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Re: 80+ oil is a lock this week.
Old 08-07-2006, 10:24 AM   #21
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by IHateCNBC
What gets me is:

BP (British Petroleum) owns a pipeline that U.S. taxpayers dollars paid for.* *
Not even close. Privately owned and operated by a consortium of oil companies.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 10:36 AM   #22
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Re: 80+ oil is a lock this week.

When BP bought ARCO it aquired some of ARCO's interest in AK, the rest were sold to Phillips (along with it's marine transportation division).*

Oil companies are global and they are all competiting for resources.* It is no accident that Russia effectively re-nationalized their oil companies.*

My mariner son commented that this incident will demonstrate the impact of sudden resource changes on the economy, and it doesn't take much of a change to hit hard.*

IMHO it will take at least 50 years to decrease oil's % of our energy source.* Brazil thought this through years ago but we will be pushed, kicking and screaming, by world events.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 10:42 AM   #23
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Re: 80+ oil is a lock this week.

I'd guess the only reason oil hasn't spiked much higher is that the gummint will open the taps on the strategic petroleum reserve if this outage takes a long time to fix.

All we need know is a well-placed GOM hurricane...
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 10:47 AM   #24
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by frayne
Not even close.* Privately owned and operated by a consortium of oil companies.
Tax Break for 3 Oil Companies to Build an Alaskan Pipeline
Title VII, Section 706
Cost to Taxpayers: $150 million

Oil Company Tax Break
Title VII, Section 707
Cost to Taxpayers: $295 million

Tax Breaks for Oil Refiners
Title III, Subtitle C, Sections 328-329
Cost to Taxpayers: $119 million

Government Subsidizies
Title II, Subtitle A, Section 201
Cost to Taxpayers: $1.26 billion over 10 years


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Re: 80+ oil is a lock this week.
Old 08-07-2006, 11:01 AM   #25
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by IHateCNBC
Tax Break for 3 Oil Companies to Build an Alaskan Pipeline
Title VII, Section 706
Cost to Taxpayers: $150 million

Oil Company Tax Break
Title VII, Section 707
Cost to Taxpayers: $295 million

Tax Breaks for Oil Refiners
Title III, Subtitle C, Sections 328-329
Cost to Taxpayers: $119 million

Government Subsidizies
Title II, Subtitle A, Section 201
Cost to Taxpayers: $1.26 billion over 10 years
Those are nothing but tax breaks on accelerated tax depreciation and lower capital taxes to ease the front end burden of the oil companies making the investments in Alyeska. The companies spent billions to build the line itself.

Don't mix tax breaks which are calculated based on standard tax code formulae, with the taxes themselves.* Had their been no capital investment, there never would have been any taxes paid.* Thus there is no "real" cost to the taxpayer, just a potential 'lost opportunity' cost. Those comments are nothing but spin by those in opposition.

Example (for illustration only - not factual):

Potential investment:* $2B
Standard tax code: $500M in taxes
As incentive for private industry to invest, tax breaks: $200M
Actual taxes paid: $300M

So....the odds are:* Do you want to get $300M in taxes paid? Or roll the dice and get greedy for $500M and possibly get $0?

That is how the tax system works everywhere when there is significant capital investment.

Disclosure:* I spent a career in project management of mega capital projects.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 11:03 AM   #26
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by Leonidas
Wow. * So, this Senate report basically says that Enron snuck in some legislative changes in 2000 that allowed energy futures to be traded without any oversight, and now former Enron traders are practicing the same price manipulation tactics they got busted for last time.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 11:46 AM   #27
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by JPatrick
All those events fall under the expected--only the time/date/faces/places remain to be seen.
That is my point, if either of those things happened, we would see oil prices go up. So while they are expected, they will increase oil costs.

I do agree with your statement: "If the Middle East takes an unexpected bad twist. (how many more can there be?) then we could exceed $78 this week."
if you remove 'unexpected' from the sentance.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 01:52 PM   #28
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Re: 80+ oil is a lock this week.

Whew. I just read that they will take 3 to 5 days to fully shut down the pipeline and two weeks to fully inspect it. After that, any facilities with serious corrosion issues will be down for weeks to months for replacement. This is not good.

If there is a GOM hurricane that disrupts production or transport for more than a week, we may have a big problem. I think I will be ordering that half cord of fire wood as an insurance policy...
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 01:57 PM   #29
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Re: 80+ oil is a lock this week.

O.K., so lets say a big hurricane hits the gulf and shuts downs the rigs, and prices spike up and we see $4 a gallon gas. Will that be an extra $500 per person annually? It's the trickle down effect through the economy we have to worry about, but in the short term, I'm just not seeing a crisis.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 02:02 PM   #30
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by Laurence
O.K., so lets say a big hurricane hits the gulf and shuts downs the rigs, and prices spike up and we see $4 a gallon gas.* Will that be an extra $500 per person annually?* It's the trickle down effect through the economy we have to worry about, but in the short term, I'm just not seeing a crisis.
I don't know how things were out west when Katrina and Rits tore sh!t up, but in the Northeast there was serious concern that we would have a fuel shortage. Gas stations started running dry within a few days in some places. I'm willing to pay the going rate for gasoline and heating oil; I just want it to be available.

And the economic fallout would be very ugly. There is already a lot of evidence that consumers are pulling back spending on everything except fuel.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 02:36 PM   #31
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Re: 80+ oil is a lock this week.

There were no shortages here, price bumped and that was it. Sounds like it was ugly!
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 02:41 PM   #32
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Re: 80+ oil is a lock this week.

I think the east was more directly affected because the pipelines pretty much go from the Gulf north and east. The west coast mostly gets oil from Alaska, with some TX/NM/CO, etc. and some stuff shipped by tanker from the ME and Gawd knows where else (Brazil?). If this BP mess goes on for a while, you guys are probably not going to see any shortages since likely every takker in the Pacific has reoriented toward West Coast destinations by now. But we're gonna be paying up...
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 03:11 PM   #33
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Re: 80+ oil is a lock this week.

I used to know all the AK tanker traffic (son & DIL don't sail merchant ships these days so set that issue aside). All are full right now and there is an inventory at the dock in Valdez so, other than price, we have a couple weeks. What is happening is that everyone will max their personal inventory in their gas tanks so we will see a quick retail draw-down in the west that wasn't anticipated.

It is the AVAILABILITY that concerns me, not the price at the moment.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 03:16 PM   #34
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by Brat
It is the AVAILABILITY that concerns me, not the price at the moment.
Yeah, but I suspect that avilability isn't much of an issue, aside from some panic buying in the short term. The Western refiners have pretty much all said they have stocks sufficient for a month, give or take. That should be long enough for the tankers to arrive and the SPR is already on line for any refiners that need it.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 03:26 PM   #35
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by brewer12345
Yeah, but I suspect that avilability isn't much of an issue, aside from some panic buying in the short term. The Western refiners have pretty much all said they have stocks sufficient for a month, give or take. That should be long enough for the tankers to arrive and the SPR is already on line for any refiners that need it.
Remember the gasoline lines back in the 70s?

we have problems around the corner.
BIG trouble.

Large SUVs with 30 gallon tanks and credit cards.

People don't care what the cost is these days they charge it run up balances in the 5 digits like 10 15 K on credit cards balances.

Now with the dummies who have no idea that topping off the tank only screws the next guy who needs some gas well. We really is efed.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 04:30 PM   #36
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by brewer12345
Yeah, but I suspect that avilability isn't much of an issue, aside from some panic buying in the short term.* The Western refiners have pretty much all said they have stocks sufficient for a month, give or take.* That should be long enough for the tankers to arrive and the SPR is already on line for any refiners that need it.
Read closely "sufficient for a month".* The days/weeks the north slope is shut down will impact availability once the inventory of crude is depleated.* It takes time for the existing crude in the pipe to make it to Valdez, there is crude in the tanks at Valdez which will be drawn down by ships now heading north.* Ships heading south are currently full.* The run from Valdez to Bellingham is about a week, about 10-12 days to Long Beach - each way.* Add a couple days to load, same couple days to unload.* There goes a month!

Yes it will be about a month before all is empty, but remember after start-up it will take time to re-supply the network.* Start-up won't be a cake walk either* - the re-pressure will put strains on the system it hasn't experianced for years.* I can understand why BP is saying 'indefinate'.
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Re: 80+ oil is a lock this week.
Old 08-07-2006, 11:01 PM   #37
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by Brat
Yes it will be about a month before all is empty, but remember after start-up it will take time to re-supply the network.* Start-up won't be a cake walk either* - the re-pressure will put strains on the system it hasn't experianced for years.* I can understand why BP is saying 'indefinate'.
Very nice analysis. Also, I haven't heard whether all Canadian supplies that currently flow to Vancouver, BC from Alberta already go to the PNW, but if they don't, I can envision some incremental diversion to extent possible.
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Re: 80+ oil is a lock this week.
Old 08-09-2006, 06:42 PM   #38
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Re: 80+ oil is a lock this week.

I hope BC will share. The BP refinery in Bellingham is very close to the border (cell calls get picked up by CN towers).

At this point I think that the refiners are lining up crude contracts and getting samples so that they can adjust their processes. There are BP, Standard, Tesoro and Shell refiners on the west coast. Williams used to own a plant at N. Pole. Don't know what Phillips-Conoco is doing with their portion. This will be a HUGE scramble.

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Re: 80+ oil is a lock this week.
Old 08-09-2006, 07:34 PM   #39
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by eridanus
I am long oil as of about an hour ago.
a bit late to the party? I've been long oil for 5 years....via Mutual funds of course. Are you long via commodoties?
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Re: 80+ oil is a lock this week.
Old 08-09-2006, 10:06 PM   #40
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Re: 80+ oil is a lock this week.

Quote:
Originally Posted by Alex
a bit late to the party? I've been long oil for 5 years....via Mutual funds of course. Are you long via commodoties?
Yes, on the Nymex. I sold yesterday for a quick gain.

I'd like to get a long term commodity contract but the volume is nothing for 1+ years out. What mutual funds do you use?
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