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August 31, 2012

Oil Trading in Wait and See Mode

 

Hurricane Isaac could have been much worse, and refiners and drillers erred on the side of caution.

An estimated 1.3 million barrels of crude in the Gulf federal waters was offline due to Isaac. 509 drilling platforms evacuated. Workers pulled from 50 drilling rigs.

“We have to wait and see. A lot of refinery capacity was taken down and the key is going to be how the restart goes,” Andrew Lebow, senior vice president of energy derivatives at Jefferies Bache LLC told the Associated Press.

Pretty much all of your local pump prices were raised anticipating the really bad happening in the wake of Isaac. It didn’t.

Even though President Obama was prepared to release some of the strategic oil reserves, it doesn’t look like we will need it.

Filed under:Fuel cost,Fuel Price Trends,Gas price | by Pump Girl @ 2:24 pm | 

August 29, 2012

Professor Hamilton Cuts Through the Spaghetti

 

James Stafford of OilPrice.com recently interviewed Professor James Hamilton, the world’s leading energy economist.

Stafford observed the confused energy picture Joe Lunchbox is getting from the media – mixed messages, not so accurate reporting, and sensationalism. What’s really going on?

Among others, Stafford asked the following question that, I for one feel, goes right to the heart of the matter.

Oilprice.com: Whenever oil prices spike politicians are quick to blame speculators and oil companies for manipulating the markets. Are you in agreement with this – are speculators and oil companies to blame? Or are there other factors that are overlooked deliberately or otherwise by the mainstream media?

James Hamilton: The story is pretty simple, and even though politicians may try to distort it, you’d hope that the media would do a better job of reporting the truth than they have. World oil production was basically stagnant between 2005 and 2008, even though world GDP was up 17%. With economic growth like that you’d normally expect increased demand, particularly from the rapidly growing emerging economies, and in fact China did increase its consumption by a million barrels a day over these 3 years. But with no more oil being produced, that meant that the rest of us– the U.S., Europe, Japan– had to reduce our consumption. It took a pretty big price run-up before that happened. To those claiming the price is too high, I would ask, how high do you think the price had to go to persuade Americans to reduce oil consumption by a million barrels a day

Read the full article for more enlightenment. Also take a trip Professor Hamilton’s blog Econobrowser.

Filed under:Energy,Fuel Price Trends | by Pump Girl @ 9:47 am | 

August 28, 2012

Hurricane Isaac Bears Down on New Orleans

 

Shortly after being officially declared a Category 1 Hurricane, Isaac hit the gulf coast this Wednesday. While most of the news coverage is fixed on comparisons to Hurricane Katrina and the Republican National Convention, the fact of the matter is that Isaac has wreaked havoc on the nation’s gas prices – even when it was only a tropical storm. Just yesterday we at Pumps posted that the storm had driven up prices 2.5% since the end of the week.

The US government already said that daily oil production in the Gulf would be cut by almost one fourth over the weekend, bringing national gas production down a total 8%. The most current updates indicate that Hurricane Isaac is both slowing down and becoming stronger, which will mean more serious damage to New Orleans and the surrounding area than some may have expected.

“Noting that the storm was moving west and threatening to grow more powerful, energy giant BP evacuated all its installations and temporarily halted production in the Gulf Sunday. Earlier, it had pulled workers from its massive Thunder Horse platform in the eastern Gulf.

Royal Dutch Shell is withdrawing all workers and suspending production in the eastern Gulf. It is pulling out all but essential personnel and cutting production in the central Gulf.

Apache Corp., a Houston oil services company, is withdrawing 750 workers and contractors from its installations in the eastern Gulf. It is also cutting production of oil and natural gas. Other energy companies have also been evacuating their platforms and rigs in the Gulf.

Murphy Oil Corp., based in El Dorado, Ark., said Sunday that it is pulling out all workers and suspending operations in the Gulf.

Overall, oil companies pulled workers off 39 (7 percent) of 596 production platforms and eight (11 percent) of 76 Gulf oil rigs, the U.S. Bureau of Safety and Environmental Enforcement reported Sunday.”

Given that Hurricane season officially lasts until the first day in November, Isaac serves as a powerful reminder of how unpredictable – yet inevitable – price shocks are in the energy markets.

Filed under:Causes and Solutions,Energy,Fuel Budget,Gas price,Price Shocks | by Eyes on Energy @ 7:29 pm | 

Will They or Won’t They?

 

There is speculation that the Obama administration will release oil from the Strategic Petroleum Reserve as was done after Hurricane Katrina.

This might be not necessary at all. Gulf Coast refineries have already conducted what they call an ‘orderly shut-down’. This way there is no half-cook oil in the pipes, and the refineries can restart as soon as the electricity source is stable. (They will probably stay offline for 3 days)

If operations can quickly resume, gas prices will soon begin to fall on their own.

Tom Kloza of OPIS predicts that gas prices could be below $3.50/gal. by Nov.

Filed under:Fuel cost,Fuel Price Trends,Gas price | by Pump Girl @ 9:47 am | 

August 27, 2012

Isaac and Fuel Prices

 

The impact of tropical storm Isaac has taken gasoline futures to a new recent high at $3.15/gallon, up 2.5% today.

This year’s hurricane season has (thankfully) been pretty tame. While we all hope this continues, we know from experience that such storms will occur. We just don’t know when.

Interestingly, it is still possible to lock in very low prices for calendar 2013. The pricing for that time period is different, and lower, than the current spot price. It is an opportunity for the astute fuel purchaser.

Filed under:Energy,Fuel Cost Control,Fuel Price Trends | by OldProf @ 3:49 pm |