August 2007 Archives

...or maybe a cry.

Our friends at Slate have compiled editorial cartoons from around the world on the topic of oil.

The only way a cartoonist can be successful is if the cartoonist has a deep grasp of the complexity of an issue, and then take all of that complexity and reduce it to utter simplicity. The Barrel remembers hearing the late legendary cartoonist Jeff MacNelly say that he read hours and hours each day in order to draw one cartoon. (And MacNelly was one of the best, ever).

So what's interesting about these cartoons is the number of times that refinery problems keep coming up. It's clear from the best cartoons that the artists are well familiar with what went on in the refining sector these past few months. They then take that deep knowledge and make it simple, in some cases, too simple. You'll see for yourself.

John Edwards gave a speech to a forum organized by the International Association of Machinists and Aerospace Workers, and said some nice things that nobody, on the surface, would disagree with.

In fact, they are the type of statements that you hear from a lot of people these days, not just political leaders, but men and women on the street. There would be broad consensus with this Edwards statement: "I think Americans are actually willing to sacrifice."

Just when it seemed that concerns over gasoline supplies were fading, falling inventories and surging demand hint that prices may have fallen too far, too fast, leaving outright gasoline prices and crack spread values vulnerable to snapping back higher.

US gasoline inventories fell more than expected last week, according to the latest weekly data from the Energy Information Administration, as refinery glitches cut production levels and imports failed to take up the slack.

The Calgary Sun has always been that city's racier newspaper, a tabloid that unfailingly managed to find something fairly seamy about what otherwise looks like a relatively tame town.

Its website has numerous links, including one called jobboom.com; no mistaking that for what it is. It's a listing of the enormous employment opportunities that the explosion in Canadian oil sands production has helped to drive.

Asked for his impression shortly after Western Gulf of Mexico Lease Sale 204 in New Orleans this past week, Lars Herbst, acting Gulf regional director for the US Minerals Management Service, characterized it as "not a record sale, but ... a good sale."

But his comment merits a second look, because the auction, which captured $290 million in total high bids across 282 blocks, actually did set some records.

The US Department of Transportation's Traffic Volume Trends report, whose frequency had been running behind slightly, is now caught up through June. And it continues to show declines in demand.

It's important to note that these numbers are through June, but more recent figures from demand show growth in US consumption. For example, in its latest weekly report, the Energy Information Administration reported implied gasoline demand of 9.762 million b/d, a record. But that occured after a fall in average retail prices of roughly 45 cts over the month; prices were roaring along in June.

The Cape Wind controversy is a satirists' delight. A project that has long been the type of energy development that everyone says they favor -- clean, not right next door to anyone, in an area that is energy-deficient -- should be supported by virtually everyone.

But it's not. Local residents, many of them wealthy and prominent, have banded together from various areas around Nantucket Sound to fight Cape Wind, which would install 130 turbines in the sound to produce, at peak, 420 Mw of electricity from the winds blowing over the sea off Cape Cod.

In the motion picture classic "Casablanca," the Vichy prefect of police, Captain Louis Renault, pronounces himself shocked to find out that gambling is going on at Rick's American Café. At that very moment, a croupier hands Renault his winnings, which the captain pockets with a straight face.

But it came as absolutely no shock when the Center of American Progress Action Fund reported this week that members of the US House of Representatives who received the major portion of campaign contributions from the oil industry, voted overwhelmingly against legislation that would have stripped the industry of $16 billion in tax breaks.

The Barrel took a relatively quick in-and-out tour of the oil sands north of Fort McMurray, Alberta, Canada this week. The oil sands' ographic footprint covers an area as big as the state of Florida, so it would take days to visit all that can be seen.

But we had earlier difficulties scheduling a visit, so were gratified when one company -- we won't say which, because the visit was off the record -- let us come and take a tour.

Hurricane concerns for the Gulf of Mexico re-emerged as a market force this week, after a mild 2006 season.

Not only is Tropical Storm Dean steaming from the Eastern Atlantic Ocean toward the Lesser Antilles at 18 mph, but Tropical Depression Five popped up off the Yucatan Peninsula and is expected to reach Tropical Storm status and hit the lower to middle Texas coast Thursday, according to the National Hurricane Center.

"All politics is local," declared longtime Democratic Speaker of the US House, the late Thomas "Tip" O'Neill. It's such a brilliant, palm-slap-to-the-forehead-obvious insight, that it has become cliché. It's dusted off whenever someone needs to make the point that all politics is, well, local. Even the politics of global warming.

It's not for The Barrel to speculate about whether Alaska's two Republican senators, Ted Stevens or Lisa Murkowski, care about the potential environmental and health impacts of global warming and climate change on the people of remote Pacific Islands, or India, or Africa. Assume they do, and very much so. But they were moved to support legislation reducing US emissions of greenhouse gases that contribute to global warming only when it became painfully and undeniably obvious that their own state is facing major climate-related problems.

Paraphrasing Karl von Clausewitz, physical confrontations are the continuation of policy debates by other means.

Last week's acrimonious debates in the US House were limited to verbal assaults. But from time to time, "the passion which arises in debate over differing views on policy issues transfers to hostile personal feelings between members [of Congress]," a posting on C-Span's website notes. These exchanges "can become physical."

Even though the US House of Representatives gave up a day of its month-long summer vacation to pass an energy bill in a rare Saturday session on August 4, there's no guarantee that the bill passed will be what is laid before the president for his signature into law.
The Senate passed its own version of energy legislation in June, and it's quite a bit different than the House version.
Those differences are going to need to be ironed out since both chambers need to agree on a single bill before they vote it out and send it to the president.

By the time the US House of Representatives considered energy legislation on August 4, much of the partisan fury that characterized the House session last Thursday appeared to have subsided into a sullen determination to finish work and get out of town for the month-long August recess.

"I know that there are those on my side of the aisle, and probably some on the other side of the aisle, who would rather fight all day," Republican leader John Boehner, Ohio, told the House Friday. "But at the end of the day, our responsibility is to the American people. This is the People's House."

There is no doubt that Nigeria's continued loss of production has been a significant boost to oil prices. There also is little end in sight to the shut-ins that have taken so much oil off the market.

Platts' Africa correspondent, Jacinta Moran, with many years' experience covering that part of the world, has compiled the most accurate and complete list of the precise size of the outages. If you read various media accounts of just how much oil has been lost there, the estimates vary widely. But here is what we at Platts are using, based on Jacinta's research.

The Energy Information Administration was so excited about this week's data that it released the report 7 minutes early. And an exciting report it was, showing that the US refining system is finally back to pre-Katrina and Rita status.

US crude stocks tumbled 6.5 million barrels last week, according to the EIA, as refineries came back up from maintenance, and gasoline inventories rose 600,000 barrels. The RBOB crack spread is coming under further pressure as we speak, as concerns over tight gasoline supplies fade.