OIL IMPACT DISCUSSION

[Andrew Geil]

The price of gas may become somewhat irrelevant after tonight.

$70 or $90 or $100 a barrell will be mitigated by any actual /physical/ shortage of gasoline. You can't buy a product, regardless of price, if it isn't physically on the shelf to be bought...

 

[Shannon Vasquez]

Natural gas is impacted significantly by this hurricane as well:

http://money.cnn.com/2005/08/29/markets/ny...nymex/index.htm

The NYMEX said in a statement that contracts are operating under "Force Majeure" because of a shutdown at the Henry Hub facility operated by Sabine Pipeline in Louisiana.

Henry Hub is the centralized point for natural gas futures trading in the U.S. and Sabine serves as the official delivery mechanism for NYMEX's natural gas futures contracts.

"Force Majeure" -- which means "greater force" -- excuses a party from liability if an unforeseen event, such as a natural catastrophe, prevents it from performing its obligations under the contract.

Delivery of contracts take place every day, Thomas Bentz, senior energy analyst at BNP Paribas Commodity Futures, explained. However, since the Henry Hub has been shutdown, deliveries will have to be delayed until the facility is back in operation. He said this is the first time he can remember Force Majeure being declared for natural gas contracts.

 

[Jeff Snyder]

I was just about to post about this... I see natural gas is up 16%. Oil is trading "only" near $68/ba last I checked, certainly less than I had anticipated.

 

[Anonymous]

President Bush

President Bush is considering opening up the oil reserves to lesson the impact. We should hear more about it later... maybe during his press conference.

 

[Scott Olson]

I've read that OPEC may again increase production in response to the shortages that might result. Perhaps that is calming the nerves of the caffeinated trigger happy oil traders.

I wonder what the damage to the rigs was? It looked like a good 6 oil rigs were directly in the path of the eyewall with LOOP being very close to the western eyewall.

 

[Damon Scott Hynes]

The price of gas may become somewhat irrelevant after tonight.

$70 or $90 or $100 a barrell will be mitigated by any actual /physical/ shortage of gasoline. You can't buy a product, regardless of price, if it isn't physically on the shelf to be bought...

Discussion I had somewhere else--the Strategic Petroleum Reserve doesn't matter, since there's no Strategic Refinery Reserve...

 

[Houston Girl]

stock market is up.

The Dow is up. How bizarre!

Here is a good article about what is happening with oil.

http://moneycentral.msn.com/content/CNBCTV...hes/P127804.asp

 

[Jay Cazel]

The price of gas may become somewhat irrelevant after tonight.

$70 or $90 or $100 a barrell will be mitigated by any actual /physical/ shortage of gasoline. You can't buy a product, regardless of price, if it isn't physically on the shelf to be bought...

Discussion I had somewhere else--the Strategic Petroleum Reserve doesn't matter, since there's no Strategic Refinery Reserve...

Damon is right, it is not the crude it is the refining of it. Here is a break down of the refinerys that are shut down because of Katrina.

The Louisiana Offshore Oil Port, the largest oil import terminal in the United States, evacuated all workers and stopped unloading ships on Saturday.

Chevron Corp., Royal Dutch-Shell Group, BP PLC and ExxonMobil Corp., among others, evacuated offshore workers by Saturday.Refineries capable of processing some 1.6 million barrels a day have shut down. According to Dow Jones, they include:

• Chevron's 325,000 barrel a day refinery in Pascagoula, Miss.

• ConocoPhillips' 255,000 barrel a day Alliance refinery, south of New Orleans.

• Valero Energy Corp.'s 260,000 barrel a day refinery in St. Charles.

• Murphy Oil Corp.'s 120,000 barrel a day refinery in Meraux, La.

• Exxon Mobil Corp.'s 183,000 barrel a day refinery in Chalmette, La.

• Motiva Enterprises' 225,000-barrel a day Norco refinery, and its 235,000-barrel-a-day Convent refinery.

• Marathon's 245,000 barrel a day Garyville, La. refinery.

 

[Anonymous]

The price of gas may become somewhat irrelevant after tonight.

$70 or $90 or $100 a barrell will be mitigated by any actual /physical/ shortage of gasoline. You can't buy a product, regardless of price, if it isn't physically on the shelf to be bought...

Discussion I had somewhere else--the Strategic Petroleum Reserve doesn't matter, since there's no Strategic Refinery Reserve...

Damon is right, it is not the crude it is the refining of it. Here is a break down of the refinerys that are shut down because of Katrina.

The Louisiana Offshore Oil Port, the largest oil import terminal in the United States, evacuated all workers and stopped unloading ships on Saturday.

Chevron Corp., Royal Dutch-Shell Group, BP PLC and ExxonMobil Corp., among others, evacuated offshore workers by Saturday.Refineries capable of processing some 1.6 million barrels a day have shut down. According to Dow Jones, they include:

• Chevron's 325,000 barrel a day refinery in Pascagoula, Miss.

• ConocoPhillips' 255,000 barrel a day Alliance refinery, south of New Orleans.

• Valero Energy Corp.'s 260,000 barrel a day refinery in St. Charles.

• Murphy Oil Corp.'s 120,000 barrel a day refinery in Meraux, La.

• Exxon Mobil Corp.'s 183,000 barrel a day refinery in Chalmette, La.

• Motiva Enterprises' 225,000-barrel a day Norco refinery, and its 235,000-barrel-a-day Convent refinery.

• Marathon's 245,000 barrel a day Garyville, La. refinery.

Reminds me of something the Saudi ambassador one said. He said that Saudi Arabia and OPEC could easily pump all the oil america needs with no problem but that America doesn't have the refinery capacity to convert such oil.

 

[Andrew Geil]

If you've read "Long Emergency", his prophesy is starting to come true.

Today was the first time in my life I've seen a armed police officer with an assault rifle standing guard at a busy gas station. Makes me glad I live in the cornbelt and not in a big ol' city.

 

[Shannon Vasquez]

If you've read "Long Emergency", his prophesy is starting to come true.

Today was the first time in my life I've seen a armed police officer with an assault rifle standing guard at a busy gas station. Makes me glad I live in the cornbelt and not in a big ol' city.

:!: :!: :!:
Where was that gas station, Andrew? That's nuts. Was this something you saw in person, or was it on TV in the hurricane area?

 

[Tim Vasquez]

This shows the Port Fourchon and LOOP oil terminals around the estimated time they were getting max wind.

This shows the Florida State University T1 site within 20 minutes of the time that they reported 78-81 mph with gusts to 102-105 mph.

As you can see, they are both in comparable quadrants and radii from the center. The terminals appeared to be between double-eyewall structures, and since I'm not a tropical cyclone expert I'm not sure what effect that would have on the surface winds. However I think it's a safe bet that the oil terminals saw at least an equivalent speed, and perhaps even more considering the reduced friction and stronger storm state two hours earlier. The LOOP terminal probably got stronger winds as it was even closer to the center.

My guess offhand is that Port Fourchon got gusts to 120 mph and perhaps 140 mph at LOOP.

I'd imagine right now that the oil companies are gearing up to fly out there to assess the damage.

Tim

 

[Andrew Geil]

Originally posted by Shannon Vasquez+--><div class='quotetop'>QUOTE(Shannon Vasquez)</div>

<!--QuoteBegin-Andrew Geil

If you've read \"Long Emergency\", his prophesy is starting to come true.

Today was the first time in my life I've seen a armed police officer with an assault rifle standing guard at a busy gas station. Makes me glad I live in the cornbelt and not in a big ol' city.

:!: :!: :!:
Where was that gas station, Andrew? That's nuts. Was this something you saw in person, or was it on TV in the hurricane area?[/b]

In person, in central Illinois. During the lunch noon hour; in part, I think it was due to the gas station was in a bad place to deal with heavy traffic. The cops were out doing traffic, and one of them was sitting on the bumper of his car with an assault rifle watching people. Given that its a pretty warm day, I can imagine tempers are loose.

 

[nearpass]

oil rigs afloat?

Reuters UK reports two oil rigs afloat: http://today.reuters.co.uk/news/newsArticl...HER-KATRINA.xml

 

[Anonymous]

Reminds me of something the Saudi ambassador one said. He said that Saudi Arabia and OPEC could easily pump all the oil america needs with no problem but that America doesn't have the refinery capacity to convert such oil.

Of course, this would be irrelevant if the problem was:

- Refinery capacity intact

-500,000 or so b/d knocked out

In that case, we'd actually have a refinery surplus, and the US clearly has no problem importing oil.