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Tuesday, February 17, 2015

Derail and Catch Fire

The derailment yesterday of a North Dakota oil train in Mt. Carbon, WV, made national news:


The tank cars exploded and fell into a river, causing a water treatment plant to shut intake valves. They were still burning 21 hours later. Thousands of people may have their water turned off. Charleston is downstream of the spill

What didn't make national news was a derailment in Ontario of a train carrying crude oil from the tar sands of Keystone XL fame:
The train, heading from Alberta to eastern Canada, derailed shortly before midnight about 80 km (50 miles) south of Timmins, Ontario, a CN spokesman said. Canada's largest rail operator said 29 of 100 cars were involved and seven were on fire.
Another oil train fire killed 47 people in Quebec in 2013, and several other trains have exploded in North Dakota and on the east coast.

The cars carrying the crude oil in West Virginia were the new, supposedly safer, tank cars that the railroads didn't want to use because they cost too much. Turns out they aren't much better than the flimsier ones they want to continue using.

Oil prices are really low now because of the glut of oil coming from Canada and North Dakota. Now is the time to take a step back and reevaluate everything about the way we're getting oil out of the ground. And it's not just train accidents.

Oklahoma used to have two or three earthquakes a year. Now they're having two or three a day. It's due to injecting massive quantities of fracking fluid into fault lines, which lubricates them and allows them to slip. But oilmen insist that it's not their fault:
But Kim Hatfield of the Oklahoma Independent Petroleum Association says he's not convinced there's a connection. He says oil companies have been pumping brine down wastewater injection wells for decades. More than 3,200 of the wells dot the state.
They've been pumping this crap into the earth for decades and they don't think it has something to with the 100-fold increase in earthquakes. Right...

Clearly we need to continue to drill for oil for the foreseeable future. But we don't need to drill so manically fast that we kill innocent people who live along railroads and pipelines, and destroy the houses and property values of people who live near injection wells.

The oil coming out of the tar sands and the Bakken formation is much more flammable than other types, according to that liberal rag, the Wall Street Journal. The sulfurous chemistry of Canadian tar sands oil may also make it more likely to eat through pipelines, which is one reason many land owners along its route are skeptical.

Cleaning up oil spills, compensating land owners, shutting down water treatment plants, repairing damaged track inflict significant economic costs on people who aren't profiting from the sale of this highly flammable oil. It's the tragedy of the commons all over again.

It's obvious that pipelines should be used to transport this oil, but they have to be up to the task. The right technical solution isn't clear yet: putting highly corrosive and flammable crude into a pipeline may never be feasible. It could be that the right solution is to filter out the problematic components of the crude first. (And then where do you dump that?)

In the long run what will stop an oil company from ignoring that requirement in 10 years, once all the shouting is over, and start pumping explosive acidic oil across America? How do you make pipeline owners strapped for cash because of low oil prices keep their lines properly maintained?

When these companies violate these agreements and everything explodes in their employees' faces the execs just have that subsidiary declare bankruptcy and then go off and form another subsidiary to do it all over again.

25 comments:

GuardDuck said...

the railroads didn't want to use because they cost too much

Fix your blame in the correct direction. The railroads don't actually own most of the cars they transport. Look at the next train that goes by you. The cars' are identified by a series of letters followed by numbers. If the last of the letters is an 'X' it is not owned by a railroad. Some others that do not end in an 'X' also are not owned by a railroad, but that is the easiest way of telling.


Oil prices are really low now because of the glut of oil coming from Canada and North Dakota.

You may want to consult with Mark. He claims that increased supply will not reduce prices.


juris imprudent said...

Talk about a wake up call for the opponents of KXL. Oh wait, they aren't sleeping, they are fucking idiot zombies praying to Gaia. I don't suppose a 2x4 to the forehead would actually get their attention.

Mark Ward said...

He claims that increased supply will not reduce prices.

Straw man.

Increased supply combined with increased demand does not reduce prices. If demand is lower, as it is now, prices will also drop. Prices are also lower now because the speculators have pulled out of the market (and into renewables) and the Saudis are thus far refusing to play games with their supply.

GuardDuck said...

Straw man.


We can drill and drill and drill but the oil we produce will go to places in the world where the demand is higher. It's not going to go here which means prices won't go down.
Markadelphia

Remember that one? You know the one where YOU disagreed with my statement thus:

"Plus ole N makes the same mistake that M makes by assuming that oil being a global commodity somehow divorces it from market forces - while at the same time bemoaning the effect those same forces have on a global commodity.


Supply. Demand.

Increase supply, apply to global market, decrease global price."









Oh and a p.s. - regarding your comment upon 'basis belli' on the presidents thread:


I'm pretty kind on here when it comes to typos
Markadelphia

Guess you couldn't just resist the personal and childish attack huh?

Mark Ward said...

Supply. Demand.

Increase supply, apply to global market, decrease global price
?

And what happens when the demand increase maintains pace with the supply increase or outpaces it?

http://www.raybromley.com/notes/noteimages/equilibrium/incrdemsup3.jpg

http://www.raybromley.com/notes/noteimages/equilibrium/incrdemsup2.jpg

A visual representation of the current oil market.

http://www.raybromley.com/notes/noteimages/equilibrium/incrsupplyeq.jpg

So, depending upon which increases outpaces the other or if they increase at the same pace, price can be affected in multiple ways.

Even Unix admitted he was wrong and I "won the interents" whatever that means...

Larry said...

But, but, but, Markadelphia, you said increasing production would never lower prices in the real world because demand would rise as fast or faster. In fact, just getting you to admit that increasing production could even mitigate price increases from rising demand was like pulling a bad tooth from unanesthetized donkey. We're in a situation you had pretty much categorically rejected as being a "right-wing fantasy".

Mark Ward said...

But, but, but, Markadelphia, you said

Everything after that is a straw man..

Larry said...

No, it's what you fucking said, you pathetic excuse for a teacher. Or maybe you don't remember this classic piece of crap: Drill Baby Dr-hey, waitaminute!?

You brayed: Their solution is domestic drilling and they fault the Democrats for not allowing it to happen. If we drilled more here, they say, prices would go down and all would be well and good. As is often the case, they are completely full of shit. Here's why.

Then this epic gem of paragraph, where you demonstrated that the concept of different nations and states having different tax rates (and how that affects prices) completely eluded your steel-trap mind: The blue line shows the average price of gas in the United States. The red line shows the average price of gas in Canada. The green line is the price of crude oil. Canada is a net exporter of oil meaning they export more oil than they consume. They export around 3.3 million barrels a day and consume 2.2 million barrels a day. So, even with their abundance of oil and smaller population, they still have higher prices than we do. In other words, drilling and keeping more of their own oil hasn't helped them at all. They still pay more for gas.

Yup, mind like a steel trap -- rusty, illegal in most of the union, and worst of all, snapped tight on your own fool leg.

And so on: So why are gas prices so high and why can't drilling help us? To put it simply, that's the marketplace for oil. Whatever extra we would produce would be insignificant in comparison to what the world consumes. In addition, OPEC would likely cut production to match what we were producing.

and on, but now with a bald-faced lie to lead in with: I'm well aware of the higher taxes in Canada, Larry. That doesn't change my point about "drill baby drill" being completely ineffective at lowering prices. Even if we became a net exporter (like Canada), we'd still be shackled to the global market.

That's what I found in 2 minutes, you fraud.

Mark Ward said...

Nowhere in their did I write "because demand would rise as fast or faster." And I have written extensively about demand falling when renewables become more attractive.

Moreover, drill baby drill and Keystone are event more pointless now with oil worth less. How are those booming towns in North Dakota doing these days? Man, you really gotta love the free market:)

GuardDuck said...

Nowhere in their did I write "because demand would rise as fast or faster."

You did say that any increased supply in the market would go to where the demand was greater.....

Remember all that wailing about China and India? You know, the 'it's pointless to drill here because of increased demand there?'



Moreover, drill baby drill and Keystone are event more pointless now with oil worth less. How are those booming towns in North Dakota doing these days?

And we discussed that too. Remember the 'costs of producing domestic oil verus oil price and it's relation to when domestic production rises and falls' discussion? Remember how we discussed the moderating influence of increased production that counters increased prices? Remember my example of domestic widgets versus Indonesian widgets? Remember discussing decreasing costs to produce domestic oil vis-a-vis the entrance of that oil on the market at a lower price point?

Surely you remember these things?

Mark Ward said...

The main thing I remember, GD, is a severe case of myopia in terms of demand. I presented three graphics above which support both my previous assertions and my current one. Respond to them. Otherwise, it's obvious you don't know what you are taking about in terms of basic economics .

GuardDuck said...

And the main thing I remember is that after arguing with you for months you finally came out and claimed EXACTLY what we were saying and claimed that you had been saying that all along.

Mark Ward said...

So, that's a no on the graphs then? No on any mention of demand changing?

I want you to go on record here GD, and say that the reason why oil is cheaper now is solely because of increased supply.

GuardDuck said...

I presented three graphics above which support both my previous assertions and my current one. Respond to them.


OK.

Despite having went round and round with you years ago over this you kept arguing that this graph:

http://www.raybromley.com/notes/noteimages/equilibrium/incrsupplyeq.jpg

Would be impossible.

We never said that the other graphs were impossible.

Your focus the entire time was that increased production could not decrease prices. Period. Full stop.

You gave the reasons for that as various causes but mostly because you insisted that, despite oil being a global commodity, that any increased production would go to the specific world location where demand was higher - thereby muting any decreased prices.

Our argument was that, since oil is a global commodity, increased production applied to the world oil market sates demand and acts to reduce price. Whether that be by actual reduction in price or by keeping the price from rising.

You disagreed vehemently.

Now you claim you've been saying that all along.

Bullshit.


Demand for oil is greater in the rest of the world than it is here. Since oil is part of the world market, oil companies will go to where the greater demand is and sell their product there.
Markadelphia

Remember that?

If demand is increasing, then prices will go up. If supply also goes up, then there is a countering downward pressure on prices. If supply goes up faster than demand, prices will go down.
Larry

Said that shortly after your above comment. He said exactly what you are claiming you've always been saying. Did you agree with him or did you argue with him?



No, I'm saying that demand in China and India exceeds demand here so oil companies will simply drill here and sell over there which won't have much of an impact on price here.
Markadelphia

Nope, arguing the point. Get that? You argued against the point you are now claiming as your point. If you argued against it, would one be wrong to assume that you disagreed with it? And if you indeed disagreed with what Larry said - then come here and claim that EXACTLY what Larry said is the truth - well you can't be right on both counts.

So yes, you did claim that increased supply will not reduce prices.








GuardDuck said...

I want you to go on record here GD, and say that the reason why oil is cheaper now is solely because of increased supply

And just why would I do that? I never said such a thing. Apparently you don't actually read what is written. Surprised and shocked I am.

Mark Ward said...

Would be impossible.

So yes, you did claim that increased supply will not reduce prices.


Straw man...never said either one...

And just why would I do that? I never said such a thing

Increase supply, apply to global market, decrease global price

You just did again in this thread!! So, I guess I don't what you are saying.


GuardDuck said...

You just did again in this thread!! So, I guess I don't what you are saying.

Wow. You are being particularly stupid today.

That was a quote. you know, it has italics and quotations marks and stuff. That means it was said somewhere else. Probably in reply to something else. Like in response to something someone else said.

Posted here as an example of you arguing that increased supply CANNOT reduce prices.

What it most definitely does not do is illustrate me claiming that increased supply is the sole reason oil prices are cheaper.

You may wish to talk to your co-blogger Nikto though, since he did in fact claim that oil prices are cheaper because of increased supply.



Straw man...never said either one.

BULLSHIT.

"Increased stable supply with lower production cost means oil on the world market is cheaper."

No. This is simply wrong.

Markadelphia



Mark Ward said...

If you are going to complain about pulling quotes out of context, then don't turn it around and do it to me. Simply link the entire thread. There are some interesting things in that conversation:)

Of course, one of the reasons why prices are lower is due to increased supply. It's also due to demand falling off because countries are developing more fuel efficient cars. Demand is not falling off simply because of increased supply which is what you seem to be asserting here...please correct me if I am wrong. Demand is also falling because the various conflicts around the world aren't requiring as much oils as they did...even as recently as last year.

What's very interesting about recent developments is that we managed to increase supply without "drill baby drill," right? The president held firm on drilling in Alaska and other places that you guys insisted had to happen in order to drop prices and guess what? It still worked. So, the straw man you made the president out to be (as usual) ridiculous.

GuardDuck said...

Demand is not falling off simply because of increased supply which is what you seem to be asserting here

I am not. I am asserting nothing here regarding economics. Read what has been written. I am asserting that you have, in the past, claimed that if we 'Drill baby drilled' it would have no impact upon oil price.

N claimed that increased production has made oil prices low.

That is in direct contradiction to what you argued and argued.

Now you argue that you didn't make such claims.


The president held firm on drilling in Alaska and other places that you guys insisted had to happen in order to drop prices and guess what? It still worked. So, the straw man you made the president out to be (as usual) ridiculous.

Now that is a straw man. I never made any such claims.

Mark Ward said...

Hmm...no link...controlling the propaganda is paramount:)

GuardDuck said...

It's your own fucking site Mark. Find it yourself.

Mark Ward said...

Yep...just like I thought:)

Larry said...

More fuel efficient cars are having a negligible effect in so short a time because the vast majority of cars on the road aren't brand spanking new. Even in China where there aren't all that many older cars, there's no way that the majority of cars are less than two years old, AND how much has Chinese new car fuel efficiency gone up in 2 years? Compared to the number of new cars hitting the road, the only difference it could make is that instead of fuel consumption going up by (for example) 1.5x, it might go up by only 1.4x. That doesn't translate to reduced demand by any maths known to mankind.

GuardDuck said...

Just as you thought? I.e. great job of deflection.

You said it mark. Can't change that.

juris imprudent said...

You said it mark. Can't change that.

Of course Humpty-delphia can - words only mean what he wants them to mean in the instant they are spoken. After that, it doesn't matter.

Now that doesn't mean anyone in the real world has to buy that bullshit.