Thursday, April 17, 2014

Petroleum: Americans Want It, As Long As It Isn't Messy AND Costs Less Than A Gallon Of Milk

There is a lot of ruckus being raised across America concerning the construction of the Keystone Pipeline.  Many political leaders and American people support it and want it finished YESTERDAY.  Others, both leaders and citizens, want President Obama to stop the construction of this pipeline.  Among the former group are former Presidents Clinton and Bush (II).  Among the latter, former President Carter, as well as several other Nobel Prize recipients, as well as millions of concerned Americans who warn against the dire consequences of the spills and other accidents associated with this high-pressure pipeline, not to mention the ecological damage, and the infringement on private property this project would entail.  It looks like President Obama, a Nobel recipient himself (although for what accomplishment exactly, we were not told, nor had he accomplished anything that I can list here, at the time of his award), will be the "tie-breaker" in this impasse.

But back to our (America's) need for and desire for CHEAP petroleum with NO MESS involved.  Since we do not want pipelines built, that only leaves trains for shipping the huge quantities of oil from collection points across the nation.  This fact, coupled with the several oil "Booms" happening in several states right now, means that more petroleum WILL BE shipped by train.  There is no other mode of transportation that would be practical for this much crude oil.  We have all seen or heard the news reports of the major train derailments that have occurred across the nation, with perhaps the most spectacular being the train wreck in Alabama this November past, where several rail cars exploded.  The entire load on that particular train was over 2.7 million gallons of crude oil.

No reasonable person wants this kind of thing to happen, especially right in his own back yard, or in the center of a town or city.  For instance, the main railway for West Texas comes right through the center of Midland, Texas and skirts the city of Odessa, Texas.  In the one case, a derailed and exploding train would endanger several thousand people working downtown.  In the other, the derailment and explosion would occur in very close proximity to several plants producing various chemicals and oil products.  The same is true for Big Spring, Sweetwater, and Abilene, not to mention all the small towns that are bisected by the railroad as it stretches across Texas from the coast to the western border.  In the right circumstances, a crude oil explosion after a train derailment could cause a blast of similar magnitude as the terrible explosion last year in West, Texas.  No we don't want this sort of thing to happen, but we do want our oil...CHEAP.

Shipping oil by rail is not nearly so cheap as transporting oil thousands of miles through pipelines.  And we want cheap oil.  Right now, here in the lovely Midland desert, fuel prices are hovering at $3.42 per gallon.  I am one of those people who want to pay hardly anything for a gallon of gas.  When I first started pumping gas as a teen, fuel was much less than a dollar a gallon.  But with the oil embargo of the late seventies, oil hit record prices.  I remember being somewhat afraid that people would refuse to pay for fuel when it hit ONE DOLLAR per gallon.  My friends, I have to tell you I knew NOTHING then!  Gas crept up to one dollar, then OVER one dollar, and just kept going.  But guess what...people just kept coming to Mr. Hix's gas station and bought gas, the same as usual.  Oh, but with a lot of griping, too.  Flash to today, and fuel is well over three dollars per gallon, and probably will never hit under three again.  We can always HOPE!

I would like to point out something about the price of a gallon of gasoline, just one of the hundreds of products made from crude oil.  Did you know that a gallon of milk costs MORE than a gallon of gas!  That is right.  It is difficult to find milk for less than $3.50 per gallon at the moment.  I bet the dairymen are wishing THEY were making three dollars per gallon for their wholesale milk!  What about beer?  The average price for a twelve pack of twelve ounce cans of beer is around twelve dollars, meaning that a gallon of beer costs well over TEN dollars.  Yet, you don't hear many people yelling at the poor Stripe's cashier about the price of beer.  Even a twelve pack of Dr Pepper costs nearly five dollars.  There is just something about the high price of gasoline that makes us yell!  But really, I have often wondered how a gallon of gasoline could possibly cost only three dollars and some change. 

If you think about all the expense involved in producing a single gallon of gasoline, it is truly a wonder that we can buy one gallon for less than ten dollars!  For instance, untold hundreds of thousands of dollars have been spent before a single barrel of crude is even brought to the surface.  Then crude must be transported, costing more thousands of dollars.  Then crude must be refined, costing millions of dollars.  And since not all crude oil is refined into gasoline, a gallon of gasoline is that much scarcer, therefore that much more expensive.  Luckily, since gasoline is refined by the millions of gallons, we as users are able to pay only a fraction of what it actually costs to produce one gallon of fuel.  Not only that, but for years we here in the United States have paid much less than people in Europe and Asia have had to pay for their fuel.  I know there are several reasons we pay less here in America for fuel than many other places, but the primary reason is that the United States has such an extensive pipeline network.  Like it or not, the pipeline is still cheaper than all the trains needed to replace it, or, in our current situation, to supplement it.  And, like it or not, our fuel will only remain relatively cheap IF we are willing to allow pipelines to be built.

Americans (including ME) have not shown an inclination to significantly reduce their use of gasoline by any of the conventional alternatives that are available.  For instance, I own a Chevrolet Tahoe that I drive almost daily to work and back.  If I do not use the Tahoe, I drive a Jeep Wrangler.  Neither vehicle is very fuel efficient, in terms of getting over 25 miles per gallon.  Yet I have not chosen to part with either vehicle, even though I could sell both vehicles and use the cash to purchase a fuel efficient vehicle.  I am not alone in this attitude, either.  Vehicle sales statistics indicate that the most popular "car" of the past decade was a certain pickup truck.  Another thing I have not done is moved closer to my job.  At the time I bought my current residence, there were several homes and apartments available that were within walking distance of my place of work.  And millions of people live suburbs or rural areas, sometimes two or three hours away from their jobs.  Why do they choose to do this?  Because fuel is still cheap, making the expense of commuting justifiable.

I honestly do not support the building of yet another pipeline, but neither can I think of a viable alternative, at least one that the American people would be willing to adopt.  It is worth noting that the Keystone Pipeline will not transport crude oil in the conventional fashion, but will instead use a slurry of crude mixed with sand.  This will enable to transportation of oil at a much higher pressure, which means a much faster speed.  The down side of this is that ruptures and explosions will be inevitable.  Then there is the forcible purchase (eminent domain) of right of way, meaning the loss of thousands of acres of agricultural land as well as homeland for some people, since there can be no planting or excavation over the pipeline.  The ecology will inevitably suffer from transportation accidents and incidents.  Unfortunately, the alternative is the use of the railway to move this same crude oil.  I believe the shipment of crude by rail is even more dangerous, and it is certainly more expensive.  But we want our cheap oil, and we do not want the mess that goes with it.  And it better never cost more than a gallon of milk!



 

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