More oil ramblings

First, a word of explanation. In a day like today (when my at work productivity is probably in the 40% realm), I'll read a crapload of articles and just minimize the ones I want to pull from. On a day like yesterday, I was just free ball rambling. Today I'll be referencing a few articles, but I'm still writing while on hold with no actual structure to my post, so it's still likely to be a scattershot bird pellet type rant on oil and energy. Sorry if it's hard to follow, but I'm not quite in a position to spend time during the day organizing the damn thing. I might do that some day, just not right now. So, onto the good times. Or let them roll. Whichever you prefer.

First, here's an interesting little bit of knowledge I found, which explains why our leaders were/might still be pushing so hard for ANWAR drilling. Turns out for the next five years, and the past 10 or so, we give some serious royalty relief to oil companies drilling in the U.S. The rest of the quote is just more reasoning as to why domestic companies want to pursue domestic production:

"At a time when energy-producing countries such as Venezuela are raising the royalties that oil producers must pay on each barrel they pump to 30%, the United States is headed in the other direction. Thanks to legislation passed during the Clinton administration and never revised, oil companies pumping oil and gas from federal lands will get about $7 billion in royalty relief between now and 2011. The problem, first exposed by The New York Times, is the result of incentives designed to encourage expensive deep-sea drilling in the Gulf of Mexico when oil was selling for less than $20 a barrel. But the royalty relief, which covers all drilling leases from 1996 through 2000, is still in place, even though oil is selling for more than $60 a barrel. Add in the relative predictability of U.S. and Canadian law -- nobody is about to seize domestic oil projects belonging to ExxonMobil (XOM, news, msgs) -- and domestic producers have a big edge on costs and reliability of production. This hasn’t been lost on oil and gas companies: EnCana (ECA, news, msgs), the Canadian-based oil-and-gas producer, has been busy selling off foreign reserves in order to invest in North American projects, for example. Big winners from this North American edge include EnCana, Canadian oil sands producers such as Canadian Natural Resources (CNQ, news, msgs), and companies such as EOG Resources (EOG, news, msgs) that are tapping into the huge Barnett Shale formation in north central Texas."

In this article by the same fellow as the previous article, Mr. Jubak goes into some more detail about royalty fees in the global market, as well as what many of the oil producing nations are doing to further grab control of the energy sector. Here are a few funny little quotes from this article:

"In Bolivia, for example, the government has issued an arrest warrant for the CEO of Repsol after charging that Repsol smuggled oil out of the country." (This one just racks my ass up, because it was in regards to a protest the company made against Bolivia ratcheting their royalties up to 50%.)

While that is funny, there's still this:

"While protesting the arrest warrant issued against its CEO, Repsol pledged to go ahead with $150 million in investments with the Bolivian national oil company."

The gist of this particular article, though, is that while oil consuming nations such as us and the European Union have a disheveled, disorganized response to growing demand on foreign oil, oil producing nations such as those in OPEC, and especially Saudi Arabia have a coordinated attack, planning to expand their refining capacity by around 50%. What's that mean for us? More demand for foreign petroleum products, including gas, heating oil, and feeder stocks for plastics. That's flat out dumb on an energy balance sheet. Look at things right now. Presently, we import crude, spending energy on that, then refine it closer to the end user, limiting the amount of energy we're spending transporting the fuel and feeder stocks. Since we're not likely to stop importing crude just because we're also importing finished product, we'll be spending MORE energy on transportation of product that we're already producing here.

One thing I did take note on at the end of the article is the increasing trend in investing in companies pursuing alternatives to the present energy markets. I've seen the same in my own personal research on XSunX, Ballard Power Systems and a few others.

That's really about all I have today. I did find another article that I don't really have time to get into now. It was a little more evidence in how much OPEC has lost control of the international oil market, basically pointing out their feather ruffling after the State of the Union Address and how fake it was. Basically, after Bush said we're researching alternatives, OPEC or maybe just Saudi Arabia (I forget) said, "You do that, and we'll cut production now." Unfortunately for them, they can't, because most of the nations in OPEC are dependant on Western money being spent on oil to maintain their current regimes. While Iran might be crazy enough to shoot itself in the foot while slapping Bush in the face, most of the other OPEC nations haven't shown a trend toward that. Of course, if they didn't say anything, they'd be seen as week and pandering to Western demands, yada yada, you got all of that yesterday.

Again, that's it from the land of Muzak hold time. Enjoy your meal, and be careful, that coffee might be hot.