Delta In Chapter 11 By Sept '05

[jimntx]

Once the commerical inventory is built up sufficiently to cover the future "projected" demand with a comfortable margin, the supply disruption theory will then start breaking down by itself.

I'm guessing that you are making the same incorrect assumption that one can stockpile commercial inventories of crude oil or refined product the way one builds up inventory of refrigerators, cars, or TVs.

The oil industry just about invented JIT (Just-in-Time) manufacturing and marketing. Over the years they learned to "schedule" production from the oil fields so that crude did not arrive at the refinery until it was needed. There is also limited storage capacity for refined product (compared to our voracious appetite for same). And, there is the problem that jet fuel/gasoline/other refined petroleum products are organic. They can decompose/degrade/break down over time. That's why they tell you not to use that gasoline in the Spring that has been sitting in your garage since the last time you cut the grass last Fall.

 

[invtrade]

"I'm guessing that you are making the same incorrect assumption that one can stockpile commercial inventories of crude oil or refined product the way one builds up inventory of refrigerators, cars, or TVs."

Your point about JIT for refining purpose is taken. On the other hand, I think you may be missing the point.

When you said above about "crude oil or refined product", I assume you really meant "refined product" only. Otherwise, why do we create the SPR ? Is it another way for the government to waste tax payers money ? I hope not (though it is not unheard of). Crude has been down beneath the earth for so long; if propertly stored, the crude will be as good as if it were undernearth the earth. In fact, I would think crude can be stored better than the refrigators, cars or TVs since refrigators, cars or TVs depreciate, deteriate, and become obsolete !

 

[jimntx]

Your point about JIT for refining purpose is taken. On the other hand, I think you may be missing the point.

When you said above about "crude oil or refined product", I assume you really meant "refined product" only. Otherwise, why do we create the SPR ?

You are confusing 2 different issues. The SPR was created after the 70's oil embargoes to provide a temporary supply of crude in the event of another OPEC embargo. However, when full the SPR contains approx. 570 million bbls of crude oil. That is a 60-day supply. Not enough to materially affect the price of crude at current consumption rates. Since most oil futures contracts are for delivery in a 60-90 day timeframe, releasing ALL of the SPRs reserves into the market might drop the price for a day or two, but then the SPR would be empty. What would you do next week to control the price?

Storing crude oil in salt domes is simply putting it back from where crude oil was originally extracted; so, yes it is an effective way to assure an emergency supply of crude. However, this is not a solution for managing current crude oil prices by "building inventory." There are costs involved in reinjecting the oil into the ground and pumping it back out when needed; so, you do not want to be injecting and extracting constantly. And, those costs are on top of the fact that the oil was purchased at current market prices.

What I meant by limited storage facilities for crude oil is that there are no tank farms large enough to "build inventory" of crude sufficient to affect the current price. When a VLCC tanker arrives at a Gulf Coast refinery, for the most part the tanker itself is the storage facility for the crude until it is needed. But, as I said before, they are scheduled to arrive when the crude is needed. It is usually pumped directly from the ship to a cracker unit, IIRC.

Using the "diversion" of crude oil into the SPR as a "supposed" major factor in the current cost of crude oil is either a misunderstanding of the volumes of crude oil used in this country on a daily basis and the mechanism of the SPR itself or a deliberate lie by those who want a "government conspiracy" answer to obscure the fact that we as a nation do not know how or even want to conserve energy resources.
It's all a plan to deny me my Constitutional right to drive a Sherman-tank-sized vehicle if I want to!

 

[jimntx]

Oh, and for those who keep thinking that crude oil prices are going to start dropping any minute now...

According to the NYMEX (NY Mercantile Exchange) website at 1358EDT, the last bid for crude oil for delivery January, 2006 was $66/bbl! Last bid for Dec. 2005 was $65.40, and Feb. 2006 was $65.60. That's a pretty tight range for wild, mindless speculation.

 

[Beer Guzzler]

(#1) Oil Surges to $66 a Barrel

(#2) I think NW CEO- Steenland hit the nail on the head and I quote, "bankrupt giants like United Airlines have been able to slash costs to levels that their rivals can’t achieve without Chapter 11 protection". (IE.. Pension Dumping)

Northwest braced for labor battle. Chief executive says he has no choice but to restructure.

 

[HGIEFOswitch]

I hope oil contiunes into the $75-$80 range. It's tough medicine but probably the best long term outcome for the country.

 

[Beer Guzzler]

Delta Bankruptcy Financing

Delta Air Lines has begun arranging the financing it would need should it seek bankruptcy protection, The New York Times reported on Saturday.

Citing “people with direct knowledge of Delta’s actions,â€￾ the Times reported that Wall Street analysts, industry executives and finance experts said the troubled airline could seek the protection within weeks.

The No. 3 domestic airline is also exploring selling or refinancing its commuter lines, Comair and Atlantic Southeast Airlines, and is seeking more savings from employees, according to the report.

The Times also said that Delta officials had acknowledged that it needed to be financially prepared for a filing, which legal experts expected would occur in New York, although a final decision was not imminent.

Delta exploring bankruptcy financing

 

[Beer Guzzler]

Rumor around Atlanta Today is .. Chapter 11 will be filed on Sunday, Sept 11 ..

Followed quickly by more $$$ cuts ... :down:

 

[invtrade]

Rumor around Atlanta Today is .. Chapter 11 will be filed on Sunday, Sept 11 ..

Followed quickly by more $$$ cuts ... :down:

[post="293598"][/post]​

That is really a rumor, 911. What a better day than this ! DAL would be making a historical mark though I doubt it.

 

[Raizin_Cain]

Just my opinion: Delta will file next week after congress comes back from vacation and decides on the pension reforms ! :unsure:

 

[Beer Guzzler]

Delta Air Lines Inc., the nation's third-largest carrier, could file for Chapter 11 bankruptcy protection next week if it can line up financing, sources familiar with the plan said yesterday.

The Atlanta-based airline is trying to line up between $1.6 billion and $1.7 billion in debtor-in-possession financing, which is used to operate during bankruptcy proceedings, according to a report in Debtwire, an online news service for hedge funds and investment bankers. Banks or other financial institutions that provide debtor-in-possession financing have first claims on any assets during a reorganization.

According to the report, Delta officials have received proposals from J.P. Morgan Chase & Co., Citigroup Inc. and General Electric Co.'s commercial finance arm.

Delta Moves Closer to Bankruptcy Protection

 

[Beer Guzzler]

As predicated. Delta BK before the end of Sept.. Reasons.. Katrina, Oil/Fuel & Pensions .. Not to mention debt..