<Things of Note The Oil Drum DrumBeat: May 15, 2007>
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222 comments on DrumBeat: May 14, 2007

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suyog on May 14, 2007 - 10:20am Permalink | Subthread | Parent | Comments top

One thing I don't understand is how are the Asian refineries making up for the reduced supplies? If they buy more oil on the spot market, shouldn't that cause spot prices to go up a lot?

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Leanan on May 14, 2007 - 10:26am Permalink | Subthread | Parent | Comments top

I think so. The Dow Jones version of this story said:

With the arbitrage window for crude oil from the West closed and Saudi Arabia maintaining term supply cuts for June, some refiners in Asia may take spot cargoes for July loading, helping to push up spot premiums further.

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suyog on May 14, 2007 - 10:35am Permalink | Subthread | Parent | Comments top

Thanks. That makes sense.

But the Saudi's have been cutting supplies to Asian refineries since November last year. I am wondering how they have coped with reduced supplies so far. There are no reports of fuel shortages from countries affected by the cutbacks.

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Leanan on May 14, 2007 - 10:42am Permalink | Subthread | Parent | Comments top

Prices have gone up in Asia and Europe.

And some have said that the Asian refiners can't handle heavy crude. There was that story about China rejecting some shipments because their refineries couldn't handle that much heavy sour. So maybe the cuts were not that big a deal.

The interesting thing is, for the first time, Saudi Arabia is cutting back the light stuff, too.

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suyog on May 14, 2007 - 10:47am Permalink | Subthread | Parent | Comments top

The interesting thing is, for the first time, Saudi Arabia is cutting back the light stuff, too.

Yup! That is the key!!
So far the cuts were for heavy or medium grade crude. Now they are beginning to cut the supply of light grade crude. The next few months should be interesting.

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Darwinian on May 14, 2007 - 11:05am Permalink | Subthread | Parent | Comments top

There are no reports of fuel shortages from countries affected by the cutbacks.

News.google- Asian Fuel Shortage -and get a different opinion. Or better still just news.google Fuel Shortage because it is a worldwide problem.

Fuel is being diverted from Africa, (those unable to pay higher prices) to Asia, (those able to pay higher prices).

Hey, think about it. You say they are buying more oil from the spot market. The Asian spot market is simply tankers willing to sell to the highest bidder. If some Asian country outbids Zimbabwe or wherever for oil, and averts a shortage in that part of Asia, that just means the shortage is shifted to someone else who could not afford to bid high enough.

Ron Patterson

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GLT149 on May 14, 2007 - 11:28am Permalink | Subthread | Parent | Comments top

The African countries, are they bidding on spot crude or do they bid on refined product? Do they have their own refineries, or do they bid on crude that is later refined in a third country?

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worried on May 14, 2007 - 11:59am Permalink | Subthread | Parent | Comments top

I just watched the very excellent documentary, Manufactured Landscapes. In it there is a section on the ship salvaging area of Bangladesh. There is a shot of 100 men carrying by hand a giant, 2 and a half inch cable along the tidal flats. In the bonus features, the filmakers say they asked the foreman why they didn't use their winch to pull along the cable. The foreman did some quick math, saying hiring 100 men at 10 cents an hour cost them $10. The diesel for the winch would cost them $15. Is this our future?

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InJapan on May 14, 2007 - 12:18pm Permalink | Subthread | Parent | Comments top

Here is a website by a well known photographer and teacher, who visited that part of Bangladesh (he is also a videographer and perhaps the video you saw was partly his doing). He has a pic of a cable gang:

http://www.luminous-landscape.com/locations/ship-breaking.shtml

His conclusion:

I am not a social activist. I went to the yards with my workshop's members to simply photograph what I knew to be one of the world's most fascinating locations for unique images. But, I was deeply affected by the working conditions at Chittagong, as I was with the fact that this incredibly poor country still has child labour, and numerous other social ills, at least by the standards of advanced western countries.

There are organizations that are working with the people and government of Bangladesh to address these ills, and though it isn't the intent of this photo essay to grind any axes, maybe in its own small way it will draw the world's attention to this distressing situation.

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davebygolly on May 14, 2007 - 12:30pm Permalink | Subthread | Parent | Comments top

Is this our future?

Yes. But first and foremost in agriculture.

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DelusionaL on May 14, 2007 - 1:15pm Permalink | Subthread | Parent | Comments top

Also Jeffery Brown's estimation of our future. I bet OPEC is reading TOD and thinks Jeffery has the "nut flush". Cut back on contracted volumes and allow selling on spot market to the highest bidder. Makes perfect sense.
Jeffery, I have to give you a hand on this one, that was a very insightful call on your part. Your other comments are with out a doubt coming to "fruition" as well, as much as I don't like reading any of it.
Farmland or light rail accessable? I bet you will say farmland...
Best, D

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LeGorfou on May 15, 2007 - 12:38am Permalink | Subthread | Parent | Comments top

What about Nepal?

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Leanan on May 15, 2007 - 6:57am Permalink | Subthread | Parent | Comments top

I can't help but think there's a lot of countries that will be going the way of Nepal. They can't pay their fuel bill, so they've been cut off. They are begging for delivery to be resumed, but they can't pay. And I don't see how they will ever be able to pay. They've fallen so far behind. I guess they're hoping that oil will get cheaper, or their economy will boom, giving them more money to spend.

I also recall a story from 2004, when oil prices first started to spike. The forests were being denuded, as people turned to firewood instead of fossil fuels for cooking.

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AlanfromBigEasy on May 15, 2007 - 8:12am Permalink | Subthread | Parent | Comments top

Nepal sells hydroelectricity to India, which desperately needs every MWh it can get (with more projects in the pipeline). So there is hope for them long term. Nepa; is probably a net energy exporter and can expand that.

Not true for other nations.

Alan

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Bruce Scott on May 15, 2007 - 1:57pm Permalink | Subthread | Parent | Comments top

Nepal has a huge population problem... several times larger than the 1900 level, to which it must eventually find a way back. The current growth rate is 2.17 (CIA Factbook 2006, via Wikipedia). Ominous signs.

ciao,
Bruce

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PeakTO on May 14, 2007 - 10:56am Permalink | Subthread | Parent | Comments top

Drawing inventories still.

From IEA May Oil Market Report

Preliminary OECD stock data continue to point to a 930 kb/d draw in first-quarter total oil stocks, following on from a draw of similar magnitude in the previous quarter.

And that is JUST from OECD. I suggest the remaining shortfall is being demand destroyed in poorer countries.

Pushing my T+3 week for KSA's failed ability to meet summer demand, September is a joke for reassessment - by the we can expect:

1) Oil supplies to be even tighter as stocks are drawn all summer.

2) Gasoline to be potentially critical(but not necessarily for the same reasons).

3) Natural gas and heating oil prices rising rapidly in anticipation of a tight winter.

4) An economy shaky at best.

What happens after that is the stuff of nightmares...you fill in the blanks.

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Marotti32 on May 14, 2007 - 12:59pm Permalink | Subthread | Parent | Comments top

5) the coming hurricane season in the GOM, which ist again expected to become intensive this year

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222 comments on DrumBeat: May 14, 2007

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