Will Ending Tax Breaks for Big Oil Make a Difference?

Facing public resentment, Big Oil tax breaks may soon end.

The controversial bill proposed by the Democrats to end the substantial tax breaks extended to the major oil companies known as 'Big Oil' did not make it. Big Oil commonly refers to the five industry giants - Exxon, Shell, BP America, Chevron, and ConocoPhilips. It is estimated that these companies have garnered profits of about $900 billion in the past decade alone! The rise in prices of gas and crude oil has fetched them over $30 billion in the first quarter of this year. Despite this, over the years, the federal government has been providing them with various types of subsidies through tax codes.

Since direct grants would put the focus on the government's preferential treatment of Big Oil, they extend benefits in the form of deductions, credits or exemptions; in short, tax breaks. Now, the Democrats have come up with a proposal which suggests doing away with some of these tax loopholes for the oil companies. Known as the 'Close Big Oil Tax Loopholes Act', Democrats claim that this will help rake in up to $21 billion over a period of ten years and thus, help bring down the budget deficit.

There are suggestions that the savings will be better utilized if diverted to promotion of clean energy programs. Solar and wind are the energy options of the future and developing these is likely to be high on the priority list of the federal government for quite some time to come. Though stopping these tax benefits has been on President Obama's agenda for long, it has taken him three years to propose any action on the matter. His detractors see this as a ploy to curry favor ahead of an election year.

With gas prices touching $4 per gallon this summer, the move to eliminate tax breaks is being seen more as political rhetoric than anything else by analysts. In reality this move will not impact much on the federal deficit or even the prices at the pump. At best this move may somehwat appease consumers (as well as earn votes) and only serve as a kind of vengeful retribution and will not actually translate into any benefits for the government or public. It will also have a negligible adverse impact on profits for the oil companies.

The public views Big Oil with resentment mainly because of the clout they wield and the money that they rake in. The common man sees the price of gasoline at the pump and an increase of even 10 cents produces outrage against these oil conglomerates. Hence, any kind of action that hints at reduction of benefits to Big Oil is welcomed and appeals to the emotions of the layman.

Though the figures and analysts say otherwise, the honchos of Big Oil did not hesitate to term the proposal detrimental to the American economy, when they appeared at the Senate hearing. They claimed that doing away with the tax breaks will lead to job cuts and investors' exit from oil. This is in contradiction to earlier claims by Big Oil saying that they do not need incentives or subsidiaries from the government for oil exploration purposes. Also, Big Oil executives claimed that it was unfair to target them alone while many other industries are also sharing these tax breaks. They also urged the administration to encourage drilling if it really wanted to keep gas prices in the country down.

The PR departments of Big Oil have also been successful in propagating the myth that ending subsidies for them will lead to significant increase in taxes for the rest of the population.

Republicans are protesting against the move and claim that the measures will have no impact on existing gas prices. The matter will be voted on later this week and it seems highly unlikely that the Democrats will win the vote in the Senate and the House of Representatives.

At least two earlier attempts to scale down on tax breaks for oil companies have failed in the Senate. Even if they don't win, Republicans sure will have gained sufficient political mileage from it which will stand them in good stead in the elections next year. In an attempt to garner support for their proposal, the Democrats have embarked on an online campaign. They are planning to use grassroots-level activists to target Republican senators on their support for Big Oil.

The Republicans have also come up with a bill 'Offshore Production and Safety Act of 2011' which favors American exploration and offshore drilling ventures. This addresses matters such as lease sales in the Gulf of Mexico and in Virginia as well as setting of a timeline for reviewing pending offshore applications.

Big Oil executives have been found to be using the profits to boost their personal wealth and enriching their shareholders. Reports say that the profits have been used by executives to increase their stock holdings and to pay out generous dividends over the past five years.

Opponents of Big Oil and supporters of energy independence claim that even if the tax breaks are stopped, this will not resolve the bigger issue of price manipulation. They suggest that Wall Street oil speculators be controlled and prevented from raising the prices of oil artificially. It has also been recommended that OPEC members be stopped from manipulating prices, and tax incentives for foreign oil be stopped.

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Will a Melting Arctic Help Postpone Peak Oil?

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Last week brought the news that this summer the Arctic icecap shrank to an all-time low of roughly half the size it was in 1980. While this is the lowest ever seen since satellite monitoring began 33 years ago, some experts are saying that the summer of 2012 was probably the smallest the icecap has been in the last million years. The announcement triggered a spate of newspaper and magazine stories pondering the meaning of this development.

It now appears that the arctic is melting much faster than the models have been predicting: that the ice cap would stay intact during the summer for another 40 years. Some of the stories have been downright scary such as the one in the Guardian in which Professor Wadhams, Cambridge University's arctic expert, predicts the final collapse of the Arctic sea ice during the summer will come within four years. The professor terms this event as a "disaster' for the Arctic as it will result in much faster warming of the Arctic Ocean, the seabed, and the permafrost along the Arctic shoreline.
Most of the hundreds of articles commenting on the event reached the unsurprising conclusion that our global weather was going to get worse – perhaps much worse. At the extreme, some argued the case that so much methane will be released into the atmosphere as the permafrost melts that life on earth will be extinct by the end of the century. Others speak of the tipping points, that once past will set off such an avalanche of disasters that the world will take centuries or millenniums to recover.
Our interest here, however, is about what the end of the Arctic's summer ice cap will mean for oil production – in the Arctic and elsewhere. This question would seem to have two sides. The obvious one is if and how quickly oil companies can move to exploit the 90 billion barrels of oil (about three years of global consumption) and 44 billion of natural gas liquids that the U.S. Geological Survey believes is somewhere under Arctic waters. Indeed, the rush to exploit has already started with Shell receiving a permit to drill off the coast of Alaska. Although drilling did not get started this year due to a series of delays related to safety, preliminary work is being done so that Shell's drilling program should be ready to start up in 2013. ExxonMobil, ENI of Italy and Norway's Statoil are preparing to drill in Russia's Arctic waters. However, Russia's Gazprom recently announced that it was shelving it massive arctic Shtokman natural gas project due to excessive costs.
With a minimal permanent ice cap, much of the Arctic ocean may be open to shipping, and drill rigs may be free to operate during the summer months. Drilling in the Arctic, however, is not in the same league with drilling in the Gulf of Mexico where only the occasional hurricane can cause disruptions. Gulf support bases, helicopters, and numerous support ships are only hours away from the drill rigs. In the Arctic a drillship is largely on its own, for until very expensive support bases are established there is little help offshore.
Even if much of the permanent ice cap melts away in the next 5-10 years, strong winds can still blow large ice blocks around, threatening drilling operations. This August, a large storm settled in the Arctic for many days and was partly responsible for the breaking up much of the permanent ice cap. Storms over water can be far more fierce than over ice caps making the risk of drilling even higher. The CEO of French oil giant, Total, recently stated the belief that it is too dangerous to drill in the Arctic and that the risk of oil spills is not worth the reward.
Then of course we have the issue of just who owns the Arctic's seabed. The U.S., Russia, Canada, Norway and Denmark are all seeking to claim part of the continental shelf. As the US still has not signed the Law of the Sea convention and recently 34 Republican senators indicated that they are opposed, the US's position of exploiting resources beyond the 12 mile limit is in limbo. Russia, however, has moved stake claims deep into the Arctic in regions it says are extensions of its continental shelf.
Even with relatively ice free waters, the big problem may turn out to be the availability of drilling rigs and ships that are robust enough to withstand encounters with Arctic ice. The upshot of all this is that there are so many factors inhibiting the widespread drilling for oil in the deep arctic, it is doubtful that much of this will take place in the next five to ten years. During this time frame, the odds are high that global oil production will begin to start down due to depletion of the best fields, and it seems unlikely that Arctic resources can be brought into production quickly enough to offset most of this decline.
The other side of this issue is just how much climate change will a near term disappearance of the permanent Arctic ice cap cause. Here there are no shortages of informed opinions. All agree that without polar ice to reflect incoming sunlight, the average temperature of the Arctic Ocean and surrounding land masses will rise sharply. In the Arctic, snowfall will likely increase thereby forming a protective blanket on whatever ice forms, preventing it from becoming thicker. There will be more storms in the region that will tear up coastlines.
Again the bottom line is that there will likely be an increase in droughts, storms and floods that will cause great damage across the world. How this will affect economic activity or the demand for increasing amounts of oil is hard to say. For now it looks as if while it may be easier to get at Arctic oil in coming decades, the costs of doing so and the demand for the product may not be worth the price.

By. Tom Whippl

Will Oil Prices Decide the US Elections?

Oil prices are linked closely to presidential disapproval and so will decide the presidential elections' outcome

Before jumping into the question, a recap:
In a previous article titled "Is Oil Fueling the Rise in Political Partisanship", Oil-price.net went on a search to see if rising oil prices had any influence on the behavior of American voters in the period between December 1999 and July 2010. We asked: could discontent sparked by an uptick in volatility in oil prices be one reason why American politics of late seems to have gotten so much nastier? We delved into three polls: Presidential approval ratings, the Congressional approval ratings and direct questions to the voters on whether the country was in the "right track" or the "wrong track". What we found, to state the obvious, wasn't very surprising. What was surprising, in fact, was the degree of shifts in the approval rating of the President vis-a-vis oil prices-inversely proportional. As for the question of "Congressional approval" and "Direction of the country", they showed even more impact to the volatile oil prices.

Thus, between 1999 and 2010, oil and politics moved from being indifferent partners to having a burly relationship. Oh, yes, Obama was elected on the back of all-time high oil price volatility from the late Bush era (oil went up to $160 then back down). Even otherwise, you don't need loads of grey cells to make a correlation between high oil prices and slide in the approval ratings of the decision maker. Oil and politics-think of the wars and bloodshed-is welded marriage.

So back to the present scenario. How exactly are we faring? After all, we are bang in the middle of the Presidential campaign. There is no denying the fact that oil prices are higher. As a result, it is nearly impossible to defend against it for a politician, and Republicans are milking it. As it turns out, they are already at it.

Take the captious Romney for instance. He has taken Obama to task for the increase in oil prices, calling for the resignation of, what he has drubbed as, 'gas hike trio'. The trio, Energy secretary Steven Chu, Interior secretary Ken Salazar and Environmental Protection agency Administrator Lisa Jackson are directly responsible for the increase in oil prices, he alleges. Mitt Romney has also accused the President of slowing the domestic energy production. Indeed, Romey wants more land allotted for drilling and less stringent regulation for hydraulic fracturing.

For his part, Newt Gingrich has promised gas for $2.5 a gallon. Both the candidates want more drilling in search of oil-even on pristine forest floors, while the President maintains that rising oil prices have more to do with global market indicators. And, Rick Santorum, rather unsurprisingly, has also blamed Obama for blocking energy production in the US. He also feels high oil prices led to the economic downturn in 2008.

Of course, all Americans, differing only in degrees, feel indignant about the spiralling gas prices. One only has to browse the online forums to see the palpable anger. From accusation of "Obama's wars" to 'Big oil' and 'Big money', Americans have different ideas on the root cause of the price increase. Yes, oil under Obama has had rough days: First the BP disaster which tarnished not just BP, remember? Then subsidies going to solar, away from big oil's pockets; controversy about fracking and water pollution; opposition to ANWR oil drilling. Questions have also been raised on the Keystone XL oil pipeline from Canada's tar sands. Promoted by TransCanada, the pipeline would carry oil from Canada's tar sands to the Gulf of Mexico. This pipeline needs Presidential approval as it passes the international border. Earlier this year, the President rejected the bill, though TransCanada is looking at alternate routes that do not require the state's approval. Romney has questioned promoting alternative energy- like giving a loan of $500 million to Solyndra, the solar panel manufacturer-calling the keystone decision 'bad policy'- Fact: The loan to the solar panel manufacturer was in 2009, while the key stone permit is of recent times. According to the Gallup's annual Environmental survey, 57% are in favour of the pipeline, as opposed to 29% who have other views, while the other 14% was undecided. So, there it goes.

Meanwhile the President says: "Do you think the President of the United States, going into re-election, wants higher gas prices?". Spruced by almost 17% increase in the price, so far, as reported by the AAA, gas prices are an easy way to target the incumbent President.

What's the ground situation, anyway? According to the Gallup's Annual Environmental survey, 56% of Americans believe that the President is doing a good job with regards the environment. However, only 42% had the same optimism about his handling the national energy policy. (In 2004, George W. Bush's were much lower- 41% believed that he was doing a good job of 'making America prosperous as well as protecting the environment', while for his energy policy he clocked a mere 34% support).
White House Press Secretary Jay Carney stated, "if increasing drilling were the answer in the United States to lowering prices at the pump, we would be seeing lower prices at the pump, because under President Obama we have increased significantly domestic oil and gas production. That is a fact."

Yes, there is speculation in commodity markets that nudge oil prices higher for no apparent reason. Speculations are so. But Wall Street sharks are only a small reason for the increase in the price of oil.
Increasing demand- according to the latest report from the International Energy Agency, global oil demand is forecast to climb to 89.9 mb/d in 2012, a gain of 0.8 mb/d (or 0.9%) on 2011. Demand is increasing in Asia, in particular in China. Volatile situation in oil producing countries could also lead to increased oil prices- Sudan, Iran, Libya, anyone? This February, global oil supply fell by 200,000 barrels a day, as reported by IEA. And, it's basic Economics, if supply doesn't match demand, even on the basis of imaginary fears, oil prices will move on. Blame the oil driven economy, as well.
And, to be honest here, the oil companies do make more profit than they ought to. Then again, they do need the money to invest in exploration. Wait. If not, one day, oil is going to dry up. And, whoever wants that to happen, please step forward? Further, let's not forget that these companies employ a whole lot of people with generous salaries.

To sum up, the next President will be decided on the basis of oil prices. During his term he will have to contend with increasing oil prices and worsening geopolitical volatility. His 4-year term will be too short to implement any long-term policy likely to affect either. He will also be blamed by the opposition for high oil prices like the current President and the one before him.

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IMF warns of oil scarcity and a 60% oil price increase within a year

In a benchmark scenario of its latest World Economic Outlook (April 2011) the International Monetary Fund (IMF) analyses what it calls oil scarcity (after “energy security” another code word for peak oil?) and warns of a 60% increase in oil prices within a year and almost 90% within 5 years due to a reduced growth in global oil supplies (assumed to be + 0.8% pa, down from a long term 1.8%) and low oil price elasticities of oil demand between 0.02 (short-term) and 0.08 (long term). Even in the best case scenario in which oil price elasticities increase almost 5 fold (greater substitution away from oil), oil prices are simulated to go up by 60% in 5 years.

Summary table of scenario simulation

Oil supply growth down to 0.8% paImmediate spike of 60%,

200% in 20 years

Oil price elasticity of demand 0.3Immediate increase of 50%, but “only” 100% in 20 yearsImmediate increase of 200%. In 20 years 800% increase but non-linear impact not covered by modelContribution of oil in output 25% instead of 5%Long-term reduction of oil price increase by 25%

The IMF report can be found here:

http://www.imf.org/external/pubs/ft/weo/2011/01/pdf/text.pdf

All graphs in this article are from chapter 3 “Oil scarcity, growth and global imbalances”

(I) Oil supply context and outlook until 2015

Starting point for the IMF is the observed change in the 1.8 % oil supply growth trend from 1983 which ended in 2005.

The outlook for the next years has been taken from the Medium Term Oil Market Report of the IEA:

The graph shows negligible net additions in years 2011 to 2013.  OPEC’s incremental barrels in 2013/14 are supposed to come from the Saudi oil field Manifa, heavy-sour crude for which a special refinery is under construction.

Aramco Manifa oil field will start in 2013, chief says

9/12/2010

Saudi Arabia’s Manifa oil field is on schedule to start pumping 500,000 barrels a day in 2013 and Saudi Aramco is planning chemical and refinery plants to process the kingdom’s crude, the company’s chief executive officer said.

“It’s planned ultimately for 900,000 barrels per day but the market doesn’t need 900,000 barrels now,” Khalid Al-Falih said today in Dubai. Manifa had been slated for completion next year before oil demand slumped amid the global recession.

http://www.bloomberg.com/news/2010-12-08/aramco-s-manifa-oil-field-will-start-in-2013-ceo-says-update1-.html

No need for 900 Kb/d? That tells you everything about future OPEC capacities

(II) Oil demand price and income elasticities

With trend changes in oil supplies and oil prices in mind the IMF analyses the oil demand price and income elasticities of the past, both short term and long term (past 20 years):

(III) How to calculate oil price increases in a period of oil scarcity

On the basis of the above, the IMF assumes for the next 5 years (p 99,100)

(a) Because capacity increases are the main drivers of supply growth—the short-term price elasticity of supply is very low, with most estimates ranging between 0.01 and 0.1—supply increases will likely be equally modest, except for the buffer provided by OPEC spare capacity. The latter is currently estimated at some 6 million barrels a day. Assuming that between two-thirds and four-fifths of that spare capacity will eventually be tapped, cumulative oil supply growth during 2011–15 could amount to 6 to 8 percent, or 1¼ to 1½ percent annually on average, if the price of oil remains broadly constant in real terms.

(b) The current WEO forecast is for an annual average world GDP growth rate of about 4.6 percent over the period 2011–15.

and calculates as follows:

(1)   GDP growth x income elasticity = 4.6 %  x 0.68 (table 3.1) = 3 % oil demand growth

(2)   Gap between oil demand growth and supply growth 3 % – 1.5% = 1.5 % pa gap

(3)   Oil price increase  = % gap / demand price elasticity = 1.5% / 0.02 (Table 3.1)  = 75%

That of course is shocking. In order to come out of this catch 22 between GDP growth and limited oil supply growth the IMF then embarks on simulating 4 scenarios, whereby oil is used as a 3rd parameter (apart from capital and labour) in the economy’s production functions.

General assumptions in modelling:

Oil price elasticity of oil demand in both production and consumption: 0.08 (long term) and 0.02 (short term)Oil cost share in production: 2-5%Oil supply growth below historical trendsOil supply response with a low price elasticity of 0.03Initially, 40% of oil revenue to be used for intermediate goods inputs, later real extraction cost will increase at a constant 2%In oil exporting countries governments will not spend oil receipts immediately but accumulate them in US dollar and use them at 3% paShort term oil shocks (impact on financial markets, confidence effects) are NOT included

(IV) Benchmark scenario

Assumption:

Average oil supply growth rate of 1.8% is reduced by 1% to 0.8 % pa

Result of benchmark simulation:

Immediate oil price spike of 60%200% oil price increase over 20 yearsReduction of GDP in oil importing countries, but surge in goods exports to oil exportersWealth transfer from oil importers to oil exporters, whose currencies appreciateReduction in real interest rates as the oil exporter’s additional oil revenue leads to higher savingsEmerging Asia benefits from lower world interest rates for their investmentsUS and Euro current accounts deteriorate

(V) Scenario 1: greater substitution away from oil

Assumptions:

Higher, optimistic long term oil price elasticity of demand is 0.3

Result of scenario 1 simulation (dotted red line):

World oil prices increasing by only 100 % (instead of 200%) in 20 yearsFall in GDP reduced by 2/3

The IMF concludes: “This simulation highlights the fact that fairly high demand elasticities would be required to negate the effects of lower oil availability” .(p 104)

(VI) Scenario 2: greater declines in oil production

The IMF may be very well aware that the assumed 6 mb/d OPEC spare capacity may not actually exist. This could be the reason why this oil decline scenario is done.

Assumptions:

The oil supply growth rate is reduced by 3.8% (instead if 1% in the benchmark), leading to a decline of  -2% pa (=1.8 % trend  – 3.8 = – 2%)

Results of simulation:

200% immediate increase in oil price and 800% over 20 yearsLong-term output and current account effects are 3-4 times as large as in the benchmarkChanges of this magnitude may have non-linear effects which the model does not handle

(VII) Scenario 3: greater economic role of oil

This scenario considers research from economists indicating that certain technologies are possible and remain usable only when there is a ready supply of oil.

Assumptions:

The contribution of oil to output is increased from 5% to 25% in the tradables sector and from 2% to 20% in the nontradables sector

Results of simulation:

Deterioration of GDP by factor of 2

(VIII) IMF’s summary and conclusion

“The alternative scenarios indicate that the extent to which oil scarcity will constrain global economic development depends critically on a small number of key factors. If, as in the benchmark scenario, the trend growth rate of oil output declined only modestly, world output would eventually suffer but the effect might not be dramatic. If higher oil prices brought about easier substitution away from oil, not just temporarily but over a prolonged period, the effects could be even less severe. But if the reductions in oil output were in line with the more pessimistic studies of peak oil proponents or if the contribution of oil to output proved much larger than its cost share, the effects could be dramatic, suggesting a need for urgent policy action. In the longer term, the worst effects would be experienced by regions whose production is highly oil intensive, such as emerging Asia, and/or with weak export links to oil exporters, such as the United States. (p 106/7)

This rather optimistic summary comes along with a number of conditions which must be met for the model to work:

In general the transition to a new equilibrium in the balance between oil supply and demand must be smoothFinancial markets absorb the huge flood of petro-dollarsBusiness responds flexibly to higher oil prices and re-allocates resources accordinglyLower real wages do not spark social unrest

The IMF is fully aware of the limitations of their model and that it could be too optimistic:

“Unlike in the model, real economies have many and highly interdependent industries. Several industries, including car manufacturing, airlines, trucking, long-distance trade, and tourism, would be affected by an oil shock much earlier and much more seriously than others. The adverse effects of large-scale bankruptcies in such industries could spread to the rest of the economy, either through corporate balance sheets (intercompany credit, interdependence of industries such as construction and tourism) or through bank balance sheets (lack of credit after loan losses).Finally, the simulations do not consider the possibility that some oil exporters might reserve an increasing share of their stagnating or decreasing oil output for domestic use, for example through fuel subsidies, in order to support energy-intensive industries (for example, petrochemicals) and also to forestall domestic unrest. If this were to happen, the amount of oil available to oil importers could shrink much faster than world oil output, with obvious negative consequences for growth in those regions” (p 109)Such benign effects on output [-0.25% in GDP], however, should not be taken for granted. Important downside risks to oil investment and capacity growth, both above and below the ground, imply that oil scarcity could be more severe. Moreover, unexpected increases in oil scarcity and resource scarcity more broadly might not materialize as small, gradual changes but as larger, discrete changes. In practice, it will be difficult to draw a sharp distinction between unexpected changes in oil scarcity and more traditional temporary oil supply shocks, especially in the short term when many of the effects on the global economy will be similar. In addition, it is uncertain whether the world economy can really adjust as smoothly as the model envisages. Finally, there are risks related to the scope for the substitution away from oil, on both the upside and the downside. The adverse effects could be larger, especially if the availability of oil affects economy-wide productivity, for example by making some current production technologies redundant. (p 110)

Most of the above points have been discussed by peak oil aware analysts for years. It is a big step forward that the IMF has now brought this to the attention of the financial community who will hopefully be able to read between the lines and separate optimistic outlooks from reality.

(IX) Policy implications

The IMF advises, in very diplomatic language and on a macro-economic and structural level:

“Fundamentally, there are two broad areas for action. First, given the potential for unexpected increases in the scarcity of oil and other resources, policymakers should review whether current policy frameworks facilitate adjustment to unexpected changes in oil scarcity. Second, consideration should be given to policies aimed at lowering the risk of oil scarcity, including through the development of sustainable alternative sources of energy.” (p 110)

But this is more interesting:

“Regarding policies aimed at lowering the worstcase risks of oil scarcity, a widely debated issue is whether to preemptively reduce oil consumption— through taxes or support for the development and deployment of new, oil-saving technologies—and to foster alternative sources of energy. Proponents argue that such interventions, if well engineered, would smoothly reduce oil demand, rebalancing tensions between demand and supply, and thus would reduce the risk of worst-case scarcity itself.

(X) Comments:

-          The 6 mb/d spare capacity assumed in the introductory calculation is not there, as shown in the case of Saudi Arabia in this post:

2/3/2011
WikiLeaks cable from Riyadh implied Saudis could pump only 9.8 mb/d in 2011
http://www.crudeoilpeak.com/?p=2669

-          The model does not consider the impact of peaking and then declining oil production in major oil producing countries. For example, in the above graph of the world’s oil production history we see the oil crises in 1973 and 1979. The OPEC embargo after the Yom Kippur war was only successful AFTER the peaking of the US production in 1970. And that was the non-linear impact:

German highway patrol stopping motorists to check their driving permits (trips deemed “essential”)

during Sunday driving bans in November 1973 on an otherwise empty autobahn

http://www.abendblatt.de/multimedia/archive/00158/konjunktur4_HA_Wirt_158883b.jpg

And the Iranian revolution was preceded  by the peaking of Iranian oil production BEFORE the fall of the Shah.

-          Oil price movements will not follow straight lines but will zigzag around trend lines as we have already experienced in the last years

-          The panels in Figs 3.9 – 3.12 do not show inflation and employment. Due to higher oil prices inflation is going to increase, especially in oil importing countries.

-          It is not clear why oil supplies should increase again after 25 years – as mentioned in figure 3.9

-          It is also not clear to which oil price level the increases relate to: is it $100 oil?

-          The focus should be on the first 5 years in those scenarios which is a reasonable time during which many implied parameters in the models may still be valid. We really do not know how the world will look like in 10 years, not to mention 20 years.

-          The above scenarios show that the lowest oil price increase and the smallest negative impact on GDP can be achieved by increasing the oil price elasticity of demand. This means:

(1)   Any project which increases oil demand like toll-ways, new airports, new car dependent sub divisions and shopping centres will NOT be increasing this elasticity and thus contribute to a lower GDP than would otherwise be the case. These projects should be immediately abandoned.

(2)   Given the short time during which oil prices are estimated to explode the only way to increase price elasticity for petrol is car pooling. This in turn means the financial end for toll-ways – unless tolls are charged per passenger and not by car. Past peak oil ignorance has trapped us now.

(3)   There is no more time to transition the car fleet before big oil price increases make current long distance commuting by car unaffordable.

(4)   All new infrastructure projects must be designed to lower the demand for oil, fast and at the lowest possible construction cost. That can only be achieved by electric trolley buses & light rail in urban areas, night trains between capital cities and rail freight

Conclusion: The IMF’s World Economic Outlook gives us a glimpse into the future of run-away oil prices and the short time frame during which these prices will reach unaffordable levels. While the IMF’s summary at the beginning of the oil scarcity chapter suggests that the oil supply outlook poses no “major constraint” on global growth, details in all scenarios presented demonstrate that dramatic changes are ahead of us

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Oil and Refineries

Lack of US refining capacity is partly to blame when gasoline prices spike.

The debate is raging in full swing: the dearth of new refineries in the US. Many are surprised to see the continued increase in oil prices despite the surge in domestic oil production. Could refineries be the missing element in the equation, they wonder. 'Why not just build new refineries and scale down the price of oil,' our readers continue to ask us. Yes, it's a fact- no new refinery has been built in the US in the past three decades. The last refinery constructed in the US at Garyville, Louisiana was way back in 1976. So, the question is reiterated as the point is so obvious: new refineries. But then, there aren't any easy three reasons, nor is the dimension only four.

First though, let's take a look at the prevailing price of oil. According to a AAA fuel gauge report, the national average for a gallon of gasoline is $3.62 - more than 13 cents from the previous week and 24 cents more than a month ago. After the fall in May and June, gasoline prices have increased gradually for the last seven weeks, adding pain to the already pained consumer. Is this because of dwindling oil reserves? Well, of late domestic oil production has increased by fourteen percent in the last 12 months. According to government sources, the oil production in the country hit the highest 'quarterly level' in almost a decade (for the first three months of this year). And, US produces 55 percent of the oil consumed in the country, mainly due to production spikes in Texas and North Dakota.

Clearly there is oil, so shouldn't the oil price decrease? After all, the more the commodity, often, lesser is the prices. Put it that way, the present oil prices do sound ominous. It's not as if higher demand has hiked the oil prices. On the contrary, demand for oil has been decreasing with fuel efficient cars and ethanol blended gasoline. This July, crude oil demand in the U.S. dipped to its lowest in four years on the back of average economic growth in the country, according to the American Petroleum Institute. The demand for gasoline fell 3.8 percent this July with consumption down 1.1 percent. After the peak in 2007, demand for gasoline has been sluggish. That is, despite increase in the price of crude, demand for gasoline is at record low. So, the speculation does gain force - are lack of refineries hampering the fall in the price of oil? North Dakota produces more than 600,000 barrel/month but has only one refinery in Mandan. An element of bafflement does linger to see the country producing substantial oil and yet importing refined products.

There is colossal gap in the realm of production and refining capacity in the country. The refineries are churning at full capacity which makes them profitable, but on the downside there is no room for mistake. They have to deal with variable demand on one hand and higher costs of inputs on the other. Recently, Sunoco Inc. announced closure of its largest refinery leading to fears of fuel shortage and higher oil prices in the US. Fortunately, a deal with the Carlyle Group saved the day for Sunoco Inc. and the oil industry. But, the problems in the refining sector are far from over. Two refineries owned by Sunoco Inc. did close in the last eight months, which means a loss of nearly half the gasoline and other refined products in the East coast.

True, new technologies have increased the domestic oil production. For once, though, the infrastructure in the US has failed to catch up with the surging domestic oil production. Barges, rails and trucks, believe it or not, still transport crude. Naturally, the oil barely reaches the refineries and this mode of transport also makes oil more expensive for the consumer. How about pipelines? We know that imported oil is expensive. Still, the Marcus Hook refinery continued to import oil at $114 a barrel in 2011, even when the West Texas Intermediate crude traded lower. Why? Lack of pipelines, again. And with this paucity in pipelines, crude produced in the country isn't reaching the refineries. Of course, the much hyped Keystone XL pipeline would connect Canada's oil with refineries in the Gulf of Mexico and Houston, but that may take years.

Staying with refineries, the need for pipelines is more pronounced in the Gulf coast. The refineries in the Gulf coast contribute about 45 percent of the refining capacity, and 30 percent total crude oil production in the US. Of late, the imports have declined in the Gulf coast, thanks to drilling in the Eagle Ford Shale in Texas and Bakken shale in ND. Unsurprisingly, import of the more expensive light sweet Nigerian crude stood at 150,000 b/d in January, the lowest since 1996. (For the corresponding period, there's decline in the import of Nigerian crude to the East coast too.) Yet, imagine the figure with more pipelines in the region. Yes, the crude from Eagle Ford from Texas has started to arrive in the Gulf coast. However, the crude is sweet light. Most of the refineries in the Gulf Coast are more sophisticated, designed to process heavy and more sour crude. As investment to refine the lighter sweet crude is expensive, the only option for the refineries is to blend the different crudes. The irony.

Meanwhile, woes of the refineries in the East coast continue. Two have already closed, and the rest of them are barely managing to scrap through. These refineries are dependent on imported crude as they don't have easier access to cheaper West Texas Intermediate crude. Hence, they continue to import the expensive Brent crude. There are plans to transport oil from North Dakota to the East coast by rail, but when?

Although a continuation of the import story, the scene is slightly different in the Midwest. The refineries here are enjoying higher profits, credit to generous supplies from Canada and domestic oil. Imports from Canada reached 1.76 million barrels a day in the first quarter of 2012, an increase of almost 22 percent from last year (Source: EIA). Unsurprisingly, Canada is the largest supplier of crude to the US followed by Saudi Arabia.

Recently the Port Arthur refinery underwent expansion to almost double its daily capacity. So, why do refineries expand rather than build new ones? It's easier because of the environmental regulations. The apparent lack of logic in not having refineries does get answered when you take the environment under consideration. Refineries gobble up water, not to mention vast tracts of land, and contribute loads of CO2 to the air, as well. So, environmental regulation tends to be hard for anyone interested in refineries. The EPA regulations are also strict on the sulfur content Light crude is easier to process, has lower sulfur content so it's easier to get the environmental nod. Heavy sour crude, on the other side, has more sulfur and is more difficult to process. Sunoco Inc. is said to have lost $ 1 billion in the last three years, attempting to upgrade in accordance with the stricter EPA regulation.

Will the picture change? Everyone wants refineries, just is someone else's backyard. The new EPA regulation for new refineries scheduled to be released this November has been deferred because of the Presidential elections. How is it going to pan out? Mitt Romney is all for more drilling. He wants to drill "virtually every part of U.S. lands and waters" but is silent on his take on refineries. For his part, Obama is for 'energy independence' but with his strict environmental laws, no refinery is going to come up anytime soon. The situation is precarious. The demand isn't expected to rise anytime soon. EIA has lowered the forecast of oil consumption in 2012 and 2013.

Any destruction due to accidents (like the recent fires), weather conditions, and maintenance would affect the supply with immediate effect. For instance, the recent fire in the Chevron refinery at Richmond, California disrupted almost 16% of the supply in the region. Abundant reserves, yet prone to import fluctuations- which country would want to continue in this position?

If the refineries aren't taken care of, the dream of cheaper crude would continue to be a dream. That would be sad with the present domestic resources.

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Niger, Nigeria and the oil price rise

 While gunfire errupted in Niger's capital, traders who mistook the country for oil-rich Nigeria sent oil prices soaring

What's in a name? Niger or Nigeria will be in a better position to answer this question. If not anything the confusion in the name pushed oil prices to $80 a barrel last week. How? There was a coup in Niger and traders hustled to buy oil, mistaking Niger for oil rich Nigeria.

On February 18, a coup took place in the West African country, Niger. Armed soldiers stormed the presidential palace in Niamey, the capital of the country and kidnapped the President of the country Mamadou Tandja. The coup was orchestrated by a soldier named Colonel Adamou Haroun. He was aided by another Colonel Djibril Hamidou. This is the third coup in the country since the 90's.

In dramatic style, the soldiers declared on TV, the suspension of the constitution and all the institutes associated with it. Colonel Goukoye Abdul Karimou, read a statement on behalf of a group called Supreme Council for the Restoration of Democracy (CSRD). In the statement he appealed to everyone to have faith in the group's ideas which "could turn Niger into an example of democracy and of good governance".

The coup wasn't entirely unexpected. President Tandja came to power after the election in 1999. He was supposed to step down on Dec 22. However, he chose instead to change the country's constitution last year to stay on. The move enabled him to stand for a third time in office, and with more powers without election.

The fifteen nation West African regional bloc, ECOWAS (Economic Community of West African States) reacted by suspending Niger. The US terminated non-humanitarian aids and cut off trade benefits. The US state department spokesman Philip Crowley said "President Tandja has been trying to extend his mandate in office. And obviously, that may well have been, you know, an act on his behalf that precipitated this act today". African Union chief Jean Ping condemned the military coup in Niger and said he was following developments "with concern".

The reaction from Nigeria, coincidence or not, does take pains to differentiate between the countries. According to a statement by Senior Special Assistant to the Acting President on Media and Publicity, Mr Ima Niboro, the acting President of Nigeria Dr. Goodluck Ebele Jonathan has expressed deep concern over reports of shooting in Niger's capital.

Meanwhile, Colonel Djibrilla Hima one of the leaders of the coup said that their group would hold election too. The plan, he said, is to hold elections once the situation has stabilized.

Niger has in recent years attracted billions of dollars as investment in oil. Exploration in Niger began in the 1950s. Drilling was done in the 60's by Petropar in Tamesna-Talak and Djado blocks. But the two main blocks that emerged were Djado Basin and the Agadem BasinIn the year 1992, the Djado permit was given to Hunt oil. In 1997 the Tenere permit was given to TG World Energy Inc.In 2004 the Niger government approved the joint venture arrangement between CNPC International Tenere Limited (CNPCIT) and TG World Petroleum Limited (subsidiary of TG World).In 2005, Petronas Carigali Niger Exploration & Production Ltd. (PCNEPL), announced that it had found hydrocarbons in the Agadem BlockEsso and Petronas had sole rights to the Agadem block. But in 2008, the rights were transferred to CNPC for USD$5 Billion investment. The oil reserves in the block are estimated at 325 million barrels. The company is also building a 20,000-barrel-per-day refinery in Zinder.Other oil companies in the region are Shell, ExxonMobil and Chevron

Thus, though Niger isn't a major player in the oil business, the markets reached on hearing news of the coup. Tom Bentz, analyst at BNP Paribas Commodities said, "Markets took off at around the same time a Reuters story came out about gunfire erupting in the Niger capital in an apparent coup bid, mistaken by many as being Nigeria".

To be fair, other factors too contributed for the increase in oil prices-tension of Iran's nuclear program, weaker dollar and the report of EIA on heating oil supply falling by 1.4 million barrels. However, among the factors, the name confusion was the most important reason for the immediate oil price rise.

Yet, the fact remains that Niger is yet to produce oil for the world market.

Nigeria, Benin, Burkino Faso,
Mali, Algeria, Libya and ChadFrench. The country
got independence from France in 1960more than 8 percent of world's Uranium.

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Sell Bonny Light Crude Oil - Find Buyers of BLCO

If you are looking for buyers of mazut m100 (fuel oil), d2 (diesel oil), blco (bonny light crude oil) or bitumen (petroleum asphalt), then there is a genuine way to find them both online and offline. One of the genuine ways to find them online is through the use of business to business sites. Business to business sites contains buyers of crude. Most real buyers of oil do not like wasting time. They need sellers who can perform, that is a seller who has the product. They also want a seller that can show proof of product before they issue proof of fund. The equation is POP = POF. It should not be any form of POP but it should be one that can be verified and ascertained to be valid and authentic.

Another thing most buyers want is sellers that can work with their own procedure. This is very peculiar to bonny light crude oil and forcados buyers. Most times the first clause on their procedure is: vessel name and location. This is not always the case. BLCO buyers may also want verifiable product allocation certificate from NNPC or details of a loaded vessel so they can verify and proceed to sign a contract. As for mazut 100, jp54, bitumen and d2 buyers, they need sellers that can show POP in form SGS or refinery commitment to produce the crude.

If you are a seller and you are not able to meet the buyer's preferred criteria above, you do not have to worry. This is so because different buyers have their respective criteria. Some of the online sites where you can find buyers of mazut m100, jp54, bitumen, d2, blco and forcados to sell your product are tradekeys, eczplaza, spaintraders, fuzing and alibaba. This is a few of b2b sites where buyers can be found. You should note that you can hardly find end buyers at these sites. The types of buyers you can find are intermediary buyers. If you want to work with end buyers, then you need to write to refineries who are the end buyers of raw crude. As for refined crude oil, you should write to major oil dealers who buy and store at fuel depot from where it is supplied to filling stations to be sold to consumers. Selling raw and refined crude oil to major oil dealers requires the use of professional experience. You need to show something that certifies you as a serious and genuine businessman.

 

US shale oil deposits: Two trillion barrels of crude oil

This may sound like a fiction story but it is true! While total world resources of oil shale are conservatively estimated at 2.6 trillion barrels, US sits on close to two trillion barrels of crude. Possibly more than all the crude than was ever produced worldwide since petroleum age began.

The Green River Shale Formation encompassing the States of Colorado, Utah and Wyoming was first discovered in 1924. This famous shale formation covers tens of thousands of square miles. It is found in three different ancient lake basins. The layers of sediment in this formation stretch undisturbed for many miles.

This shale is a soft sedimentary rock that readily fractures into layers, composed of minute particles of clay, which may easily be removed. It was formed from multi layers through erosion. There are 40 million layers in one part of this formation. Deposits within these layers are fossilized plant, animal life and algae, which has turned over millions of years into kerogen. Some claims have been made that this was formed from the Great Flood of Biblical times. Geologists say that this formation was formed through countless floods perhaps through 500 to 700 millions of years.

There are two conventional approaches to oil shale processing. In one, the shale is fractured and heated to obtain gases and liquids by wells. The second is by mining, transporting, and heating the shale to about 450oC, adding hydrogen to the resulting product, and disposing of and stabilizing the waste. Both processes use considerable water. The total energy and water requirements together with environmental and monetary costs have so far made production uneconomic. During the oil crisis of the 1970's, major oil companies spent several billion dollars in various unsuccessful attempts to commercially extract shale oil.

After initial attempts proved to be too expensive and were shelved some ten years ago, a host of energy companies are revisiting technologies to successfully extract kerogen from shale and economically turn it into crude oil. Participating giant Shell Oil representative, Terry O'Cannon states, "We try to keep them from speculating too much and keep expectations low because we don't know if this technology will be successful and viable in the long term."

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WTI edging on Brent Crude Oil?

With the new Seaway pipeline, WTI crude oil will flow more freely from Cushing to the cost refineries.

WTI vs Brent- which is the better benchmark? Or, perhaps what is WTI and what is Brent? Primarily, there are two types of crude oil traded in the international markets (three really, but two majors): WTI (West Texas Intermediate) and Brent.

WTI used as a benchmark in determining oil prices, is crude oil of high quality. The spot price is fixed at Cushing, Oklahoma. WTI is lighter than Brent crude, has lower sulfur content- comparatively-and produces more oil during the refining process. With lesser sulfur, easier is the refining, and lesser the environmental effects on the planet (WTI has .24 % sulfur, while the sulfur content of heavy crude oil, like the one from Venezuela's Orinoco Belt, is as high as 4.5 %. A reason why many people love this benchmark.) To be noted, though: WTI is more important in- and is-limited to the US, probably because WTI is produced and refined within the US.

Brent is the real international benchmark. Two-third of the oil consumed in the US is Brent, and two-third of international crude is priced to it. (Brent crude is sourced from fifteen oil fields in the North Sea.) Still the media and market persist in quoting WTI, rather. This is a US singularity, like the non-adoption of the metric system.

First, to a bit of history: In April 2007, with the shutdown of Valero Energy Corp.'s McKee refinery, Sunray, Texas, the oil inventories surged to 27 million barrels. The huge stock pile brought down the price of WTI crude-an artificial scenario, as it was more of a technical glitch. Consequently, a report released by Lehman Brothers Inc. (now defunct) stated that the WTI could no longer be used to gauge the international oil market. Though useful for future oil pricing, the benchmark had 'lost its utility' for near-term pricing, the report said. By 2009 Saudi Arabia, the second largest oil exporter in the world, had stopped using WTI as a price benchmark for their oil.

Back to the present, and to answer the question: Yes, the oil price of Brent and WTI exist in parallel universe, with WTI lagging behind Brent. Why? Oversupply of crude in the Midwest. With Canadian imports, and increased oil production in North Dakota, the Midwest gets more oil, which stagnates. In other words, there is a huge bottleneck in moving oil of Cushing. The physical delivery point for New York Mercantile Exchange (NYMEX) futures contracts, Cushing has the largest storage capacity in the US. In 2009 Cushing had shell capacity of 16.3 mmb and working capacity of 37 mmb. According to the US Department of Energy, the shell crude storage by the end of March 2011 was put at 57.9 mmb, while the working storage capacity stood at 48.0 mmb. So, fewer pipelines out of Cushing mean more storage, which in turn, translates to lower oil prices, with excess oil (when compared to Brent).

Lately, though, WTI has been catching up on Brent, here's why: a new Seaway pipeline, moving oil from Cushing to the Gulf coast. Come April 2012, more of WTI crude oil would arrive in the Gulf coast. Initial estimate indicate 150,000 barrels of crude arriving in the Gulf coast every day (after regulatory approval), increasing to over 400,000 barrels per day by 2013. With the given evidence, looks like WTI is closing in on Brent

With Enbridge Holdings, LLC, the subsidiary of the Canadian company Enbridge, Inc., buying fifty percent of ConocoPhillips' interest in the Seaway Crude Pipeline Company (SCPC), things are moving fast. According to Patrick Daniel, President and CEO of Enbridge, Inc., "A Seaway reversal will provide capacity to move secure, reliable supply to Texas Gulf Coast refineries, offsetting supplies of imported crude."

With the Seaway pipeline reversal, there's renewed interest among investors. Already, JP Morgan has increased the WTI forecast to $110/bbl in 2012 from $97.50 forecast in October, and to $118 in 2013 from the initial forecast of $114.25. At oil-price.net, our 2013 forecast stands at $117. Further, the Brent-WTI spread is expected to narrow to $5 per barrel in 2012 and $3 per barrel in 2013. (On September 22, the WTI-Brent spread had reached $29.50). (Earlier this year, Bernstein and Barclays' estimated the Brent-WTI spread at $5 in advantage of Brent). Meanwhile RBC Capital revised its WTI outlook, from $90 per barrel to $100 in 2012 to and $160 in 2013 (from $100 per barrel )- while keeping the forecast for Brent prices the same. Also even if more oil arrives from Canada and North Dakota, the excess oil can be shipped through trucks and rails or with added pipelines.

These pipelines, though, may not be enough if the Keystone XL pipeline is brought into the equation. Shale oil production is increasing in Canada, and the Keystone XL pipeline would give the Canadian oil more access to the refineries in the gulf coast. But considering the opposition from environmental groups, and delay in government approval for the pipeline itself, the excess crude is still far away in the future.

For now: If huge speculation has kept Brent prices artificially higher, the focus has shifted. Indeed, the logistics seems clear, but then oil prices depend on other ground factors and market fundamentals as well. Yet, looks like WTI is closing in, and it would be interesting to observe the WTI-Brent spread in the coming days.

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Different Types Of Crude Oil

Types Of Crude Oil

A lot people arbitrarily converse about oil not knowing oil is not a solitary, indistinguishably the same substance without the basic knowledge of any distinctive differentiation, but it is really not the situation in the least! In reality, you'll find quite a few various types of oil. In its healthy, unrefined form, crude oil or oil has ranges in density &  from very or fairly thin, light in weight & volatile liquid to an incredibly thick, semi-stable heavy weight crude oil.
There is certainly also a great gradation inside colour which the oil derived bellow sea level exhibits, ranging from a fairly, golden yellow  and to its very deepest black imaginable.

For your goal of possessing a arranged, agreed upon “Terms,” the petroleum sector generally utilizes references pertaining to “Geographical Areas” so as to descriptively give crude oil classfication.
This complements undeniable fact that Crud oil from diverse geographical locations naturally have got its personal very exceptional attributes. This oil ranges from one part to another when it is pertaining to viscosity, volatility & toxicity.

The expression “viscosity” means  oil resistance to flow. Larger viscosity oil is a lot more tough to pull  underground/ bellow sea level, transport & refine.

The name “volatility” defines how quickly and easily the oil disappear  in the air. Oil which can be naturally extremely volatile need to have additional work to be certain about temperature regulation & the sealing procedures  get loose as small oil as it can.

The word “toxicity” defines how dangerously toxic the oil and its refining methods are to neighborhood life, from human beings, to flora & fauna in addition to other environmentally  insubstantial existing entities & organisms. If crude oil spill arise, each and every sort of crude oil  or oil presents requires special “clean up” issues, methods & priorities!

The 4 major forms of Crude oil are:

1. Pretty Light crude Oil / Light Distillates, this involve: Gasoline,Jet Fuel, Virgin Naphtha, Kerosene, Petroleum Ether, Virgin Naphtha, Petroleum  Premium Spirit, & Petroleum Naphtha. This category of oil have a tendency for being extremely volatile & it can evaporate in the air just a few days or nights, which easily diffuses & decreases toxicity ranges.

2. Light Crude Oil / Middle/Semi Distillates which involve the following: Most 1st and 2nd class Fuel Oils & Diesel Fuel Oil too as Most local Fuels & very Light Marine Gas or Oils. This category of oil is moderately volatile, significantly less evaporative & moderately poisonous.

3. Medium Oils: Almost all crude oil at the marketplace rcently falls onto this main category. Minimal volatility helps make for messier and additional complicated “clear ups” & when it on its improved toxicity levels, You can imagine or live extended life enough to determine what “this Medium Crude Oil” spills can do towards the community ocean lifestyle around the sea.

4. Heavy Crude Oil: This include the following, heavy crude oils,  (Oil Bunker B and C) & Grade 3,4,5,6 6 Fuel Oil in addition as Intermediate & Heavy Marine Fuels.  The above oils there exists very gradual and minor evaporation and thus toxicity is really highly improved. This not just implies potentially serious toxic for fish, fowl & fur creatures, but feasible “long lasting” intoxication of water & soil.

Actually, you will find really over 160 diverse oil traded on the current crude oil market recently, for simplicity’s sake, allow the discussion of the 3 primary oil that get critical attention of the masses or news & Crude oil markets.

Crude Oil Terms

West Texas Intermediate: The WTI can be really prime quality oil that can be greatly valued with the indisputable point that it truly is of this kind of premium excellent, far more & far better gasoline is often refined from one sole barrel more than from other sorts of oil available at the crude oil market place.

The West Texas Intermediate “API Gravity”  has 39.6C/degrees, which helps make it a  sweet “light” crude oil, that has only 0.24%  sulfur, which helps make it a “cool” crude oil. Expression “API Gravity” means “American Petroleum Institute, which the measure of comparing how very light /heavy an oil/crude oil  really is in respect to drinking water. If any oil “API ” is higher than 10 this implies that it is really lighter than mineral water & float or flow easily on it. If any oil “American Petroleum Institute Gravity” is much less than ten, it's heavier than drinking water & will sink.

These combined characteristics likewise as location makes WTI the main oil/crude  oil being refined within the U.S, which can be significantly, the biggest gasoline consuming place on our Planet. The vast bulk of WTI oil/crude oil are mostly refined in the Midwest & Gulf Coast area. Even with the production of  most WTI oil decline, WTI is frequently priced from $5- $7 increased for every barrel more than “the OPEC Basket” crude oil & on an average of $1 - $2 per barrel more than “Brent Blend”crude oil.

Brent is basically a blend of distinct oils from about 15 fields all over Scottish Brent & Ninian systems found inside the North Sea. The “American Petroleum Institute Gravity” is equal to 38.3C/ degrees, which helps make it  is a “light” oil or Crude oil, however, not very “light” as WTI. It contains 0.37% sulfur, that makes it “cool” oil, but once again, not  as “cool” than WTI.

Brent Blend, this is exceptional for producing gasoline & Middle distillates, the two of which can be utilized in huge quantities in North western Europe, this is  where Brent oil is quite frequently refined. Brent manufacturing, a lot like the one of WTI, keeps declining, nevertheless it remains the main benchmark for oil in Europe and Africa. Brent oil cost is frequently priced at  $4 more for each barrel compared with OPEC price.

OPEC oil can be a collective of seven distinct crude oil from Nigeria, Algeria, Indonesia, Dubai', Venezuela, Saudi Arabia as well as the Mexican Ismathuss. The full meaning of OPEC is “Organization of Petroleum Exporting Countries” that is a corporation that was founded in  the year 1960 so as to make some prevalent procedure with the manufacturing & selling of oil in its jurisdiction.

 OPEC oil features a very much larger % of sulfur in its pure make-up & for that reason is just not practically as “cool” as WTI as well as Brent Blend & because it really is not as natural as “light” at the same time, the selling prices of OPEC crude oil are typically persistently lower than possibly Brent or WTI. Nevertheless, OPEC’s willingness or capacity to quickly boost manufacturing when essential can make OPEC a constant “Major Participant” from the oil sector!