2011 January 7

The Master Resource Report  2011-01-07

Rural gasoline consumers will suffer first. (page 1 )

Predictions for the year of the electric car. (page 2 )

Not enough coal at any price? (page 3 )

Will Israel join Opec? (page 3 )

The IEA is worried about the price of oil. (page 3 )

Oil consumers aren’t the only ones addicted to oil. (page 3 )

Carbon Capture & Sequestration (CCS)

My friend Craig Shumaker wrote a very good special article for the Tribune-Star (Terre Haute, Indiana) this week addressing the realities of CCS. Craig makes it very clear why if this is so easy and cheap it isn’t already being done today. I encourage you to read his article so you can evaluate whether your political leadership grasps the realities of CCS.  If they are promoting it as a solution to the release of carbon dioxide by coal power plants they had better be able to answer all of Craig’s points.

“Carbon capture is like trying to catch the chickens after the barnyard gate has been left open. Carbon dioxide is just one of several gas species going up the stack. The CO2 at 14 percent concentration must be removed and purified, then compressed and pumped back in the ground. Deep saline aquifers are the target storage locations. The latter two steps are like natural gas production, only backwards. Pipeline transmission is the only proven commercial process in the whole CCS scheme.”

U.S gasoline.

Last week’s report contained plenty on U.S. gasoline demand but some folks still don’t believe the U.S. isn’t cutting its gasoline consumption dramatically. So here is some further proof.

According WardsAuto.com domestic light truck sales jumped 22% in 2010 over 2009 sales while domestic car sales climbed only 6.3%. When imported light trucks and cars are included the numbers slip to 18.4% and 4.3% respectively.

It is always better to see how consumers spend their money than listening to what they say. In the case of vehicles it is simple; $3/gallon gasoline doesn’t matter. Ford sold more of its F Series trucks (the number one selling vehicle in the U.S.  528,349) in 2010 than the three next best selling Ford vehicles combined (Fusion, Focus & Edge  510,277).

The graph below will also help put U.S. gasoline consumption into further perspective. This graph based on EIA data illustrates weekly U.S. gasoline supplied (thousands of barrels/day) over the last 7 year period beginning January 2004. The yellow dashed line represents the average consumption for the period of 9,167 thousand (9.167 million barrels) barrels/day. The last data point on the right is for the third week in December 2010. The daily average for that week was 9.4 million barrels which is 100,000 barrels higher than the average since 2004 for the same week. Any thoughts on why the price of gasoline is above $3/gallon???

EIA releases new country brief for Saudi Arabia.

“Saudi Arabia is the largest oil consuming nation in the Middle East. In 2009, Saudi Arabia consumed approximately 2.4 million bbl/d of oil, up 50 percent since 2000, due to strong economic and industrial growth and subsidized prices. Contributing to this growth is rising direct burn of crude oil for power generation, which reaches 1 million bbl/d during summer months, and the use of natural gas liquids (NGLs) for petrochemical production. Khalid al-Falih, CEO of Saudi Aramco, warned that domestic liquids demand was on a pace to reach over 8 million bbl/d (oil equivalent) by 2030 if there were no improvements in energy efficiency and current trends continued.”

Did anyone at the EIA consider that if Saudi Arabia consumed 8 mb/d by 2030 it would take 80% of the EIA’s own estimate of the Kingdom’s current production? Or that 8 mb/d would consume 109% of the Kingdom’s current exports of 7.3 mb/d. Is that reasonable to expect?

It is probably a safe bet that the “current trends” won’t continue.

One other interesting point to note is that over 50% of Saudi Arabia’s exports of oil and refined products now go to the Far East. It is clear that the U.S. is an important market but it is not the biggest.