UsingPetroleum

ONE BARREL crude oil yields ALL OF

Quality of crude is declining

Refineries must be reconfigured for this, expense makes them inflexibleRequires more energy in

Impacts … ERoEI

“Boutique gasoline” in summer for local smog control & T

Reid Vapor PressureReFormulated GasolineCleaner Burning Gasoline

Price rises spread toWA, OR, BC and evenAustralia

Oil industry (“oil patch”)

Upstream Exploration & extraction

Extraction is mostly controlled by NOCs

All of OPEC, 1/3 of rest

Downstream/mid-stream Refining, distribution,

retailing Transport, ship &

pipelines

Many tax subsidies Oil depletion allowance

Move profits/losses from down/mid to up

Intangible drilling cost allowance

Deduct 70% of well cost in 1st yr, rest over 5 yrs

Enhanced oil recovery credit

For running stripper wells

What/who sets oil $ ?

Depleting supply of cheap-to-market oil

Cost of “last barrel” to large pop in developing country

Demand in developed world is intertwined w/ global finance

Motivations of NOCs (85%) vs multinationals (15%)

CERA 2008

barrel price required to sustain flow

Likely overstated!

Petrostates Organization of

Petroleum Exporting Countries ~40% of world extraction

Libya, Algeria, Venezuela, Ecuador, Nigeria, Angola, Iraq, Iran, Kuwait, Saudi Arabia, Qatar, UAE

Cartel to set oil price for max. profit to petro-economies

“Dutch disease” Big revenue flow

strengthens currency, makes exports too expensive to compete

High wages, expensive real estate

“Oil curse” Highly automated, no

need for educated pop no incentive to diversify

economy easy control & corruption,

suppression

Fake Middle East Oil Reserves