Posted on 04/22/2005 9:23:19 AM PDT by Jomini
The price of crude ticked upward Friday, fueled by Thursday's terrorist attack in Saudi Arabia and refinery problems in the United States triggering supply concerns.
Gasoline futures rallied nearly four cents in New York on Thursday as supply worries grew amid a rash of refinery glitches and rising prices of MTBE, an additive used in cleaner-burning summer gasoline sold in some U.S. states.
Benchmark light, sweet crude for June delivery was up 38 cents to US$54.58 in afternoon trading in Europe on the New York Mercantile Exchange.
Heating oil prices fell slightly to $1.5330 per gallon, while unleaded gas gained more than a cent to $1.6310 per gallon.
In London, Brent crude for June delivery gained 44 cents to $54.45 per barrel on the International Petroleum Exchange.
"There is a general fear in the market that gasoline supplies will be very tight heading into the summer and glitches at U.S. refineries further exacerbate that issue," said Adam Sieminski, an oil price strategist at Deutsche Bank in London.
In Saudi Arabia, suspected militants linked to al-Qaida clashed with security forces Thursday, prompting fresh fears of a supply disruption from the world's largest exporter. Two extremists and two policemen were killed.
"Terrorism definitely factors into prices," said Tetsu Emori, energy analyst at Mitsui Bussan Futures in Tokyo.
In Paris, Norway's Oil Minister Thorhild Widvey warned an international conference of oil ministers that prices were unlikely to fall back, and could even keep climbing.
"When prices hit $50 a barrel, the view was that was unusual. However, prices are still around $50 and may rise higher," she said. "It's not just a price spike but a new price level."
Crude prices hit an intraday high of $58.28 at the beginning of April before falling back to around $50 per barrel in recent sessions. Crude futures are over 45 percent higher compared to a year ago.
In New York on Thursday, May gasoline futures closed at $1.6200 a gallon after the country's commercial stocks fell for the first time in 10 weeks. Gasoline levels declined by 1.5 million barrels to 211.6 million barrels, or about 5 percent above year-ago levels.
The U.S. government's weekly report has been a major factor in moving crude prices.
"People are looking at inventory data, especially gasoline. But if you compare the stocks with last year's levels, it remains quite healthy," Emori said.
Still, traders are concerned that falling gasoline inventories and reported refinery outages in the United States could drive prices higher as the summer driving season in the Northern Hemisphere approaches.
Prices at pumps across the United States, the world's largest energy consumer, are above $2.20 a gallon compared to around $1.80 a year ago amid rising demand.
"The inventory levels are probably able to cover demand over summer if there are no refinery problems but now, there are," said Emori.
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Oil now the spearpoint for the Islamic attack on the West. Once the pricing structure reaches the tipping point, the playing field becomes level for the economic Tet.
Maybe it would be a good idea to cool off those printing presses in DC. The world now drowning in excess liquidity -- $100/bbl only a matter of time...
J
Wow, its a good thing we don't do most of our drilling in this country or we'd really be in trouble.
Three cheers for Free Trade!!!!
Wow, its a good thing we don't do most of our drilling in this country or we'd really be in trouble.
Three cheers for Free Trade!!!!
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Exactly. And the obstructionist left says we should not pursue oil on our own turf, because we will "endanger wildlife"...right. What we will endanger is (a) the middle-east's chokehold on our energy costs and (b) the libs will have one more less thing to obstruct against those who would develop a responsible and independent energy policy.
And forget Free Trade agreements which are hurting this country big time.
We could drill until the cows come home and we'd still need to import a goodly amount of oil.
Now, at this price, we can start looking at exploiting oil shale and tar sands - and those we have out the wazzoo...
And the oil companies are laughing themselves all the way to the banks.
Tar sands and, more generically, surface deposits, are another story. Question: why did research into producing them die?
And then there is the simple fact that we leave most of the oil in the formations that we drill and pump down in the hole. Our basic technology has only marginally changed and improved in over 60 years.
Gee, I wonder why we leave so much oil in the ground for every barrel we produce here? Can anybody hazard a guess?
The price of oil ain't going down anytime soon...and it ain't going down far from $50 anytime soon.
I used to think the same way - but I've heard rumblings about some new techology that might be feasible for extraction at current prices. The point is, at $55/bbl, oil sands and oil shale can be viable without governmental props.
Our basic technology has only marginally changed and improved in over 60 years.
That's not correct at all. For example, a fundamental shift happened a few years ago because of directional drilling techological improvements. Boreholes now go vertically down to the pay zone and then horizonatally through the pay zone - dramatically increasing how much oil can be recovered, especially in formations such as Austin Chalk with poor permiability.
But the main reason we left so much oil in the ground before is the exact same reason we haven't exploited oil sands - basic economics. If it costs $35/bbl for tertiary recovery and the price of oil is at $20/bbl, the tertiary oil stays in the ground. But at $55/bbl, producers will have a strong incentive to add tertiary recovery, as well as re-open older wells.
Keep on driving your stupid-@ss giant SUVs.
Oh, puh-f'n-leeze. That kind of idiocy is something I'd expect to read on DU, not FR. Most of the current crude oil price spike is due to spiraling demand from developing countries. If someone is driving a low-mileage vehicle and doesn't like the prices, they can get a high-mileage vehicle. If they can afford the high prices, they can keep driving. But the price of gas in this country is also driven by a lack of new refineries and botique formulations that inihibit market reactions to regional price imbalances.
Plus, it's a lot easier to run a smug, annoying bicyclist off the road with a giant SUV. /sarcasm, but you had it coming
Still believe a coordinated nationwide one-day-a-week (for starters) boycott on filling up would send a message to the oil companies.
I wonder how much of GM's current financial problems might be related to people backing off on purchases of SUV's? One thing about the SUV craze is that there's a lot of latent potential in the market for consumers to start buying gas efficient cars if they choose.
Can someone tell me how in the heck refinery problems are going to drive up the price of crude? Refinery problems are going to reduce demand, not increase it, and that's would bring the price down, not up. What am I missing? (Besides a degree in un-journalism?)
Now they would reduce the supply of refined oil, e.g., octane, so I understand gas going up, but not crude.
Keep on saying your stupid-@ss liberal comments, DU troll.
This burst of better technology, much of it breakthrough, was more intense in the offshore and out of it grew such things as directional drilling. A lot of it was centered in Louisiana and the motivators and players included people who were willing to take a different look at things and bring money to better ideas. I think of Howard, Weil in those days and the late Shelby Friedrichs in particular.
Directional drilling, computerization and feedback at the drilling head, all of these things are revolutionary in their way, but they do not alter the fact that we have not moved beyond traditional drilling and pumping and that we leave the bulk of the oil in the ground.
Tertiary recovery as we presently know it, despite all the hullabaloo, is, in the words of the late oil field super and inventor, George Thompson,about as scientific as dynamiting a well.
Check out the amount of money given by us taxpayers to Exxon/TOSCO and Unocal for oil shale and measure the ratio of our money spent to the results obtained. Of course it is meaningless to divide by zero. No how much money is spent, so far we're talking about using more energy than you get. There may be a way to do it, I admit, but so far there is no indication of anything but a repetition of the same old boondoggles designed to subsidize those large companies that will not only develop breakthrough technology but have demonstrated time and time again that they will obstruct such technology and those who come up with it.
Tar sands are another matter, but there too government's record and that of DOE in particular, is abominable and their cost assumptions are all wrong. Again, look up my article on it in the WND archives. The last gasp, and it was a miserable one, was in the 1993 act and it petered out into nothing. Our present so-called policy is designed to to enable solutions but to crowd them out by subsidizing the products of the big oil, big ethanol, and to a degree, big auto lobby that provide only marginal improvement, endless expensive research at the taxpayers expense with strictly marginal results and by enabling a dance between large companies with a rear guard stake in existing technology in big environmental lobbies whose principle interest is in increasing donations. This is what Reagan described and the present efforts, so far, will only extend this dance. Environmentalists, for example, obstruct breakthrough technology because it will make obscure inventors and entrepreneurs enormously wealthy.
The environmentalists prefer companies like ADM, companies that pretend to be working with them while they get millions and millions in subsidies from you and I for so-called "solutions" such as ethanol which make the problem worse.
The lack of leadership on these problems in Washington since 1973 has been truly appalling. It is one of the most flagrant examples of abandoning leadership in favor of subsidization in our history. Think Synfuels. We cannot win this war if we repeat this folly.
$100/barrel is not going to happen - But the WH needs to stop putting oil into SPR (we don't need to sell what's in there but we have to stop putting $45 + oil into SPR)
A barrel of oil has anywhere from $5 to $10 specked into right now by the energy traders (for some valid and many non-valid reasons) - Stopping SPR, demanding another OPEC increase (which the Saudi's alone can produce - they are not anywhere near maxed out! - That is BS) and oil will drop back under $40 in a rather quick time period.
The WH however has been way behind the ball on this one -
The fact is the private sector has dealt with the soaring energy costs over the past two years as well as could be expected - But these costs are really starting to hurt now and with increased interest rates (foolish Greenspan) we are looking at a serious problem unless the WH acts!
You are all backwards here - Refinery problems will have no effect on the demand of every day drivers (other then to increase the price one pays at the pump) -
There is more than enough crude oil (to some extent) the problem we have in America is that while we have the needed quantities of crude....we don't have the processing (refinery) capabilities to produce gas from all that crude in quick of time periods - Thus increasing costs (and price) as there is more demand than supply -
And since we have such a lack of refinery capacity we (America) have been buying an increasing share of already "refined" crude shipped into America (from the Middle East) and this is much more costly than is simply buying raw crude oil - (thus an increase in price we pay at the pump).
So just as in any business if the process to produce a product is more time consuming than needed, added costs will be incurred and thus prices will go up. That is exactly what happens during peak usage periods here in America because of our lack of refinery capacity.
We need to stop putting $45 + oil into SPR - We need to build new refineries - We need to demand more oil production from OPEC to ease the cost/bbl - and we need to continue with ANWAR -
One last note - Oil companies make their most money when the price is falling not rising (most don't understand that).
The problem with crude costs right now is 1. Fear is helping spec that cost of a bbl anywhere between $5 to $10 - 2. World demand is increasing - 3. OPEC reduced supply in 2002,2003 and in 2004 (while the WH sat back and put NO pressure on Saudi) 4. OPEC needs to produce more (and they are not anywhere near maxed out! that is BS).
The WH should stop putting oil into SPR - (for starters).
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