Oil supply

There seems to be a lot of confusion about the price of oil and its refined products mainly gasoline. The facts show that we currently have an excess of oil here in the US mostly because of the Bakken range in North Dakota has increased US production by 10%. We also have an excess of gasoline because the slow economy has reduced usage. The question is why the price rising if we are using less and the answer is that the price is set on the world market and there is large demand in places like China and India. Some say that speculators are driving up the price but prices on the futures market only rise when there is a demand and there is only demand when supply is low. People are getting mixed up between the US market and the world market. Some are upset that the US is exporting gasoline but that adds to the world supply which lowers demand which lowers future prices.
US refineries are running at near capacity and if we are interested in lowering the price of refined products we need more refineries. Once we have increased our capacity for refining then we can use the excess oil to increase the supply of gasoline which will lower the price. We have not built a refinery in this country for more than 30 years.
If the permit requirements were expedited we can build a refinery in three years. If they started building a hundred refineries today and started drilling in the Gulf and on the continental shelf we could cut the price of gas in half by 2015. The immediate effect would be speculators would stop bidding up the price because they would know that the supply will be increasing rapidly in the near future.
If however your objective is to move away from oil and use other sources for energy then you would oppose further development in the production and use of oil. You might even see the rising price of oil and gasoline as the direction you want to go.
For those who want to decrease the use of fossil fuels there are some important questions that need to be addressed. First is where will the electric cars get their electricity. Since electricity can’t be stored and since the wind doesn’t always blow and since solar cells don’t work at night we are stuck with nuclear. It takes ten years to build a nuke power plant assuming you can speed up the permit process. Don’t hold your breath on that since environmentalists wield a lot of power in the courts.
In the past few days President Obama has adjusted his green talk to say we need to explore all possible ways to meet our energy needs. This is double talk for saying we need more oil and gas. If this satisfies the opposition to fossil fuels we can proceed to build new refineries but once again, don’t hold your breath.