Tag: shutdown

Status after BP announcement. No hike threat YET.

With BP’s announcement today, I’m sure you’re all curious or
wondering what immediate effect this will have on our gas prices.

BP’s announcement is fairly important, but not the biggest deal in
the world. Over the next WEEK, BP will be shutting down 400,000
barrels of oil supply per DAY. While this may seem big, think about
this. Last year when Hurricane Katrina shut, she destroyed MILLIONS
of barrels of oil production PER DAY, some of which are STILL OFFLINE
almost a year later. This also is not that big of a deal for this
reason: we have ample amounts of crude oil. As of a few weeks ago,
the nation’s inventories contained the most crude oil since MAY 1999.
At 335 million barrels, we’re sitting very well off, and as the Dept
of Energy says, we are MUCH ABOVE AVERAGE when it comes to oil
stockpiles, compared to the 5 year average.

If this had been a gasoline refinery with 400,000barrels of refining
capacity per day, then YES, I’d be very worried and wholesale
gasoline prices would skyrocket- however, this is just oil. Saudi
Arabia’s state run oil company has already raised its prices to U.S.
customers- however, it may take a month or two for oil companies to
receive this more expensive oil, and by that time, the BP pipelines
should be done.

I see no reason for a price hike- gasoline prices traded near their
Friday levels- about 2.25 per gallon. Today there was no change.

I got a kick when I logged onto GrandRapidsGasPrices.com at 10pm and
saw a user post a price of $4.50 and say “GAS HIKE IMMINENT”. No way.
$4.50? I started laughing. Not this year. The economy would tank
before we saw $4.50.

You ask why oil went up $2 per barrel and yet wholesale gasoline
prices didn’t rise?
Just why I explained- crude oil is traded on the commodities market
seperate from gasoline. It is done this way because gasoline and
crude oil are completely different. Yes, gasoline DOES contain crude
oil, however, it makes up only about 50% of what is in gasoline. We
have LOTS of crude oil right now, and gasoline inventories could be
better- thus we’re paying more than last year at this time.

HOWEVER, if we now see a Hurricane that wipes out much of the LOOP
(Gulf offshore oil unloading platform) this shutdown could come into
play, and worse case scenario, we could see $3.75. Unlikely.

There are MANY things going into gasoline prices these days- fear of
terrorism, fear of shortage, etc. The media really does no favor by
scaring the American public into thinking that this is some sort of
crisis, which it most DEFINITELY isn’t.

There will be plenty of gasoline today and for the next weeks.

I see no reason for a price hike at this time.

If you have ANY questions about oil or gas prices, feel free to post
on WOODTV8’s Gas Price forum.


August 30: Hurricane Katrina

Hello everyone!

Unfortunately, it looks like we’re going to be taking a turn for the worst. If you think its bad right now, better settle in, as I said in my last e-mail, because we’re in for a ROUGH TIME.

This will be a long e-mail with a lot of gasoline news, so bear with me.

Simply put, these rises are *JUSTIFIED*. As of this writing, Katrina has caused SEVEN oil platforms in the Gulf of Mexico to break loose. Two are missing, and one may be sunk.

Keep in mind that Louisiana is home to about 20% of the overall U.S. gasoline and oil production. Most of that is currently closed, so before Katrina, refineries were making gas all out and barely keeping up with demand, but now with LESS CAPACITY, we’re facing a dire situation.

>>>>Today on the stock market, Nymex gasoline went up 40 CENTS per gallon.

It rose so fast that the exchange halted the trading of gasoline. Its current price is $2.5150, up about 40 cents in the last 12 hours.

Unforunately, these prices will hit the pump very soon. Today’s price hike was a result of the first wave of bad news, and todays price change has NOT YET HIT the market. I expect that we see prices jump in the next few days. Its hard to tell when, because we’ve never seen a 20 cent hike two days in a row. Maybe Thursday after we hear about the bad production news from the DOE, but as of now, I remind you this is a PREDICTION, I would not be suprised to see regular gas at $3.299 soon.

Aug. 30 (Bloomberg) — At least seven oil drilling rigs were adrift today in the Gulf of Mexico and two companies said they couldn’t find their rigs and platforms after Katrina plowed through the region yesterday.

The U.S. Coast Guard said seven offshore oil drilling rigs were adrift in the Gulf as of 9 a.m. New York time today, Coast Guard spokesman Lt. Rob Wyman said from St. Louis. None of them were linked to specific companies.

“There’s the potential for some environmental impact,” Wyman said in a phone interview. “We are trying to keep tabs on them.”

That report comes as individual energy companies begin to sort through the effects of the storm, which slammed ashore in Mississippi yesterday with winds as high as 140 miles an hour, causing flooding in four states.

Oil producer Newfield Exploration Co. reported a missing production platform and driller Rowan Cos. said it a missing rig. Both companies are based in Houston.

Newfield, a U.S. producer of oil and natural gas, said it was searching for a production platform that before the storm had been pumping 1,500 barrels of oil a day.

Missing Rigs

Rowan’s Rowan-New Orleans jack-up rig is missing and may have sunk off the Louisiana coast, the company said in a statement today.

Diamond Offshore Drilling Inc. said its Ocean Warwick jack- up rig was found today, about 66 miles from where it had been operating, on Dauphin Island off the coast of Alabama. Before Katrina’s arrival, the rig was about 12 miles from the Louisiana shore.

Another of the company’s jack-ups, Ocean Voyager, broke away from its moorings and was found about 9 miles north of where it was before the storm hit.

Jack-up rigs are vessels with retractable legs that can be dropped to the seafloor for drilling in waters that are several hundred feet deep.

Noble Corp., a U.S. oil driller, said one of its Gulf of Mexico offshore drilling rigs was torn from its moorings by the storm. The Jim Thompson semi-submersible rig was in the main path of the storm, Noble said in a statement today. The unit is now located about 17 miles north-northeast of where it was moored, Noble said.

No Injuries

A team from Noble was scheduled to board the Thompson later this afternoon. Semi-submersible rigs are units that cost more than $350 million and are used to drill in water depths down to 10,000 feet.

GlobalSantaFe Corp. said its Arctic I rig was grounded in shallow waters at the mouth of the Mississippi River after breaking free from its original location. Surveyors will be sent out to determine the rig’s condition, Houston-based GlobalSantaFe said in a statement.

Transocean Inc., the world’s largest offshore oil and natural-gas driller, said yesterday that its semi-submersible Deepwater Nautilus rig broke free from its moorings in the aftermath of Katrina. A call to spokesman Guy Cantwell today wasn’t immediately returned.

No injuries were reported with any of the lost or drifting rigs.

Aug. 30 (Bloomberg) — Crude oil and gasoline rose to a record for a second day after Hurricane Katrina shut 95 percent of production in the Gulf of Mexico.

Royal Dutch Shell Plc said its 220,000 barrel-a-day Mars platform, equivalent to 15 percent of total U.S. Gulf oil output, suffered damage. Katrina crossed the U.S. coast yesterday after closing the Louisiana Offshore Oil Port, the largest U.S. oil import terminal. The storm forced the shutdown oil refineries in Louisiana and Mississippi.

“Prices will continue to wander higher as confirmation of the damage comes in,” said Aaron Kildow, a broker at Prudential Financial Derivatives LLC in New York. “It will be real tough to get everything back up and running quickly. Refiners that were left undamaged by the storm may not be able to operate at their full potential because of all the missing crude oil.”

Crude oil for October delivery rose $2.61, or 3.9 percent, to $69.81 a barrel on the New York Mercantile Exchange, the highest close since trading began in 1983. Futures touched $70.85, an intraday record. Prices are 65 percent higher than a year ago.

The storm shut 1.4 million barrels of daily crude-oil output, according to the U.S. Minerals Management Service, which manages offshore resources. Platforms in the Gulf are responsible for about 30 percent of U.S. output.


Gasoline for September delivery surged 41.39 cents, or 20 percent, to $2.4745 a gallon, the highest since trading began in 1984. Futures touched $2.50, an intraday record. Prices have more than doubled in the past year.

“What we really have to worry about is finished product stocks,” such as gasoline, jet fuel and diesel fuel, said Matthew Simmons, chief executive of Simmons & Co., an energy investment bank in Houston, in an interview today. “When you have a physical shortage, it always appears in finished product stocks, not in crude oil.”

Regular-grade gasoline, averaged nationwide, rose 0.1 cent to $2.604 a gallon yesterday, according to data released today by the AAA, the nation’s largest motoring organization. Prices averaged a record $2.614 a gallon on Aug. 19. Pump prices are 39 percent higher than a year ago.

“With gasoline futures at records a nationwide average of $3 at the pump is likely in the near-term,” said Jason Schenker, an economist at Wachovia Corp. in Charlotte.

Strategic Reserve

A U.S. refiner has requested a loan of crude oil from the nation’s Strategic Petroleum Reserve, the first such request since Katrina halted output, an Energy Department spokesman said. The request is under review, department spokesman Craig Stevens said. He declined to say which company asked for the loan or whether it was for a specific amount of crude.

The government loaned 5.4 million barrels of oil last year to refiners whose supplies were disrupted by Hurricane Ivan.

“The government’s offer of barrels from the Strategic Petroleum Reserve has mitigated some of the upward price pressure on crude oil,” said Schenker. “The problems with gasoline and natural gas may not be helped even if the SPR is tapped. If refineries are off line and can’t run the extra oil, it will make no difference.”

The Louisiana Offshore Oil Port’s terminal is located about 20 miles south of the coast and handles about 1 million barrels of crude oil a day, or 11 percent of U.S. imports. It consists of mooring buoys, platforms and pipelines.

“We are encouraged by the initial damage assessment,” said Mark Bugg, scheduling manager at New Orleans-based Loop LLC, the port operator. “We are conducting more assessments from our operations center in Galliano,” Louisiana.


The port will not resume oil shipments until power is restored, Bugg said. Entergy Corp., which provides power for the pipeline system connecting the port to refineries, said it will take weeks to rebuild its electric delivery system in Louisiana, where 80 percent of its customers are without power.

Port Fourchon, Louisiana, the base for three-quarters of support services to the Gulf’s deepwater oil and gas facilities, is shut because of the storm, said Port Director Ted Falgout.

“We have just got to the head of the port,” Falgout said. “We have yet to enter because there are several large vessels on the highway in the port itself.”

More than 600 offshore platforms are within 40 miles of Port Fourchon, according to the port’s Web site.

“It’s going to be extremely difficult to supply and repair platforms if the port is closed,” Falgout said. “The nearest alternative location for logistics is Venice, Louisiana, which was totally destroyed.”

Repairs to Gulf platforms and pipelines damaged by Hurricane Katrina will be delayed if the storm deposited silt in the port’s channel, Falgout said.

LOOP `Incredibly Important’

“The LOOP is incredibly important right now,” said John Kilduff, vice president of risk management at Fimat USA in New York. “If it is not up soon there will be a spillover for refineries in the Midwest, which could run out of crude quickly. This could lead to gasoline shortages in the weeks ahead.”

Katrina caused the shutdown of at least eight U.S. crude- oil refineries, idling about 1.79 million barrels a day of refining capacity, or more than 10 percent of the nation’s total, according to data compiled by Bloomberg.

Heating oil for September delivery jumped 16.71 cents, or 8.8 percent, to close at a record $2.0759 a gallon. Futures touched $2.09 during the session, the highest in 27 years of trading on the exchange. Heating oil is 85 percent higher than a year ago.

High Prices, Volatility

“We can see in the short run some very clear signs that the prices are going to remain at very high levels with a very high volatility,” said Jose Sergio Gabrielli, chief executive of Rio de Janeiro-based Petroleo Brasileiro SA, the largest South American oil producer. “We don’t see any reason why prices should fall in the short run.”

In London, the October Brent crude-oil futures contract rose $2.70, or 4.2 percent, to $67.57 a barrel on the International Petroleum Exchange, the highest close since trading began in 1988. Futures touched $68.89, a record intraday price. The exchange was closed yesterday for a public holiday.

The storm shut 8.8 billion cubic feet of natural-gas output, equivalent to 88 percent of the total amount of gas produced in the Gulf, according to the Minerals Management Service.

Natural gas for October delivery rose 52 cents, or 4.7 percent, to close at $11.659 per million British thermal units in New York, the highest since the contract was introduced in 1990. Futures touched $12.07 yesterday, a record intraday price.

The Reuters-CRB index of 17 commodities rose as much as 10.22, or 3.2 percent, to 333.45, the highest since 1980. It was up 2.5 percent at 2:30 p.m., the biggest increase since February. The index is up 21 percent from a year ago.


I would advise you to avoid travel, and to seriously think about donating money to the American Red Cross to help out hurricane suvivors. I personally chose to already donate, lets see how many of you are willing. Here is a link:

Anyway, find alternate travel. I am personally thinking about biking 2.5 miles each way to work. Gas prices will remain high for weeks and perhaps months. Dig in. The damage caused will last a LONG time.

TheGasGame.com (c) 2017 Frontier Theme