Q and A about crude oil and gas prices

Q: Do you think governments are allowing oil fields to decline? What alternatives are there to the government’s action/inaction.

A: How would the government prevent oil fields from declining? The presence of oil is due to geological processes not political will.

Oil fields are not like tanks that can be easily emptied. They are more like sponges. (Picture using a straw to extract all the water from a sponge!) Extracting oil depends on pressure inside the field forcing the oil out. This works well enough at the start, but as pressure decreases, less oil comes out. Sometimes pressure can be maintained by injecting seawater or carbon dioxide. However, you can never extract all the oil from a field. There always comes a point when more effort is put into extracting the oil than is economically justifiable.

Q: Aren't we discovering more oil fields all the time?

A: Yes, but not enough to keep up with what we're using. Worldwide discovery peaked in 1964. Every year after that, we have discovered less than the year before. Right now we discover 1 barrel of oil for every five barrels of oil we use.

Q: What is per capita oil production and what significance does it have?
A: The amount of oil produced per person. Per capita oil production began declining in the late 1970s. If world population had remained constant, we would now have more oil available per person. But because the world population is rapidly increasing, there is less oil available per person than there was in the 1970s.

Q: The U.S. has 200 years of coal left, so why can't we just replace the oil with coal?

A: If coal were to replace oil then it would last closer to 50 years than 200. Also, while coal can be used for some applications that oil is currently used for, oil is the best fuel for transportation. It would be impractical to power cars with coal.

Even FOX News Doesn't Trust BP

The ongoing Deepwater Horizon oil blowout disaster has revealed that BP, as a corporation, lacks integrity. Even FOX News does not trust them!

Big Oil Cutting Back on Exploration

Before oil can be produced and refined into gasoline it has to be discovered. Without maintaining a pace of discoveries at least equal to the pace of production, obviously the total amount of oil available as reserves will decline. For anyone thinking about how much oil and gasoline might cost a decade from now, knowing how much effort is being put into discovery today is very important. Bad news I am afraid. Big Oil has recently begun investing their profits into mergers, stock buybacks and dividend payouts instead of exploration. Of course playing financial games will not discover even a single drop of oil.

The fact that Big Oil is cutting back exploration budgets means that we can expect fewer discoveries in the years ahead. The reasons for the exploration budget cutbacks are of course known only the the corporate bosses of Big Oil. But it seems increasingly obvious that one contributing factor is that all of the best oil has been found. What is left will be hard to discover and hard to produce. So instead of doing that honest hard work, Big Oil prefers to try for easy money in the world's financial casinos.

The US cannot count on big oil in the future. It is up to us to save on gas!

If It Is Possible to Get Better Mileage, Why Don't the Automakers Do It?

Here is a video which asks the question if it is so easy to improve gas mileage, why aren't the big automakers already doing it? The video says it is because the automakers have a stake in the big oil companies. So they work something like the laser printer industry. They sell the cars (or printers) but also make money on the gas (or refills). Anyway, watch and see for yourself.

Whatever you think about the automakers and big oil, one thing is for sure: don't let this be an excuse for not trying to save on gas!