Larry:
With your background, perhaps you can answer a question for me regarding the
refining process as it relates to lower and higher octane gasoline. Over the
past year, while we have seen normal pump gas escalate in price, I have noticed
that 110 race gas from Union 76 and Sunoco has hardly changed. Is this due to
the demand for race gas being fairly constant so refiners can forecast their
production and costs more accurately which keeps the cost to us relatively
level?
At our race last weekend at Infineon, I bought 110 race gas at $4.50 per gallon
which is the LEAST I have paid for this type of gas in a couple of years. Is
this just an anomaly? Will we begin to see ever increasing prices associated
with race gas in the near future? Thanks.
Gary
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> I spent almost 30 years in the oil industry, so this is something I know
> something about. I started out working in enhanced oil recovery at Amoco
> Research, two years after the '73 embargo. You have to realize that oil
> does not exist in pools under the ground. It is in porous rocks, sort
> of like the oil stain on the garage floor underneath your Triumph. If
> you've tried to completely remove one of those stains, you can
> appreciate that most fields achieve about 40% recovery by conventional
> methods. Enhanced recovery was aimed at getting a portion of the
> remaining 60%. These processes are expensive. It was a hot idea that
> never really happened because of economics. Americans would rather buy
> cheap foreign oil and OPEC could manipulate the market price to make
> sure it never happened. There is a lot of oil in the world, but it's
> going to cost increasingly more to get it out. For example, the
> Athabasca tar sands in Canada are huge, but very expense to produce.
> The writing has been on the wall for a long time, but Americans have had
> their heads stuck in the sand.
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