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.
~Patrick