Somehow, I must have closed the comment section. I don’t know how, but that’s no surprise—Word Press bedevils me daily.
The comments are now open, for anyone who’s interested.
Yesterday, as I filled my gas tank in Phoenix, I noticed the cost topped $60. Filling up my car hasn’t cost that much in a long time.
Gas prices are indeed rising. What’s worse—look for prices to get higher this summer. From ABCNews.Com’s article on January 6th, titled “Forecast: 2012 Worst Year For Gas Prices:” (All emphasis in the blockquotes is added).
To the dismay of drivers across the country, 2011 went down in the record books as having the most expensive gasoline average ever, $3.513 for the year, 72 cents per gallon higher than 2010′s yearly average, according to GasBuddy.
Patrick DeHaan, GasBuddy’s senior petroleum analyst, projects that by Memorial Day, the national average will be between $3.86 to $4.13 per gallon, and that prices in 2012 will come close to or set new all-time highs. If that happens, drivers could spend $200 to $300 more for gas this year.
Inflation adjusted data from the Energy Department’s U.S. Energy Information Administration confirmed that 2011 was a record year. The real annual average for a gallon of regular gas last year hit $3.56, up from $2.90 in 2010, according to the EIA. From its data that begins in 1919, the previous record high was in 1981, at $3.45.
Wouldn’t it be nice if we could find ways to keep the costs of gasoline down? Well, one way to do that—lower shipping costs.
(AP) BISMARCK, N.D. — North Dakota oil drillers increasingly will rely on trains to move barrels of crude to market after the Obama administration’s decision to reject plans for a pipeline that would run from Canada to refineries on the Gulf of Mexico, state and industry officials say.
“Pipelines are by far the safest and most economically efficient way to transport oil, but we are left with a limited number of options if pipelines are off the table,” said Tony Clark, chairman of the North Dakota Public Service Commission. “Once the oil is flowing, it has to go somewhere.”
How much would we save if pipelines could carry our oil, instead of trains?
Alison Ritter, a spokeswoman for the state Department of Mineral Resources, said the state’s so-called takeaway capacity is adequate, though producers and the state were counting on the on the Keystone XL to move North Dakota crude.
Shipping crude by pipeline in North Dakota adds up to $1.50 to its cost, compared to $2 or more a barrel for rail shipments, producers say.
“Oil that would have moved by the Keystone XL is now going to shift to rail transportation,” Ritter said.
Boy, it sure would be nice to be a rail shipper, now that the Keystone pipeline—and the thousands of jobs it would take to build it—has been put on hold.
Yep…you guessed it. (My headline gave it away, didn’t it?).
From the AP article:
Mile-long trains laden with North Dakota crude began running in 2008 when the state first reached its shipping capacity with existing pipelines and infrastructure, said Justin Kringstad, director of the North Dakota Pipeline Authority.
Rail shipments now account for about one-quarter of the more than 510,000 barrels produced daily in North Dakota and will increase exponentially with increased oil production and the shortage of pipelines, Kringstad said.
“If the (Keystone XL) is blocked or delayed, we still have to meet our transportation needs,” Kringstad said. “It’s pretty simple.”
BNSF Railway Co. hauls about 75 percent of the oil that currently leaves North Dakota by train, Kringstad said.
The railroad is a unit of billionaire Warren Buffett’s Berkshire Hathaway Inc., and Buffett is a longtime Obama adviser.
Neither BNSF officials nor Buffett at his Berkshire Hathaway office in Omaha, Neb., returned telephone calls from The Associated Press.
Billionaire oilman Harold Hamm, chairman and chief executive officer of Continental Resources Inc., said he believed Buffett had no influence in Obama’s decision to block the pipeline. Instead, he called it a “lucky break” for Buffett.
“Warren is smart and I like his intuition. He is a friend of mine,” Hamm said. “I don’t agree with his political leanings and his liberal outlook on things. But certainly he’s favored by this decision — it’s easy to figure that one out.”
$2 for every barrel shipped by rail from the North Dakota oil fields. Yes, Team Buffett is lucky, indeed.
Multiply 510,000 barrels a day (North Dakota’s current output) X .50 (the added cost per barrel of shipping by rail instead of through a pipeline)…well, I guess we can all absorb a extra quarter-of-a-million dollars a day in added fuel costs. (Looks as if we don’t have much of a choice.)
To be fair, though, only 10% of North Dakota daily output currently goes by rail (see above). However, the pipeline authority rep expects that total to jump “exponentially.” So, for planning purposes, let’s suppose that, eventually, half of North Dakota’s output moves by rail. OK—255,000 barrels X .50 = $127,500 in added fuel costs. Costs that will be passed on to us.
Did anyone in Washington D.C. ask you if you were OK with paying more for gas, so that we could just say no to that icky pipeline? Me neither.
I guess, in the big scheme of things, $127,500 a day isn’t a big deal. According to the Energy Department (see 1st blockquote), each of us is already paying hundreds of dollars more for gas than we were a few years ago. So, why not pay a little bit more?
Keep telling yourself that when you’re pumping gas, as the price meter climbs higher…and higher…and higher.
One of the reasons I write “Fort Buckley” is to “spread the wealth” of the good writing I see on the conservative blogosphere. To be sure, some (many?) TC.com readers don’t see the same “wealth” that I do, or even any value at all. Well, we’ll have to agree to disagree.
One of the wisest voices I’ve encountered in conservative media is that of Victor David Hanson. A classicist at Stanford University’s Hoover Institution, Hanson writes for National Review and is a regular guest on The Hugh Hewitt Show, heard locally on KVOI.
On Thursday Hanson penned this gem on the downsides of President Obama’s decision to reject current plans for the Keystone pipeline.
a) Jobs in tough times? Anywhere from 10,000 to 20,000 high-paying jobs were lost. These were shovel-ready and private-sector, and they would have led to the real creation of wealth — the antithesis of Solyndra. How strange — we pay tens of millions of dollars for a few hundred subsidized, money-losing jobs, while passing over thousands of money-making ones.
b) National security? While we ratchet up the pressure on Iran, as gas prices climb, and as our subsidized wind/solar alternatives fizzle, we hope that, in extremis, the Saudis can reroute their exports through the Red Sea. How strange — we cancel our own pipeline while expecting others will never do the same.
c) Environment? If the Keystone project raises environmental issues, then every other comparable one would too. It is not as if the route bisects Yosemite on its way to Big Sur. How strange — we assume that the Saudis or the Turks can build pipelines across their own lands without environmental problems, but that we, the apparently less technologically advanced, cannot. We hear that oil is “fungible”; if so, each barrel that we pass on, someone else less green won’t.
d) Financial solvency? We are now almost $16 trillion in debt, and we import over $500 billion in fossil fuels per year. The more energy we produce, or the more cheaply we can import it, or the more our export dollars stay in North America, where they can be easily rerouted into the U.S. economy, the less we, the near-insolvent, must borrow. How strange — we keep passing on projects that would increase gas and oil production and availability and earn us money, but not on wind and solar counterparts that produce little energy and lots of debt.
e) Symbolism? President Obama and his supporters recently have talked of “big” ideas and projects, as if our generation fears to gamble on a Hoover Dam or man-to-the-moon project. Yet the president passed on the one chance that he’s had in his presidency to match reality with his empty rhetoric. How strange — our elites expect unstable regimes overseas to provide us with oil (Air Force One and Warren Buffett’s jet are not powered by solar panels), and to risk their own environments to do so, and for others to lend us the money to pay for our imported oil, and for the world to insulate itself from the blackmail of oil-exporting monstrosities like Iran, but we ourselves will do little of what we advocate or expect for others.
Eventually, I think the pipeline will be built. The American market for Canadian oil is large, enduring and right next door. Moreover, China’s economy is showing signs of weakness. And, in all fairness, I think the White House and State Department have determined that the Canadians will wait, stewing with resentment, until the U.S. is ready to deal with them. (Or, until the Luddites in the U.S. environmental lobby can be placated or marginalized, whichever comes first).
(Of course, the Canadians may not be willing to wait. Recently, Canadian Prime Minister Stephen Harper reportedly said that some Americans “would like to see Canada be one giant national park for the northern half of North America”. A wounded national pride, coupled with the lure of Chinese money now, might make the Canadians think twice about actually obeying the American environmental movement’s command to sit and stay.)
Nevertheless, when the Washington Post, whose desire to see the president win in 2008 was so blatant, is now moved to write an editorial titled “Obama’s Keystone pipeline rejection is hard to accept,” it’s hard not to notice.
UPDATED at 7:00 AM to (a) include Prime Minister Harper’s quote and (b) add some more thoughts to the paragraph immediately following Professor Hanson’s blockquote.
