← Autodidact Archive · Original Dissent · Sertorius
Thread ID: 19896 | Posts: 4 | Started: 2005-08-31
2005-08-31 02:29 | User Profile
30 August, 2005 A2 White House May Tap Oil Reserves
Closure of Wells in Region Prompts Capacity Concerns Amid Fragile Global Supply By Russell Gold in Austin, Texas, Bhushan Bahree in New York and Thaddeus Herrick in Lafayette, La.
Hurricane Katrina's march through the Gulf of Mexico and its key oil and natural-gas production facilities sparked fears of damage and rattled energy markets, moving the White House to signal its willingness to open the nation's emergency oil stockpile if needed.
The extent of the hurricane's effect may not be known for weeks, and preliminary inspections of offshore oil and gas facilities have only begun. But the concerns underscored the extent to which the U.S. has come to rely on this vital energy region in a time of world-wide supply concerns.
U.S. Energy Secretary Samuel W. Bod-man said President Bush was willing to tap into the U.S. emergency crude oil supply, known as the Strategic Petroleum Reserve, to offset Katrina's impact if necessary. Yesterday, Citgo Petroleum Corp., a unit of Petroleos de Venezuela, said it needs 500,000 barrels of crude oil from the reserve to keep operational its Lake Charles, La., refinery. The reserve has been tapped in the past following big storms.
Oil futures surged past $70 per barrel in overnight electronic trading, reaching a new nominal high, but fell back during daily trading. Oil for October delivery settled at $67.20, up $1.07 from Friday's settlement price but still below the previous record. Oil prices are still well below the high of $95.26 reached in April 1980 when adjusted for inflation. (See related article on page C3.)
Gasoline and heating-oil futures also rose, amid worries that the region's refineries may not be able to meet demand. Both could be vulnerable to more increases if any of the half-dozen major refineries near New Orleans suffers damage or is flooded and cannot restart in the next few days. Larry Goldstein, president of New York-based Petroleum Industry Research Foundation, estimated that U.S. households were likely to spend an extra S250 on gasoline bills this year, due to both the hurricane and earlier surges. He also estimated it was likely to have to spend as much as $500 extra in heating bills this winter alone.
As production has declined elsewhere in the U.S. the gulf now supplies roughly one-quarter of the oil and natural gas consumed domestically. The New Orleans area also is home to 12% of domestic refining capacity-the industrial complexes that turn crude oil into gasoline, jet fuel, heating oil and other products. The region's concentration of production platforms, pipelines and refineries has created a giant chokepoint for the industry. And as oil companies drill farther offshore, the gulf industry has become more vulnerable to weather disruptions such as Katrina.
Though damage isn't yet known, experts believe it might be extensive and could conceivably cripple production for months. Katrina was rated a Category 5 hurricane, with winds of 175 mph, as it swept through the gulf's most prolific offshore producing region, though it weakened as it hit land.
The rergion's production was shut-in- an industry term for temporarily closed off before the storm struck. The federal Minerals Management reported that 92% of daily oil production, or l.4 million barrels a day, and 83% of gas production, or 8.3 billion cubic feet, remained shut-in yesterday, although the government noted the figures could be low due to underreporting.
As Katrina moved onshore, oil companies yesterday began preparing to dispatch planes and divers into the gulf to begin evaluating how badly rigs, pipelines and production platforms, which represent hundreds of millions of dollars of investment, may have been damaged. "It's just going to take some time for this to pass through before people can get out there and then it will take some time to inspect for damage," said Tony Lentini, a spokesman for Apache Corp., one of the top producers in the Gulf of Mexico. Yesterday afternoon Transocean Inc. said an unmanned moored drilling rig had floated away during the storm and it was being tracked by its beacon.
Hurricane damage is difficult to assess quickly. When Ivan, a slightly weaker storm, took a less instructive path through the Gulf last September. initial reports were encouraging. It was later discovered that the hurricane had triggered hundreds of underslides that wreaked havoc on the pipeline system and took months to repair.
Oil prices have continued surge higher in recent weeks on concerns that spare crude production capacity, now estimated to be about 1.5 million barrels, is so thin that any disruption could create a shortage. Most of that extra capacity is in Saudi Arabia, whose oil minister Ali Naimi yesterday repeated a promise to increase its pumping to full capacity to resolve any shortages in the world's crude-oil market.
Taken from a graph by me:
A Crucial Neighborhood The Gulf of Mexico is home to major offshore oil fields... Total 2004 U.S. oil production 5.42 million barrels a day Total U.S. oil supplied in 2004 20.73 million barrels a day Gulf production 145 million
Key refinery areas Total U.S. refinery capacity 17.12 millior Barrels a day Louisiana refinery capacity 2.77 million
And an essential import terminal 2004 U.S. imported oil 10.09 million barrels a day Louisiana Offshore Oil Port can handle one million barrels a day
2005-08-31 12:38 | User Profile
This morning I was up early and watching the futures markets and things were ugly until the US Energy ecretary announced the release of the strageic reserve. That sent futures higher into positive territory. Then at 8:30 ET, the GDP readings came out and futures went back into negative territory. This all happening 30min to an hour or so BEFORE the stock market opens. :clown:
One thing for sure, oil and gasoline prices are having a HEAVY economic impact on the economy and will continue to do so for the near term.
2005-08-31 13:09 | User Profile
Atlanta Journal-Constitution
ajc.com > Business
HURRICANE KATRINA Gas pipelines down
Much higher prices, shortages possible
By STACY SHELTON , MICHAEL E. KANELL The Atlanta Journal-Constitution Published on: 08/31/05
Metro Atlanta drivers are facing the possibility of paying considerably more than $3 a gallon for gas by Labor Day ââ¬â if they can get it at all.
The two pipelines that bring gasoline and jet fuel to the region are down ââ¬â powerless to pump as Hurricane Katrina wreaked havoc on electrical infrastructure.
The metro Atlanta region generally has about a 10-day supply of gasoline in inventory, said BP spokesman Michael Kumpf. The pipelines have been down for two days.
Alpharetta-based Colonial Pipeline Co., cut off from its suppliers on the Gulf Coast, is now pumping gas from huge storage tanks, many in Powder Springs. Whether electric power can be restored to the pipeline pumps before supplies run out is "the great uncertainty ... that hangs over all of us," said Daniel Moenter, a spokesman for Marathon Ashland Petroleum, a major supplier of metro Atlanta's fuel.
Some suppliers are rationing gasoline to retailers, so some stations may already be near empty.
With supplies uncertain, oil companies and larger wholesalers are ratcheting up prices, partly to slow demand. Some local wholesalers already are paying 65 to 80 cents per gallon more than they paid three days ago. That kind of price increase will hit the pumps within a few days.
On Monday, the scare talk was about prices hitting $3 a gallon at the pump. By Tuesday, that line had changed for the worse, said Tex Pitfield, president of Saraguay Petroleum Corp., which delivers gas to retailers.
"Depending on how much damage has actually taken place and the time involved in getting the infrastructure up and running, is $4 a gallon out of the question? Not necessarily," he said.
Peter Beutel, an oil analyst with Cameron Hanover, told The Associated Press: ''This is the big one. This is unmitigated bad news for consumers.''
It's unclear how soon the pipeline outages may affect operations at Hartsfield-Jackson International Airport.
Fuel suppliers and airlines have 22 storage tanks at the airport that hold up to 27.6 million gallons of fuel. At full capacity, that's enough for about 10 days of fuel at the airlines' recent daily consumption rate of 2.8 million gallons.
No information was immediately available on how much fuel remains in the tanks.
Gov. Sonny Perdue's office is aware of the situation and is meeting with Georgia's fuel suppliers.
"We know that they're on top of this issue, and they're assessing damage to their production and distribution process in the wake of Hurricane Katrina," said Heather Hedrick, Perdue's press secretary.
Hedrick said it's too early to say whether Georgians should be concerned.
"In order to answer that question fairly, the governor needs a full briefing from fuel suppliers in Georgia," she said. "We're waiting for that information now."
Metro Atlanta motorists already pay a little more for gas than those in surrounding states because of a clean-fuel requirements to reduce air pollution.
Perdue issued a statement Tuesday saying those requirements would be lifted temporarily to increase supplies and lower prices, once the pipelines are again operational.
Perdue's decision, which awaits approval from the U.S. Environmental Protection Agency, would affect 45 counties in and around metro Atlanta.
"The governor felt it was important to take some steps to help alleviate gas prices that have been increasing for weeks now," Hedrick said.
Lisa Ray, a spokeswoman with the Georgia Emergency Management Agency, said the department is prepared to help deal with any gas shortages.
"We have talked to the Georgia Department of Agriculture, and they said supplies are not a problem in Georgia at this time," Ray said.
GEMA is a coordinating agency for emergency support functions.
ââ¬âStaff writers Carlos Campos and Russell Grantham contributed to this article. [url]http://www.ajc.com/business/content/business/0805/31bizgasprices.html[/url]
2005-08-31 14:50 | User Profile
No! Oh no!!!
Sert, does this mean that the low riders and gang bangers will not be able to gas up their "phat rides" this weekend in order to cruise around aimlessly blasting ghetto noise from killer subwoofers at all hours of the day and night?
Death toll, smeath toll! Forget the sandbags and levy breaches, we need to pour all available heavy-lift capability into trucking or flying all possible gasoline supplies into metro Atlanta to prevent this cultural disaster from taking place. Anything less is sheer racism!