9. Oil and Transportation Flashcards
Resource
Resources are everything. It is all that has been produced (yet not yet consumed) and what is known to be in the ground. M
Reserve
Quantities of petroleum anticipated to be commercially recovered from known accumulations from a given date forward. Reserves must be:
(1) discovered through one or more exploratory wells
(2) recoverable using existing technology
(3) commercially viable
(4) remaining in the ground
Production
The process of extracting resource (usually petroleum or natural gas) for sale on the market.
Depletion
The state in which all recoverable reserves have been extracted, and any remaining or theorized reserves are economically or technologically unrecoverable.
Peak v
An event, based on M. King cc theory, at which point the maximum rate of extraction of petroleum is reached, after which the rate of production is expected to enter terminal decline.
Supply elasticity
Elasticity is the term economists use to describe how much supply or demand responds to changes in price. If a small change in price produces a large change in demand, demand is said to be elastic. If a large change in price produces a small change in supply, then supply is said to be inelastic. In economic terms, the oil supply is becoming less elastic as new oil supplies come increasingly from unconventional oil
Unconventional Oil
Oil produced through techniques other than traditional oil well extraction and is commonly seen as more costly than conventional oil production, less efficient, and is likely to cause more environmental damage. This is because it is considered “heavier” and requires more complex procedures to process. However, the ever-increasing global demand for petroleum, combined with shrinking supply, has more firms turning to unconventional oil. Sources include synthetic oil, oil sands, and shale formations
Shale Oil
Unconventional oil produced from oil shale rock fragments by pyrolysis, hydrogenation, or thermal dissolution. These processes convert the organic matter within the rock (kerogen) into synthetic oil and gas. The resulting oil can be used immediately as a fuel or upgraded to meet refinery feedstock specifications by adding hydrogen and removing impurities such as sulfur and nitrogen. Refined products can be used for same purposes as those derived from crude
Tar Sands Oil
Tar sands (also referred to as oil sands) are a combination of clay, sand, water, and bitumen, a heavy black viscous oil. Tar sands can be mined and processed to extract the oil-rich bitumen, which is then refined into oil.
Natural Gas Liquids
A group of hydrocarbons including ethane, propane, normal butane, isobutane, and natural gasoline. Generally include natural gas plant liquids and all liquefied refinery gases except olefins
Asset Lock-in
Switching cost of moving to a different fueling type might require behavior or operational changes that customers are unable or unwilling to accommodate. E.g. switching from petroleum fuels to other types of fuels may make it harder or less certain that fueling stations will be available
Refining
Process of transforming crude oil into the specific types of hydrocarbons necessary for fuel and heating applications. Refined fuels include: AV-Gas (Jet fuel), Gasoline, Heavy Fuel Oil (for freight ships), Diesel, kerosene
Passenger Kilometers (PKM)
Transportation of one passenger over a distance of one kilometer on a transit vehicle. Used as metric for standardizing passenger transport in order to measure and compare transportation costs (especially for public or mass commercial transit).
Tonne-Kilometers (TKM)
The transportation of one tonne over a distance of one Kilometer. Used as a metric for standardizing freight transport in order to measure and compare transportation costs.
CAFE Standards
Corporate Average Fuel Economy (CAFE) - purpose was originally to reduce energy consumption by increasing the fuel economy of cars and light trucks. Showed dramatic fuel improvement through 1985. Basically ignored since until oil and gasoline price spike led to new standard being established in 2007 (35 mpg by 2020 for passenger cars).
Unintended Consequence: (1) Perverse multi-layer tax structure (2) Modified consumption choices for vehicle (3) Rebound effect (Oil prices dropped precipitously with rising CAFÉ) (4) Fleet safety implications
