Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

02 November 2011

North Dakota Oil, Truckers, Railroads, Jobs

Government energy policy is presently directed at propping up unsustainable companies such as Solyndra which provide expensive and unreliable so-called green energy.  Solyndra and others of these companies subsidized by the government have already failed with massive losses of government loan or loan guarantee money. 

Meanwhile, in the private sector, the massive Bakken shale oil formation in North Dakota, Montana, and Saskatchewan is producing oil so cheaply that it is selling for $30 a barrel less than Brent crude, which is used as a world oil market benchmark for light, sweet crude oil.  The Bakken crude oil is of high quality and much in demand by refiners.  North Dakota's oil output is now 450,000 barrels a day and may double by the 2015.  This output is exceeding the capacity of present oil pipelines and more are being built, but will not come on-line until 2013.  At that time, production is still expected to exceed pipeline capacity.

The Bakken formation is large and fleets of oil tanker trucks are used to consolidate 70% of the oil from the wells to railroad terminals.  This has led to a boom for the railroads between northwest North Dakota and Louisiana.  Trucking outfits are booming, oil terminals are being built, and it is expected that two trains, each with about 104 oil tanker cars, will be filled each week.  The North Dakota Pipeline Authority thinks it will have 700,000 barrels a day rail terminal capacity by next year.

Moving oil by train, rather than pipeline, adds $5 to $10 per barrel of cost.  But, this highly desirable light sweet crude oil is so inexpensive that adding this cost to the price still leaves it in great demand.  The demand is so great that trucks, truck drivers, and tank cars are in short supply.  Truckers are being supplied with free housing as well as high pay.  Local trucker Lunderby Trucking, of Sidney, Montana, grew from 1 truck to 18 in the last year.  Lease prices for tank cars have doubled in the last year and a half to about $1,000 a month per car.  Tank car manufacturer's have backlogs and no available cars.

Rational people have to wonder why our government threw away more than half a billion dollars on Solyndra so it could expand its production just before it collapsed.  Similar large sums are being spent on numerous other so-called green energy company subsidies.  Now, this is not a proper function of government and the stupid "investments" are no surprise.  But if it were an appropriate function of government to invest in energy production, it would be more rational to help companies produce more pipelines and more tanker cars!  Fortunately, we have a private sector, that though robbed of blood by many government parasites, can still perform such functions in a manner to preserve our individual liberties and to provide us with real power, relatively inexpensively and definitely reliably.  And because it can, North Dakota has the lowest unemployment rate in the country at 3.5%!

Obama, get out of the way and allow the private sector to provide for our energy!

5 comments:

Anonymous said...

Claiming government energy policy is geared towards solar is nonsense when over $2 billion/year goes to subsidizing oil companies.

Randian supermen of the world unite!

Charles R. Anderson, Ph.D. said...

If the government were subsidizing the oil companies at $2 billion per year, that would be much less of a subsidy than so-called green industries and ethanol are getting. One of the greatest subsidies is the pressure put on electric utilities to produce more and more electricity from so-called green energy sources.

There are frequent claims that the government is subsidizing the oil industry, but rarely does anyone actually attempt to describe what the subsidy is and how it is given to the oil industry. The oil industry gets four tax breaks, the domestic manufacturing break of $1.7 billion, the oil depletion break of $1 billion, the foreign tax credit of $0.85 billion, and the intangible drilling costs break of $0.78 billion. The first three tax breaks are given to every manufacturing company whether in the oil and gas industry or not. The oil depletion allowance is the equivalent of the depreciation of capital equipment, which is reasonable. The intangible drilling cost write-off allows drilling costs to be written off in the first year rather than over the entire time of the investment. This is probably most important to the very many small drilling companies and it is the only tax break really unique to the oil and gas industry.

Charles R. Anderson, Ph.D. said...

Every human being has equal, sovereign individual rights to life, liberty, property, the ownership of one's body and mind, and the pursuit of personal happiness. It is those who believe government grants rights and that it can have powers beyond simply protecting rights, who claim that the progressive elitist central planners of government are supermen and get to direct the use of force to dictate values to the peasants and to micromanage their lives because they are incompetent.

Those who understand Ayn Rand's philosophy or mine, understand that we want every individual to be free to choose his own values and to live his own life in accordance with those values, so long as he does not initiate the use of force against others who have equal rights.

It is the Progressive Elitists who believe they are the all-knowing supermen, while everyone else is dumb and incapable of life without a paternalistic government controlling their lives. As usual, the Progressive Elitists have the truth inverted.

Oil Jobs said...

I am glad that there is some vacancies like this job opportunities.

Charles R. Anderson, Ph.D. said...

If the government energy policy were not so completely irrational, there would be many more energy jobs and many more jobs in the many industries that use energy.