Alaska oil pipeline shutdown - fill your car up ASAP

[FurnaceFace]

For those who only get their news through CP, British Petroleum has discovered corrosion and cracks in their pipeline and will be shutting it down in the next few days for potentially a number of months. The pipeline accounts for 8% of the US supply and mainly services the US west coast however oil prices are rockin which likely means our prices are going higher any day now.

[Displaced Flames fan]

Just another in a long line of events/conditions which will have absolutely zero effect in short term gasoline supplies but will surely see the price of gasoline skyrocket.

Funny how gasoline prices simply ignore the laws of economics.

[metallicat]

Global news said it is 2% of the supply.

[BlackArcher101]

I'd fill up if gas stations were open around me. Damn closing late on a holiday.

[ken0042]

Originally Posted by Displaced Flames fan

Just another in a long line of events/conditions which will have absolutely zero effect in short term gasoline supplies but will surely see the price of gasoline skyrocket.

Funny how gasoline prices simply ignore the laws of economics.

Or here's another look at it. A pipeline breaks down, and everybody is talking saying "fill up your car before prices go up." So people do fill up sooner than normal, and all of a sudden there's a strain on demand because people are trying to get the jump on prices. How can the oil companies get a hold on demand? Raise the prices so people stop filling up.

I'm no economic major, but doesn't that make some sense?

[Red Mile Style]

I feel really bad for BP, they only make $50 000 a MINUTE! :baby:

We should start a collection to help them in their time of need...

[Red Mile Style]

Originally Posted by ken0042

Or here's another look at it. A pipeline breaks down, and everybody is talking saying "fill up your car before prices go up." So people do fill up sooner than normal, and all of a sudden there's a strain on demand because people are trying to get the jump on prices. How can the oil companies get a hold on demand? Raise the prices so people stop filling up.

I'm no economic major, but doesn't that make some sense?

Yeah, if someone can explain the economics of oil, that would be great.

I've taken a year of economics, and it still makes absolutely no sense to me. It would appear as though the oil companies have total disregard for the basic principles of economics and do not follow the rules that govern economics.

I think it might have something to do with the fact that oil, in a basic context, does not apply to the supply-demand curve because it is a necessity, therefor gauging can and does occur. And then there are things like OPEC that monitor gas prices, and probably align costs so that companies sell oil at a standard rate. Oil companies make huge profits, so they can definately lower prices, but since they all seem to charge the same for oil, there is no competitive advantage.

Does this make sense? Are there any economics majors out there? (Just when I thought they were completely useless )

[Displaced Flames fan]

Originally Posted by ken0042

Or here's another look at it. A pipeline breaks down, and everybody is talking saying "fill up your car before prices go up." So people do fill up sooner than normal, and all of a sudden there's a strain on demand because people are trying to get the jump on prices. How can the oil companies get a hold on demand? Raise the prices so people stop filling up.

I'm no economic major, but doesn't that make some sense?

Everyone buying their gas on Monday instead of the following Friday does not put a strain on supplies. Are people going to use more gas because they anticipate a price increase.

No.

It's the same flawed logic as the gas freeze out. People are actually convinced that they can effect a change on gas prices by not buying any gas on a particular day. It's ridiculous.

And finally, raising gas prices will not have a significant effect on short term demand.

[flamingchina]

Originally Posted by Red Mile Style

Yeah, if someone can explain the economics of oil, that would be great.

I've taken a year of economics, and it still makes absolutely no sense to me. It would appear as though the oil companies have total disregard for the basic principles of economics and do not follow the rules that govern economics.

Does this make sense? Are there any economics majors out there? (Just when I thought they were completely useless )

We're not completely useless, just mostly useless (all the economicsts laid end to end still couldn't reach a point)

Anyways, the reason gas prices go up immediatly when crude prices go up is that the station isn't concerned what the gas they have in the ground is worth, the number they need to worry about is the cost to replace the gas already in the ground.
To a certain extent, prices do take a bit to filter through the market, but really, each step has it's stockpile of goods (crude to refinery, refinery to distributor, etc.) but again, it's the cost to replace the goods already owned (the sunk costs)

Think about it this way, if you bought an apple for 50c, and all of a sudden, apple prices shot up to $10, would you sell that apple for 50c or 10$?

[Sylvanfan]

Originally Posted by fotze

Ya thats what I was referring to. It will cost money so that means this wasn't a conspiracy by BP to raise the oil price.

Or perhaps they're using this to fund the pipeline repairs? Knowing they had to do this they figured a nice scary press release like this jack the price up a couple dollars a barrel. That way all their existing supplies get a bonus while they upgrade the line that needed work anyways. Either way they were looking at losing access to that line at somepoint in time. Now they've ensured that their other lines will make more money while this one is shut down. Plain and simple they're fataing with the consumer to see just how much we will pay for gas!!!

They keep raising prices and we keep consuming. Until we figure out how to consume less the price of oil isn't comind down.

[return to the red]

Originally Posted by Sylvanfan

Or perhaps they're using this to fund the pipeline repairs? Knowing they had to do this they figured a nice scary press release like this jack the price up a couple dollars a barrel. That way all their existing supplies get a bonus while they upgrade the line that needed work anyways. Either way they were looking at losing access to that line at somepoint in time. Now they've ensured that their other lines will make more money while this one is shut down. Plain and simple they're fataing with the consumer to see just how much we will pay for gas!!!

They keep raising prices and we keep consuming. Until we figure out how to consume less the price of oil isn't comind down.

ding, ding, that's the winner.

Until we as the consumers stop becoming so dependent on oil companies then they are going to charge whatever the hell they want because we bitch and complain but still pay it in the end

damn I think I just said what you did sylvan

[RougeUnderoos]

Originally Posted by Sylvanfan

They keep raising prices and we keep consuming. Until we figure out how to consume less the price of oil isn't comind down.

We have figured out how to consume less, we just don't do it.

[Sylvanfan]

Originally Posted by RougeUnderoos

We have figured out how to consume less, we just don't do it.

Well in reading my July gas bill I see that I hardly consumed anything and the price went from like $3.5 a gigajoule to like $5.50. I used like 3 GJ for the billing period so it was like an extra $6. Had this happened in the winter when usage is more like 15-20 GJ of gas than people would have cried bloody murder at the prospect of their gas bill going up $20-$30. As it is I haven't heard a damn thing about it, yet the price jumped like 60% in a month where no one is using the resource so their should be ample supply.

[Mr.Coffee]

Originally Posted by Sylvanfan

Well in reading my July gas bill I see that I hardly consumed anything and the price went from like $3.5 a gigajoule to like $5.50. I used like 3 GJ for the billing period so it was like an extra $6. Had this happened in the winter when usage is more like 15-20 GJ of gas than people would have cried bloody murder at the prospect of their gas bill going up $20-$30. As it is I haven't heard a damn thing about it, yet the price jumped like 60% in a month where no one is using the resource so their should be ample supply.

ooooo.... that's where your probably wrong. Because of the recent heat across major cities in North America, the use of air conditioning which requires natural gas increased significantly and storage dropped from 21BCF to 9.

[Sylvanfan]

Originally Posted by Mr.Coffee

ooooo.... that's where your probably wrong. Because of the recent heat across major cities in North America, the use of air conditioning which requires natural gas increased significantly and storage dropped from 21BCF to 9.

heh, I guess being from BC I seem to be under the false impression that hydro is how a lot of power is generated. Forgetting that natural gas is often used to generate electricity......D'oh!!!

Hence why a Geothermal system in Alberta is somewhat pointless. You need a tonne of electricity to run one of those things and in the winter you use a lot of electricity to run the thing to keep your house warm. And the power to run that system comes from Natural Gas usually.

I should know better.

[Mr.Coffee]

Originally Posted by Sylvanfan

heh, I guess being from BC I seem to be under the false impression that hydro is how a lot of power is generated. Forgetting that natural gas is often used to generate electricity......D'oh!!!

Hence why a Geothermal system in Alberta is somewhat pointless. You need a tonne of electricity to run one of those things and in the winter you use a lot of electricity to run the thing to keep your house warm. And the power to run that system comes from Natural Gas usually.

I should know better.

Well it's an interesting point.. I really have no clue about B.C.'s power supply but in Alberta there is very little hydro I believe.

In fact lots of people think that Alberta uses those windmills by Lundbreck to generate power, when in fact I am fairly certain there are mandatory levels that must be kept in check with the Alberta government for the different types of power generation. This means that the windmills don't get used as much as we'd hope for the sake of the environment. I could be wrong but I'll go check it out on the eub website.

[Red Mile Style]

Originally Posted by fotze

Ya thats what I was referring to. It will cost money so that means this wasn't a conspiracy by BP to raise the oil price.

Wait a minute. Maybe it is a conspiracy!

What if oil IS NOT renewable and the huge, gross amounts of global oil consumption is actually taking a toll and the oil is running out?

Rusty pipes, or oil depletion?

[Bring_Back_Shantz]

Originally Posted by Mr.Coffee

Well it's an interesting point.. I really have no clue about B.C.'s power supply but in Alberta there is very little hydro I believe.

In fact lots of people think that Alberta uses those windmills by Lundbreck to generate power, when in fact I am fairly certain there are mandatory levels that must be kept in check with the Alberta government for the different types of power generation. This means that the windmills don't get used as much as we'd hope for the sake of the environment. I could be wrong but I'll go check it out on the eub website.

No, that's not right.
Ever since the power industry was deregulated, anyone can sell any kind of power they want onto the grid. My uncle owns two windmills down by crowsnest pass, and so could you.

Anyway, it's interesting to note that in alberta the most common fuel source for electricity is in fact coal, natural gas is second of course, but coal is still #1.

[Mr.Coffee]

Originally Posted by Bring_Back_Shantz

No, that's not right.
Ever since the power industry was deregulated, anyone can sell any kind of power they want onto the grid. My uncle owns two windmills down by crowsnest pass, and so could you.

Anyway, it's interesting to note that in alberta the most common fuel source for electricity is in fact coal, natural gas is second of course, but coal is still #1.

Hmm you most definitely are right about that...

anyways after trying a small search last night I couldn't find what I was looking for anyways so just disregard that point I was making about the mandatory levels of power.

[Lurch]

No, that's not right.
Ever since the power industry was deregulated, anyone can sell any kind of power they want onto the grid. My uncle owns two windmills down by crowsnest pass, and so could you.

Not exactly - it is sort of true there is a limit. Alberta currently has a limit of 900 MW of wind capacity for the province, but with only about 250 MW currently in operation, it is not yet an issue. There are grid stability issues that preclude more than 900 MW for the time being - whether the limit is real or arbitrary is not yet clear until more wind is actually developed. It comes down to intermittency issues for the most part, and whether other generators/load can compensate.