OPEC and the Price of Oil – March 15, 2009

OPEC and the Price of Oil – March 15, 2009

OPEC, at its meeting Sunday (March 15, 2009) in Vienna decided not to ask members to cut output any further. This decision will hold off any official changes until the next meeting in May.

As is normal for this group of market manipulators, they cannot agree on what to do or how to do it, so they create a press release that tries to convince the not too bright, that they are maintaining production levels to “help” with the worlds current economic problems.

Nothing could be further from reality or the truth. They did not cut production for a host of reasons, first and foremost is that many of their members are ignoring the previous reduction of 2.2 million barrels per day that supposedly took effect in December. Even by their numbers (which are far too generous) they are only getting 80% compliance from their members on those production limits.

Why you may ask are they unable to control production and force up prices? Well the biggest issue is that many of these OPEC Countries (Note: OPEC Countries theoretically control about 40% of the world’s oil) spend their petro-dollars as fast or even faster than they take them in. Venezuela needs oil to be about US$80.00 per barrel just to pay the bills.

Many of the Middle Eastern countries have gone on staggering spending sprees basically acting as socialist entities.

These countries temporarily import workers to do their dirty work, while their own citizens do less and less but keep getting ever growing government handouts to live on (this sounds vaguely like some western country I may have heard of).

They have spent hundreds of billions on infrastructure projects and other enticements to try and bring foreign businesses to their countries before the oil runs out (yes, it will run out).

However all of this has been based on cheap capital and the idea that oil would keep going up in price forever.

Well fast forward to today, There is more crude oil sitting in storage than at any time in history, the demand is off by more than 1 million barrels per day (Note: this is another manipulated number and the reality is that demand is off by two or even three times this number), the economy in the US and now the rest of the industrialized world is contracting and will likely do so for a year or more, before starting a slow, painful, and just plain ugly recovery, and it appears that there is at least a glimmer of hope that the world including the US will finally wake up and recognize that the way we have been using energy for the last 100 years is unsustainable and that we need to do things now, not is 20 years to fix the problems.

All of this leads me to some oversimplified conclusions on oil pricing over the next year or two. If there is reduced economic activity worldwide there will be less demand for oil. The oil inventories will likely continue to grow as OPEC and Russia will need to pump more and more to make up for the lower per barrel prices.

Right now there is a concerted effort to hold and try to push crude prices up. However to keep oil in storage costs a lot of money every day. At some point traders and speculators will decide that they cannot afford to pay $100,000.00 a day to park crude in a tanker because the price is not going up enough make it profitable. When this happens, we could see oil flood the markets at levels not seen since the 1970’s. This will then further exacerbate the problems of the oil producing countries who will try to pump even more.

Short of a war (not out of the question) or a cataclysmic natural disaster, it is hard to see crude oil going up significantly anytime soon.

Refiners and some marketers are likely to benefit as crude prices decline and more finished product becomes available. In some areas where there is tightly controlled distribution there may months or even years of high profitability due to reduction in cost followed more slowly by reduction in retail prices.

I have regrettably spent my life creating a carbon footprint of embarrassing proportions. I am now working on reducing not only my negative impact on the world, but on creating new and better ways for everyone to do the same without destroying their livelihoods or lifestyles.

Please join us in our efforts.

To read this and other articles on fuels, alternative fuels, oils, lubricants, and coolants, please go to: http://www.lcbamarketing.com/ and click on technical articles.

Please post your comments, thoughts, ideas, and suggestions here.

Diesel Doctor

Copyright 2009© - William Richards

Gasohol – Ethanol Blended Gasoline – How to Prevent Storage Problems

Gasohol – Ethanol Blended Gasoline – How to Prevent Storage Problems

Image Courtesy of JME Sales

One of the biggest problems with gasohol (Ethanol blended Gasoline) is that it is extremely hygroscopic (the ability to attract water molecules from the surrounding environment and to hold them either through absorption or adsorption.

E-10 Gasohol (Gasoline containing 10% Ethanol) can hold up to 3.8 teaspoons of water in solution in the fuel. This water can lead to corrosion, poor economy, drivability problems, and to phase separation leading to other much more serious problems.

To combat this hygroscopic problem it is vital that storage tanks be purged of all water before any fuel containing Ethanol is added. The use of dispersant additives to deal with any residual water is also beneficial.

Storage tanks will pick up water from condensation of moisture in the air due to the daily changes in temperature. A large storage tank can actually generate anywhere from several ounces to as much as a gallon of water per day. Normally this water would settle to the bottom of the tank; however the Ethanol will pick it up, blend with it, and hold it in suspension.

The addition of a Desiccant type filter in the vent system will dramatically reduce or eliminate this condensation. While this idea is relatively new in the US many other countries mandate the use of these filters to prevent water problems.

It is also vital to regularly check the storage tank with water finding paste to be certain that there is no separated water on the tank bottom. Another advantage to water finding paste is that it will begin to slightly change color or in some cases small colored dots will begin to appear on the paste. This indicates that the fuel mixture is approaching the saturation point where phase separation will happen.

Note: Many of the electronic monitoring systems used for tank water detection may not register properly with Ethanol blended fuels. Also we have seen many instances where the fuel tank sending unit becomes saturated with water and stops functioning properly. When this happens the device will show the last good reading indefinitely.

It should be expected that tanks containing Ethanol will require a significantly higher level of maintenance than those holding regular gasoline or diesel.

For more information on this and other fuel related issues visit: http://www.lcbamarketing.com

Diesel Doctor

Copyright 2009© - William Richards

Parking Crude Oil

Parking Crude Oil

Here is a bit of information that is hard to digest.


Speculators are leasing Super Tankers called Very Large Crude Carriers (VLCC’s) (tankers holding 2 million barrels or 84,000,000 gallons each.) to store crude oil. There are currently between 35 and 45 of these behemoths sitting, many in the Gulf of Mexico and Persian Gulf holding approximately 80,000,000 (80 million) barrels or 3,360,000,000 (3.36 billion) gallons of crude.


This is almost one day’s worldwide consumption. The speculators are and have been paying $60,000.00 to $75,000.00 dollars per day to lease each of these tankers to sit holding this oil.


Factoid: If you lined 35 VLCC tankers end to end, the total length would be about 7 miles.


Why would someone pay this huge amount of money to park oil in the ocean? Well look at it this way, using the $60,000.00 per day figure to store 2,000,000 gallons of crude works out to approximately $.03 (three cents) per barrel per day. If it sits there 100 days that’s only $3.00 per barrel.


Now let’s say that you purchased crude that was $35.00 per barrel and today (02/26/2009) it is $45.00 per barrel. Even if you have stored it for 100 days at $3.00 per barrel or $6,000,000.00 ($60,000 X 100 days) you will still profit $7.00 per barrel or $14,000,000.00.


So this might us to conclude that the current rise in crude oil prices is a manipulation of the market rather than the result of supply and demand.
Right now the market is off by about 1,000,000 barrels per day, there are at least 80,000,000 barrels floating around, every land storage tank in the world is full, all waiting for the price to go up.


OPEC would have us believe they are reducing production to stabilize (this means “drive up”) the price of crude oil. In reality they are reducing production only because they have no where left to put it.


In a true supply and demand world, prices should be going down, not up.

One thought is that our government should be filling the national Strategic Petroleum Reserve (SPR) as fast as they can get it in the ground. If all of these speculators believe crude will go up in the future then this a worthwhile investment to make.


In spite of the fact the current price is based on market manipulation, I doubt that the government will ever be able to police it. The ability to move staggering amounts of oil around the world with little or no regulation or accountability makes tracing it virtually impossible.The best things we can do are to reduce consumption through more efficient vehicles, equipment and practices and to work on alternative fuels to reach a point where we are able to produce most if not all of our fuel domestically.



Diesel Doctor



Copyright 2009© - William Richards

Asphaltene's and Plugged Fuel Filters

Asphaltenes and Plugged Fuel Filters

Asphaltenes in diesel fuels are becoming a much larger problem since the introduction of Ultra-Low Sulfur Diesel (ULSD - S-15) fuels.

There are actually several problems that have come together to cause the filter plugging black slime we so often see today.

Asphaltenes are highly polarized long chain components in crude and the heavier refined oils. Under certain circumstances these compounds associate themselves to form complex colloidal structures.

In Low Sulfur Diesel (LSD – S-500), High Sulfur Diesel (HSD – S-5000) and heating and bunker fuels the higher aromatic content of the fuel tends to discourage the formation of the complex colloidal structures limiting the problem.

However the EPA mandated reduction in aromatic content in ULSD has allowed this problem to happen sooner, more often, and in cooler temperatures than had been seen previously.

Asphaltenes agglomerate into an oily sludge. This problem is made worse when water is added to mix.

Petroleum and bio-derived fuels all hold water suspended in them, ULSD unfortunately holds approximately twice as much as the LSD and HSD fuels we had seen prior to June of 2006. Biodiesel (B100) can hold ten (10) times as much water as LSD and HSD, so even small amounts of biodiesel blended with diesel fuels dramatically increases the amount of dissolved water present.

Blending of fuels refined from different crude stocks further exacerbates this problem. Also, warmer temperatures in storage or due to the recirculation of fuel by the engine fuel system speeds the process and thickens the sludge.

Fuel that looks perfect going into a clean tank can develop tiny asphaltene droplets in a matter of hours when recirculation temperatures exceed 140°F (note: some newer engine fuel temperature as it exits the head exceeds 210°F). These pin-prick sized droplets can plug a 10 micron fuel filter in 3ooo to 4000 miles or less 50 hours of operation.

Many people mistakenly see this as a biological (bacteria and fungi) problem, however in the majority of cases the accelerated biological growth is the result of near perfect growing conditions that allows this rapid growth after the filter plugging asphaltene material has blocked the filter(s).

Keeping the water out helps, but the real solution is a thermal stability additive, a oxidative stability additive, together with a water dispersant.

Please comment with your experiences, suggestions, and or questions.

Diesel Doctor

Copyright 2009©

Fuel Storage Tank Maintenance - Keep It Clean

Keep It Clean - Fuel Storage Tank Maintenance

Most owners and operators of fuel storage tanks do not understand that maintenance is required to safely and successfully operate fuel storage tanks.

We constantly hear that customers have tanks that have never been cleaned and worse yet, that they believe that they never need to check to see if they have any problems.

This is made even worse by the information that some fuel suppliers tell their customers; for example that it OK to have some water at the bottom of the tank.

Well here is some real world information for everyone on this subject.

Fuel Storage Tanks all require regular maintenance. They are designed with the pickup tube 3" to 6" from the tank bottom so that small amounts of water, sediment and other contaminants have a space they can settle out so that they will not be drawn into the vehicle or equipment tanks as fuel is pumped out. This water and sediment material will accumulate over time and will cause problems if not removed periodically.

Some will tell you that 1/2" or 1" or even 2" of water is alright, and they are flat out wrong. Every time fuel is transferred into that tank it stirs up all that material and it may take as long as a day for it to settle out again. In the meantime every tank you dispense fuel into gets some of this material.

If you have a steel tank that water is corroding your tank from the inside out and putting rust particles into your fuel. We often find above ground tanks only a few years old that have rusted from the inside to the point of leaking from water and sludge in the tank.

Many customers have electronic monitoring systems that provide constant readings showing fuel level, water level, and leak detection. Some of these customers will see 1/2" or a few gallons of water on these system and ignore it because they have been told it is not important.

One problem we see time and again is that the sensors on these monitoring systems fail and they don't tell you when they fail, they just go on showing the last reading forever. This goes on until they start pumping water into their equipment at which point someone checks the tank with a stick and water finding paste only find that they actually have several inches of water.

We have told all of our customers for many years that even though you have spent several thousand dollars for a state of the art monitoring system, you still need to have some one check every tank at least once a month with a stick and water finding paste.

And this rule should be written next to the monitor and maybe next to where you store the measuring stick: "The Only Acceptable Amount of Water in Any Fuel Storage Tank is ZERO (0)".

For those of your with in-ground steel tanks, these tanks have Sacrificial Anodes attached to them. These Anodes take the weak electrical current generated by the tank and pass it into the ground through them. This prevents the tank metal from corroding, however the Anode "Sacrifices" itself in this process. The Anode is used up over a period of time. When the Anode is "used up" the tank begins to corrode often very quickly. Tank owners should periodically check these Anodes and Replace them as necessary. In many states this is part of the required maintenance and testing procedures, however you should know this and check to be certain it has been properly done.

Caps, Sumps, and Vents should all be checked for integrity and to see that they are doing their intended job.

Fuel Storage is a vital link in getting clean fresh fuel safely and efficiently into vehicles and equipment. You have a big investment in the tank, its installation, and in the fuel in it. It only makes sense to properly maintain and protect this investment.

Today we have new challenges with Ultra-Low Sulfur Diesel (ULSD), Biodiesel, Gasohol, Conventional Gasoline, and Reformulated Gasoline containing any amount of Ethanol. These fuel products hold much higher levels of water and are much more corrosive than fuels we have traditionally dealt with. They require much higher levels of monitoring and maintenance to have a safe and trouble free delivery system.

We are happy to offer analysis and suggestions on how to operate and maintain your systems.

Please post your comments or questions here.

Diesel Doctor

Long Term Fuel Storage

Long Term Fuel Storage

STORAGE LIFE

Under normal storage conditions diesel fuel can be expected to stay in a useable condition for:

9-12 months or longer at an ambient of 70ºF.

6-12 months at an ambient temperature higher than 85ºF.

Note: There are many factors that will affect storage life, including but not limited to:

· Ambient temperature

· Temperature variation - the wider the range, the more likely you are to have problems

· Above-Ground versus In-Ground Storage

· Dissolved water content of the fuel

· Humidity

· Quality of the fuel when added to tank

· Condition of storage tank

· Materials used in the tank and fuel piping system

As diesel gets older, fine sediment and gums will form in the fuel brought about by a chemical reaction between components in the diesel fuel with oxygen from the air. The fine sediment and gums can block fuel filters, leading to fuel starvation and the engine stopping. Frequent filter changes are then required to keep the engine going. The gums and sediments do not burn completely in the engine and this incomplete combustion can lead to carbon and soot deposits on injectors and other combustion surfaces.

The expected life of a diesel fuel can be indicated by the oxidation stability test ASTM D2276. The test measures how much gum and sediment will be deposited after keeping the fuel at 120°C in the presence of oxygen for 16 hours. It roughly corresponds to one year storage at 25°C. A result of less than 20mg/L of sediment and gum after the test is considered acceptable for normal diesel.


ACCELERATED AGING

The aging process can be accelerated by the following conditions:

• Contact with zinc, copper or metal alloys containing them. These metals will quickly react with diesel fuel to form unstable compounds.

• The presence of water. Water allows the growth of fungus and bacteria, these produce natural by-products such as organic acids which make the fuel unstable.

• Exposure to high temperatures.

• Exposure to dust and dirt which contain trace elements that can destabilize the fuel, such as copper and zinc.

• Fuel composition. Some components in diesel fuel naturally age quickly.


PROLONGING THE STORAGE LIFE

Prolonging the storage life is achieved by removing or controlling the conditions described in the previous section. Important measures to take are as follows:

• Ensure that the fuel is not in contact with any surfaces containing zinc or copper or compounds containing those metals (e.g. brass). If those metals are present then a metal deactivator additive may help.

• Establish a regular fuel maintenance program to ensure that water and dirt is removed from storage tanks. This will also remove any chance for fungus to grow.

• Water should be drained from the storage tanks weekly. The frequency can be extended if the tank shows no tendency to collect water but should be done at least monthly.

• Tanks should be kept full to reduce the space for water to condense, maintaining tanks half full increases the water build up and promotes corrosion in the top half of the tank. Most water will come from condensation as the tank breathes. The rate at which water collects will depend on local climate and will be higher in hot humid coastal areas.

• Tanks if possible should have a well defined low point where water will collect and can be drained. For example, cone down bottoms.

• Establish a system for filtering the contents of the main storage tank through a recirculating filter system. This can be made automatic and will reduce the potential for problems by removing sediment and gums. The filters should be checked and changed at regular intervals. When the filter change interval reaches a certain frequency then the fuel should be changed over.

• Tanks should be emptied and cleaned at least once every 10 years, or more frequently if there is a major contamination.

• Ensure that the fuel supplied conforms to a recognized specification to ensure the fuel matches the winter cloud point for the area to avoid filter blocking by wax drop out in cold weather.

• Always purchase fuel to replenish stocks in the winter season November - March. This will help to ensure that the fuel will not cause wax problems whatever season it is used.

• Obtain assurances from the supplier that all components are fully refined to promote stability.

• Establish a monitoring program whereby samples are taken at regular intervals to monitor the condition of the fuel. The samples can be examined at the site visually for evidence of haziness, sediment, darkening or sent to a laboratory for testing.

• Regularly turn the fuel over. If possible, plan the fuel usage so that it will all be used within 1-5 years and replaced with fresh fuel.


ADDITIVES TO IMPROVE STORAGE LIFE

The following additives can improve fuel storage life:

• Metal deactivators. These work by stopping copper, zinc and other reactive metals from reacting with the fuel.

• Fungicides/Biocides. These work by stopping fungus and bacteria from growing in the fuel and so prolong the life of the fuel. They are only effective on fungus and bacteria and will not stop other oxidation reactions from taking place. They are normally active at the water fuel interface where the fungus and bacteria grow. If fungus is present then a kill dose is required. Otherwise a maintenance dose is used to stop fungus growing.

The disadvantages of biocides are:

• Handling and mixing is hazardous because they are poisons.

• When using a kill dose, it is important to remember that killing the fungus can lead to a buildup of dead matter which will block filters and also cause the fuel to oxidize.

• Ideally, the fungus should be killed and then the tank emptied and drained out.

• Maintenance doses are effective but no more so than regular water draining and or the use of a Water Dispersant.

• Disposal of water bottoms requires special handling with due regard to the environment.

• Anti-Oxidants. These work by stopping the oxidation processes from taking place. They prevent the fuel oxidizing and reduce the formation of sediment and gum.

As always, your questions and comments are welcomed and encouraged