More on the fuel debate

[Rosco]

I just received the following. It puts a different slant on the whole fuel issue and is worth a read, notwithstanding the odd spelling and typo ... sorry Ron .. :D



Fuel: The Mass Debate Or How to Knock About 50c a Litre Off the Price Of Fuel First and foremost this debate should be centred on Diesel NOT Unleaded. Why? You may ask. Just look at the increase in supermarket prices for your answer. While it may cost you $5 or $10 extra to fill your tank everything that is transported (which is everything) rises as Diesel rises. My average basket at the supermarket per week has increased on average $30 and that’s for one person. Australia’s whole economy is tied to Diesel and therefore it should be afforded the same priority and status as water i.e. an essential commodity. I own a small transport company and I have had to significantly raise my prices twice in the past year just to maintain profit margins. This cost you money too. I am compelled to write this letter because I am sick of all the namby-pamby pussyfooting around everyone seems to be doing about the current fuel debate. I have spent considerable time researching this area because it affects my income. Contained herein is the WHOLE truth about the debate, the WHOLE big picture, if you will. NO-ONE till now has had the testicular fortitude to stick their necks out and present the WHOLE argument about just how much we are being RIPPED OFF. If you want the truth and the WHOLE truth read on. DON’T – Listen to spin doctors from the oil companies. THEY HAVE A VESTED INTREST TO KEEP FUEL PRICES HIGH. DON’T – Listen to the government – state or federal. THEY HAVE A VESTED INTREST TO KEEP FUEL PRICES HIGH. DON’T – pay too much attention to news or current affairs programs. THEY HAVE THEIR OWN AGENDAS. So here we go, how to make fuel cheaper! FIRSTLY – DISBAND FUEL PARITY Parity, for those that don’t know, is government sanctioned price fixing (simple as that). Parity allows fuel companies to sell their products for the highest current price they find in the Asia Pacific region. It completely disregards supply and demand economics and eliminates any need for competition amongst themselves. Don’t believe me? Just look at the price of Diesel. If you remember growing up when Diesel was always 10-15c p/l cheaper than Petrol you might understand this more. How can a product that costs far less to produce (partially a by-product of producing Unleaded as well) and a product that Australia uses more of than any other fuel be MORE EXPENSIVE than Unleaded? Simple, ring Singapore, where they don’t use a lot of Diesel and import all their fuel, find out how much it’s selling for there and charge the same here – sound fair? NOT!
Any other industry who tried this one would be hauled of to the High Court quick smart and prosecuted for price fixing! Oh but hang on, our government ALLOWS them to do this NUMBER TWO – BARRELL PRICE That price the news loves to show us each night is the PREMIUM GRADE crude oil price. Australian oil companies DO NOT buy PREMIUM GRADE crude oil! In fact Australia produces around 70% of its own oil and imports about 30%. The cost of production per litre produced here is cheaper than that of imported fuel, but in no way is this factored into the pump price, because they don’t need to (SEE PARITY ABOVE) we pay a pump price based on PREMIUM GRADE crude oil price the same as if we imported all of it, say somewhere like Singapore! Starting to get the picture? NUMBER THREE – LEVIES Everyone knows that both State and Federal Governments take a large slice of the cost of a litre of fuel. This equates in total to about 46% of the price per litre. This money is used for infrastructure, road trauma etc. etc. so fair enough right? WRONG! What is wrong is that it is a PERCENATGE! Look at this. If a litre of fuel costs $1.00 then the Government gets 46c p/l, right? A week later fuel rises to $1.10 p/l; the Government gets 50.6c p/l, bingo! Something tells me that in one week, their costs, IN NO WAY have gone up 9%! As I stated previously – THE GOVERNMENT HAS A VESTED INTREST TO KEEP FUEL PRICES HIGH. THEY MAKE LOTS MORE FREE MONEY! Why else do they allow fuel companies to maintain PARITY? If they changed the tax (sorry, levy) to a flat rate tied to the GDP then the fuel price would drop drastically and immediately! NUMBER FOUR – GST - THE DOUBLE DIPP Now this one is outright “THIEVERY” and also applies to cigarettes and alcohol. GST = Goods and Services Tax, correct? 46% or 46c in every dollar in the price of a litre of fuel is TAX (sorry; again, LEVY). What part of LEVY is a good or a service? YOU CANNOT TAX, TAX RIGHT? WRONG! You do the math. Say fuel costs $1.00 p/l – the GST component = 9c But hang on a minute 46% or 46c of this is TAX! i.e., 4.14c of the GST is ILLEGALLY CHARGED ON THE TAX COMPONENT! Not much you say? FOR EVERY LITRE SOLD IN AUSTRALIA EVERY DAY! That equates to millions of free dollars for the Government! I’ll say it one more time - THE GOVERNMENT HAS A VESTED INTREST TO KEEP FUEL PRICES HIGH. THEY MAKE LOTS MORE FREE MONEY!
The GST on fuel should be 5.4% not 10%. At $1.75 p/l this would drop the current price by around 8c p/l. Feeling a little annoyed? You should be! Even without disbanding parity and introducing real competition among fuel companies, you should be paying about 40c less per litre! My name is Graeme Strempel, (gusto1@arach.net.au) and I run a small transport business, I happily welcome anyone, Government and fuel companies included to prove me wrong. If you feel strongly about this issue then pass this missive on to everyone in your address book. Eventually someone might take notice.

[Lotz-A-Landies]

I think that some of the facts are wrong, the federal excise on fuel is fixed and expressed in dollars per litre (or in fact part dollars per litre) to 5 decimal places see Petrol and Diesel Excises (Research Paper 6 2000-01) (http://www.aph.gov.au/library/pubs/rp/2000-01/01RP06.htm#WhatisExcise) so the value of excise is unchanged by the cost of crude oil. Previously the excise was increased alongside the CPI but this no longer the case.

What does increase as the price of crude rises is the GST collected. Only a small part of the GST collected is the GST on the Fuel Excise and is why the various Government spokespeople were only discussing reductions in the order of 8 cents/litre. GST is essentially a federally collected State Tax.

Why is diesel more expensive, because the excise on diesel is higher than the excise on petrol. Why diesel, because trucks mostly use diesel and the damage they do to roads is greater. For smaller diesel powered vehicles the excise difference actually means that the excise tax/kilometre between small diesels vehicles and small petrol vehicles is similar.

For rural and regional diesel users there is the Diesel Rebate Scheme for vehicles over 4.5 tonnes and for on farm use there is a similar rebate.

The current cost of fuel remains with the volatility of futures markets with the gambler philospohies of the traders and the greed of the oil companies. It has very little to do with the growth of the Chinese and Indian markets because if that were the case the price would have been skyrocketing over the last 20 and not just the last 5 years.

What happened in the last 5 years, hmmm???? The Oil Man G W Bush had to have a war in Iraq.

My opionion

Diana

[Treads]

What happened in the last 5 years, hmmm???? The Oil Man G W Bush had to have a war in Iraq.

My opionion


Yep, 'cause it was all about the oil :wacko:

[DeeJay]

Whilst I agree with the message we need to get our facts right.
Quote:
Australian oil companies DO NOT buy PREMIUM GRADE crude oil! In fact Australia produces around 70% of its own oil and imports about 30%

The latest figures are that Australia can only use 50% of local crude for petroleum production and has to import the shortfall.
So whilst the above is half close to correct, it is totally misleading in its context as it infers that Australia produces 70% of its fuel requirements.
See attached, -2005 figures coz I cant be bothered to look closer- but you get the trend.

1301.0 - Year Book Australia, 2008 (http://www.abs.gov.au/AUSSTATS/abs@.nsf/7d12b0f6763c78caca257061001cc588/2C85CF256D79E06FCA2573D20010CFE9?opendocument)

[303gunner]

I think that some of the facts are wrong, the federal excise on fuel is fixed and expressed in dollars per litre ....
Why is diesel more expensive, because the excise on diesel is higher than the excise on petrol.

For rural and regional diesel users there is the Diesel Rebate Scheme for vehicles over 4.5 tonnes and for on farm use there is a similar rebate.

My opionion

Diana
The excise on both petrol and diesel was fixed in 2006 (ie: no longer indexed for CPI increases) at $.38143.

The Diesel Rebate Scheme (http://www.ato.gov.au/businesses/pathway.asp?pc=001/003/044&mfp=001/003&mnu=9955#001_003_044) is not just limited to rural and regional operators, or limited to farms. It is available to ANY ABN holder using a diesel vehicle of GVM greater than 4.5t on a public road. From this (http://www.ato.gov.au/businesses/content.asp'doc=/content/76594.htm&page=2&H2=&pc=001/003/044/009/010&mnu=9955&mfp=001/003&st=&cy=1), you can see that businesses are not eligible for the full amount back, while farmers only get the full rebate for their machinery if they ALSO operate a truck on public roads!?!

[303gunner]

Fuel: If you want the truth and the WHOLE truth read on. How can a product that costs far less to produce (partially a by-product of producing Unleaded as well) and a product that Australia uses more of than any other fuel be MORE EXPENSIVE than Unleaded? Simple,....
Production costs of Ultra Low Sulphur Diesel is much higher than the older spec fuel with higher sulphur limits. Refineries have virtually had to be redesigned, and do not have the same capacity as before. In the US (http://www.eia.doe.gov/oiaf/servicerpt/ulsd/chapter5.html), this has had a significant impact on the supply side of the diesel market, and even with the higher prices, many refineries are not recouping their costs and considering closing.

[Rosco]

In the interests of fair play, I dropped the gentleman named in the article a quick email, advising him I had posted his thoughts here and welcomed him to drop in to comment on any responses. I rec'd a delivery response, but no read response as yet. At least the address is kosher.

It will be interesting to see his response to some/all of the above.

Cheers

[solmanic]

Whilst I agree with the message we need to get our facts right.
Quote:
Australian oil companies DO NOT buy PREMIUM GRADE crude oil! In fact Australia produces around 70% of its own oil and imports about 30%

The latest figures are that Australia can only use 50% of local crude for petroleum production and has to import the shortfall.
So whilst the above is half close to correct, it is totally misleading in its context as it infers that Australia produces 70% of its fuel requirements.
See attached, -2005 figures coz I cant be bothered to look closer- but you get the trend.

1301.0 - Year Book Australia, 2008 (http://www.abs.gov.au/AUSSTATS/abs@.nsf/7d12b0f6763c78caca257061001cc588/2C85CF256D79E06FCA2573D20010CFE9?opendocument)

Correct me if I'm wrong, but that statistics page doesn't give any indication of what percentage of oil Australia imports vs domestic production for domestic use. It only refers to oil exports and imports.


FIRSTLY – DISBAND FUEL PARITY

I've said this in another thread, but I'll repeat it here. We can't abandon parity pricing and lower the price of oil locally. If we do then ALL our locally produced oil will simply be exported to countries where it attracts a higher price and we will be left to import the shortfall - at world market rates (so no nett benefit). We would need to nationalise our local oil production to force the oil to stay here.

[Slunnie]

I was under the impression that Australian oil wasn't suitable for diesel production because it was too light.

[JDNSW]

Actually, you have left out a couple of taxes - State and federal royalties on production plus Resource Rent Tax on offshore production, plus fees and charges too numerous to mention on every aspect of production, distribution and refining.
Just at a local level, I was talking to the fuel agent in the local village about what is involved in running his truck to deliver fuel to properties round here. I don't remember the details, but I know that I was staggered by the amount of red tape, inspections, safety courses, demands for new equipment etc, to the extent that I could not imagine why anyone would take it on. (His whole business, Shop, service station, fuel, fertiliser, stock & station agency etc is on the market as he wants to retire - I suspect the fuel business is why he is having trouble selling it. It is a lot worse than agricultural chemicals apparently).

It is possible to refine diesel from any oil base - but the Australian refineries are almost all very old (designed and built before Australian crude was available), and were designed to work on middle eastern crude, and can only refine mostly petrol and kerosine (jet fuel) from typical Australian crudes without major investment - and importing the heavier feedstock is easier. This may have changed a bit with the requirement to produce ultra low sulphur diesel, meaning that the diesel line needed to be completely redesigned anyway.

John

[discomuzz]

It has very little to do with the growth of the Chinese and Indian markets...

You're correct, but!

I remember reading an article about the impact on world fuel prices in the future from the growth of private vehicle ownership in China.

It ended with the cold hard fact that, at that time, private vehicle ownership per 1000 head of population in Australia was around 85% (850 vehicles per 1000 people), in China it was around 3% (30 vehicles per 1000 people).

Simply put, as the Chinese buy more vehicles so they can enjoy more personal freedom, the price of fuel will go up! Add India, Eastern Europe, Africa and you will get the picture. Into this mix add the increased demand on fuel for the purpose of heating as populations around the globe can afford the equipment.

So, what do we do? Simple.

Prepare for 3 and 4 dollar per litre prices for fuel.

The idea that the Australian governments can do anything about it is absurd!

Welcome to the Neo-Con free trade future! It's a race to the bottom, always has been, and pretty soon we will all be equally poor.

[Lotz-A-Landies]

The excise on both petrol and diesel was fixed in 2006 (ie: no longer indexed for CPI increases) at $.38143. ....


... federal excise on fuel is fixed and expressed in dollars per litre (or in fact part dollars per litre) to 5 decimal places ... ... Previously the excise was increased alongside the CPI but this no longer the case. ...
Isn't that what I said ? Except the Indexing alongside CPI ended in March 2001. (Fuel Tax Inquiry - Background Papers - History of Fuel Taxation in Australia (http://fueltaxinquiry.treasury.gov.au/content/backgnd/002.asp))


...The Diesel Rebate Scheme (http://www.ato.gov.au/businesses/pathway.asp?pc=001/003/044&mfp=001/003&mnu=9955#001_003_044) is not just limited to rural and regional operators, or limited to farms. It is available to ANY ABN holder using a diesel vehicle of GVM greater than 4.5t on a public road. ...
Yes, strictly speaking you are correct, however for brevity I was including the Diesel and Alternative Fuels Grants Scheme, which applies everywhere to vehicles over 20 tonne GVM and for vehicles between 4.5 and 20 tonnes GVM only in regonal and remote areas.

Regarding the increased excise on diesel, I can not currently find a reference and perhaps it was only a NSW tax, before the High Court ruling that it was illegal for States to impose an excise tax. So I will currently accept my err on that matter.

To return to the whole issue of fuel prices, the ability for any Government in Australia to have any real impact on the price of fuel at the bowser is very limited and if they removed all taxes the price would still be over $1.00/litre. It is not only our problem here it is worldwide and blaming the Government, any Government will do little to find a solution to the problem.

Perhaps we should be driving solar powered Land Rovers!

[mcrover]

It's a frivilous (sp?) arguement due to the fact that there is absolutly nothing at all that we can do about it.

There is not enough available farming area to produce a reliable amount of Bio fuels which would before long end up the same as this anyway.

There would be a shortage for about 5 mins that would keep echoing though pricing for the next 5 years thanks to things like Parity, GST, Levies and profit margins.

If parity was to be dropped then for a very short period of time all af the oil companies would flood markets like China and India who have the money to pay for the oil and at the moment will pay as much as they want to charge but if parity was dropped and their markets were flooded then the shoe would change feet so to speak and those markets would then start bargining and push the prices down.

This is the reason that they are protecting parity, no other reason.

Any company that is floated on the stock exchange is run by crooks that all they are out to do is extract as much money out of their customers so they can increase dividends for their stock holders...........and this is why Oil companies are greedy.


WHO HERE HAS STOCKS in an oil company or 2 or an oil exploration company.

If you do then your part of the problem as Im sure you dont have them just so the company your invested in doesnt go broke, You want to make money off it, you want a dividend and that is why this is a visious circle.

What the government is doing is just skimming off the top........like thieves and not really putting back into roads etc.

With record fuel prices, why are we still paying tolls on roads......they tell us that it is because of the rise in prices due to the rise in fuel prices etc etc..... Thats the visious circle again.

As much as I hate Hybrid vehicals (I think they are stupid, unnessesary, ugly and just a fad and dont use much less if any less than modern petrol/diesel engined cars the same size), I still think that if you have a small car that just runs you to work, it should run on electricity and could be charged from a wind turbine on the roof of your house for a smaller carbon Blah blah footprint.

[JohnE]

I thought this started off okay, a bit of sense, it then changes you have to look at the reality of it.

I recall speaking/dealing with a bloke in the oil exploration business some years ago, he told me that the was more oil here in oz than anyone in government was letting on about, the mob he worked for, were drilling locating, testing then capping each find. Yes i know someone on here will probably discount that one.

But as someone earlier put, the iraqi business , i think it was LAL. there is more oil under their deserts than all the arabs combined. but they have exported less than when sadam was still operating, an OPEC plot or an arab one, who knows, there are probably a thousand conspiracy theories.
The bottom line, is your average persons ability to afford things, as the flow on effect from higher fuel prices is very noticeable. Eventually the weekend drives will be taken off most families agendas, as the struggle to make a living and provide for the family gets harder and harder,
We all just have to grin and bear it,stop driving unless absolutely necessary, at least cityites are fine they have public transport.

john

[mcrover]

I thought this started off okay, a bit of sense, it then changes you have to look at the reality of it.

I recall speaking/dealing with a bloke in the oil exploration business some years ago, he told me that the was more oil here in oz than anyone in government was letting on about, the mob he worked for, were drilling locating, testing then capping each find. Yes i know someone on here will probably discount that one.

But as someone earlier put, the iraqi business , i think it was LAL. there is more oil under their deserts than all the arabs combined. but they have exported less than when sadam was still operating, an OPEC plot or an arab one, who knows, there are probably a thousand conspiracy theories.
The bottom line, is your average persons ability to afford things, as the flow on effect from higher fuel prices is very noticeable. Eventually the weekend drives will be taken off most families agendas, as the struggle to make a living and provide for the family gets harder and harder,
We all just have to grin and bear it,stop driving unless absolutely necessary, at least cityites are fine they have public transport.

john


The Iraq thing was about human rights more than oil and anyone who believes otherwise is just pandering the conspiricists.

As far as the unreported oil deposits, I have heard similar but to add to that was that they are either in places that would cost too much at the moment to extract or it is not of sufficient quality or quantities to make it viable at the moment.

As far as public transport goes, I have to nearly walk half way to work to then wait 30mins for a bus to take 15mins to go the 7kms to my work.......I think I will drive as I also dont have a pushbike but are considering another motor bike.

All this making us a poorer society will do is centralise the everyone again and cause outer fringe suburbs to turn into getto's and inner suburbs will become the middle and upperclass area as well as it will mean the end of the house and big backyard, driving hundreds of Kms off road for holidays etc.

And a littles closer in time than we all thought it would.

[303gunner]

Isn't that what I said ?
No, what you said was:

..because the excise on diesel is higher than the excise on petrol.
but I was agreeing with you, in that the Fed Govt has no incentive to see higher fuel prices as the amount it receives per litre remains the same, at 38.143 cpl. In fact, as fuel prices rise sales volumes fall (5% down during the first 3mths of 2008) and the Govt get less revenue. The GST amount may rise, but all of this goes to State Govts, and each state has no real say in how the Feds want to divvy up this money. But ABN holders can claim back the GST on fuel as an input cost anyway, so it has little impact on the overall cost of commercial Road or Rail transport. Govt taxes, Levies and Excises on fuels are a necessary pain, but they have little to to with current fuel price rises.

[DeeJay]

Quote:
Australian oil companies DO NOT buy PREMIUM GRADE crude oil! In fact Australia produces around 70% of its own oil and imports about 30%

[quote=solmanic;761929]Correct me if I'm wrong, but that statistics page doesn't give any indication of what percentage of oil Australia imports vs domestic production for domestic use. It only refers to oil exports and imports.

I simply guesstimated the percentage of imports Vs exports as a % and it was not close to the 70/30.
I would think that most oil not exported from Aus is used here in petroleum refining ??.

[Lotz-A-Landies]

The Iraq thing was about human rights more than oil and anyone who believes otherwise is just pandering the conspiricists.
...

O.K then, if it's about human rights, tell me why we aren't in Zimbabwe? West Papua?, Sudan?, Burma (Myanmar)? and even East Timor under the Indonesians?

[Slunnie]

As far as the unreported oil deposits, I have heard similar but to add to that was that they are either in places that would cost too much at the moment to extract or it is not of sufficient quality or quantities to make it viable at the moment.
Yes, I was chatting to an engineer from the UK that is heavily into the extraction of oil and he agrees with this. There is oil under there which is only becoming viable as the cost of oil goes up.

[Tote]

At the end of the day we are sitting on some of the worlds biggest coal deposits. When it becomes economically viable the oil companies will start developing fuels from coal and/or shale and we will still be paying for it.
I'll still be driving my Landy in 10 years time , it just might cost a bit more.
As for the argument that the Chinese will all want to drive larger cars as they get richer I'm not sure that that is the way it will go. I'm currently in Vietnam where the preferred mode of transport is a variety of 75-110cc motorscooters/stepthroughs. Even if the local populace could all afford cars tomorrow the cities would be gridlocked as the infrastructure is simply not there to support that many cars. Also the people here have different things to spend their money on as they don't have the same car culture as westerners do.
Regards.
Tote

[Lotz-A-Landies]

The excise on both petrol and diesel was fixed in 2006 (ie: no longer indexed for CPI increases) at $.38143. ....


... federal excise on fuel is fixed and expressed in dollars per litre (or in fact part dollars per litre) to 5 decimal places ... ... Previously the excise was increased alongside the CPI but this no longer the case. ...
Isn't that what I said ? Except the Indexing alongside CPI ended in March 2001. (Fuel Tax Inquiry - Background Papers - History of Fuel Taxation in Australia (http://fueltaxinquiry.treasury.gov.au/content/backgnd/002.asp))

Isn't that what I said ?No, what you said was:
..because the excise on diesel is higher than the excise on petrol.I'm going to be pedantic on this (How unusual.) My comment, paraphrased by the "Isn't that what I said", about fixed excise and it no longer being indexed was made in lines 1 through 3 of my original post. You chose to condense my post by deleting part of line 1, all of lines 2 through 6 and part of line 7, changing the subject of the apparent paragraph. Then accused me of not knowing what I had written.

Furthermore, I acknowledged that in the absence of a quotable reference for the subject of my third paragraph, I may have erred in the reason for the difference between petrol and diesel prices.

If you wish to criticize my posts then do it by accurately, referencing the text of the original source material, not your own paraphrasing of my words.

Diana

[303gunner]

I'm going to be pedantic on this (How unusual.) My comment, paraphrased by the "Isn't that what I said", about fixed excise and it no longer being indexed was made in lines 1 through 3 of my original post. You chose to condense my post by deleting part of line 1, all of lines 2 through 6 and part of line 7, changing the subject of the apparent paragraph. Then accused me of not knowing what I had written.

Furthermore, I acknowledged that in the absence of a quotable reference for the subject of my third paragraph, I may have erred in the reason for the difference between petrol and diesel prices.

If you wish to criticize my posts then do it by accurately, referencing the text of the original source material, not your own paraphrasing of my words.

Diana
WHOA, slow down! I did not mean to accuse or criticize you or what you said. I actually agree with what you have said, but YOU SAID:"the excise on diesel is higher than the excise on petrol" I SAID:"The excise on both petrol and diesel was fixed in 2006 at $.38143"

By not pasting in the whole complete post, I was not trying to change the context of your words, but highlighting the point I wanted to comment on, and that is only that fuel excise is now the same for both fuel types, and what the value of that excise is. That's it, end of story, no hidden agenda.

Same with the comment re the Diesel Rebate Scheme. It applies nationwide, rural and metro. The argument currently doing the rounds is that the tax component of diesel fuel costs is raising the prices of groceries and other retail commodities, but the truth is that the excise has not risen, and the GST component is claimable by businesses.

Diana, my comments were never meant to criticise or attack you, or to paint you out as not knowing what you had posted, but to complement and clarify the information you had provided in your post. If my response has come across as intending any slight, I apologise for my inarticulate ineptiude. I am sorry for any offence I may have caused you.

[303gunner]

Quote:
Australian oil companies DO NOT buy PREMIUM GRADE crude oil! In fact Australia produces around 70% of its own oil and imports about 30%

[quote=solmanic;761929]Correct me if I'm wrong, but that statistics page doesn't give any indication of what percentage of oil Australia imports vs domestic production for domestic use. It only refers to oil exports and imports.

I simply guesstimated the percentage of imports Vs exports as a % and it was not close to the 70/30.
I would think that most oil not exported from Aus is used here in petroleum refining ??.
From This page (http://www.jforrest.com/pdf/Diesel_Fact_Sheet.pdf)
"In 2004/05, Australia imported 64% of it's crude oil, and around 34% was from domestic oil sources."
In 2004/05, Australian refineries produced 12,661 megalitres (million litres)of Diesel, while Australian users purchased 15,185 megalitres of Automotive Diesel. 3,965 megalitres of Diesel was imported, with 3,081 Ml coming from Singapore. In addition, 294Ml of Diesel was exported.
So the import/local crude oil balance is 64/36, and even with 64% of our crude oil needs being imported, refinery capacity wasn't sufficient to meet the local demand for Diesel, with 26% of the local demand being imported.

[JDNSW]

I thought this started off okay, a bit of sense, it then changes you have to look at the reality of it.

I recall speaking/dealing with a bloke in the oil exploration business some years ago, he told me that the was more oil here in oz than anyone in government was letting on about, the mob he worked for, were drilling locating, testing then capping each find. Yes i know someone on here will probably discount that one.

But as someone earlier put, the iraqi business , i think it was LAL. there is more oil under their deserts than all the arabs combined. but they have exported less than when sadam was still operating, an OPEC plot or an arab one, who knows, there are probably a thousand conspiracy theories.
The bottom line, is your average persons ability to afford things, as the flow on effect from higher fuel prices is very noticeable. Eventually the weekend drives will be taken off most families agendas, as the struggle to make a living and provide for the family gets harder and harder,
We all just have to grin and bear it,stop driving unless absolutely necessary, at least cityites are fine they have public transport.

john

As you say, someone will probably discount your report. I have worked for 45 years in the oil exploration industry, much of it in the area where decisions are made on where to drill and the assessment of the results.

I can say categorically that there has been no oil wells capped that could have been produced (although mistakes can and have been made, usually due to faulty assessment - and these go both ways). There is a grain of truth however in the assertion that some discoveries have been capped and abandoned.

When oil is discovered in a well, the first question that is asked is "how much is there?", and an assessment is made of this (which may or may not be accurate, depending on the amount of data available). The question has to be asked then, is how much will it cost to put this into production. At a minimum, it will include running casing in the well, running production tubing, a wellhead, probably a separator and stabilisation plant, possibly a pump, and a pipeline to the nearest existing gathering station. All this is costed, and the capital cost compared to the cash flow expected after operating costs and taxes. If the answer is positive, and the discoverer can convince a financial backer of this, development will proceed.

Now it is fairly obvious that there are a lot of variables in these calculations. Obviously, one is the amount of oil, but other key ones are where it is (Development is a lot cheaper if the well is onshore ten kilometres from a gathering station compared to in 2000m of water 200 nautical miles off NW Australia). But the other major variables are the production tax regime, the price of oil, interest rates, how long it will take between capital expenditure and the start of income, environmental constraints and delays, price and availability of hardware etc.

So yes, some oil wells have been capped which discovered oil, but bear in mind that most of these were very small discoveries - for example, Roma Blocks Oil No 4, which discovered oil in about 1938. Despite extensive (and expensive) efforts over the last seventy years, this "discovery" produced a total of about 100 gallons of oil. Even fifteen kilometres from a railhead at Roma, this would not have been produceable. On another scale, the discovery at Rough Range in the fifties found a lot more oil than that, but a number of followup wells, some almost on top of the discovery well, failed to find any more - add to that the distance of the discovery from anywhere, and there was never any chance of it producing.

Of course, from time to time earlier discoveries become economic as infrastructure is extended, as technology is improved, and most importantly, as oil prices increase. I can think of a number of these for example in Bass Strait.

As far as the amount of oil in the middle east goes - there are now suggestions being made that the reason the Saudis have not increased production is not that they don't want to, but that they can't - because they have grossly overstated their reserves and production capacity for years for political reasons.

John

[Rosco]

Is this a con ???.....

YouTube - Water Powered Vehicle (http://au.youtube.com/watch?v=ImGaraPrEo8&feature=related)

[JDNSW]

Is this a con ???.....

.....

Not quite, I think. The clue is where he says "all it needs is water plus electricity". The energy actually comes from the electricity, and for a lot of welding operations an oxy-hydrogen flame is useful.

But when it comes to running a vehicle, while there is no doubt that the engine would run well on an oxy-hydrogen mixture, unless he has come up with some way of storing the gases better than those that the car industry has, it simply begs the question as to how the electricity is supplied.

If from any sort of storage battery, then just running an electric motor would be far more efficient, although it is possible that as part of the welding device he has actually come up with an efficient way of storing the gases. (There is no actual need to store the oxygen - you could use air instead, but this would reduce efficiency).

John

[tony]

Sorry about the cut and paste,but this could explain the rising cost of fuel, it's a direct copy from the Wall Street Journal (one of the better US broad-sheets) worth a read

comments awaited

Tony




Oil Exporters Are Unable
To Keep Up With Demand

Domestic Needs,
Sluggish Investment
Crimp Shipments
By NEIL KING JR. and SPENCER SWARTZ
May 29, 2008; Page A8

The world's top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defies traditional market logic and looks set to continue.
Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world's top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well.
There are several reasons behind the net-export decline. Soaring profits from high-price crude have fueled a boom in oil demand in Saudi Arabia and across the Middle East, leaving less oil for export. At the same time, aging fields and sluggish investments have caused exports to drop significantly in Mexico, Norway and, most recently, Russia. The Organization of Petroleum Exporting Countries also cut production early last year and didn't move to boost supplies again until last fall.
In all, according to the Energy Department figures, net exports by the world's top 15 suppliers, which account for 45% of all production, fell by nearly a million barrels to 38.7 million barrels a day last year. The drop would have been steeper if not for heightened output in less-developed countries such as Angola and Libya, whose economies have yet to become big energy consumers.
For all the attention paid to China's increasing energy thirst, rising energy demand in the Middle East may pose the greater challenge. Last year, the region's six largest petroleum exporters -- Saudi Arabia, United Arab Emirates, Iran, Kuwait, Iraq and Qatar -- curbed their output by 544,000 barrels a day. At the same time, their domestic demand increased by 318,000 barrels a day, leading to a loss in net exports of 862,000 barrels a day, according to the U.S. Energy Information Administration.
Demand in the Middle East is a major factor right now, said Adam Robinson, an oil analyst at Lehman Brothers in New York. Mr. Robinson predicts the region will constitute more than 40% of increased demand next year.
Saudi Arabia in particular has become a major energy consumer as the country pushes to put its oil riches to greater use. The kingdom is in the middle of a major investment campaign to become a world player in petrochemicals, aluminum and fertilizers, all of which will require huge amounts of oil and natural gas.
Since 2004, Saudi oil consumption has increased nearly 23%, to 2.3 million barrels a day last year. Jeffrey Brown, a Dallas-based petroleum geologist who studies net export numbers, said that at its current growth rate, Saudi Arabia could be consuming 4.6 million barrels a day by 2020.
That would cut significantly into Saudi exports even as the world looks to its largest oil supplier to help manage rising demand. Saudi Arabia has nearly a quarter of the world's proven reserves and supplies around 12% of the 86 million barrels a day that the world now consumes.
One reason Middle Eastern nations are using more oil is a shortage of natural gas, said Bill Farren-Price, director of energy at Medley Global Advisors. This is particularly troublesome during the summer, when governments scramble to keep the lights on and air conditioners cranking.
Some producers, such as the U.A.E., are easing back at times on the crucial industry practice of injecting natural gas into crude oil fields, which is done to boost reservoir pressure and increase crude recovery rates. Halting the injections ends up undercutting oil production, further reducing exports.
As top exporters hit trouble, historically marginal players such as Brazil and Kazakhstan are likely to play a greater role. Three of the four non-OPEC players among the top 15 oil exporters -- Russia, Norway and Mexico -- are reporting declines in production this year. Kazakhstan is showing slight net export gains.
No big exporter is struggling more than Mexico, where net exports dropped 15% in 2007. Mexican officials announced Monday that output from the country's once-mighty offshore Cantarell field had plunged by a third in less than a year.
Analysts said there are reasons for optimism. Russia's government is scrambling to alter the tax rates that many say have put a lid on new oil development. Mr. Robinson said 65 new ultra-deepwater drilling rigs are expected to arrive over the next three years, following a five-year stretch in which the industry gained only 10 such rigs.
Those additional rigs will help companies tap some of the most promising, but now inaccessible, waters off Brazil, Australia, West Africa and in the Gulf of Mexico.
"The sense in the market is that peak oil is here and that things will only get worse," says Mr. Robinson. "But the verdict is still out on that."
https://www.aulro.com/afvb/images/imported/2008/06/521.jpg

[JDNSW]

A good post. The reason that the oil market defies traditional market logic is that it takes years for the work to be done to increase production in the face of increased prices - and given the history of the industry, investors need to know that they (rather than governments) will reap the benefit of the higher prices before they spend the money.

Major oil producers such as Saudi Arabia, Mexico, Venezuela etc have spent most of the profits from their production on anything (for example, subsidising local petrol prices) rather than increasing production (why do that - it will just force the price down), which is all well and good until demand exceeds production capacity, which is what has happened. And even now, why would they spend money on exploration or production facilities given that even though the exports are less the income is more?

John

[Phred]

I thought this started off okay, a bit of sense, it then changes you have to look at the reality of it.

I recall speaking/dealing with a bloke in the oil exploration business some years ago, he told me that the was more oil here in oz than anyone in government was letting on about, the mob he worked for, were drilling locating, testing then capping each find. Yes i know someone on here will probably discount that one.


john

I worked on oil-rigs in western Qld in the mid eighties there were wells capped then only because it wasn't ecconomicly viable to retrieve the crude, what the situation with those wells is now I don't know.
Peter

[tony]

A good post. The reason that the oil market defies traditional market logic is that it takes years for the work to be done to increase production in the face of increased prices - and given the history of the industry, investors need to know that they (rather than governments) will reap the benefit of the higher prices before they spend the money.

Major oil producers such as Saudi Arabia, Mexico, Venezuela etc have spent most of the profits from their production on anything (for example, subsidising local petrol prices) rather than increasing production (why do that - it will just force the price down), which is all well and good until demand exceeds production capacity, which is what has happened. And even now, why would they spend money on exploration or production facilities given that even though the exports are less the income is more?

John


Hi John,

If we take a look at the oil market over the last 1/4 century, whenever there has been a big upsurge in demand or the barrel price has gone too high the big two players Saudi and UEA have always upped there output to either meet demand or stabilise the barrel price it would seem that over the last 5 years they have been unable to (or not wanted to) increase there output...we are now hearing about places like Angola filling gaps in export markets....I don't know about you but I have never heard Angola mentioned as a big exporter until recentley...there was a paper written recently (last couple of years ) By a Chris St Lawrence ? where he states that the big Saudi Fields are ruining dry,he had a lot of data to back up his statement as well, even though the Saudis haven't let foreigners onto their fields for years..

I find it interesting that Even the Oz defence department has commissioned a paper to find out the extent fuel shortages will have on the defence of the country. And everyone now agrees that Iraqi was about oil not WMD's

I believe we are on the cusp of Hubert's prediction...only time will tell


Tony

[landy63]

Dont know what every one is complaining about , Petrol/diesel is still cheaper than Beer.:wasntme:

[PhilipA]

Come on folks, there are several options even in Australia that have not been researched because of ideology.
1 Barrier Reef area exploration. EXTERMINATE. How many explorations have caused oil spills. How long can we afford the luxury of ignoring prospective areas. There will be no tourists if oil keeps increasing in price. The Barrier reef area is the most prospective in Australia.

2 Queensland Rundle oil shale. Due to the resistance of environmentalists the venture failed and is now owned by Canadians. I once met the MD of ARAMCO, and the first thing he said to me was somthing like "Australia, thats where you have that fabulous oil sand/shale deposit".
I am sure they would be viable at $130 barrel , if the Feds kick started it.

The new Feds have a bigger ideology problem than The Howard mob.
Their biggest problem is not realising that the game has changed. Nobody worries about their 38 cent take at 80-90 CPL, but its a different matter at 1.60CPL. AND they think they can add a carbon tax as well( even though even Europe does not have carbon tax on fuel.)
I believe that they have to find a new cash cow. Here is a suggestion.
Australia has become what is called an "enclave" economy, where the exchange rate is determined by our coal, steel and energy exports to the detriment of almost everything else
All other exports are suffering eg cars,ag products, food etc etc.

The Feds should introduce a more swingeing resources rent tax which rises and falls with the exchange rate. the miners are at the moment unbelievably profitable, and although they would scream like hell, it would not affect ther profitability much. Qld has just taken some steps in this direction.( I say this as a shareholder of BHP)
Why should Australia subsidise China with ultra cheap gas exports, when they will not let us export anything else there.
Regards Philip A

[Panda]

Dont know what every one is complaining about , Petrol/diesel is still cheaper than Beer.:wasntme:


Yes but even I can't get through 133 litter's of Guinness in one stop at the local


Tony

[isuzurover]

Come on folks, there are several options even in Australia that have not been researched because of ideology.
1 Barrier Reef area exploration. EXTERMINATE. How many explorations have caused oil spills. How long can we afford the luxury of ignoring prospective areas. There will be no tourists if oil keeps increasing in price. The Barrier reef area is the most prospective in Australia.

I can't believe you are advocating drilling for oil in a world heritage listed area :eek:



2 Queensland Rundle oil shale. Due to the resistance of environmentalists the venture failed and is now owned by Canadians. I once met the MD of ARAMCO, and the first thing he said to me was somthing like "Australia, thats where you have that fabulous oil sand/shale deposit".
I am sure they would be viable at $130 barrel , if the Feds kick started it.

There were some environmental issues, but I know quite a few people who were involved in this project. It failed because it wasn't technically feasible. In the future it will likely be picked up again if prices rise high enough.

There has been a huge increase in exploration. I am sure more reserves will be found, but the fact remains is that we are over the peak, and we need to start looking at other alternatives.

[PhilipA]

I can't believe you are advocating drilling for oil in a world heritage listed area

Er The air force BOMBS in it.
Until recently trawlers TRAWLED about 80% of it.( now about 40%)
Oil TANKERS and other ships use Navigators Passage every day.
The Sugar industry sends tonnes of fertilizer into it every day.
The tourism industry craps into it.
Global warming is killing the coral. Maybe if they found gas , it would reduce greenhouse gases.
Why single out oil exploration?
Regards Philip A