November 2007 Archives

The first-ever Platts Lecture , held in conjunction with the Nov. 29 Platts Global Energy Awards Dinner , featured two presenters from sides of the fence that 10 years ago might have been miles apart on the issue of global warming. But when the dust settled this year, the differences between the two didn't seem all that large.

And that's the point.

It's hard to determine what exactly to make of Rigged, the story behind the founding of the Dubai Mercantile Exchange and the role of its partner, the New York Mercantile Exchange. It's described as nonfiction, but the main characters' names have been changed. Two of the key characters -- Gallo, who represents the wildly successful, crusty old floor trader resistant to change, and Khaleed, the key representative of the Dubai government -- are described as composite.

Those of us who have covered OPEC meetings over the past few decades have often wished we could be flies on the wall at these closed door ministerial huddles in Vienna, Doha or Caracas. Last week those wishes came true. And it was pretty dramatic stuff.

The journalists who had flown in from five continents to cover the OPEC summit in Riyadh were milling about the press room, writing stories, transcribing taped interviews or chatting, with one ear tuned to the television set that was relaying live coverage of the pre-summit proceedings.

See the update below.

Add the cost of buying existing petroleum storage to the list of oil-related things that are soaring in value.

Tony Quinn told the Platts' European storage conferfence in Budapest that prices for existing storage have climbed to levels that he clearly saw as borderline ridiculous. Existing facilities are going for 10 to 14 times EBITDA (earnings before interest, taxes,depreciation, amoritzation).. A few years ago, it was 3-4 times EBITDA.

One little noticed figure in Wednesday's Energy Information Administration report: 4,942. Actually, the figure is 4,942,000, and it's the average number of barrels per day of crude that the US produced last week.

(Update for November 28: the figure went above the 5 million b/d mark for the week ending November 23, rising to 5,117,000 b/d).

Earlier this month, the NYMEX hiked margins on its petroleum complex futures repeatedly earlier this month, and that has finally appeared to have had an effect. Open interest is down, although some of that undoubtedly had to do with contract expiration.

But while open interest has shrunk from 1,556,921 contracts on November 9 to 1,381,981 contracts Monday, prices have failed to remain contained.

In Homer's epic poem, The Odyssey, his hero Ulysses faced one character test after another in his quest to return to Greece following the conclusion of the Trojan War. One memorable test was the song of the Sirens, maidens whose passionate song drew sailors too close to a coast where their ships were smashed on to the rocks by unforeseen currents. Are recent events in the oil industry a repeat of Homer's character test, I wonder?

Nigerian president Umaru Yar'Adua is making good on his anti-sleaze crusade in a country where blatant corruption has not only sapped public trust but pervades all levels of government in Africa's largest oil producer.

A few of the highlights from today's report from the International Energy Agency, which is seen as one of the key factors behind Tuesday's sharp drop in crude prices. At one point, the light sweet crude contract on NYMEX sunk to $90.13, flirting with the $90 mark just four trading days after everyone braced for $100.

Four news items carried by Platts on one day couldn't help but stand out.

At Platts, we're supposed to be neutral in the age-old conflict between bears and bulls. But we're not robots; we understand that prices at this level are bad news for many, many people in the world.

Especially with record-high prices for crude oil, it's not easy to be the oil industry these days. In poll after poll, the American people rank the industry's popularity at pariah levels. Congress wants to take away tax incentives the industry has enjoyed for years.

And now, the industry's leading trade group can't even give their money away to charity.

There's a type of polling known as "push polling," and at its rawest form a question on such a survey might go something like this: "Jim Nelson is running for town council. If you knew that he carried a picture of Osama Bin Laden in his wallet, gave parenting lessons to Britney Spears and may have had something to do with that really ugly divorce over on Cherry Street that you may have heard about, would you vote for him?" Safe to say, it wouldn't be Jim Nelson's campaign paying for that poll.

We don't know if the questions were quite so stark when the nation's ethanol makers squared off against the makers of Spam recently, but one can only imagine.

Elizabeth (Chris) Mobaldi's afflictions are of biblical proportions: fatigue, headaches, bloody stools, rashes, welts, blisters, a speech disorder, pituitary tumors and a swollen gallbladder that had to be removed.

"Several times Chris said, 'something is killing me living in this house,' so we packed up and abandoned the house (in Rifle, Colorado), in 2004 after trying to sell it for years," her husband Steve told the House Oversight and Government Reform Committee October 31. Chris Mobaldi's problems began within weeks after drilling operations began on property 3,000 feet from her home."We now believe the oil and gas industry is to blame," Steve Mobaldi said.

It is mid-afternoon May 4, 2009 and GNN cable network breaks into regular programming with the news of violent protests in Azeri capitol of Baku. Intelligence officials do not know what is behind the violence. Azerbaijan is blaming Armenia, which denies involvement. Electricity is out in the much of the South Caucasus nation, and, as a result, the 1,800-mile Baku-Tiblisi-Ceyhan crude oil pipeline is temporarily out of service.

While the 1 million b/d pipeline, which links supplies from Azerbaijan and Kazakhstan to Turkey and beyond into Europe, should only be down for a matter of "hours, not days," according to the newscast, oil prices have surged to more than $112/barrel and retail gasoline prices are over $4.00/gal.