$10 per gallon gas

[EvilMonkey]

The balance is still out of whack, though. I work in Des Plaines and live in Woodridge right now. If I wanted to get close to work (

My problem too. My current house bought for about $200,000 would be $350,000 anywhere within 10 miles of my store.

[StrangeSox]

That's the fun part... Everyone seems to want more refining capacity, but no one wants it built next to them. The NIMBY factor is huge here. Not to mention with all of the emphasis towards getting off of oil, why would any company look at putting up billions of dollars into technology that everyone is talking about phasing out?

 

well, I understand the NIMBY factor. Just drive down New Avenue in Lockport/ Lemont, IL. The Texaco refinery that closed in 1982 and takes up a few hundred acres along the Des Plaines river was just finally cleaned up in the last few years. And the land is still only usable for industrial purposes. A little further down the road is the ComEd coal-fired power plant and a Citgo refinery. My parents often have an oily film on their pool (they're a little down-wind). There are risks of explosion (I think the Texaco refinery had a major explosion, and the Citgo refinery had a minor explosion a few years ago.) They usually smell awful at night.

[Cknolls]

Even at those prices, it would take a couple years to begin ramping up production of those enough to meet the demand spike/production decline associated with a price spike of this magnitude. It takes an awful lot of energy and work and equipment and time to turn those in to usable gasoline.

 

 

Kind of like Ethanol, huh.

[Balta1701]

Kind of like Ethanol, huh.

In many ways, yes. Both take a lot of fossil fuels to produce, both add to the cost of other goods. The one potential difference with ethanol is that it's possible that in the future, methods for generating it without the heavy use of fossil fuels in its production might be available, if we could ever develop some means of reliably producing it from things like algae or grasses.

[Balta1701]

That's the fun part... Everyone seems to want more refining capacity, but no one wants it built next to them. The NIMBY factor is huge here. Not to mention with all of the emphasis towards getting off of oil, why would any company look at putting up billions of dollars into technology that everyone is talking about phasing out?

If the issue were refining capacity, then I doubt we'd really have a problem, because even with the NIMBY issue, there's more than enough land on earth to cover the refining capacity. It's not like we're actually not producing enough gasoline. There's no stations running out, there's no lines or quotas for people. The issue is that there's simply not enough oil coming out of the ground to keep up with the growing demand. There simply isn't enough energy available. Adding additional refining capacity does nothing if you don't have the material to refine. That's a big part of the reason why the oil companies are trying to shutter profitable refineries rather than build new ones, because they're smart enough to know that there's no reason to build additional refining capacity if there's not going to be additional crude coming out of the ground to refine.

[Cknolls]

well, I understand the NIMBY factor. Just drive down New Avenue in Lockport/ Lemont, IL. The Texaco refinery that closed in 1982 and takes up a few hundred acres along the Des Plaines river was just finally cleaned up in the last few years. And the land is still only usable for industrial purposes. A little further down the road is the ComEd coal-fired power plant and a Citgo refinery. My parents often have an oily film on their pool (they're a little down-wind). There are risks of explosion (I think the Texaco refinery had a major explosion, and the Citgo refinery had a minor explosion a few years ago.) They usually smell awful at night.

 

 

I've lived in Lemont for six years now and have never experienced any foul odors. Maybe its where I liv Also, you would be surprised at how much Citgo does for Lemont, i.e. they just donated $500,000 for a new township office, and they just co-sponsored a motor-oil recycling event a week and a half ago.

[StrangeSox]

I've lived in Lemont for six years now and have never experienced any foul odors. Maybe its where I liv Also, you would be surprised at how much Citgo does for Lemont, i.e. they just donated $500,000 for a new township office, and they just co-sponsored a motor-oil recycling event a week and a half ago.

 

You have to be driving on New Ave. to smell it, but man does it stink. Sorta like rotten eggs.

 

I'm sure Lemont gets TONS of tax money from those two plants as well. I don't know that I'd necessarily oppose it myself, I was just saying that I understand where the NIMBY mentality comes from when it comes to places like these. I know some of the refinery cities in Texas (Port Arthur, in particular) are very seriously polluted.

 

On a side note, I've always found it odd that the Citgo station directly across the street from the refinery usually has some of the higher prices in the area. You'd think they'd be able to sell a little cheaper due to zero transportation costs.

Edited April 29, 2008 by StrangeSox

[NorthSideSox72]

The areas where refineries would be built (in some cases on top of old ones) are usually where there is already heavy industry. No oil company is going to build a refinery in Winnetka. NIMBY isn't such a huge issue. There are large swaths of derelict industrial space in SE Chicago, Gary, Whiting, etc., for example, that are right on the lake (port access for oil) and that would be ideal. I really don't think NIMBY is the issue. The issue is that its expensive to build new capacity, and as someone else said, the image of them building more is that they aren't moving forward to alternative energy.

 

I favor large scale investment in alternatives, but I ALSO think that some addition to refining capacity, and some upgrades to EXISTING drilled fields in and around the US, are smart investments.

 

[Cknolls]

You have to be driving on New Ave. to smell it, but man does it stink. Sorta like rotten eggs.

 

I'm sure Lemont gets TONS of tax money from those two plants as well. I don't know that I'd necessarily oppose it myself, I was just saying that I understand where the NIMBY mentality comes from when it comes to places like these. I know some of the refinery cities in Texas (Port Arthur, in particular) are very seriously polluted.

 

On a side note, I've always found it odd that the Citgo station directly across the street from the refinery usually has some of the higher prices in the area. You'd think they'd be able to sell a little cheaper due to zero transportation costs.

 

 

Exactly what I thought. when I first moved there, that station was usually cheaper than anywhere else in town. But now, you are right, it is usually more expensive. Consequently, there are two other gas stations in Lemont, both Citgo's. The two BP stations, one on Archer and one on State St. both closed in the last two years.

[Disco72]

The areas where refineries would be built (in some cases on top of old ones) are usually where there is already heavy industry. No oil company is going to build a refinery in Winnetka. NIMBY isn't such a huge issue. There are large swaths of derelict industrial space in SE Chicago, Gary, Whiting, etc., for example, that are right on the lake (port access for oil) and that would be ideal. I really don't think NIMBY is the issue. The issue is that its expensive to build new capacity, and as someone else said, the image of them building more is that they aren't moving forward to alternative energy.

 

I favor large scale investment in alternatives, but I ALSO think that some addition to refining capacity, and some upgrades to EXISTING drilled fields in and around the US, are smart investments.

What's a better investment? Building more refineries to sell more gas or keeping supply limited and making more money on the gas that is sold? My guess is that the ROI on a new refinery does not offset the increased profitability of a limited supply. I don't work for the oil/gas industry...but I did stay at a Holiday Inn Express last night!

[NorthSideSox72]

What's a better investment? Building more refineries to sell more gas or keeping supply limited and making more money on the gas that is sold? My guess is that the ROI on a new refinery does not offset the increased profitability of a limited supply. I don't work for the oil/gas industry...but I did stay at a Holiday Inn Express last night!

That depends on the perspective. For the government and the nation, clearly, better to invest in infrastructure than not. For the oil companies, it does make some sense to not build out, sort of. There is a limit to that. If they let the prices get too high, they will start to create too many pressures and that profit will dwindle.

 

[southsider2k5]

That depends on the perspective. For the government and the nation, clearly, better to invest in infrastructure than not. For the oil companies, it does make some sense to not build out, sort of. There is a limit to that. If they let the prices get too high, they will start to create too many pressures and that profit will dwindle.

 

Prices are up by a factor of almost 4 in the last few years, and that hasn't stopped demand at all. In fact demand has still been increaseing until recessionary pressures set in.

[NorthSideSox72]

Prices are up by a factor of almost 4 in the last few years, and that hasn't stopped demand at all. In fact demand has still been increaseing until recessionary pressures set in.

Demand is one aspect, and you are right it has gone up, in great part due to overseas pressures. Also, demand WILL fall in the US if prices stay this high for long, because people will change their behavior. But that doesn't happen instantly. It takes time.

 

I was more referring to other problems that absurdly high prices (i.e. $10/gallon) will cause. You think there is pressure for a windfall profit tax now? At $6, the government will basically walk into the oil companies and just take half those profits straight off. I guarantee it. At $8 a gallon, the whol regulatory structure for oil production in the US will change. The government simply won't allow those prices to stay as they are without acting, even if their actions are stupid. And you can bet that for every dime that price goes up, more and more money will pour into alternatives, and some of those will hit the market.

 

[Rex Kickass]

If supply/demand was really the issue, the price of oil would be a lot lower, no? Inventories are not significantly lower than they have been in past years. In fact they are higher, no? The problem seems to be that oil is being traded like a commodity recently (i.e. Gold) almost being used as a hedge against the dollar.

 

My prediction: if the government actually starts to follow the strong dollar policy that they've given lip service to over the past six years of constant depreciation, we'll see oil back in the 70 dollar a barrel range within a year.

[southsider2k5]

Demand is one aspect, and you are right it has gone up, in great part due to overseas pressures. Also, demand WILL fall in the US if prices stay this high for long, because people will change their behavior. But that doesn't happen instantly. It takes time.

 

I was more referring to other problems that absurdly high prices (i.e. $10/gallon) will cause. You think there is pressure for a windfall profit tax now? At $6, the government will basically walk into the oil companies and just take half those profits straight off. I guarantee it. At $8 a gallon, the whol regulatory structure for oil production in the US will change. The government simply won't allow those prices to stay as they are without acting, even if their actions are stupid. And you can bet that for every dime that price goes up, more and more money will pour into alternatives, and some of those will hit the market.

 

5 years ago, the idea of $4 gas was more absurd than the idea of $10 gas today. At that time I remember reading things like $60 crude would push people into alternatives and that at $25-30 bbp it was too cheap to make it viable. Now at $115, and the alternative methods are still too expensive? Trust me, I remember studying this stuff and thinking of it in terms of a logical commodity. As time has played out, energy has proven only to be completely irrational to the normal economic behaviors that everything else works according to. The bar has just kept moving up, and yet nothing has changed. I guess I will believe it when I see it.

[NorthSideSox72]

5 years ago, the idea of $4 gas was more absurd than the idea of $10 gas today. At that time I remember reading things like $60 crude would push people into alternatives and that at $25-30 bbp it was too cheap to make it viable. Now at $115, and the alternative methods are still too expensive? Trust me, I remember studying this stuff and thinking of it in terms of a logical commodity. As time has played out, energy has proven only to be completely irrational to the normal economic behaviors that everything else works according to. The bar has just kept moving up, and yet nothing has changed. I guess I will believe it when I see it.

I think it already is changing. Hybrid cars are selling faster than companies can make them. I drive around Chicago and I see solar cells on top of houses and buildings, where there were none before. Heck, go to sunnier climes, and you see solar cells on half the houses in some newer suburbs. But the changes are happening underneath, and aren't seeing much market yet. Electric cars? First real production ones will hit this year, with others to follow. Wind turbine fields appearing all over the place. So it is happening - it just takes a number of years for it to reach the markets.

 

What is needed is some comprehensive policy, including tax inducements, grants and loans, and a stronger push towards competition for energy provision (utilities).

 

[Steve9347]

What is needed is some comprehensive policy, including tax inducements, grants and loans, and a stronger push towards competition for energy provision (utilities).

ding ding ding

[Texsox]

The issue is that there's simply not enough oil coming out of the ground to keep up with the growing demand.

 

And no urgency to refine even faster. For all practical purposes, there is a finite amount of oil. What is the incentive to pump faster for less?

[mr_genius]

http://www.ft.com/cms/s/0/4200dc9e-1521-11...00779fd2ac.html

 

Opec saying $200 a barrel

 

http://biz.yahoo.com/ap/080429/earns_oil.html?.v=2

 

more record profits form oil companies. so can we all agree we shouldn't be handing out corporate welfare to these guys?

[EvilMonkey]

And no urgency to refine even faster. For all practical purposes, there is a finite amount of oil. What is the incentive to pump faster for less?

Are you sure that it is finite?

 

http://www.wnd.com/news/article.asp?ARTICLE_ID=38645

 

[NorthSideSox72]

more record profits form oil companies. so can we all agree we shouldn't be handing out corporate welfare to these guys?

I think you'll get 100% agreement on that. You could poll the nation and get 90%+. And yet, Congress and this President will hear nothing of it.

 

[mr_genius]

I think you'll get 100% agreement on that. You could poll the nation and get 90%+. And yet, Congress and this President will hear nothing of it.

 

well all those profits sure do equal plenty of bribe money

[lostfan]

You have to be driving on New Ave. to smell it, but man does it stink. Sorta like rotten eggs.

I was in Kuwait for a while, and yeah. When you are close to the refineries you definitely know, especially when it's 125 degrees.

[lostfan]

My problem too. My current house bought for about $200,000 would be $350,000 anywhere within 10 miles of my store.

Here between DC and Baltimore it's a lot like that too, except my commute is probably 1/4 of what yours is. It's amusing how much the prices spike when you go 5 miles east. In the Fort Meade area it's a pretty booming economy and a single-family home there is going to run you about $400k because everybody wants to live close to work. But where I am, basically in a suburb of Baltimore and a 20 minute drive, a home is about $300k and my townhome was $265k which is almost the least you need to pay if you want to live in a decent neighborhood. It makes you wonder where all the jobs are that so many people can actually afford this.

[Balta1701]

I was in Kuwait for a while, and yeah. When you are close to the refineries you definitely know, especially when it's 125 degrees.

The best one in Northwest Indiana hits you when you're on the I-90 toll road heading out of Chicago and towards Gary. Can't remember exactly which toll booth it is, it's not the Skyway one and it's not one of the ones after 80 and 90 merge, it's right in-between those 2 spots. And you have to roll down your window to pay the toll...and every night the stench is there. I always likened it to some sort of disgusting version of garlic potatoes, like rotten ones. Definitely a garlic and potato scent in there, with something else mixed in.

 

Interestingly, it only appears at night. Almost as if some organization, some agency, perhaps devoted to environmental protection, might have people watching during the day but either they can't see the smoke plume at night or they simply go home.