But the oil quickly ran out and the town disappeared. But there is a
historical site.
The picture of barrels reminds me that during most of the 1800s, tank cars had not been invented. A shipper could choose boxcars, gondolas, or flatcars.
In this article pause the video and just read the text. The video, after a painfully long commercial, is about all sorts of things that happened on Jan 10. The article describes the discovery of oil at
Spindletop. By 1901, Rockefeller had created his monopoly by buying most of the wells in Pennsylvania, Ohio. etc. But after this Jan 10, 1901 gusher proved there was a lot of oil in Texas, new wells were brought online faster than Rockefeller could buy them. Companies formed in Texas ("Humble (now Exxon), the Texas Company (Texaco) and Magnolia Petroleum Company (Mobil)") that could compete with Standard Oil after it was broke up. In the 1800s, oil was used for kerosene in lamps and refined for lubricants of the many machines that were built in the 1800s as part of the industrial revolution. But the invention of the electric light bulb killed the market for kerosene. Fortunately for the oil companies, the development of the internal combustion engine around the turn of the century created an even bigger market for oil.
By the 1950s, the Spindletop fields had been drained. And foreign companies in the Middle East and elsewhere discovered big reserves. In the 1970s, they organized OPEC and could control the supply of oil. Not only did the price of gas go up, filling stations limited the amount of gas they would pump. I remember sitting in a long line on a street during the few hours that a station was open hoping I would get through the line before the station closed. Thank goodness, at that time, my commute to work was just 1 mile rather than 30 miles to a Chicago office. Portable terminals had yet to be developed so working from home was not an option.
The higher prices that OPEC forced on the world made secondary oil recovery and new exploration economical in US. Russia also started exporting oil in significant quantities. And the Alaska pipeline helped break the OPEC monopoly.
But the booming economy in China and the rest of the world made supplies tight again and we saw gas prices over $4.00. Then we had the recession of 2008, the development of shale oil fracking and Canadian oil sands. But why the prices stayed high for years than collapsed in a time peroid of weeks continues to confuse me because the new production of shale oil and oil sands took at least a couple of years to ramp up. Why didn't the price come down slowly as the additional supplies were put online? Various wars in the Middle East would move the price a few dimes, but they don't account for the price falling 50%. Saudia Arabia refusing to cut output had an impact on the fall. But I assume they kept their output the same as the new wells came online, so that doesn't account for the sudden drop. Maybe the announcement by Saudi Arabia that they won't cut output because they wanted to hold market share spooked the oil traders into realizing the world's oversupply was permanent.
When we were seeing gas prices over $4, the price-per-barrel of raw crude was over $100 (peaked at $107.95 in June 2014). That price bottomed below $30 in February, 2016. [June, 2016,
BlackSwans]
But we may never see the price go above $60 again. One reason is that at $60/barrel, it becomes economic to restart development of most shale fields and oil sands. [
Financial Times] The graph below is rather fascinating. I noticed Onshore Opec is $40. But then I noticed that this is an average. Is Saudi Arabia significantly below that or have they already drilled all of the cheaper wells? I also note that the Bakken field is one of the more expensive shale-oil fields, and it is more expensive than oil sands. I wonder where BP's deepwater development in the Gulf of Mexico would have been on this chart if they did not have the blowout. Also, how deep is Brazil and Angola's wells compared to what BP was trying to drill? I've seen an article about how many wells in the North Sea are going to have to be decommissioned in the upcoming decades. Evidently that field is getting played out and the economics of "Europe shallow water" is becoming worse. I wonder if the North Slope of Alaska is one of the unlabeled offshore dots. And I would like to know which dot(s) represent Russia.
[
Peak Oil Demand] did not teach me much. But it did get me to thinking about where does the price of oil go from $50? Saudi and Russia can't let it go back down to $30 again because they were reminded that their economy is now too dependent on oil income. They had to cancel/postpone some of their big-buck projects. If they hold it at $50, they would crush deepwater producers, half the shale fields, Europe shallow water, and oil sands production. But if they put that much production out of business, prices would go way up again. That would drive people to the alternatives such as E85, especially since
cellulosic ethanol has been developed; wind (although I have read that most of the good wind locations have already been developed); solar (maybe, I don't think any of the companies that the Federal Government poured money into had any success); more efficient cars; propane and/or LPG locomotives, trucks and buses; people moving back to the city and using public transportation; cities reusing rail infrastructure by adding light-rail lines; ride sharing; an unsustainable global GDP growth [
Growth Decline]; reduction of brick-and-mortar activities: working from home with "hotel" space in the office, 3D-printing, not hanging out in a mall, etc. [
Third Industrial Revolution]; etc. Too many viable alternatives, would crash the oil industry. Cheap natural gas as an alternative to coal for electric power plants along with another round of environmental regulations has made the coal industry an example of how quickly an industry can collapse. (The last deep-pit mine in England has closed. They still have surface mines, but a big factor in the closure of deep-pit mines was the increase of imports. [
BBC] All of the large, publicly listed American coal companies have filed for bankruptcy: Peabody Energy, Arch Coal, Alpha Natural Resources, Patriot Coal and Walter Energy. [
WSJ])
I just recently read that sales are down in malls because teenagers are no longer going there to "hang out." They spend their time on social media in their room rather than go to the mall. And how many now stream a movie rather than go to a movie theater? In the 1950s, when gas was really cheap, teenagers used to cruise on Friday and Saturday nights and go to drive-in movie theaters.
Also, Americans have demonstrated that gas prices have some elastic. They switch between buying hulking SUVs and trucks vs. small and hybrid cars depending on the price of gas. And soon electric cars may be a viable alternative. Florida, Las Vegas, and the airlines learned that Americans will find places to visit that are closer to home when the price goes up. They even coined the term "staycations." That is, skipping the annual travel vacation and finding something different/interesting to do near home.
A couple of years ago, I bought my third minivan, and it has flex-fuel. I started using E85 because gas was around $3 and E85 was just less than $2. But when the price of gas went below $2, E85 still stayed in the $1.90s. I figured out that E85 needs to be less than 80% of the price of gas to be more economical because of the reduced gas mileage. So I quit looking at E85 prices. But when I noticed that E85 was down to $1.40s, I started looking again. At my last fill up, gas was $2.39 and E85 was $1.69. 80% of 2.39 is 1.91, so I bought E85 again. I wonder what percentage of the engines on the road now are flex-fuel. Unfortunately, I just read that using ethanol causes the intake valves to become dirty. When I am in Kentucky, I do buy Shell because it is competitively priced down there. And I got my best gas mileage ever (30 mpg in a minivan travelling a 79 mph) when I had a tank of Shell. Hopefully, its additives will keep my intake valves clean.
I wrote the above several years ago. This draft got kinda lost. Now, Aug 2023, gas is above $4 again. But I don't know why. We have had some general inflation, the past few years, but I don't think accounts for the increase.
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Industrial Engineering World posted
Crude Oil Products with Different Temperature
[Now, if they start with tar sands from Canada instead of liquid crude oil, they get petcoke at the bottom instead of asphalt.]
Dave Durham shared |
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Chemistry : The Mystery of Molecules posted
Jimmy McCauley posted
Justin Biscoe: They haven't used fractional distillation since before world war 2... Molecular cracking is how it's done now.
Ken Newman: Justin Biscoe distill then crack.
Justin Biscoe: Ken Newman not really, you limit your choices, the reason why we crack is because we get more petrol than the otherwise would and this is become more important over the years, and less black sludge which is only useful for tarmac, the modern solvents are easier to synthesize from methane than wasting it from distilling crude.
Martin Hardy: Justin Biscoe Does the cracking process mean that to obtain a certain amount of petrol you don't need to refine a proportionate amount of diesel as a by-product? I had the understanding that if petrol demand rises faster than diesel demand than the refining process would lead to a glut of cheap diesel? Does the cracking process mean that actual market demands for petrol and diesel can now be met without over-production of diesel as a by-product of petrol ? |
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Illinois Petroleum Resources Board posted
Did you know? The Texas Independent Producers and Royalty Owners Association's latest State of Energy report shows Illinois ranks 9th in the United States in total oil and natural gas industry jobs. TIPRO projects the Illinois upstream, midstream and downstream oil and gas industries combined to generate $23.7 billion in gross regional product in 2022 and directly employ 20,431 people. TIPRO shows that Illinois added 362 oil and gas industry jobs in 2022, including 93 exploration and production industry jobs (Note: the latter figure does not include independent contractors, which have traditionally accounted for about half of Illinois' exploration and production industry jobs). Check out IPRB's updated Illinois Oil and Natural Gas Industry By the Numbers infographic for more facts on the state's oil and gas industry. |
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Illinois Petroleum Resources Board posted
Did you know? The United States consumes more than 20 MILLION barrels of oil per day. Here’s a breakdown of how that 20+ Million BPD was consumed in 2022 by refined petroleum product.
Find out more here: https://iprb.org/industry-facts/petroleum-products/
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