Seems the Arab Spring is polluted now.

[A Nonny Moose 8,262]

Remember all that money we spent on these guys?

 

Now where is General Montgomery when we need him?  The western world has spend billions on Libya, a lot of it recently, and they can't even keep their ports out of rebel hands.

 

Radicalization of Islam continues in spite of or in accordance with the Saudi regime's mood, apparently.  Since Islam lacks a central authority, the number of schisms seems to be multiplying daily as each tinpot Mahdi sets up his own set of jihadists.  Something has to be done by the Arabs themselves before the whole works becomes a giant anarchy.

 

The Western states need to keep their hands in their pockets and their people at home.

[TekindusT 3,809]

... and the money spent on military, spent on that people you were saying.

 

It's curious that every time somebody sneezes on an Islamic country, oil prices rise; but when there are no news, they keep constant. What a coincidence...

[A Nonny Moose 8,262]

North America is really independent of Arab oil.  I think we should invite them to drink it themselves.

[hym 358]

North America is really independent of Arab oil.  I think we should invite them to drink it themselves.

 

The reality is a bit more complex than that.

 

Oil isn't really a fungible asset.  Things like API gravity, sulfur content, and source location actually matter quite a bit (hence their ability to set crude demand and thus prices).  There are complaints by some members of Canada's government (or perhaps Alberta's government, not really sure here) that Western Canada Select (WCS) isn't trading for as much as West Texas Intermediate (WTI), so they are losing money that they feel they should be making.  While it is true that lack of pipeline capacity is helping depress WCS prices against WTI, there is still the fact that WCS is a far lower quality crude than WTI is, so refiners simply aren't willing to pay the same price that they will pay for WTI.  No oil & gas company in its right mind will trade you a barrel of WTI for a barrel of WCS, so oil's non-fungibility becomes an issue when discussing crude markets.

 

This matters to the consumer because refiners can't just process any old oil that they want.  Refinery design will dictate the characteristics of the crude oil that the refinery can process, which in turn dictates the various crude feedstocks that the refinery can purchase for processing.  Refineries can improve their flexibility through crude blending, but even then, there will be crude feedstocks that simply cannot be refined at that facility.  Some examples, all from Texas refineries:

 

• Refinery A is a light oil refinery.  Attempting to run a pure WCS feedstock would destroy the facility, though small amounts of WCS can be heavily diluted with light oil feedstock to allow some feedstock flexibility.
• Refinery B was built for low quality feedstocks from the beginning, and can run a WCS feedstock with almost no dilution.
• Refinery C is built for processing WTI and has almost no ability to process any other quality feedstock.

 

This matters because there is actually an incredible mismatch in the US and Canada between what each country is producing and what its refineries are good at refining.  Canada is sitting on a gold mine of crude, but few of its refineries can process it.  Thus it becomes imperative to Canada that Keystone XL get approved to move that oil to the Gulf Coast, which is increasingly becoming the only place of importance in the world with the refining muscle to crack WCS into meaningful products.  Oil production in the US is exploding thanks to hydraulic fracturing, but the vast bulk of what is being produced is extremely light oil, which most Gulf Coast refineries would crack into oblivion.  Canada, on the other hand, has several refineries that could be easily retrofitted to process this abundance of light oil.

 

Now you may be looking at that and thinking, "So Canada and the US set up a trade partnership and problem solved."  For the most part, you'd be right, except that California unravels the whole thing.  Thanks to geography and an abundance of regulations that exist nowhere else, California is an energy island.  California gets its oil from the international market, and it is processed by refineries in California that exist to serve only California.  If the US tells the Middle East to drink its oil, California runs into massive problems sourcing its oil, and the Californian economy would likely tank, taking the US economy, and thus the world economy, with it.  So unless California and the EPA have a massive change of heart regarding fossil fuel and air quality regulations, the US is likely stuck in the Middle East for a long time yet.

 

Interestingly, there is also another reason for the US and other countries to stay involved in the Middle East.  Given the US and Canada's burgeoning oil & gas production, both countries will have more clout in determining the direction of world oil & gas markets.  An economic partnership with the right Middle East nations (likely including Iraq and Iran) can possibly crack OPEC's power on the world's oil markets.  It could even be a pseudo-rebirth of the Seven Sisters that controlled the oil industry before OPEC gained its power.

[A Nonny Moose 8,262]

You know, my friend, I could care less about California.  It is just a matter of finding funds to refine the various grades of oil and I think a slight cut in defence spending over the continent would do the trick.  And defence spending includes such black items as the NSA and CSEC as well as some of the more arcane things CSIS and the CIA are up to.  I am thoroughly sick of toadying up to the Sheiks of Petroleum.  Security is all very well, but somehow this horse has got the bit in its teeth.

 

As far as fungible product goes, we'll be shipping a lot of our more difficult Alberta product overseas, now that the BC government has come to terms.  Apparently the Chinese will be able to refine this stuff without difficulty in view of the avidity in which they are trying to purchase big chunks of the Alberta oil patch.

 

Meanwhile, everyone continues to give lip service to energy policies that are really out of bounds, while trying to maintain a status that has lost its quo.

 

There is also one historical fact that we need to keep in mind.  In the 1920s and 1930s we both sold a lot of scrap iron and steel to an oriental country and in the 1940s they threw it back at us.

[BLANKBLANK 4,414]

Maybe the best thing the US and NATO should have done was not to interfere with the Libyan civil war, to not have supported the Muslim Brotherhood which has links to Al Qaeda, and finally to stop giving weapons and supplies to Syrian rebels affiliated with Al Qaeda. I thought the whole war on terror was to destroy Al Qaeda, now we're helping them? This war on terror is a sham!

 

Oh yes here's a wacky thing. In the midst of the Libyan civil war -- and when NATO was imposing that no-fly zone over Libya -- the Libyan rebels decided to set up a central bank in Benghazi. WTF? I've got to admit this whole Arab Spring has become more and more surreal.

[A Nonny Moose 8,262]

I am starting to feel like a yokel who has been hoaxed.  Oh!  My ducats!

 

Let us leave Moorish subtleties to the Moors.

[TekindusT 3,809]

Want to reduce your dependency on oil? Renewable and nuclear power. But there are still many up on the goverments that still haven't realized of that. Ah, yeah, sorry. They have, but their political campaigns are paid by those tho extract, refine and sell the oil. Time for a change, voters?

 

Our current ways of life are now depending on a bunch of guys who are (simplifying the problem a lot) arguing about the interpretation they give to a book. I'm not saying that we really need to get into the car to go to the baker's, but there is definately people having a bad time because prices don't stop rising.

[hym 358]

You know, my friend, I could care less about California.  It is just a matter of finding funds to refine the various grades of oil and I think a slight cut in defence spending over the continent would do the trick.  And defence spending includes such black items as the NSA and CSEC as well as some of the more arcane things CSIS and the CIA are up to.  I am thoroughly sick of toadying up to the Sheiks of Petroleum.  Security is all very well, but somehow this horse has got the bit in its teeth.

 

Unfortunately, it is not merely a matter of funds.  Politics are heavily involved, as evidenced by the delays in the Keystone XL pipeline.  Environmental groups in both the US and Canada would bitterly oppose the upgrades necessary for both countries to become independent.  Harmonization of US fuel standards would require California adopting the standards used by the rest of the US (which environmentalists would fight) or the rest of the US moving to California's standards (which the oil & gas industry would fight).

 

As far as fungible product goes, we'll be shipping a lot of our more difficult Alberta product overseas, now that the BC government has come to terms.  Apparently the Chinese will be able to refine this stuff without difficulty in view of the avidity in which they are trying to purchase big chunks of the Alberta oil patch.

 

China also doesn't have environmental lobbies to the extent found in the US and Canada.  There are things you can do when you don't have meaningful opposition, like build oil refineries like they are going out of style.

 

There is also one historical fact that we need to keep in mind.  In the 1920s and 1930s we both sold a lot of scrap iron and steel to an oriental country and in the 1940s they threw it back at us.

 

Although it may not seem like it, I'm not debating whether your philosophy on Middle East policy is correct or not.  The point of the earlier post was to explain that there is more to energy independence than raw production numbers and, consequently, we are likely still going to be involved in the Middle East for a while.

[Duke87 1,070]

Want to reduce your dependency on oil? Renewable and nuclear power.

 

Not that simple. Those are ways of producing electricity, and while the technology to run cars on electricity does exist, it isn't ready for prime time. We don't really have a robust method of powering cars and trucks that doesn't involve some petroleum distilates, except perhaps for compressed natural gas (but then that has safety issues).

 

Meanwhile, very little electricity in the US is generated using oil because it is not a cost-effective means of doing so. Traditionally the most popular fuel was coal, although because of political pressures to move away from coal and fracking making natural gas really cheap, natural gas is rapidly gaining ground as the preferred fuel of power producers who are not running nuclear or hydro.

 

Meanwhile, the US has not commissioned a new nuclear power plant since the Three Mile Island incident in 1979. Because of that and later incidents elsewhere in the world, people are generally spooked about nuclear power, and so the trend is to shut existing plants down whenever practical. Forget about building new ones. Nuclear power, if done properly, is nowhere near as dangerous as people think it is, but unfortunately perception is more important than reality with these things.

[A Nonny Moose 8,262]

Let's get serious about petroleum.  It does a lot better producing things other than motor and aircraft fuels. 

 

All those nice plastics you use are essentially petroleum products, and where would you be without, for example, thin film food wraps?  Using waxed paper, that's where.  But where does the wax come from?  It could be yet another petroleum product or it could be beeswax. 

 

Meanwhile, some big chemical outfits are busily poisoning our bees using yet another set of petroleum products.  All this with the aim of protecting farm products which farmers refuse to rotate.  Mono-cropping is fatal, as the dust bowl farmers discovered about a century ago.  The whole farm economy is being held up by questionable technologies which are dependent on petroleum.

 

The reason we don't have better electric vehicles is because there is no public will to have them.  It is easier to stick to the status quo, when in fact, it is a fatal move.  The public in general is more inert than Argon, and getting them moving towards something sensible requires some kind of cattle prod or panic, usually when it is far too late.

 

Nuclear cafard in the U.S. has been going on for so long that it must be actively promoted by vested interests.  Probably vested in petroleum as fuels.  Nuclear technology has so far surpassed the BWR technology used in Three Mile Island it is time to stop thinking about something that happened more than a generation ago.  Why are young people afraid of nuclear power?  Because they are being taught this, that's why.  There is a song in the Broadway show South Pacific that says this magnificently: "You have to be carefully taught".

 

Anyway we've wandered considerably off the topic of the Arab Spring.  How about we return to our muttons, and chew over events in Libya?