Tag Archives: tankers full

Refineries Full, Oil Tanker Sent Back to Alaska

Alex DeMarban, AlaskaDispatch.com
May 01, 2012

“Drill, baby, drill” and other hogwash designed to make Americans think the country can drill its way to cheaper pump prices gets a blast from reality when you consider one pesky fact: Domestic crude-oil production has reached historically high levels yet gas costs haven’t come down to earth.

The unfortunate irony gets play in a Houston Chronicle article that dives into the new oil glut and some of its ramifications. The piece indirectly casts doubt on a favorite argument of pro-drilling politicians, such as our beloved Rep. Don Young.

“Supply and demand, buddy,” is how Alaska’s lone Congressman explains his logic that more domestic drilling leads to cheaper oil. He recently reiterated that message at a meeting in Fairbanks on high fuel prices that included talk of $12 per gallon diesel in rural villages. Of course, Young blasted Obama: If he’d only allow more drilling!

But despite the rhetoric, America appears to be over-supplied with oil. The story starts with a recent tale of a 940-foot tanker that returned to Valdez recently with 300,000 barrels of oil it couldn’t deliver to Washington refineries because onshore storage tanks there were full. Not normal, a state environmental officer in Valdez is quoted as saying.

“Valdez inventories are pretty high. Our inventories are high. Nobody is taking much crude on the West Coast,” Bill Kidd, a spokesman with the BP refinery in Washington, is quoted as saying.

Domestic crude oil stocks are up in part because new drilling technology has increased production. Demand for gasoline is down too, for reasons that include more efficient cars and drivers cutting back to save cash.

So why the heck do gas prices stay aloft? Because the price of crude oil, the mother of gas and other fuels, are set globally. The system aids producers by eliminating price fluctuations tied to local supply and demand.

“The profitable oil production industry benefits from the fact that it operates within a global market,” says the article, which turned to experts such as Richard Newell, former head of the Energy Information Administration. “Fuel conservation in the United States cannot overcome the rising hydrocarbon demand in emerging markets like China and India. The price stays up even where more local market pressures might force it down.”

To Young’s credit, he gets it right when arguing that more oil production creates high-paying jobs, boosts state and federal treasuries and reduces US dependence on foreign oil.

And what about Valdez? Tanks there were more than 90 percent full when the Alaskan Explorer sailed back into port with its unusual load on April 11, the article says.

The reporter says Alyeska spokeswoman Michelle Egan downplayed the significance of the close-to-full tanks. But she also “acknowledged that Alyeska officials begin worrying when the storage tanks at the terminal are over 90 percent full. Such a glut could force a slowdown of oil production on the North Slope. That would reduce flow in the trans-Alaska Pipeline, she said, which can result in increased maintenance problems,” the article said.

Link to original article



Why would they want to drill when there is plenty of conventional oil available? Answer: The Oil Depletion Allowance