Sky High Gasoline

“(CNN) -- Four gunmen have attacked an oil company compound in Khobar, Saudi Arabia, killing at least 12 people and taking a number of hostages, according to informed sources and Saudi officials.

One American and one British citizen were among the dead, western diplomatic sources said. A U.S. State Department spokesman said two Americans are known to be wounded.

The U.S. embassy in Riyadh has advised all American citizens to leave Saudi Arabia, officials there said.

Sources said the dead also included several Saudis, three Filipinos, a Pakistani and a 10-year-old Egyptian boy -- whose father worked for an oil company at the compound in Khobar, about 400 kilometers (250 miles) northeast of the capital, Riyadh.

Saudi security forces tried to end the hostage standoff by storming the compound, but they were repelled by the barricaded gunmen, sources said.

The attackers released all of their Arab hostages but continued to hold westerners, according to western diplomatic sources.



This will help lower prices.”

“On the national news tonight they said if these attacks continue it could push oil prices to $100 per barrel. That doesn't sound to good and I wonder how much gas prices would be then.”

“(CNN) -- Twenty-two people were killed Saturday when gunmen stormed a compound housing oil workers, the Saudi Interior Ministry said Sunday.

A man believed by authorities to be the top al Qaeda figure in Saudi Arabia later purportedly claimed responsibility for the attack.



Gas will be vewwwy expensive if Al Qaeda destabilizes Saudi Arabia. The world economy will tank. And W wom't stand for that, so expect W to declare war on terrorists.”

“Sense this latest spike in prices I have buckled down to see just how much I can up my MPG. I leave for work five minutes early so there's no reason to rush and drive like an A-hole (I usually drive between 75-80). By leaving early I can just putz along at 65-69. I also use my cruise control every chance I get. Because I'm not going as fast I don't run up on people and have to turn the cruise off. My MPG is through the roof now.

Who'd a thunk it?”

“So before the price got so high as to inconvenience you, you fully supported world instability and terrorism, but now that it hits affects your wallet, your enthusiasm has waned a little?”

“Didn't Dubya declare war on terrorists 2¾ years ago?”

“No V, you ignorant dipshat. I did it to see what kind of difference I could make in my driving habits. I can't help but support terrorism because I drive an suv. At least that's what you liberals and your cronies try to tell me.

Eat stool and happy Memorial Day. Be sure to thank a vet. I know it'll be hard for you but try anyhow.”

“SYLLABICATION: blus·ter

VERB: Inflected forms: blus·tered, blus·ter·ing, blus·ters

INTRANSITIVE VERB: 1. To blow in loud, violent gusts, as the wind during a storm. 2a. To speak in a loudly arrogant or bullying manner. b. To brag or make loud, empty threats.

TRANSITIVE VERB: To force or bully with swaggering threats.

NOUN: 1. A violent, gusty wind. 2. Turbulence or noisy confusion. 3. Loud, arrogant speech, often full of empty threats.

ETYMOLOGY: Middle English blusteren, from Middle Low German blüsteren.

OTHER FORMS: bluster·er —NOUN
bluster·y, bluster·ous —ADJECTIVE”

“I'll be flipping burgers for WWII vets later Nigal. Be sure to include a tip for Osama while you fill up today.”

“Well, you'd know all about blowing, wouldn't ya?”

“The current gas prices got nothing to do with terrorism... just our own stupid lack of planning since we havent built a new refinery in 20 years....

make sure you flip them burgers atleast twice...else them cows might get mad :P”

“... just our own stupid lack of planning since we havent built a new refinery in 20 years....
-Lumberjack


Sure would be nice top know what was discussed at the Cheney Energy Task Force.”

“I don't know what costs more...the price of gasoline or the meds I need to quit worrying about the gas price.”

“I had the pleasure of driving about 700 miles, for about 35.00 this past weekend.

35.00 bucks in my Van woulda gave me 3/4 of a tank......I would have to fuel up twice (at 58.00, now....me thinks) to get that same road coverage.

_______________________________, Bless America!!
(please, insert yer diety of choice here)”

“"The current gas prices got nothing to do with terrorism... just our own stupid lack of planning since we haven't built a new refinery in 20 years....

make sure you flip them burgers at least twice...else them cows might get mad :P"

Lumberjack"

I don't think so Tim....
Oil prices jump more than $1 a barrel
”

“Gasoline prices, adjusted for inflation, are nowhere near record highs. Another artificial crisis created by the media and polititians whose jobs depend on having a problem to solve.”

“Once again, Fritz. It's not just gas prices that are skyrocketing. This affects other services and goods...”

“I haven't read the thread and I am certainly no economist. I just don't think this is a national crisis. The national oil reserves are not there to use as a tool to control the economy, except perhaps in extreme circumstances. What we have now is not an extreme circumstance.

I don't know much about anything. Just my humble opinion.”

“I also wonder about the duration of this thing. A short term hike like this isn't going to make or break us. And I was trying to get astat on how long the 1981 crisis lasted. I just don't remember feeling all that crunched by it back then. I think what's got me worried is the overall skyrocketing of the types of good and services that I utilize on a more daily basis. I know that the Labor Dept wants us to think that inflation is low right now, but they exclude energy and food prices from those stats, so those numbers reflect nothing remotely resembling the truth to me. I couldn't give a rat's ass about how many people are buying homes and cars when I am depositing more money at Shop Rite than I could imagine. So, I guess it's all relative to what is meaningful to your particular budget.”

“I paid 1.98 this weekend, which was a terrific price for a holiday weekend, compared to what I paid last week!”

“Well Fritz, at least one Princeton economist would disagree with you:


Paul Krugman : A Crude Shock

So far, the current world oil crunch doesn't look at all like the crises of 1973 or 1979. That's why it's so scary.

The oil crises of the 1970's began with big supply disruptions: the Arab oil embargo after the 1973 Israeli-Arab war and the 1979 Iranian revolution. This time, despite the chaos in Iraq, nothing comparable has happened — yet. Nonetheless, because of rising demand that is led by soaring Chinese consumption, the world oil market is already stretched tight as a drum, and crude oil prices are $12 a barrel higher than they were a year ago. What if something really does go wrong?

Let me put it a bit differently: the last time oil prices were this high, on the eve of the 1991 gulf war, there was a lot of spare capacity in the world, so there was room to cope with a major supply disruption if it happened. This time there isn't.

The International Energy Agency estimates the world's spare oil production capacity at about 2.5 million barrels per day, almost all of it in the Persian Gulf region. It also predicts that global oil demand in 2004 will be, on average, 2 million barrels per day higher than in 2003. Now imagine what will happen if there are more successful insurgent attacks on Iraqi pipelines, or, perish the thought, instability in Saudi Arabia. In fact, even without a supply disruption, it's hard to see where the oil will come from to meet the growing demand.

But wait: basic economics says that markets deal handily with excesses of demand over supply. Prices rise, producers have an incentive to produce more while consumers have an incentive to consume less, and the market comes back into balance. Won't that happen with oil?

Yes, it will. The question is how long it will take, and how high prices will go in the meantime.

To see the problem, think about gasoline. Sustained high gasoline prices lead to more fuel-efficient cars: by 1990 the average American vehicle got 40 percent more miles per gallon than in 1973. But replacing old cars with new takes years. In their initial response to a shortfall in the gasoline supply, people must save gas by driving less, something they do only in the face of very, very high prices. So very, very high prices are what we'll get.

Increasing production capacity takes even longer than replacing old cars. Also, major new discoveries of oil have become increasingly rare (although in my last column on the subject, I forgot about two large fields in Kazakhstan, one discovered in 1979, the second in 2000).

Petroleum engineers continue to squeeze more oil out of known fields, but a repeat of the post-1973 experience, in which there was a big increase in non-OPEC production, seems unlikely.

So oil prices will stay high, and may go higher even in the absence of more bad news from the Middle East. And with more bad news, we'll be looking at a real crisis — one that could do a lot of economic damage. Each $10 per barrel increase in crude prices is like a $70 billion tax increase on American consumers, levied through inflation. The spurt in producer prices last month was a taste of what will happen if prices stay high. By the way, after the 1979 Iranian revolution world prices went to about $60 per barrel in today's prices.

Could an oil shock actually lead to 1970's-style stagflation — a combination of inflation and rising unemployment? Well, there are several comfort factors, reasons we're less vulnerable now than a generation ago. Despite the rise of the S.U.V., the U.S. consumes only about half as much oil per dollar of real G.D.P. as it did in 1973. Also, in the 1970's the economy was already primed for inflation: given the prevalence of cost-of-living adjustments in labor contracts and the experience of past inflation, oil price increases rapidly fed into a wage-price spiral. That's less likely to happen today.

Still, if there is a major supply disruption, the world will have to get by with less oil, and the only way that can happen in the short run is if there is a world economic slowdown. An oil-driven recession does not look at all far-fetched.

It is, all in all, an awkward time to be pursuing a foreign policy that promises a radical transformation of the Middle East — let alone to be botching the job so completely.

The New York Times
May 14, 2004

reprinted at http://www.petroleumworld.com”

“Interesting cover on the June National Geographic.”

“It looked more impressive on the coffee table, LOL


"No More Cheap Oil"”

“People around here are getting violent over gasoline. I was almost attacked this morning at the gas station that has halfway decent prices. My offence? I needed to clean my front and back windows because of road grunge and I was out of washer fluid. This male proceeded to pull around me to the opposite side of the pump I was at, and yelled extreme profanities at me the entire time he was pumping gas, almost hit my car when he threw into reverse and backed around me and tried to follow me around town and run me off the road. Nice. It's brought my day down a bit, needless to say.”

“Sorry to hear that treebait. Good reason to carry a cell phone.

I remember stories like that during the previous oil shocks (at least one person was shot). I escaped the even-odd requirements because I worked at a hospital and plenty of people were upset to see me in line on what they thought were 'their' days.”

“There are crazy people everywhere. My guess is that he was in a rush and would have done the same thing if gas prices were low. Sorry you had a bad start to your day, treebait.”

“Sounds like he had one too many espressos!”

“It could have been worse, I admit. What bends me the most is Laurel was there with me and got to hear every word the jerkoff said.”

“Trust me Aero, this guy wasn't the espresso type if you catch my drift.”

“There's nothing more macho than scaring women with infants.”

“Nigal, using cruise control uses more fuel unless you're on fairly level ground or use the coast. On hills you use gas going up and down.”

“SmartCars are the future of the American highway!!!! ha ha ha”

“Hang on to your wallets......

Oil prices jump more than $2 a barrel
”

“still haven't heard nary a word about the BP refinery that blew up in Texas City last month. Did it ever get back on-line? And the pipeline in Alaska is leaking because of the stress on the joints. Seems like the global warming has happened too quickly for the Bush administration- the permafrost isn't permanenent- at least not as much as they planned on. Two stories from CNN- YOU won't see them unless you look very,very,very hard-”

“ah... the not-so-permafrost.

Coalmining interests can't deny that warming is taking place any longer. Their line now is that the unprecedented spike in CO₂ levels is just a coinkydink.

And it'll be really good for plants......”

“(CBS MarketWatch) Crude-oil futures closed above $42 per barrel Tuesday for the first time ever on the New York Mercantile Exchange, with traders viewing fresh violence in Saudi Arabia as a threat to output from the world's largest oil producer.

Though Saudi officials took pains to emphasize that production was not affected, concerns over disruptions to global oil supply surfaced after a weekend terror attack killed 22 people, mostly foreign oil workers, in Saudi Arabia.

"In the very least, [the attack] represents an increased threat to a vital supply source," said Michael Fitzpatrick, an analyst at Fimat USA, in a note to clients.

Crude for July delivery peaked at $42.38 per barrel on Nymex. It closed up $2.45, or 6.1 percent, at $42.33 -- the highest closing level in the 21-year history of Nymex futures trading.

"This is the biggest one-day climb for the year," said Phil Flynn, a senior analyst at Alaron Trading.”

“The Bush administration's high-profile stance that it will not use its emergency government oil reserves has made it easier for oil speculators to drive up prices, contends Jaffe.

"He is giving them (speculators) a security blanket," agrees Gheit of Oppenheimer, explaining that traders have been able to push up prices for oil deliveries at a future date without fearing they may be caught in a price squeeze if the government should release oil from its emergency stocks.


http://seattlepi.nwsource.com/business/apbiz_story.asp?category=1310&slug=Oil%20Fear%20Premium”

“Pain at the pumps provides boost for refineries
By Kevin Morrison
Published: May 31 2004 21:28 | Last Updated: May 31 2004 21:28


American motorists may be complaining about high petrol prices as the "driving season" gets under way, but refiners are enjoying their strongest earnings for 15 years - a scenario some analysts forecast will continue for several years to come.


With US petrol wholesale prices rising by more than 50 per cent this year - more than double the increase for crude oil - refineries have seen the margin on each barrel of crude oil they convert rise from about $7 last year to more than $15, a level unseen since the late 1980s.

High margins are largely a result of the reduction in US refinery capacity after the spate of big oil mergers during the 1990s.

The number of refineries has fallen by about two-thirds over the past 20 years to approximately 150, and total capacity has dropped to less than 18m barrels a day from 19.78m b/d at the start of the 1990s.

Jay Saunders, an energy analyst at Deutsche Bank, said that US refineries were unlikely to spend more capital because they had earmarked $20bn (£10.9bn) to upgrade plants for stricter emissions laws, leaving them with little money to expand capacity.

Mr Saunders said: "It's going to cost more to make gasoline. They will want to wait a few years to see their money back before spending more funds." Douglas Terreson, an energy analyst at Morgan Stanley, said the oil companies' conservative view of oil prices was another factor determining future capacity growth.

"We have had oil prices at $25-$30 a barrel for five years and it is only recently that the majors have shifted their rate of return to one based on $20 instead of $16. If it has taken them that long to shift, I can't see them moving up again for a long time," said Mr Terreson.

"It is going to take a dramatic slowdown in demand or a recession before this golden period for refiners comes to an end."

The most leveraged companies in the US refining market are Valero, Premcor, Tesoro and Ashland, independents that derive all their earnings from refining and marketing. Their potential has been reflected in a number of earnings upgrades.

For example, at the start of this year analysts expected Valero to report full-year earnings per share of $4.35; now they expect closer to $8-$10.

Valero shares are up more than 40 per cent this year, closing at $66.11 on Friday.

Independent integrated oil companies such as ConocoPhilips and Marathon make half their earnings from refining and marketing. Oil majors such as BP, Royal Dutch/Shell Group, ExxonMobil and ChevronTexaco make a third of their revenues from refining and marketing.”

“Bush's old buddies in the Oil Patch love the high prices. Their old wells are going back nto production.”

“That's right. It has nothing to do with national security or ensuring the public has a steady supply or drilling for more Domestic oil (i.e. ANWR); it's all based on profits. Like the article said, "..They will want to wait a few years to see their money back before spending more funds."”

“WASHINGTON — Nearly three-fourths of the 40 million acres of public land currently leased for oil and gas development in the continental United States outside Alaska isn't producing any oil or gas, federal records show, even as the Bush administration pushes to open more environmentally sensitive public lands for oil and gas development.

Three-fourths of oil and gas leases on federal lands aren't producing”

“The local media here in D-Town has reported that "A "fear premium" is driving up gasoline prices well past $2 a gallon."

Interesting that my mother inlaw's once worthless Exxon/Mobile stocks are now booming, again.”

“jeeez.

oh yeah.... We need to open up more land to these corporations, so they can show more acreage on their balance sheets. Why does this remind me of recent 'creative accounting' scandals?”

“Has anyone seen the price of steel lately?

Do you think it's related to the increases cost of crude?

Or...could it possibly be related to the growth rate in China?

The Chinese are buying up every bit of steel, including scrap iron, at some of the highest prices ever seen.

And, having bought all this steel, do you think they might need extra crude supplies to refine for the manufacturing of this steel?

I don't know, I haven't a clue either.

Aero, how about making a link to the Billings paper on the gas station guy from yesterday?”

“Bush Admin Policy on Energy - FAILURE”

“Few Firms Control Oil Leases on U.S. Land

WASHINGTON (AP) -- A single New Mexico family and a dozen big oil companies, including one once headed by Commerce Secretary Don Evans, now control one-quarter of all federal lands leased for oil and gas development in the continental United States despite a law intended to prevent such concentration, federal records show.

Since 1997, mainly as a result of mergers and acquisitions, six companies have exceeded the legal limit of 246,080 acres in lease holdings on public lands in states other than Alaska. But the Bureau of Land Management, in charge of enforcing the 1920 law, has chosen to extend compliance deadlines for years.

In fact, an Associated Press computer analysis found the Interior Department agency permitted companies it knew were in violation of the law in Wyoming to continue to acquire thousands of acres of new oil and gas leases in that state. The bureau has given the companies additional years to comply.

"They should not be purchasing leases," said Tom Lonnie, the bureau's assistant director for minerals, realty and resource protection. Before acquiring a lease, a company must certify that its holdings do not exceed the legal limit.

<snip>
The lax enforcement coincides with the Bush administration's push to open new public lands for oil and gas development. In March, bureau records showed 40 million acres of federal lands were under lease in the continental United States. That is 5.3 million more acres than when President Bush took office.

Companies and individuals that dominate federal oil and gas leasing have been major financial supporters of Bush and the Republican Party. Since the 1999, the top 25 owners of federal oil and gas leases have directed 86 percent of their $8.2 million in political donations to the GOP.

<snip>
Environmental groups contend the administration is rewarding its financial backers by ignoring the acreage law while pushing more public lands into development.

"It's clear from the data that there is no reason for the Bush administration to issue leases on America's last remaining wild public lands, other than as a favor to their most generous political patrons," said Dave Alberswerth, public lands director for the Wilderness Society.

<snip>”

“Chief - you might be able to search the Billings Gazette for that story.”