It is all very complicated, but I love it when people blame the EPA for the lack of oil refining in the US. The biggest problems I have ever encountered came from small town governments that would not allow expansion of a pipeline.

#47 05-06-2011, 12:54 PM

As always, energy production/distribution comes down to economics. If the price is high enough for long enough the required infrastructure will be built regardless of local obstacles. Unfortunately, energy prices are still very volatile, discouraging long term investment. The current situation is a good example, oil just fell below $100 again so most people expect to see cheaper fuel by summer. There needs to be some stability in this market.

kknudson · #48 05-06-2011, 01:04 PM

A couple of other problems exist, one is short term

A number of refineries are down, or have been down recently.
An east coast one had a power fail, that shuts them down for a day or so.
Several have been affected by the storms and flooding.

Then there is the switchover to summer gas.
While generally a god idea, IMHO it also causes grief because of the number of summer blends required.
The EPA should simplify it to maybe 2 or 3 blends nationwide, I heard there are 20 or 30 different blends depending on location.

sjh · #49 05-06-2011, 05:43 PM

Quote:

Originally Posted by Pooka

One problem with supply and demand in the US is that more supply is coming in than can make it to a market.

Oil stored in Cushing, OK, is the supply and the tanks there are almost full. But because of the way the pipelines are set up oil can go into storage faster than it can go out to a refinery.

So if you look at the figures of how much oil is in storage, which is the current practice, you will not get the full picture. How much oil is being refined is the true supply.

And please note that refinery capacity has doubled in the US over the last 20 years. The bottleneck is in the pipeline system.

The only solution is to expand the capacity of existing pipelines. Then you run into the problem of every city along the existing route thinking they can stop the project until they are paid off and in fact this is true.

It is all very complicated, but I love it when people blame the EPA for the lack of oil refining in the US. The biggest problems I have ever encountered came from small town governments that would not allow expansion of a pipeline.

Very interesting. Thanks for sharing.

Hatterasguy · #50 05-06-2011, 09:16 PM

Bubble popped.

panZZer · #51 05-07-2011, 01:55 PM

Quote:

Originally Posted by Pooka

One problem with supply and demand in the US is that more supply is coming in than can make it to a market.

Oil stored in Cushing, OK, is the supply and the tanks there are almost full. But because of the way the pipelines are set up oil can go into storage faster than it can go out to a refinery.

So if you look at the figures of how much oil is in storage, which is the current practice, you will not get the full picture. How much oil is being refined is the true supply.

And please note that refinery capacity has doubled in the US over the last 20 years. The bottleneck is in the pipeline system.

The only solution is to expand the capacity of existing pipelines. Then you run into the problem of every city along the existing route thinking they can stop the project until they are paid off and in fact this is true.

It is all very complicated, but I love it when people blame the EPA for the lack of oil refining in the US. The biggest problems I have ever encountered came from small town governments that would not allow expansion of a pipeline.

my understanding is OK has its own refineries and pipelines and is independent fromthe rest of us--perhaps like america is supposed to be while at the same time ramping up on decreasing the use in vehicles newer efficent tech-material vehicles are made with--We're never gonna stop using plastics.

Fulcrum525 · #52 05-07-2011, 02:10 PM

Quote:

Originally Posted by Hatterasguy

Bubble popped.

I've got a 1/4 tank left, how long should I wait before going to the pump....

#53 05-07-2011, 02:18 PM

Quote:

Originally Posted by Fulcrum525

I've got a 1/4 tank left, how long should I wait before going to the pump....

At least a month.

panZZer · #54 05-07-2011, 02:25 PM

Quote:

Originally Posted by Hatterasguy

Bubble popped.

Maybe for the moment--it would be nice for some of the forecasts to come real--like gas going back to 3.00 by july-I wouldn't count on it though.

#55 05-07-2011, 03:10 PM

Quote:

Originally Posted by panZZer

Maybe for the moment--it would be nice for some of the forecasts to come real--like gas going back to 3.00 by july-I wouldn't count on it though.

It will probably be $5 before it's $3. Oil has dropped too far, it will recover.

Hatterasguy · #56 05-08-2011, 12:11 AM

I predict it will settle around $3-$3.50, that's a nice sustainable number, with just enough pain to discourage poor vehicle purchase decisions, ie SUV's.

Hatterasguy · #57 05-08-2011, 12:12 AM

Quote:

Originally Posted by Craig

It will probably be $5 before it's $3. Oil has dropped too far, it will recover.

No it won't, look at the fundamentals. The markets can and do become distorted but the fundamentals always exert themselves.

#58 05-08-2011, 12:18 AM

Quote:

Originally Posted by Hatterasguy

No it won't, look at the fundamentals. The markets can and do become distorted but the fundamentals always exert themselves.

That is why I think it will blip back down to something above $3 in the short term, and then begin to slowly increase again. I doubt it will actually get back down to $3 in the short term, but I am sure it will eventually get to $5 and beyond. The long term trend is going no-place except up.

Hatterasguy · #59 05-08-2011, 12:20 AM

Yes but define short term and long term?

IMHO long term is the next 10 years, and it will go up. In the next 2-5 years I don't think it will move out of the $3 range, the demand just isn't their.

#60 05-08-2011, 12:22 AM

Quote:

Originally Posted by Hatterasguy

I predict it will settle around $3-$3.50, that's a nice sustainable number, with just enough pain to discourage poor vehicle purchase decisions, ie SUV's.

Based on that price, you are assuming that oil will stabilize at about $80-90 for the long term? I just don't see that happening over the long term. I also think that the dollar is going to continue to drop. If I did think the price of oil was going to flatten out, I would be selling my energy based mutual fund.