PermaLink Useless where it is08/08/2006 01:47 PM

Well, it only took them thirty years to break the Trans-Alaskan Pipeline.  What's next?
I am old enough to remember when they proposed, and then built, the Trans-Alaska Pipeline.   I remember the years of protests, the technical arguments, the lawsuits, the environmental reviews.  Honestly, if they were going to start that project right now, it'd never be approved and built.

But they did it.  And now, thanks to shitty maintenance, British Petroleum has managed to break the damn thing.

One basic truth about oil is, "it's useless where it is."  Iran, for example, subsidizes the cost of gasoline for its population because they import the enormous majority of their gasoline from elsewhere, even though they sit on one of the larger reserves of oil in the world.  Oil shale and tar sands aren't something you can put straight into your car, and Canada doesn't yet have the processing capacity to deal with their reserves of oil.

So, too, with Alaska.  There's some refinery capacity in Alaska, but it's way beyond the needs of Alaskans themselves.  The largest, the North Pole Refinery in Fairbanks, can handle about a quarter-million barrels a day, and about two-thirds of it is processed into jet fuel.  Alaska... doesn't need a lot of jet fuel.  So, all that stuff has to be hauled somewhere else, and even then, the crude has to get to the refinery somehow.  And if you don't maintain the one pipeline that brings Prudhoe Bay oil to the big-ass refinery, everything is for naught.

How hard would it have been to have EPA check on the maintenance being performed on the TAP?  How hard would it for BP -- which earned more than nineteen billion dollars in profit in 2005 and earned more than nine billion just in the second quarter of 2006 alone -- to have done some basic maintenance with some of that money over the years?  Sure, their plans for the next four years apparently include spending a billion dollars to "improve safety in our refining facilities and upgrade pipelines in Alaska," but it seem like they should have done that four years back, right?


Bush has said that he'll release oil from the Strategic Petroleum Reserve to make up the expected loss of 400,000 barrels per day that won't be coming from northern Alaska, but again, oil is useless where it is.  The Gulf Coast -- which is where the sealed salt domes that hold the oil -- 687 million barrels as of last Friday -- doesn't need crude oil.  Its refineries are doing just fine.  And what are we gonna do, haul the crude oil up to Fairbanks, to process it at the North Pole Refinery, just to bring the jet fuel back down to the Lower 48, where it's needed?  Or even more urgently, what do we do with the southern California refineries that actually need some of that Alaskan oil?  They aren't connected to the Gulf Coast via pipelines, so the only way to get crude there is to haul it in ships.

OK, some pretty easy predictions:
  1. Crude oil prices won't actually go crazy.  Replacing 400,000 barrels of oil isn't all that hard on a worldwide scale.  We can pump more out of the Gulf Coast and the SPR, order more from the Arabs and Venezuela (assuming Bush doesn't do something else to annoy Hugo Chavez, who we need a lot more than he needs us) and Indonesia, and the East Coast and Midwest will probably have plenty of gasoline.
  2. Gasoline and other refined fuels prices will go crazy, just in time for winter, too.  Californians will see the biggest hit, probably topping $4.00 per gallon within a few weeks and stretching toward $5.00 later on.
  3. Gas will rise in any area that can send gas and diesel (and aviation fuel) to the West Coast via pipeline, simply because oil follows money as much as money follows oil.
  4. Airline ticket prices will rise.
  5. At least one major airline will disappear, probably either Northwest or Delta, though USAirways could well go into Chapter 11, from an enormous spike in fuel costs for West Coast operations.
  6. The Fed will go back to jacking up interest rates to hold down the inflation that will result from the ripple of higher transportation and home heating costs.

And one other thing:  you will cease hearing about the Republicans wanting to drill new wells in the ANWR.  You can pump all the oil you want, but if you have only a single pipeline to haul it to the mainland, you might as well just stuff it back in the ground.  To build a redundant pipeline would take years and billions of dollars, and nobody is prepared to spend that.

And all they needed to do to avoid this was simple, prudent maintenance.

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Blabber :v

1. The Turtle08/13/2006 02:36:50 AM

What do you mean, "finally started my blog?" I've been writing online for nine years and a month; you guys only recently became aware of it because I did it here... I have millions of words out there in various places over the years, pretty much in the same vein as this. I predate the word "blog." When I started, the term was "net.diarist" and there were only a few hundred of us in the world. It was July, 1997. Long time now.

2. Devin Olson08/10/2006 08:12:42 PM

By the way Turtle; I'm really glad you finally started your blog.


3. The Turtle08/09/2006 12:17:34 AM

True, but the real solution is, "competition with oil," not AMONG oil.

In other words, alternative energy!

4. Richard Schwartz08/08/2006 05:28:03 PM

The root of the problem is that oil companies are not penalized when their own problems, lack of foresight or failure to invest causes a shortage of supply. Their profits just go up because their costs go up and they, and everyone upstream from them, maintains their percentage margins, bringing up their absolute margins. It does not take an economic genius to understand that there is only one circumstance in which this can happen: inadequate competition. The mega-mergers and vertical integration throughout the industry never should have been allowed. We are going to be paying for it for years unless something is done.

5. Wild Bill08/08/2006 04:07:42 PM

In their defence, crude is pretty nasty stuff. Lots of sulphurs, large pressure, etc.

Granted, the sodding maintenance should have been done, etc. but its not as simple as running alongside the pipe with an open set of nostrils...

Course, the Bush administration isnt going to go medevial on "Big Oil"'s ass, is it...

---* Bill

6. Debbie08/08/2006 02:44:05 PM

Yeah, seems to me the timing of that with BP is a little questionable. And exactly how long have they known there was a problem? *sigh* Or maybe it was one of those instant corrosions!

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