Posted on 09/03/2005 12:32:19 PM PDT by gobucks
The U.S. energy industry showed the first signs of recovering from Hurricane Katrina's devastation on Friday as pipelines once again began pumping natural gas and several refineries inched closer to restarting.
But with eight major oil refineries shut in Louisiana and Mississippi -- and others running below capacity because of disruptions to crude supply -- officials continued to warn of fuel shortages and prices remained near historic highs.
To help offset the shortfall, Europe and Canada plan to release emergency stocks of gasoline, while up to 30 private tankers are already set to cross the Atlantic.
At the moment, the United States has lost production of about 42 million gallons of gasoline a day, equal to 10 percent of its normal consumption.
Given the severity of the damage, Valero Energy Corp. (VLO.N: Quote, Profile, Research) Chief Executive Bill Greehey warned that the country could soon face supply shortages.
"Is there enough product to meet demand? I don't think so, and I think there will be shortages," Greehey said on CNBC television.
But there were signals on Friday that some refineries may not face the sort of delays in restarting that many had feared. In another encouraging sign, several pipelines carrying natural gas, heating oil and gasoline began to move more supply.
The largest refined-oil-products pipeline in the United States, the Colonial Pipeline, which was shut because of power outages, is now running at about two-thirds of its normal 2.3 million barrel-per-day capacity. The recovery took less time than had been expected.
Natural gas is also moving more smoothly through pipelines. Williams Cos Inc. (WMB.N: Quote, Profile, Research) said the Transco and Gulfstream natural gas transportation systems are now fully operational. Two other pipelines owned by El Paso Corp. (EP.N: Quote, Profile, Research) reported that they, too, were starting to increase shipments.
But new problems also appeared, including what Louisiana officials said was a major oil spill spotted from two storage tanks capable of holding 2 million barrels of fuel near the town of Venice on the Mississippi River.
CREEPING BACK
Meanwhile, a senior White House official said about half of the refining capacity of the U.S. Gulf Coast should be back in production within two weeks -- less than the months some industry-watchers warned it would take.
Marathon Oil (MRO.N: Quote, Profile, Research) now expects to restart this weekend its 245,000 bpd oil refinery in Garyville, Louisiana.
Another plant, Motiva Enterprises LLC's 230,000 bpd refinery in Convent, Louisiana, could restart within a week.
But Motiva is still assessing damage at its 240,000 bpd refinery in Norco, Louisiana, and little is known about damage at some of the Gulf Coast's other big facilities.
At least two -- Chevron Corp's (CVX.N: Quote, Profile, Research) plant in Pascagoula, Mississippi, and ConocoPhillips' (COP.N: Quote, Profile, Research) plant in Belle Chase, Louisiana -- are believed to have suffered flood damage.
October gasoline futures settled down 22.53 cents at $2.1837 per gallon on the New York Mercantile Exchange.
Crude futures fell $1.90 to $67.57 per barrel even as much of the Gulf Coast's oil production remained paralyzed.
Crude production was down 89 percent, while natural gas output was cut by 73 percent, according to the government, which is loaning emergency crude supplies and has eased environmental regulations.
At least 20 rigs or platforms are adrift, listing, sunk or missing. And companies are still working to assess damage at many others. One company, Apache Corp., said it lost eight production platforms with daily output of 7,158 barrels of oil and 12.1 million cubic feet of natural gas.
Devon Energy Corp. (DVN.N: Quote, Profile, Research) said about half of its Gulf of Mexico oil and gas production has been restored, after suspending virtually all of its output before the hurricane hit Louisiana and Mississippi on Monday.
(Additional reporting by Randy Fabi, Bernie Woodall, Robert Gibbons and Richard Valdmanis)
Democrats are just blue seeing this news. The last thing they want is energy to get cheaper ... anything to bring on a recession is good enough for them, even if their NOLA consitutiency is drowning.
But anyway, this article is pretty upbeat, and given its Reuters, the truth must be even better. It sounds like the White House I am delighted to be watching. I'm glad we have another 3.5 years of George ahead of us.
I'm not surprised they rushed to get back. One purpose of high prices is to signal to producers that they should get going and produce more.
The tears are just beginning...
I've been hearing a lot of people, even Michael Savage, call for price controls on gasoline. This will have two immediate effect: Shortages and long gas lines.
Nixon tried it in 1971 and it was a disaster. Assuming the oil companies are not conspiring to fix gas prices, (and I don't believe they are, or will), the best solution is to let the free market operate. As someone on this board once wrote, "The cure for high prices is...high prices."
I wonder how long it would take to get some of the shuttered refineries going? I read a web page about a small Gulf Coast refinery site that is still in use as a storage facility in St. Marks, Florida, but their refinery has been mothballed for some time -- it wasn't clear how long refining operations had been shutdown, but it's certainly not an abandoned site.
Damn, I wish I'ld thought of that. Superb!
For now only shallow draft vessels can traverse, which is the oil barges, but NO is a major port for everything from Europe.
"WHAT?!? The oil companies aren't going to repair their refineries and rigs! Why would they do that? They're going to keep supply down and not fix them, so they can PRICE GOUGE US! We must must all switch to using bicycles immediately!"
To get the refineries up and running, you need workers - 10,000 is what I've heard. And currently they have no where to live.
Why are supply and production shortfalls in gulf affecting prices in California? According to the California Department of Energy, Califonria receives its crude from Alaska, 22%, from California 41% and from foreign sources 36% with minor amounts from the gulf. The cost of Alaska crude delivered to the west coast is used as a proxy for the producers cost of crude in California. Based on the world spot prices and the Alaska proxy, the per gallon cost of crude increased 16 cents per gallon between Aug 1 and Aug 31. The cost of low lead gasoline at the pump increased 50 cents over the same period. Unless the cost of refining, marketing and distribution increased 24 cents per gallon, the difference can only be attributed to profit. Absent an explanation, one can logically assume we, the consumer, are being screwed.
I saw a story about on the Arizona Republic's website about AAA and the governor warning people to conserve or Arizona will be facing shortages also:
This good news is made possible by competent, brave men working around the clock to accomplish something.
So, who gets all the media attention? The very scum at the sewer's bottom.
Thank's for the good news, time for many more new refineries.
Because California is not isolated from the nationwide crude oil or gasoline markets. It makes more economic sense to ship fuel from California to places where the supply has been almost completely gutted, like Louisiana or Georgia. Hence, the supply of fuel available in California decreases, and the price goes up.
Same reason why the price of corn in Nebraska would go up if there were massive crop failures elsewhere. Saying "but there's lots of corn here" is beside the point.
Nixon's price controls were unquestionably the worst pseudo-economic ''policy'' prescription this nation has ever seen in peacetime. The results were horrific, utterly and indescribably bad, and caused mkt dislocations that have persisted to this day.
And, just btw, it was yr hmbl srvnt who posted (several times): ''The cure for high prices is...high prices.'' That's an old, old maxim in the world of trading, particularly futures trading.
FReegards!
=====
Guy goes into a grocery, asks a clerk if they have any cantaloupes.
''Sure we do. Nice fresh ones from Colorado, eighty-nine cents a pound.''
''What! Eighty-nine cents a pound?? The store down the street only charges fifty-nine cents a pound!''
''Well, why don't you buy your cantaloupes there?''
''They're all out.''
The clerk says, ''I've got some good news for you. When we're all out, we only charge thirty-nine cents a pound.''
Lumber prices spike due to Katrina; Canadian companies ready for reconstruction
Grant to fund 10,000 jobs Temporary jobs to benefit storm victims
My 1990 Kawasaki Zephyr 550 gets 50MPG and thats with me winding it out. When I lay back I can get 55-60MPG! It's great for the environment because the engine is a quarter the size of many cars 4-cyl. engines (550cc vs. 2.2 Liters) and therefore has fewer emissions. The light weight has a minimal impact on the roadways versus larger vehicles and the smaller two wheeled footprint enables me to manuever quickly in traffic to take advantage of gaps that a car can't squeeze into. I can accellerate away from heavy traffic and generally arrive at work 10 minutes sooner than if I drive the car.
In a commute by car you plop down inside a big cage and numbly navigate your way through heavy traffic with little stimulation from the outside environment. I on the other hand can zip through quickly (not playing Speed Racer either!) and can experience the sights and sounds of the environment around me and I arrive refreshed and energized. And speaking of environment, with the high tech clothing and riding gear available today, I can ride comfortably in winter unless there's snow or ice on the road.
For more info on the benefits of Moto-Commuting, may I suggest checking out: http://www.ridetowork.org
Ride safe!
Today I paid 3.55 a gallon for gas(regular)-last Saturday I paid 2.65. My favorite Amoco station was out of gas this morning and was in the process of filling its tanks. The owner told me that his tanks ran dry at 11:00 last night because he was inundated by customers yesterday, BTW-it's the first time since he bought the station that hes ever run dry. Here in Queens, New York I'm about 3 miles from Manhattan.
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