International house of pancakes
I went to an "International House of Pancakes" last week for my "on the road" cup of coffee and suffered a devastating blow-one cup of coffee = $1.85.
When I was a kid, coffee was 5-10¢/cup (Okay, take the high price). Gasoline was 17¢/gal. Taxes on both at the time essentially zero.
Coffee is up $1.85/0.10 = 18.5 times. Gasoline should be 18.5 x 0.17 = $3.14, plus 36¢/gallon for State and Federal Tax: $3.14 + 0.36 = $3.50.
The price at the Union station today was $1.45 including taxes. Looking back, even $2.00/gal wasn't too bad.
Will somebody (hopefully, the API, if it still exists) please step up and spend a buck or two waking up the public on the absurd robbery image that has been hung on oil.
And nobody recalls that Colonel Drake and the oil business saved the whale.
Russ Green Jr.
Healdsburg, Calif.
Dangerous compromise
Your editorial, "A dangerous compromise" (OGJ, Feb. 18, 2002, p. 19) is directionally on target. On first reading, however, it suggests that alongside Archer Daniels Midlands Co. (ADM), Enron's corporate shenanigans and lobbying activities are insignificant and thus might be disregarded as irrelevant. Both are reprehensible in their own way, and comparing relative blameworthiness is no way to divert the ADM juggernaut from forcing Americans to use ethanol to meet octane requirements.
More to the point, for governments at state or federal levels to compel the use of ethanol or for oil companies simply to acquiesce to the use of ethanol would not serve the interests of consumers. In addition, using basic foodstuffs to enhance gasoline octane is a sure signal and nose-thumb to the world's starving that Americans care more about using corn to power their SUVs than using it to help to feed the less fortunate. Can't we be more principled and use grains as food?
To meet octane requirements, the petroleum industry must set as its goal the use of reformulated gasoline. Alternatively, use of ethanol made from agricultural wastes-not grains-might offer an alternative, providing it is cost effective to do so. I have full confidence in the ingenuity of the industry to meet this challenge and not be bamboozled into donning ADM's ethanol straightjacket. The guiding principle must be to serve the interests of the consumer, and here, overall cost considerations are basic. In the final analysis, a government subsidy paid to ADM to produce ethanol is just as real a cost as a hike in the price of gasoline at the pump.
Thomas Wyman
Palo Alto, Calif.
World oil output decline
Harry W. Parker's article "Demand, supply will determine when world oil output peaks" (OGJ, Feb. 25, 2002, p. 40) is thoughtful. It is a fact that gas, gas liquids, and tar belt fuels are gaining in the energy stream, and this is reflected in capital and exploratory budgets of the international oil companies. But world oil output is going to decline coincidentally with the decline of Middle Eastern avails.
Mr. Ali Morteza Samsam Bakhtiari of NIOC pointed this out in his comments to Oil & Gas Journal in the Jan. 7, 2002, issue. Supergiant field Agha Jari is near stripper status. Marun not far behind. So are Abqaiq and Qatif in Saudi Arabia. Ghawar will never again produce 5 million bo/d. Safaniya will never again produce 1.5 million bo/d.
The story is the same in the oil fields of the Trucial Coast. The Burgan is well past its peak. Only in Iraq are there possible excess avails. To understand what takes place today in the Middle East, check out the monthly international rig count. Those rigs are drilling for production.
Linton Morrell
Biarritz, France
