With over 100 years of experience in the fuel industry, we believe there is no question or problem that Portland cannot answer or help you solve. We want to hear your questions and issues with regards fuel buying, fuel quality, fuel consumption, petrol forecourts, grades of fuel, refining etc, etc, etc. The list really is endless and we would like you the fuel user to test us so we can help you!
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Read our forum questions below:
December 22, 2015 I think your comments about Euro VI trucks in your recent Oil Market Report are incorrect. NOx as such is not an aggressive greenhouse gas and in general Euro VI trucks are only a minor improvement over Euro V for fuel consumption (3-4%). So I would not expect much positive impact on global warming from this change – the main purpose of which is to improve air quality.
OK Mike. Banged to rights. We got that wrong and the researcher in question has been thrown from the ramparts of Portland Towers. What I think we can say correctly though, is that modern commercial engines (trucks, buses) are unrecognisable to their counter-parts of 20 years ago. Plus, whilst Euro VI engines may only be a 3-4% improvement in terms of fuel consumption, Euro V engines were in turn, a similar improvement over Euro IV engines, which were an improvement over Euro III engines and so on. All of this has meant that emissions of some greenhouse gases have been reduced tenfold over the last 20 years.
We had this question from Mike at Energetics Europe Ltd (www.energetics.co.uk) – a man who clearly knows more about emissions from Euro VI engines than we do.
May 7, 2015 Liked your last market report on gas. Can you elaborate a bit more on the burning efficiency of gas versus other fossil fuels?
(Here is a link to April’s Oil Market Report) Not sure we can really elaborate too much on the technical side Ben. As the report says, we are oil men really rather than gas experts. But fundamentally, gas has less carbon content that either oil or coal because the hydro-carbon chains are lighter (basically, more hydrogen molecules for every molecule of carbon). So in a nutshell, more energy and less carbon is produced when gas is burned than is the case with other fossil fuels which generate more wastage (carbon, soot) and less energy (in proportion to the volume used).
Gas has other advantages too – particularly over coal – when it comes to power generation. Firstly gas power stations are generally cheaper to run and maintain (again because the product is cleaner) and the process of reducing output on a gas powered station is fairly straight-forward. This is in stark comparison with coal-fired power stations, which basically need to stay running 24/7 / 365 days of the year – partly because of long-term heat generation requirements, but also because the capital costs in both building and maintaining coal-fired power stations. This tends to make gas a perfect partner / back-up for alternative energies such as solar and wind power. During periods of wind / solar energy peaks, gas power stations can go into idling mode but can immediately kick in when the wind doesn’t blow or the sun doesn’t shine.
We received this question from Ben in Lichfield.
Is James Spencer's fat face on the website as fat as that in real life?
Sadly the answer to this is yes Patrick. As you well know, because you are my brother.
We got this probing question from Patrick in Hertford in April 2015.
Where do you see the Brent / WTI differential now? Is it behaving in the way you would expect?
This is a really interesting question Baz and truth be told we’re not quite sure – there has been so much volatility in the oil markets
Like most things in the oil market over the last few months, the Brent / WTI differential has been on a bit of a roller-coaster ride – dropping to a negative at the end of last year, before bouncing back to a level which is more or less where it has been for the last 5 years.
Traditionally the higher price of Brent reflects the fact that Brent is a seaborne crude that can be exported anywhere in the world. On the other hand, WTI is a land-locked crude which means it can only be consumed in the United States. So whereas Brent crude reflects world oil markets and world oil demand, WTI only reflects the US market. Therefore with world demand for crude oil more buoyant than the USA over the last years, we have typically seen Brent prices trading at a $10-$15 (and sometimes up to $20) more than the value of WTI.
That all changed in 2014 with the converging of Brent / WTI prices – partly as demand outside of the US dropped, whilst firming up considerably within the US because of a strengthening economy. But this was convergence was short-lived and as we stand today, we are back to having a fairly sizable gap between Brent and WTI prices. Overall, this would seem a more logical “natural” position for us to be in with huge amounts of shale oil flooding the domestic US market, whilst at the same time conventional oil production is declining.
As we do not expect the US state of affairs to change much in 2015 (ie, a glutted market and legislation staying in place to forbid US crude oil exports), we see a continuation of this differentiation (about $10) for the foreseeable future.
We received this question from Baz
December 17, 2014 I read recently that it is illegal for American oil producers to export their oil, so how can the shale oil 'revolution' (as you call it) be affecting world oil prices downwards? Or are American exporters simply getting round this legislation?
This was asked at a recent conference we attended and on the surface it does seem confusing that shale oil is getting so much coverage in the media when we can’t actually access the stuff in the UK (or Europe or anywhere else in the world for that matter). That being said, as we know the world oil market is a single, inter-related entity and therefore what happens in the USA has an effect on prices elsewhere in the world.
Why so? Well the main point to make here is that crude production increases in the States (up from 6m bpd to 9m bpd in 3 years) has reduced crude imports into the States by the same amount. So crude oil that was hitherto coming into the States from places like Nigeria, Venezuela and Angola is now no longer needed in the USA and therefore has to find a new market elsewhere in the world.
So in a nutshell, US crude oil production has indirectly caused a glut of oil outside of the USA and this has helped push prices down.
We had this question from Iwan in Felixstowe
July 4, 2014 Why is it that gas prices are so different to oil? Do the prices not track each other?
Thanks for this question Mike. If we didn’t know better we’d think that this question has come from one of the Russian Gas Companies. The reason we say this is because for the last 10 years or so, the Russian gas suppliers have been desperately trying to keep the link between oil and gas prices alive, whereas in reality there is now little correlation between the two products.
Historically this was not the case and gas was priced alongside oil because in general, gas was a by-product of oil exploration (gas reserves typically sitting above crude oil reservoirs). At that time and because gas demand was (relatively) modest, linking oil and gas prices was very common and probably logical, ie, gas was simply a bi-product of oil.
However as gas production technology developed, increasing numbers of gas reserves were located where no crude oil was extracted or even present. In addition (and possibly indirectly related), demand for gas started to explode (boom, boom…and a further boom, boom!). Initially the linking of gas and oil prices continued because much of the gas usage was simply replacing oil for the same purposes. Examples would be heavy industry (glass manufacturing, steel making) and electricity generation (power stations), where power from gas was simply replacing power from oil for the manufacturing process. In fact in these cases, the buyers were actively keen to maintain the link between oil and gas, so that there was consistency in pricing and a benchmark to compare the new supply costs with the old.
Since that point though (around the late 1980’s / early 1990’s) the divergence of oil and gas has accelerated in almost every way: exploration, supply-chain, pricing, uses. The result is that today there really should be no correlation between oil and gas prices as they are fundamentally two separate markets. The likes of Gazprom have of course fought to maintain the link, but this has nothing to do with operational correlations but is purely because the oil price is so high – even if you end up selling gas at a discount to oil (which the Russians have recently done with their mega Chinese gas deal), this still isn’t a bad price if oil is sitting at $110 per barrel.
You only have to look outside the Russian sphere of influence to see clear differences in gas prices. For example in the USA, gas is currently trading at the $3-4 per mBTU (Millions of British Thermal Units – the gas equivalent of $ per barrel), whereas in Europe and the Far East (Russian influence), the price of gas is in the order of $15-20 / mBTU! Calculating equivalent mBTU gas prices with $ per tonne oil prices is notoriously difficult, but if we consider that the European / Far Eastern gas price sits at the top end of oil pricing (ie, $110 per barrel), this would mean that the current US gas price is equivalent to $25 per barrel! Now in reality WTI (the US crude benchmark) is trading at about $95-100 per barrel which only goes to show that where gas prices are open to market influences (rather than supply manipulation), they follow a completely different path to oil.
If only the yanks would start exporting the stuff…
This question came in from Mike in Swansea (July 2014).
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