A few observations on the day we broke the buck

--Remember the phrase you hear so often a few months ago: the days of cheap energy are gone forever. "Forever" is an awfully long time, isn't it? It reiterates the power of marginal pricing, because the percentage swings in supply and demand certainly don't merit a drop of almost $100 in the price of crude. But percentages don't matter. The battle to buy or sell that last barrel of oil on the margin is what matters. And right now, it takes a lot to get a buyer off the sidelines.

--There was this late item on Platts' Global Alert: The US Interior Department's Minerals Management Service distributed a record $23.4 billion to state, American Indian and federal accounts from onshore and offshore energy production during the federal government's 2008 fiscal year, Interior Secretary Dirk Kempthorne said Thursday. Just think of what that figure might be if such vast acreage in the US were not shut to drilling and exploration. That's the first thought that came to me. Rep. Nick Rahall, Democrat-West Virginia, said in a prepared statement that he was looking forward to working with the Obama administration to "reform the flawed federal oil and gas royalty system and to help ensure that the federal Treasury and the American people receive fair and full compensation from the wealthy oil industry." No amount of reform is going to bring as much money over the long run as opening up more of the Outer Continental Shelf.

--One shouldn't make jokes about the spate of hijackings of oil tankers and any other sort of tankers. It's violent stuff that is going to cost people their lives. But with the price of oil declining by the day, it is hard not to wonder if the owners of the oil actually want the stuff back. The various incidents, combined with the falling price of crude, bring to mind the famous O. Henry story "The Ransom of Red Chief," a standard staple of high-school English for many years.
(Platts' Beth Evans and Sheela Tobben reported today that at least some of the 2 million barrels of crude aboard a Saudi tanker hijacked Saturday in the Indian Ocean was slated for Valero Energy's refineries. One source said the entire contents of the Sirius Star, the hijacked tanker, were intended for Valero's 195,000 b/d Paulsboro, New Jersey, refinery.)

--Looking back over some recent Platts' stories for a report, we discovered this gem: Venezuelan President Hugo Chavez said September 30 the evolving US financial crisis could push oil prices below present levels and down to around $80/barrel. "The prices for raw materials could come falling down, from oil, passing through copper, mining," Chavez said. "It is still too early to say 'oh, this will not affect me.' It is a hurricane,more than 100 hurricanes unleashed." He said crude could "stabilize" in a range between $80-$90/b. If $80 is 100 hurricanes, what is $50?