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Eugene

(61,900 posts)
Tue Mar 13, 2012, 12:54 PM Mar 2012

U.S. asks Saudis to lift oil output from July

Source: Reuters

U.S. asks Saudis to lift oil output from July

KUWAIT | Tue Mar 13, 2012 10:48am EDT

(Reuters) - The United States is pressing Saudi Arabia to boost oil output to fill a likely supply gap arising from sanctions on Iran, Gulf oil officials said, adding that an increase in production is unlikely to be needed before July.

Saudi Arabia is the only producer with spare capacity and oil importers will rely on Riyadh to fill the gap should Iranian output drop.

Saudi Arabia has made clear it will only raise output if it sees additional demand for crude and does not want its oil policy implicated in efforts to disrupt Iran's atomic program which the West says aims to develop a nuclear weapon.

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Read more: http://www.reuters.com/article/2012/03/13/us-saudi-oil-idUSBRE82C0T320120313

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U.S. asks Saudis to lift oil output from July (Original Post) Eugene Mar 2012 OP
Why? earthside Mar 2012 #1
The US has always exported a lot of refined oil products happyslug Mar 2012 #2

earthside

(6,960 posts)
1. Why?
Tue Mar 13, 2012, 01:02 PM
Mar 2012

I keep reading everywhere that the U.S. is now exporting refined petroleum products.

If there is so much gasoline that it can be sold abroad, then we must not have a supply problem, right?

Or is the truth that the oil refining corporations can drive up the price here at by selling at a higher price to other countries?

So any gasoline supply shortage here is totally manufactured.

Why would the Obama administration then ask Saudi Arabia to boost oil output?
Furthermore, we asked for those sanctions on Iran, we should have to live by the consequences, right?

And who believes that Saudi Arabia really has spare capacity anymore?

 

happyslug

(14,779 posts)
2. The US has always exported a lot of refined oil products
Tue Mar 13, 2012, 02:34 PM
Mar 2012

One of the effects of the War in Libya is the Libyan oil was and is NOT in the world market (but is coming back on line as I write and has been for the last couple of months). Libyan oil is like Pennsylvania oil, a very "sweet" oil, which requires less refining to be made into gasoline. With the oil out of the market less sweet oil has to be purchased, and that require more energy to convert into gasoline.

The hard winter Europe has had also affects how much gasoline is used. Most refineries use natural gas as the energy source to refine oil, with the harsh winter most Natural gas supplies has been tight in Europe, thus oil refining has been down.

Japan has had to use other sources of electricty since FIVE of its Nuclear plants went out of production do to the Earthquake and Tusami last year. While natural Gas is used for electrical generation, on the small scale, small factory etc, it is oil, mostly diesel but also gasoline.

The slow switch to Heavy Sour Oil is going on, and right now most of the refineries that can handle the Heavy Sour oil are in Texas. Thus US oil refining is up, including gasoline production.

Gasoline consumption in the US is down to to the high price of gasoline.

Both India and China still have electrical shortages, relied in many cases by factory or home generators. Most are diesel but gasoline is still popular in colder climates (i.e. China, Europe and Japan).

World wide, Gasoline demand is greatest in Summer, and weakness in winter, this is especially true in the US.

Out of any barrel of crude you will get all types of refine oil products. The two most common are gasoline and diesel (Diesel includes kerosene and Jet Fuel, which are just minor variation of Diesel fuel). You can opt to make more of one then the other, but you will still get both products out of every barrel of crude oil.

Once you look into the above facts, you see the US has more gasoline then it can use at the present time and is exporting it, but it is minor compare to how much crude oil we are importing (Mexico and Venezuela for example, have just a few refineries, thus export mostly crude to Texas and then gasoline back to their home countries).

Europe's winter seems to have encouraged the use of Gasoline generators, more do to the ease such gasoline generators can be started in Cold Weather then any other reason. Please note this is pure speculation on my part, I can be wrong, but some one is importing that excess gasoline, my first bet is Europe, Second is Japan with China coming in a close third. In Japan and China such gasoline generators may only kick in when the main electrical power grid fails, otherwise people in both countries would be using diesels. Diesel are more efficient and the much harder time to start a diesel in cold weather is NOT a factor if you never turn it off. Thus gasoline generators make sense as a backup system, that kicks in when electrical power stops, then as a main source of electrical power.

Just some comments on the Gasoline exports of the US, it is stil at a minor level and then a product of the fact that the most of the refineries that can handle heavy sour oil are in the US. Thus US gasoline production is up as a by product of refining all the heavy sour oil NOT anything else.

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