Stale Thoughts and Broken Links

Old entries from my weblog on geophysics and the energy industry.


The opening sentence of this WSJ article says it all: "Gasoline is providing fuel for the fall political campaigns." (WSJ subscription required.)

Where should I start?

  1. Two dollars is not a lot to pay for a gallon of gasoline.

    This is a non-renewable natural resource we're talking about. It boggles my mind that this country thinks it has a God-given right to piss away the Earth's entire store of petroleum for a dollar a gallon.

  2. To the Clinton administration: don't lie about it. Of course some of the recent increase in gasoline prices is due to the new clean air rules mandating reformulated gasoline. But that's O.K.

    1. It's reasonable for everyone to pay a little extra for cleaner air.

    2. There will always be some regional price discrepancies. Different areas require different gasoline mixtures to meet their clean air targets.

    3. The implementation just went into effect, so some initial distribution hick-ups should be expected. This should smooth out in short order, except that --

    4. The Unocal patents are creating artificial distribution problems. This aspect of the new clean air rules is not o.k. How long is it going to take the media to clue-in to this situation?

  3. I am sick of politicians taking these easy pot-shots at "the oil industry," like this is still the days of John D. Rockefeller, and some big monolithic corporation controls the supply, distribution and pricing of petroleum products. It hasn't worked that way in a long, long time.

    Every single politician clamoring for a "full-scale investigation of the oil industry" knows that he's blowing smoke. This is just another "please cover my butt" song-and-dance.

Actually, the Houston Chronicle has, as usual, done the best job of reporting (and explaining) the current gas price situation.


Here's the outline for an encyclopedia article I'm working on about exploration seismology. Any suggestions or comments will be appreciated.


I didn't want to let this pass without mentioning it. Last week, The Houston Chronicle reported that Schlumberger and Baker Hughes, the world's number one and number two oil service companies, have reached a tentative agreement to spin off and combine their exploration seismic units into a single company to be named Western Geco. Together, Western Geophyscial and Geco Prakla are probably responsible for half of all seismic acquisition activities around the world.

It's estimated that the merger will save between $100 million and $150 million. Gulp.

I've known for some time that the seismic exploration industry was less than healthy. But I guess I didn't appreciate just how marginalized it was until the reporting of this event. To date, this deal has not received any mention in the Wall Street Journal, although the Dow Jones newswire put out a bulletin. And although it was reported by both the Houston Chronicle and the Oil and Gas Journal, neither publication listed the story as one of the top energy or exploration stories for last week.


The press has really failed miserably at explaining the recent spike in gasoline prices. This spike in not about OPEC production levels and the price of a barrel of oil -- at least, not entirely. It's also about patents.

Here's a few quotes from today's Wall Street Journal (access requires a subscription):

"Exxon Mobil is one of six companies that has failed in court to overturn Unocal's first patent, which was awarded in 1994. In March, a U.S. appeals court upheld a judgment awarding $69 million to Unocal from the companies -- including Atlantic Richfield Co., Chevron Corp., Texaco Inc. and Shell Oil Products, a unit of Royal Dutch/Shell Group -- for violating a Unocal patent when they made lower-emissions gasoline for California drivers in 1996.

"Starting Thursday, about one-third of the gasoline sold in the U.S. will have to meet new federal environmental standards similar to those mandated in California."

"Lee Raymond, Exxon Mobil Corp.'s chairman and chief executive officer ... said refiners are expending extra effort to make gasoline that doesn't infringe on a Unocal patent. That effort is reducing refiners' flexibility to make a new lower-emissions gasoline and likely is having "a negative impact on total volumes [of gasoline] available to market."

BTW, I am not, in general, against patent rights. I do think the U.S. Patent Office has recently been increasingly guilty of awarding frivolous and overly broad patents, but I don't know whether that's the case here. Unocal's patents may be specific and well-deserved. If so, then it is entitled to profit by exercising its patent rights.

My gripe is that the news media, in its rush to exploit popular anti-OPEC (and anti-Arab) sentiments, is failing in its responsibility to educate the American public. And in the case of the price of gasoline, it's a damned important responsibility. I don't think I'm exaggerating when I say the average American is willing to start a war over higher gasoline prices.

The energy industry is a complicated business, but the average citizen has no appreciation of those complexities. For instance, most people are totally unaware that when the price of oil rises, gasoline refiners typically make less money, not more.

It's the job of a reporter to explain complicated situations concisely and simply. In this case, though, the media is just distorting a complicated situation by over-simplifying it.

Walter Kessinger

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