Oil Prices Hit New High On Supply Fears

[Finish or Ignore]

Jim,

Yessir. The truth of it is we really are in a bit of a supply crunch.

SpinDoc replies:

Bullcrap. The only supply crunch rests
in the minds of the greedy oil companies
and their biggest supporters, G.W. Bush
and Richard "Cranium" Cheney. It's
rather obscene to watch the oil companies
rake in the money in billions,

[post="288573"][/post]​

Spin Doc
Not trying to be smart but, The oil companies put a price on oil and we(consumers) buy all we can get our hands on. If the name of the company was SpinDocOil Co. what would you charge?

 

[jimntx]

Jim,

Yessir. The truth of it is we really are in a bit of a supply crunch. We could work our way out by building more refineries.. but that will take about two years.

[post="288545"][/post]​

Correction. Building a new refinery is a 10-15 year project from start to finish. Every single piece of a refinery--every cracking unit, every transport pipe, everything--has to be designed from scratch for the particular site. Because of various Federal and state laws, what you did when you built your last refinery probably won't work this time.

And, it's not like the parts are in stock down at Home Depot.

 

[usair_begins_with_u]

Jim,

Do you know the names of any companies that supply these types of parts? Im looking for good hedge in my portfolio...

 

[RowUnderDCA]

I'm not sure that "spin doc" has always been the same person posting all these years.... or rather the same "personality"

 

[BoeingBoy]

Since I won't be around to post the weekly update till Friday nite (or Saturday if too tired Friday), here's what Bloomberg expects from it's survey of analysts:

Domestic crude inventories up 1.5 million barrels

Gasoline inventories down 1.5 million barrels

Distillate inventories up 1.8 million barrels

Jim

 

[jimntx]

Jim,

Do you know the names of any companies that supply these types of parts? Im looking for good hedge in my portfolio...

[post="288675"][/post]​

Well Refineries-R-Us used to have a couple of stores in Houston, but I think they went out of business during the refinery construction moratorium of the last 20 years.

 

[RowUnderDCA]

Three Rice grads started a website. CRUDETOFUEL.com

 

[JS]

Correction.  Building a new refinery is a 10-15 year project from start to finish.  Every single piece of a refinery--every cracking unit, every transport pipe, everything--has to be designed from scratch for the particular site.  Because of various Federal and state laws, what you did when you built your last refinery probably won't work this time.

And, it's not like the parts are in stock down at Home Depot.

[post="288640"][/post]​

On the "bright side", limited refinery capacity should keep a lid on crude oil prices, relatively speaking. The demand for oil (from the U.S. anyway) can't go up if we can't refine it.

I am surprised that the near-shortage of jet fuel in California, Nevada and Arizona lately (a few days down to a few hours worth!) hasn't been mentioned more often. This is what happens when you have a product with limited production capacity and somewhat inelastic demand (i.e., cancelling flights is a poor solution and there's only so much fuel you can ferry).

I was in Phoenix in August 2003 when the gasoline pipeline from Tuscon busted, cutting supply by 1/3. It was eerie seeing half the gas stations closed (no gas to sell) and the other half with prices of $3 to $4.50 a gallon and long lines.

What's worse is that people were hoarding gas (similar to a run on the bank), constantly topping off their tanks and even doing illegal things like putting gasoline in empty milk cartons (or stealing it from parked cars).

Not good!

 

[FWAAA]

On the "bright side", limited refinery capacity should keep a lid on crude oil prices, relatively speaking. The demand for oil (from the U.S. anyway) can't go up if we can't refine it.

[post="288835"][/post]​

Well, you're right - our quantity demanded can't increase substantially due to refining constraints, but we can still bid up the price of it to ungodly levels. I filled up the Escalade today for $2.99/gallon at my corner Chevron here in the Valley. Only cost $80. Every night some dope on the news crying about how expensive gas has become as they explain their 80 mile commute each way each day. Fools.

 

[JS]

Well, you're right - our quantity demanded can't increase substantially due to refining constraints, but we can still bid up the price of it to ungodly levels. I filled up the Escalade today for $2.99/gallon at my corner Chevron here in the Valley. Only cost $80. Every night some dope on the news crying about how expensive gas has become as they explain their 80 mile commute each way each day. Fools.

[post="288836"][/post]​

Maybe I'm just a dumb old hick, but would someone please tell me where the "Valley" is? I've been to Los Angeles several times, and from what I can tell, it's flat (valley-like) all the way from Burbank to Santa Ana. That's not very specific. 😉

Then there's the Antelope Valley where the Los Angeles en route center is (in Palmdale). It's not too difficult (but not trivial) to get a tour of the site (of course, they want to see ID for security 🙄 ) which I highly recommend.

 

[delldude]

Well, you're right - our quantity demanded can't increase substantially due to refining constraints, but we can still bid up the price of it to ungodly levels. I filled up the Escalade today for $2.99/gallon at my corner Chevron here in the Valley. Only cost $80. Every night some dope on the news crying about how expensive gas has become as they explain their 80 mile commute each way each day. Fools.

[post="288836"][/post]​

what part of reality did you miss?
if we can't refine what we import.then there is a huge price demand for a limited distributed product.......duh.............. where the fu** you been?
oh you and your "valley girl" mentality just struck home.....
my god buffie,we might have to sell the humvee......duh....

 

[jimntx]

Well, you're right - our quantity demanded can't increase substantially due to refining constraints, but we can still bid up the price of it to ungodly levels. .

[post="288836"][/post]​

Well, no. They can just increase the import of refined products. There is a HUGE refinery in Curacao (or maybe Aruba--I've seen it, but it's been awhile) owned by Royal Dutch Shell. The U.S. is already importing about 10% of total refined products. They can just import more. Of course, importing refined product also raises the price, but Americans have already shown that they don't care about price as long as they can continue drive their Humvees, Escalades and Suburbans. I saw a report the other day that said that the oil companies sold more refined product in July this year than they did last year. Where are those economists that say increased price = reduced demand?

By the way, I saw a segment on the news tonight here in Dallas which addressed the issue of "If there is no more refinery capacity, why don't they build more refineries?" They interviewed the president of a company that has been trying to build a small refinery outside of Phoenix. They have been at this process for 10 years now--getting permits, etc.--and hope to start construction next year. The best part is that they had to move the site from Phoenix to Yuma due to NIMBY. The reporter closed with a statement that everyone wants more gasoline, but no one wants the refinery built anywhere near them.

 

[delldude]

post deleted by automatic moderator..

 

[delldude]

Well, no. They can just increase the import of refined products. There is a HUGE refinery in Curacao The U.S. is already importing about 10% of total refined products. They can just import more

Well, no. They can just increase the import of refined products. There is a HUGE refinery in Curacao The U.S. is already importing about 10% of total refined products. They can just import more. Of course, importing refined product also raises the price, but Americans have already shown that they don't care about price as long as they can continue drive their Humvees, Escalades and Suburbans.

Economy
Due to its strategic location between the Americas, and its safe natural harbours with deep waters, Curaçao has always been a center of commerce and business. The 1914 discovery of oil in Venezuela gave impetus for the island's choice as the location for one of the largest oil refineries in the world with a production of over 225.000 barrels of crude oil a day.
After suffering a major shock in late 1985 when Shell Curaçao (nowadays Isla) ceased operations because of the glut in the international oil market, our refinery is once again a stable source of income and employment.

CARACAS (AFP) - Venezuela's energy minister, Rafael Ramirez, said that Caracas is "ready and willing" to cut off its oil supply to the United States, if there are any signs of aggression from the superpower toward his country.
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"We are prepared to do that, and we stand ready to defend our rights," Ramirez told the official news agency ABN.

 

[usair_begins_with_u]

Where are those economists that say increased price = reduced demand?

The demand for gasoline will be inelastic in the short run, but we will see wide sweeping changes in the long run. Just ask the american car companies about the last time oil spiked like this.

I dont think we've begun to see the fall out, my theory is the expanding economy and the bush tax cuts have lessened the effect of higher oil prices. I dont know if the growth is sustainable.. I'm starting to understand why the price of gold is creeping up.