Australian Institute of Petroleum

C. It looks like the increased demand for oil is only going to continue, which, in turn, will make gas prices go higher.

The consumption of the oil cause changes in the supply and demand. The United States produces 11 million barrels of oil every day. We are one of the biggest countries to have a big influence on the production and prices of the oil. The basic supply and demand theory explains that the if a product is produced more, the cheaper it should sell. If a country were to double the output of oil day, prices would fall and the Production is high, but the distribution of oil isn’t keeping up with the market. The United States builds an average of one oil refinery per 10 years. This is a net loss due to the fact construction has slowed down since 1970s. Since 1970s, the United States has 8 less oil refineries today. The reason why we are not oversupplied with cheap oil is because of the other countries’ higher net margin and the only operate at 62% of their capacity. Excess capacity is only there to meet future demand. With demand moving accordingly, oil prices will continue to be set mostly by the market — despite external players’ best efforts. (McFarlane)

The question that has arisen from this shift is whether or not the Canadian oil and gas industry inclusive of the upstream, and midstream sectors, has a net positive benefit to Canada. This essay will explore and seek to understand the myriad of issues that this industry faces daily.

[Oil production has jumped from 5.0 million barrels per day in 2008 to 7.4 million last year and is expected to average 8.5 million this year and 9.3 million next year, according to the EIA, the analytical arm of the Department of Energy.” (Koch par. 2)]

The supply and demand are the main driving forces within this market, it can cause a change instantaneously overnight, and these cost issues are immediate to the consumer. There could be a fire in one of the local refineries causing product shut down, this can create a panic at the pump as well. There are many reasons why this product is so volatile, it cost too much money to refine and thereby is restricted in the method of refining. Supply means that there is a large supply available for product usage, pricing goes down, too much product, if the Demand is exact opposite occurs and there is short supply and the pricing is extremely quick to be changed at the pump. The markets can be also affected; they can be changed no matter how far the original production occurs, economics are disturbed, countries global markets respond to higher cost factors to operate business development causing inflation to jump to higher records slowing down global progress.

The “U.S. became the world’s top producer of petroleum and natural gas” in 2013 (Energy Infrastructure). “Capital spending in the infrastructure that moves and transforms oil and gas into everyday products … has increased by 60 percent between 2010 and 2013” (Energy Infrastructure). The rise to become the top producer has led to the decrease in “U.S. oil import dependence” and the “rise of U.S. product exports” (U.S. Oil Import Dependence). The increased exportation of oil and gas by the U.S. has allowed both of these products to become large moneymakers for the United States. Although we will probably never “completely eliminate our need” for oil, we can reduce our petroleum consumption and the damage we inflict on the environment (Reduce Oil Dependence Costs). By decreasing the “dependence on oil” in new vehicles, there has been a

Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.

This number may comfort some, but there is still reason to be fearful. Ninety percent of Earth’s refined oil is burned through transportation, with the United States consuming 25 percent alone (Davy par. 5, 6, 8). Collectively, factors will add up to devastating consequences later if change isn 't pursued. Geophysicist M. King Hubbert confirmed, through a calculated formula, that oil production will increase to a peak in the year 2030, but will proceed to decline soon after until oil drains too far down to be economical to continue drilling or having the well run out entirely

The demand of gasoline has increased steadily over the last twenty years. In 1981 the U.S. averaged 6.5 million barrels of gasoline consumption per day. By comparison, in 2004 the U.S. averaged 9.2 million barrels of gasoline consumption per day. For most of this time period, gas prices stayed relatively the same. This is because the U.S. refineries increased their production to meet the demand and maintain the equilibrium price. Also during this same time period worldwide demand for crude oil increased 27%. Crude oil producers also increased their production to meet the demand keeping prices the same.

Australian Oil Refining Pty Ltd ('AOR') and Caltex Oil (Australia) Pty Ltd ('Caltex') were gatherings for managing harmony according to which AOR refined unrefined petroleum that was delivered to its refinery on the southern shore of Botany Bay by Caltex, and after that dispatched the refined item back to Caltex's oil terminal on the northern shore of Botany Bay by means of a pipeline that kept streaming under bay. AOR was the title-holder of the pipeline. Under the terms of the agreement Caltex held accountability for oil in its different structures, and AOR was answerable for the hazard of destruction or depletion to the oil as it streamed through its pipeline.

HollyFrontier compete with a broad range of refining companies, including multinational oil companies including Valero Energy Corporation, Marathon Petroleum Corporation, Philips 66 Company, Chevron Corporation, Royal Dutch Shell Corporation, Tesoro Corporation, BP Corporation, and the biggest competitor Exxon Mobil Corporation with a market share of 16%. Because of their geographic diversity, larger and more complex refineries, integrated operations and greater resources, some of the competitors may be better able to withstand volatile market conditions, to obtain crude oil in times of shortage and to bear the economic risks present in all areas of the refining industry. HollyFrontier is not engaged in petroleum exploration and production activities and is not producing any of the crude oil feedstocks at its refineries. Also, the company does not have a retail business and because of that is dependent upon others for outlets for its refined products. Certain numbers of HollyFrontier competitors, however, obtain a portion of their feedstocks from company-owned production and have a retail outlets. Competitors that have their own production or widespread retail outlets, with brand-name recognition, are at times able to

· There are expected to be new emerging markets in Asia opening up with the financial boom

“Any increases in the price of oil in the U.S. or in our other markets or any sustained shortage of oil, including as a result of political instability in the Middle East and African nations, could weaken the demand for such vehicles, which could reduce our market share in affected markets, decrease profitability, and have a material adverse effect on our business.” Page 26

Gas Prices affected by Geopolitics and Supply problems Along with the demand for oil rising, many disruptions to the supply have created bottlenecks. For example, the war in Iraq has resulted in reducing oil production there, as has also happened in Nigeria due to rebel activity. The continuing nuclear weapons wrangle with Iran, the government increasing its control over industry in Russia, and the oil companies being nationalized in Venezuela has given rise to misgivings about future supplies.In recent years, refining crude oil in the US has also become more expensive, with experts citing two main reasons for this: congressional mandates resulting in shifting towards the production of more environmentally clean gasoline blends, and the oil refineries on the Gulf Coast being devastated by Hurricanes Katrina and Rita in the year 2005. In addition, the production of crude oil in America has also become costlier since the places that have been easiest to drill have largely gone dry.This means that oil companies have to go increasingly into offshore oil producing areas such as the Gulf of Mexico, which cost much more to drill in. With oil companies having to access harder to reach locations, which makes it costlier to produce oil, and simultaneously them being forced to reduce their

World oil demand is increasing as emerging economies need more energy to increase their living standards. Estimates, shown below, are that by 2030, China and India as emerging markets will import over 70% to 90% of their fossil fuel needs (1) . Coupled to a continued high and growing demand for oil, makes this a robust market for the next 30 years.