<Hurricane Ike and Oil Refineries/Infrastructure Thread #2 (9/10 16:30 EDT) The Oil Drum DrumBeat: September 11, 2008>

206 comments on Hurricane Ike and Oil Refineries/Infrastructure Damage Models Thread #3 (21:00 EDT 9/11)

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Nate Hagens on September 11, 2008 - 1:18pm Permalink | Subthread | Parent | Comments top

Okay, so what will your argument be when the price goes below the marginal barrel?

The price of both oil and natural gas ARE below the marginal barrel. For natural gas, there is so much fixed cost associated with drilling the well, that to shut-in production as a 'timing' event costs more than just taking a small loss. Though at these prices it will reduce drilling. Same holds for oil especially for offshore where fixed costs are high - onshore there does exist some ability to shut in production. OPEC is acting according to Hotelling Theory.

In my less than humble opinion it is the Feds who started this short squeeze in oil and are maintaining the downward pressure

Does not compute. The last $20-$30 rise in crude was due to the momo players piling on without understanding what they were doing. The combination of credit crisis, deleveraging and oil retracement has exacerbated move in oil. IF the feds were playing the game of 'keeping things intact until election', why wouldnt they sell gasoline and diesel futures, which is what 'voters' care about? The open interest in crude oil futures (as of 3 days ago) has been declining, NOT rising - if fundamentals pointed to higher prices and speculators and investors were BUYING crude and government was 'selling' to keep price down, you would see an explosion of open interest. You do not.

As Paul Volker stated on 9/5, "the markets are broken."

I like Volker and happen to agree. But they take a long time to officially break. I wonder if he understands the second law...

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research24 on September 11, 2008 - 2:23pm Permalink | Subthread | Parent | Comments top

IF the feds were playing the game of 'keeping things intact until election', why wouldn't they sell gasoline and diesel futures, which is what 'voters' care about?

Probably because they know they'd break the backs of too many US refiners. By hitting oil they hit a world and not local market.

You miss my point that they don't have to use oil to manipulate the price. As with currency, you use the producers of currency. Without the cooperation of major central banks, the Feds can't manipulate the dollar. In this case it was mainly Bank of China. The significance of the Saudis and OPEC is that they don't sell their oil in US market, so getting them to drop price/increase supply a bit doesn't hurt them as much. Then it produces a knock-on effect in western markets. Plus, you are well aware of the recent massive disinformation campaign the Saudis/OPEC have engaged in. Ask yourself what was the reason for that.

I thought the marginal barrel was closer to $80 than more than $100, assuming you don't mean the crazy marginal bbl.

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musashi on September 11, 2008 - 4:41pm Permalink | Subthread | Parent | Comments top

Much of the reduction in oil price is due to the lowering of risk premium.

Finally the administration is doing the right thing, preventing Israel from launching an attack on Iran.

This also explains some of the strengthening of the dollar.

http://www.haaretz.com/hasen/spages/1019989.html

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DaveMart on September 11, 2008 - 4:56pm Permalink | Subthread | Parent | Comments top

I hope this is not disinformation - standard practise when you are preparing for a strike is to play the possibility down.
If it were an American strike the Israeli's would not need bunker busters.

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BOP on September 11, 2008 - 5:37pm Permalink | Subthread | Parent | Comments top

There was a report (cannot locate the URL) that the Georgian's were hosting Israeli reconnaissance drones. These were purported to be very advanced with a low radar signature and were being used to identify / monitor events in Iran. The conflict in Georgia ended this activity.

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DaveMart on September 11, 2008 - 6:14pm Permalink | Subthread | Parent | Comments top

I'm quite relieved that Putin has laid down some clear markers to caution the Bush presidency.
Sending bombers to Venezuela shows that military adventurism won't be tolerated there either.

Jeez, I sound like a commie lefty!
I was always about as right wing as they get, but we clearly have a Mafia let loose now, and they will stop at nothing.
It would be interesting to know how many others have given up the habits of a lifetime as they recognise the scams going on.

In some ways this is like the fall of communism, when the idea became clearly bankrupt, as much of the patterns of capitalism have been fatally corrupted, and it would be dishonest of me not to recognise the severity of the flaws which are wrecking destruction.

Still, I suppose astute commentators as diverse as Adams and Jefferson recognised these dangers centuries ago.

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musashi on September 11, 2008 - 8:27pm Permalink | Subthread | Parent | Comments top

Actually the report mentioned that the two air bases the Russians destroyed were intended to launch the attack.

This is the Debka link, but it was widely published outside the US

http://www.debka.com/headline.php?hid=5559

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Undertow on September 11, 2008 - 9:18pm Permalink | Subthread | Parent | Comments top

Well one report (picked up by others but which a lot of people disagreed with) suggested the bases would be used to launch the attack). The reports about drones - for whatever purpose, were more widespread.

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chemE on September 11, 2008 - 8:01pm Permalink | Subthread | Parent | Comments top

I have to agree with that. Plus if the Executive Branch were doing this, presumably they would be taking Oil up and not down. One of McCain's winning points with Joe Sixpack is Domestic drilling - in order to continue cheaply fuelling the pick-up truck & SUV. Climbing Crude would reinforce the urgency of drilling and drilling quickly.

Unless the Admin is doing this to help Obama ;-)

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206 comments on Hurricane Ike and Oil Refineries/Infrastructure Damage Models Thread #3 (21:00 EDT 9/11)

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