Gasoline, one of the main products refined from crude oil, accounts for just about 17 percent of the energy consumed in the United States. The primary use for gasoline is in automobiles and light trucks. Gasoline also fuels boats, recreational vehicles, and various farm and other equipment. While gasoline is produced year-round, extra volumes are made in time for summer driving season. Gasoline is delivered from oil refineries mainly through pipelines to a massive distribution chain serving estimated 168,987 retail gasoline stations throughout the United States. There are three main grades of gasoline: regular, mid-grade, and premium. Each grade has a different octane level. Price ...view middle of the document...
Good weather and vacations cause U.S. summer gasoline demand to average 5 percent higher than during the rest of the year. If crude oil prices remained unchanged, gasoline prices would typically increase by 10-20 cents from January to the summer. (www.eia.doe.gov)
In September of 2005, regular gasoline prices went from $1.78 per gallon in January to as high as $3.07, as Hurricane Katrina further tightened gasoline supplies. But the hurricane is only one factor, albeit a dramatic one. Another major factor influencing gasoline prices was the increase in crude oil prices. Crude prices rose throughout 2005 and 2008, as global oil demand increased dramatically, stretching capacity along the entire oil market system, from crude oil production to transportation (tankers and pipelines) to refinery capacity, nearly to its limits. In addition, Hurricane Katrina had a devastating impact on US markets, initially taking out more than 25 percent of the US crude oil production and 10-15 percent of US refinery. On top of that, major pipelines that feed the Midwest and East Coast from the Gulf of Mexico area were shut down or forced to operate at a reduced rates for significant period. (www.iea.doe.gov/pub/oil_gas/petroleum_publications)
Prior to the 2003 invasion, the principal vehicle for planning the new post-war Iraq was the US State Department’s Future of Iraq project. This initiative, commencing as early as April 2002, involved meetings in Washington and London of 17 working groups, each comprised of 10-20 Iraqi exiles and international experts selected by the State Department The policy allocates the majority of Iraq’s oilfields – accounting for at least 64% of the country’s oil reserves – for development by multinational oil companies.
Iraqi public opinion is strongly opposed to handing control over oil development to foreign companies. But with the active involvement of the US and British governments a group of powerful Iraqi politicians and technocrats is pushing for a system of long term contracts with foreign oil companies which will be beyond the reach of Iraqi courts, public scrutiny or democratic control.
Economic projections published here for the first time show that the model of oil development that is being proposed will cost Iraq hundreds of billions of dollars in lost revenue, while providing foreign companies with enormous profits.
Our key findings are:
• At an oil price of $40 per barrel, Iraq stands to lose between $74 billion and $194 billion over the lifetime of the proposed contracts, from only the first 12 oilfields to be developed. These estimates, based on conservative assumptions, represent between two and seven times the current Iraqi government budget.
• Under the likely terms of the contracts, oil company rates of return from investing in Iraq would range from 42% to 162%, far in excess of usual industry minimum target of around 12% return on investment.
With over 60% of the world’s oil reserves, their...