<New York to Move Away from Oil? The Oil Drum The situation in the UK>

29 comments on GNN: Energy Statistics from Britain

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Oil CEO on January 6, 2006 - 5:52am Permalink | Subthread | Parent | Comments top
Actually, you are quite definitely wrong. We did have enough buffer to handle Katrina. As far as I know, we didn't use the SPR. We only announced that we would use it, which is exactly what happened during Gulf War I, and I believe a few other instances in the last 10 years.

But aside from that, and more importantly, look what happened to the price of oil.

Look at the daily closing price of oil on the NYMEX. It was roughly $65 a week before Katrina hit New Orleans - just to rule out any pre-storm effect. (To be absolutely sure - it was $65 a week before that, and $62 a week before that).

We then have a HIGH closing price of $69.47 on September 1st - that was probably the same day it pushed past $70. Two weeks later the price is back down to $63 - lower than before the storm. If you use 4-week moving averages, it looks even less dramatic - in fact, you wouldn't be able to see the storm on a graph. This was in the face of a 10 percent cut in supply. I would say the buffer worked just fine. Maybe you'd like to argue some more.

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Oil CEO on January 6, 2006 - 6:05am Permalink | Subthread | Parent | Comments top
The real reason oil moved past $70 in late August/early September was peak oil. You came to the right place if you want to understand that.

Oil just began it's next assault on $70, we will be there shortly. April at the latest. Have you seen the latest gasoline demand numbers? 9.3 million barrels per day this week. Holy Jesus. That's like July in a normal year. Of course demand usually drops off January through March, but I wouldn't bet that way - not this year, at least.

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isaiah on January 6, 2006 - 6:37am Permalink | Subthread | Parent | Comments top
you are wrong about us not using the SPR:

"In its 30-year history, the 700-million-barrel reserve, which was recently authorized by Congress to expand to 1 billion barrels, has been tapped only three major times: 21 million barrels were released at the onset of the Persian Gulf war in the early 1990's, 30 million barrels in September 2000 and 24 million barrels last year after Hurricane Katrina struck. Those releases were so small considering the size of the reserve that one wonders why politicians are so dead set on having a billion barrels"

granted it wasn't much, but it was used.  it will be used more and more in the future as spare capacity dwindles and more "shocks" occur.  

an another note, do we have two Oil CEO's arguing with each other under the same nom de plume?  or perhaps Oil CEO may have a dissociative personality disorder...

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Oil CEO on January 6, 2006 - 6:51am Permalink | Subthread | Parent | Comments top
I stand corrected. 24 over 600 million. I get 4%. How about you? Thanks for that 4% correction. What is your point, BTW? That I missed that awesome example of how 24 million barrels saved the western world? Maybe if you had read the rest of what I had written, you would understand.
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Oil CEO on January 6, 2006 - 7:09am Permalink | Subthread | Parent | Comments top
On second thought(and this is Evil Oil CEO this time) you are wrong. You specify that it has been used only 3 "major" times. What constitutes major? And why is "major" important? I will surmise that "major" means it was suggested by the president and authorised by congress in some type of "crisis." The point being that "major" in this case is not really major at all - but at most 4% - and for all intents and purposes - irrelevant.

If one reads history, or other sources than your "unsourced" source, you will hear different things. Certainly transfers into and out of the SPR happen all the time to tide certain refiners/users over until better times.

Am I wrong? Has my bigger point about a relatively stable system with a large buffer supply sunk in yet or am I still full of **. Looking forward to your reply.

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isaiah on January 6, 2006 - 7:24am Permalink | Subthread | Parent | Comments top
my point was that your facts were wrong.  i understand fine what you said.  i actually agree to a large extent.  i don't appreciate your arrogance or condescension, however.  

what is your point?  that buffers will save us in the long run?  

in case you didn't notice, that was a quote from the NYT, not my own writing.  they're called "quotes", see?  or maybe you don't consider the NYT a "source"?  take it up with them if you think they are spouting sh*t that hurts your precious ego.  

only the President can authorize a release from the SPR, as far as i know.  

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Oil CEO on January 6, 2006 - 7:35am Permalink | Subthread | Parent | Comments top
arrogance or condescension? You accused me of having a personality disorder. What is that? Just being friendly?

There was no source in your text.Period. You would have had to have clicked on the link which did not specify itself as a link. It was hidden. No I didn't notice.

The article only verifies everything I've said so far.

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Oil CEO on January 6, 2006 - 7:43am Permalink | Subthread | Parent | Comments top
I just like replying to myself on this thread because everthing I say is warmly seconded by Davdh's reply (below) to the thread above. Or so I think.

My "point," my Dear Isaiah, has been stated several times. If you don't get it, and I know you do - because you said you generally agree with me, then I really don't know what to tell you except,"Buy Halliburton at$60, sell it at $85, sell your Ford Explorer, construct a bunker under your backyard, stock it with MRE's and 5-gallon jugs of gasoline, buy a gun, and - for God's sake! - learn to swim."

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isaiah on January 6, 2006 - 8:45am Permalink | Subthread | Parent | Comments top
you are quite hilarious, CEO.  i make some joke about a personality disorder because you reply to yourself with a very different tone, and you go off.  yeah, real mature; or maybe just insecure.  i fear for your employees, if you have any.  

and who taught you how to use the internet: your grandma?  it's called a hyperlink, and you should know by now what the default formatting and style is for one (at least the SOP for TOD). otherwise, you're going to be very lost in cyberspace...

although i agree with your point that we have large supply buffers built-in, in reality it's not beneficial.  precisely because, all these buffers promote complacency.  the longer we depend on internal buffers to smooth out the rough spots of supply, the longer it will take for people to wake up.  to start thinking about changing their lifestyles, pressuring for political energy reform, and searching for alternative energy sources.  

these disruptions should be warning signs of the approaching flood, not reasons to just buy more insurance and rebuild on the floodplain.  what we need is action, not docile cows strolling out to pasture.  without so much buffering there would be the chance for effective stimulus pre-peak, while there is still time, instead of the false sense of security that currently pervades public opinion.

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Oil CEO on January 6, 2006 - 8:59am Permalink | Subthread | Parent | Comments top
Are we joking or not? You don't seem the type to take a joke very well. I tried a couple. I'm not sure if you laughed. Your tone seems very serious. All doom and gloom.
You wanna joke? Or you wanna talk about oil? You tell me. Just make up your goddamn mind. I'm tired of trying to figure you out. You're not worth it. I'd rather spend my time figuring whether El Paso is worth $12 bucks a share. So far, they've been worth it. You gonna give me more heat?
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isaiah on January 6, 2006 - 9:14am Permalink | Subthread | Parent | Comments top
it's usually a little late to start joking after you overtly ridicule someone.  my joke may have been ambiguous, but your mockery was not.  it's also tough to joke with someone who needs to be right (and others who disagree to be wrong) all the time.  just a word of advice, no "heat".  
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Stuart Staniford on January 6, 2006 - 4:23pm Permalink | Subthread | Parent | Comments top
Please cool it with the personal insults guys. Debate is an excellent thing, but personal attacks lower the tone of the site. Thanks.
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Oil CEO on January 6, 2006 - 7:45pm Permalink | Subthread | Parent | Comments top
agreed.
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Rick on January 6, 2006 - 6:10pm Permalink | Subthread | Parent | Comments top
  1. IMHO, price is not a perfect indicator of supply vs. demand--there is a lot of emotion, large scale speculation, and vague information that roils the oil markets. And don't forget that the EU was also sending refined product to make up for the US shortfall.

  2. I seem to have missed your response to my main conceptual point:
A lot of the oil in transit is more like a pipeline or just-in-time delivery situation. If you speed things up so tomorrow's tanker arrives today, you'll still need to find another tanker to deliver tomorrow.

Yes, there can be a buffering effect, but only if you can refill the beginning of the supply chain promptly. If there is an oil embargo, or natural disaster, then less buffering can occur. The only way this seems to work is if there is 1) spare production capacity in the grades of oil the market demands and 2) spare transportation capacity to get it there. Aren't we seeing reduced spare capacity, especially of light sweet grades, and tankers being retired faster than replacements are being built?

Could you please explain how robbing Peter to pay Paul works? If Peter has more oil than he requires right now, then partially robbing him to fill Paul's needs works just fine. Otherwise, there is a problem.

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Oil CEO on January 8, 2006 - 5:22am Permalink | Subthread | Parent | Comments top
I appreciate your consideration of my thoughts.

I hadn't thought about the Peter-Paul analogy, however it is very much what is happening on a short term basis.

I didnt know you had to explain how the Peter-Paul analogy works, I thought that was the point of an analogy - it is doing the expaining :) But basically - well, you Rob Peter to Pay Paul. Hopefully by the time Peter finds out he's been robbed, he won't care, because you have Paul on your side to help smooth things out.

Another, maybe simpler, analogy is that of credit. Same thing really.

Or in this case, I just thought of a buffer effect. If you don't fill the buffer back up in a timely manner, you are in fact in trouble, yes - but the whole point of the buffer in the first place was to mitigate an immediate onset of syptoms following a crisis for which the buffer exists (conciously created or not).

I just thought the whole tanker, pipeline, storage issue was interesting, because in years of following the whole oil issue, having read every major work on the topic, whether it had to do with logistics, financial, or strategic concern - I have never seen the issue given more than a brief mention.

I presented the math as concisely as I could. I started investing in a couple of tanker companies a few years ago, and have done quite well in this regard - that's where I started to see the data.

When I incorporate what I know into the whole "scheme" of things I see quite clearly how this immense amount of en route oil which we never really discuss actually effects the "numbers" that we all spend a lot of time here debating.

I just think it deserves more thought.

A million barrels of interrupted production is not what it used to be. Why? What I would call oil inflation. We used to use 60 million barrels per day. Now we use 85. So any number you choose as lost production is going to be less of a percentage of 85 as 60. So although we may be use that much more oil than we used to, and are therefore that much more dependent, we are also that much more insulated from a disruption of x amount. Am I making any sense?

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29 comments on GNN: Energy Statistics from Britain

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