OIL IMPACT DISCUSSION

[guest aaron]

the average price here in the detroit area are around $2.75, with prices as high as $2.99. Today on the news they reported that several citgo area gas stations had recieved notices from suppliers saying that they would not be able to recieve anymore gasoline restocks until further notice...

 

[John MacKay]

I've been looking at prices for the last 2-3 weeks, and I can say I wasn't shocked by the minor increase. The market is fueled heavily by spectulation, and three things happened today to counter Katrina.

1) Japan exploring more refineries and suggesting a plan to increase oil capacity

2) OPEC exploring options to increase output

3) President Bush thinking about tapping into the oil reserves

Add to this that I read something that demand has gone up 1.4% from last year when oil was just under $50/barrel. The supply isn't the problem, speculation is.

What needs to be the focus is to look at the gasoline price. That price is up 18 cents/gallon in the past two weeks and 13 cents up on Monday.

So if gas is up 10 cents on Tuesday or more (the price reflected after Monday is most likely not the price of the gas your are getting when the prices go up by Tuesday), the gas stations are bordering on price gouging no matter the tax. That's why I don't expect gas to be $3.00/gallon by the weekend unless we see another jump like today, because of the threat of lawyers going after stations for price gouging. They're already at work on the Gulf Coast.

The refining of the oil is the problem, not the oil itself, so wholesale gas prices will be the determining factor.

It is still $2.64 a gallon everywhere in Manhattan, KS. I expect it to be around $2.70-$2.75 tomorrow here.

 

[Justin Turcotte]

Link to facilities that were in the path.
http://www.pannexresearch.com/katrina/LAOil.gif

Initial word is that the refineries are in resonable shape. No word yet on LOOP/Port Fourchon.

 

[Aaron]

After doing research on some of these refineries in the hurricane path, I have to wonder if the only reason we haven't seen a full-fledged price leap is because of the lack of information coming out of there at the moment. Traders are taking a "wait and see" approach because no one really knows what just happened on the coast, but once damage assesment is made, this could be pretty devasting to our energy use and ability to refine oil. Here's a news article from July 29th about a global price spike because of fire at Murphy Oil's Meraux plant:

http://www.ecommercetimes.com/story/45057.html

Meraux's plant is #56 on the Energy Information Administration's top national refiners list with a capacity of 125,000 bpd, which was directly impacted on Monday. See following links:

http://www.eia.doe.gov/neic/rankings/refineries.htm

http://news.yahoo.com/news?tmpl=story&u=/a...fineries_list_3

In addition to Meraux, we've lost 247,000 bpd out of ConocoPhillips Alliance plant in Belle Chasse, about 20 miles south-southeast of New Orleans which was more directly in the path of extreme winds and storm surge. Alliance is #18 on the national list.

The one I wonder about most is #8, Chevron USA's 325,000 bpd refinery on the coast in Pascagoula, MS. ( http://www.chevron.com/products/about/pascagoula/ ) That's no small amount of oil, and because it's location is 30 miles east of Biloxi, MS which suffered near total devastation from storm surge, one has to wonder how much of that plant is even remaining much less non functional. Hopefully it was far enough east to escape permanent damage, but being right on the coast with no offshore land masses to block the storm surge really makes you wonder.

None of these figures takes into account the numbers of intact refineries that have no power for an indefinite amount of time, mainly west of New Orleans, as well as the status of the offshore oil rigs and Louisiana's Offshore Oil Port. And prices are expected to be moderated by tapping the strategic oil reserve?

I want to be optimistic here, but what are we facing in terms of gasoline and prices? Widespread shortages maybe?

Aaron

 

[John MacKay]

As of the latest data, wholesale gas prices are up 4 cents/gallon making the total rise since the weekend 17 cents/gallon. I'm thinking by the weekend, we will be seeing prices up 20 cents/gallon from what they were Monday. Maybe more if the market goes anymore out of control.

So that means the average price would be around $2.80/gallon. The price hike from yesterday should not be felt until the prices go up before the weekend. There may be a 10 cent increase from Monday to Tuesday in order to lessen the shock of going up 20 cents all at once.

 

[Andrew Geil]

Maybe there is some sunshine out of this whole mess. Since everyone gassed up Sunday and Monday, maybe there won't be as much of a demand for gas over the next day or two.

 

[Morgan Palmer]

I just interviewed a spokesman for Delek refining. They are a major refiner in Tennessee and Texas.

He says he's confident we're looking at at least $3.50 per gallon for regular unleaded in just a few days.

i post this since it's a horses mouth confirmation.
MP

 

[Andrew Geil]

Hello recession!

Makes me glad I just bought a bicycle...

 

[David Schuttler]

12:44 P.M. - The Louisiana Offshore Oil Port did NOT suffer major damage as a result of Hurricane Katrina. And a port official says the flow of oil could resume within "a matter of hours" once its power supply is restored.

http://www.wwltv.com/

 

[Chris Nuttall]

Just filled my car up at $2.79/gal here south of Tulsa. I didn't cry about it, but I think the guy next to me filling up his truck and bass boat was. :cry:

 

[Tim Vasquez]

September gasoline futures today rose 29.94 cents, or 14.5 percent, to $2.36 a gallon on NYMEX. Trading was halted briefly because the exchange's 25-cent limit was reached.

Update: Story was an hour or two old -- gasoline is trading at $2.48 as I type this.

 

[Tim Vasquez]

Here's what happened to NYMEX September gasoline today -- we're up 42 cents today on wholesale:

 

[Shannon Vasquez]

Gas prices here in Palestine were unchanged yesterday, but today they are up a uniform 25 cents all over town. I saw 2 places where they hadn't changed the signs yet, but all the rest were up to $2.65 - 2.70. I'm certain it will increase.

Good news about LOOP, David.

 

[David Schuttler]

Just filled my car up at $2.79/gal here south of Tulsa. I didn't cry about it, but I think the guy next to me filling up his truck and bass boat was. :cry:

You are on the wrong side of Tulsa then... to pay that much

 

[Robert Dewey]

It's $2.90 here, up from $2.65 two days ago.