The results: the top 10 stories of 2008

According to the results of the Platts Top 10 survey, they thought the price of crude, more than $145 for WTI, was the biggest story of the year...by a relatively small amount. While the price rise received almost twice as many first place votes, the weighted average of 10 points for a first place vote, 9 for a second, etc. put the difference only at 500 points for the price rise, and 476 for the price decline.

The full list of the top 10 on this weighted average, is as follows:

1) Crude prices soar in 1H, WTI tops $147, Brent right behind

2) Prices collapse below $50 in 2H as demand retreats

3) Capital crunch and low prices lead to deferred investment

4) Credit crunch slows activity for once free-wheeling traders

5) Russian oil output to fall in 2008, first time in a decade

6) Developed nations’ total oil demand in '08 to decline

7) Hurricanes Ike and Gustav wreak hefty damage in US Gulf

8) Supply shows little reaction to higher prices in year's first half

9) OPEC, first time in years, implements deep cuts in output

10) Shale gas supply in US surges, a new factor in supply/demand balance

A few comments:

--There weren't any real surprises here. If you could draw a conclusion from this admittedly unscientific survey, it is that the responders believed the surge in the first half of the year was probably driven by fundamentals, because they also were heavy on citing deferred investment and the fall in Russian output as significant stories. They seem to be signaling that supply was a problem in the beginning of the year, and supply will be a problem in the future.

--After talking to people in the industry, I'm convinced that the southeastern US problems after Ike were a bigger story than it looked like at the time. A blase attitude held that this was just some understandable fallout from pipeline and terminal problems, and would right itself eventually. But it dragged on longer than expected, and some of the more apocalyptic commentators on it -- how would you get food into these regions, if trucks couldn't get fuel to get out? -- don't seem to far-fetched in hindsight.

--The events also showed the power of the forward curve. The market had been in backwardation for months prior to those hurricanes, a strong disincentive to build inventories. And then suddenly, inventories became what was needed the most. Doug Hough of Mansfield Oil, in an interview with Platts earlier this month, suggested that some sort of tax break for holding inventories when a) the curve doesn't provide an incentive to do so and b) the calendar is moving up on hurricane season might be a step the federal government should take.