Continuing news and analysis on Katrina, oil supply
The Oil Drum
The best place to check for news, commentary and links. They seem to have fixed their web access problems.
(30 August 2005)
Oil prices hit new high
Mark Tran, Guardian
US crude oil prices hit a new high today as most oil and natural gas production in the Gulf of Mexico shut down after Hurricane Katrina hit the region.
Crude oil for October delivery was up $3.50 (£1.96) at $70.70 per barrel on the New York Mercantile Exchange in morning trading. It traded as high as $70.85, its strongest level since oil futures started trading on the exchange in 1983. In London, Brent crude was up $3.55 at $68.42 a barrel.
Today’s surge in oil prices followed a widespread shutdown of oil and gas facilities in the Gulf of Mexico, which pumps a quarter of US oil and gas. Although the storm – one of the biggest in US history – eased before hitting the coast, some damage was reported.
“We’re now in wait and see mode,” Gerard Burg, a minerals and energy economist at National Australia Bank, told Reuters. “There was a pull-back after Katrina went through, but early indicators are certainly that some damage has been done.”
At its height, the storm forced eight refineries in south-east Louisiana to close, with two others having to reduce operations. The moves disabled more than 9% of total US refining capacity and sparked fears of a petrol shortage at a time when demand is already high.
(30 August 2005)
IEA – Europe may need to send oil stockpiles to US after Katrina damage
Staff, AFX News via Forbes
PARIS (AFX) – Europe will need to send some of its strategic emergency stockpiles of crude to the US if refinery damage caused by Hurricane Katrina proves severe, said International Energy Agency executive director Claude Mandil. …
(30 August 2005)
Another Storm Casualty: Oil Prices
Jad Mouawad and Simon Romer, NY Times
The region that produces and refines a major portion of the nation’s oil and natural gas was largely shut down by Hurricane Katrina yesterday, further tightening strained energy markets and sending prices to new highs.
As oil companies evacuated offshore operations throughout the Gulf of Mexico, oil production in that region was reduced by 92 percent and gas output was cut by 83 percent.
The latest interruptions in oil supplies are likely to send retail gasoline prices even higher than the current average of $2.60 a gallon. They have prompted the Bush administration to say it would release emergency oil stocks from the Strategic Petroleum Reserve if needed.
“We are still in the soap-opera phase where everyone is still wondering what is going on,” said Dan Pickering, the president of Pickering Energy Partners, a Houston-based energy research firm. “The next 24 to 48 hours, as the companies get out to see if there has been any damage, are really going to determine how significant this is.”
Halfway through the hurricane season, the storm hit at an especially bad time for consumers, who have seen gasoline prices climb to their highest level in a generation, and adds to worries that oil prices might be hurting the American economy.
(30 August 2005)
Iran’s oil gambit – and potential affront to the US
Howard LaFranchi, Christian Science Monitor
The Iranian government’s plans to create an oil exchange fit into a strategy of weakening US economic hegemony.
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WASHINGTON – Is the biggest threat Iran poses to the United States really its nuclear ambitions – or is it petropolitics?
Last month the Iranian government quietly reaffirmed plans to create by next year a euro-denominated exchange in oil, natural gas, and other petroleum products. If successful, such an exchange could start to lap at the walls of the two existing oil exchanges – London’s International Petroleum Exchange (IPE) and the New York Mercantile Exchange (NYMEX) – both owned by American companies.
If the billions of dollars in oil sales ever got going in euros, experts say, that could dry up the demand for dollars that the heavily indebted US economy depends on, and it could mean big trouble for the US economy. It’s enough to make the Great Satan-loathing visionaries behind the Iranian regime salivate. The chances of success, however, seem quite remote – at least in the short term.
…Yet even as remote as the Iranian threat may be, others note that past attempts to create new markets have not been greeted warmly. None other than Saddam Hussein decided to sell oil only in contracts dominated in euros – in the months before he was ousted by a US-led military invasion.
(30 August 2005)
Ecuador’s oil workers threaten to resume strike
Xinhuanet
QUITO — An assembly in the oil-producing region of northeast Ecuador Sunday threatened to resume a general strike, which recently disrupted the country’s vital oil industry,due to petroleum firms’ refusal to ratify an agreement reached last week.
“It seems we’ll have a new strike,” said a spokesperson for the assembly in Orellana, one of the two provinces where protests started on Aug. 14 to demand improvements in infrastructure.
The assembly, headed by local officials of the provinces of Orellana and Sucumbios, accused the petroleum firms of “making fun” of the people in the region where crude is extracted.
The spokesperson said the assembly, aimed at “analyzing the situation, and quite likely, adopting other measures,” will “ask the central government to force transnational petroleum companies to meet commitments made in the negotiations in Quito (last week).”
(28 August 2005)
After oil protests, Ecuador instability may deepen
Hugh Bronstein, Reuters via AlertNet
QUITO, Ecuador – Ecuador’s President Alfredo Palacio will likely survive violent demonstrations that throttled oil exports this month, but only by continuing to give major concessions to emboldened protesters.
Political analysts said attacks on oil wells in Ecuador’s Amazon region, which tentatively ended after the government and energy firms said they would make concessions to demonstrators, could just be the start of more disturbances in a country where three presidents have been ousted in protests since 1997.
(29 August 2005)
A longer story than usual – gives some background.
CAFE Society
Fuel-efficiency standards seem like a good way to cut gasoline consumption. They’re not.
Matthew Yglesias, American Prospect
If you want to reduce gasoline consumption, what you want to do is tax gasoline consumption, not inefficient engines. CAFE is appealing because the tax it imposes is “invisible,” and legislators can pretend they’re voting to encourage the production of more efficient cars. In the real world, however, it doesn’t work that way, and someone needs to pay the piper either way. A much better way of reducing consumption would just be to tax it straightforwardly with higher gasoline taxes. The revenue could then be used for a progressive tax cut. Most crudely, the government could simply add up all the revenue from the higher tax, divide by the American population, and then mail a check to everyone at the end of the year, giving each family that share. That would be a net transfer of wealth away from families that use more gas than average to families that use less — a clear and simple way of creating an incentive for people to use less fuel.
The CAFE approach, by contrast, only makes sense on the theory that everybody drives the same amount. If that were true, the efficiency of your car would be the sole determinant of consumption, and inefficiency would be a reasonable thing to tax. But it obviously isn’t true.
(30 August 2005)
UPDATE: See also More on CAFE and gas taxes. -BA.
Deliver Us from Oil
Editorial, Columbian (Washington state)
The charitable way to respond to last week’s plan from the Bush administration for new gasoline mileage requirements on trucks and small SUVs goes about like this: The White House took a much-needed step but came up a bit short in its effort to nudge this country toward independence from foreign oil.
The editorial comment in The Philadelphia Inquirer was more on target: “You’ve got to be kidding.”
This, the first proposed overhaul of federal fuel-efficiency standards in three decades, was overdue, but was also a missed opportunity.
… Bush could have seized the moment and begun forcefully preparing the country for the day oil from Saudi Arabia and/or Venezuela is no longer coming to the U.S. in adequate quantities, for whatever reason.
As Amory Lovins and co-authors write in their widely heralded 2004 book “Winning the Oil Endgame: Innovation for Profits, Jobs and Security,” this country has the ability to develop other energy sources. But it’s a task that needs a dedicated leader.
(29 August 2005)
Drivers using plastic to delay the pain
Use of credit cards to purchase fuel is rising
Janet McGurty, Reuters via Houston Chronicle
U.S. drivers are relying more on credit cards to cushion the pain of high gasoline prices than they have in the past, according to the National Association of Convenience Stores.
Convenience stores, which sell about three-quarters of all gasoline sold in the nation, have seen the use of credit card purchases for motor fuel rise to 70 percent from about 54 percent last year, according to the industry group. And drivers are seen reaching into their pockets for plastic more often as they try to stretch their budgets.
“Consumers are trying to displace the pain for a few weeks,” said Jeff Lenard, a spokesman for the group, which includes stores owned by oil companies. …
(28 August 2005)
