Gas Prices

[Backstop]

I'm interested in your views.

The rising fuel prices pretty much have me disgusted to no end.

We have resources here in the U.S. that are larger than Saudi's, yet we leave them sit. The end result of extracting that resource is that all sides point their fingers at the other and say, "I tried, but they won't let me do it."

2 years ago, I started driving a diesel truck. Since then, diesel prices have doubled. July 2006 = $2.20/gal, July 2008 = $4.65/gal.

In June, I spent $521.31 on fuel. I live 64 round-trip miles from work, and get 17.3 mpg - just figured the mpg Monday. I work construction, so tomorrow I could be working 10 miles from home or 50 miles; moving won't solve anything.

I have no other financial responsibilities to anyone other than myself, so the increased costs basically just cut into my recreation funds. But I know many folks who this are starting to have trouble affording gas to get to work.

The "why" of the fact we won't drill here in the U.S. certainly is open to a wide range of speculation.

But the end result is the a cold hard fact - the increased prices are causing widespread problems.

[Jag]

http://www.bloomberg.com/apps/news?p...qLA&refer=home

Gustav Cuts Gulf Oil, Gas Output; Refining Curtailed (Update1)

By Jim Polson

Aug. 30 (Bloomberg) -- Crude-oil and natural-gas shipments from the Gulf of Mexico plummeted, and Valero Energy Corp. and Royal Dutch Shell Plc cut refinery operations as Hurricane Gustav strengthened to a Category 4 storm on a course to strike Louisiana in two days.

BP Plc, Exxon Mobil Corp. and Shell, Europe's largest oil company, led producers shutting wells and whisking staff ashore. About 77 percent of Gulf oil production and 37 percent of natural-gas output was shut, the U.S. Minerals Management Service said in a statement today. The Louisiana Oil Port, the nation's largest crude-oil terminal, closed this morning.

The National Hurricane Center issued a hurricane watch from Texas to Florida, including Louisiana and New Orleans, at 5 p.m. New York time, adding that Gustav, an ``extremely dangerous'' storm, may intensify into a Category 5 hurricane within 24 hours. Gustav's winds were estimated at 150 miles (240 kilometers) per hour, and it is expected to pass through western Cuba into the Gulf overnight.

The New York Mercantile Exchange announced an extended trading session beginning at 2:30 p.m. tomorrow because of Gustav.

`Worst-Case' Scenario
``This storm will prove to be a worst-case scenario for the production region,'' Jim Rouiller, senior energy meteorologist for Planalytics.com, said today in an e-mailed message. ``This storm will be more dangerous than Katrina.''

Fields in the Gulf produce 1.3 million barrels a day of oil, about a quarter of U.S. production, and 7.4 billion cubic feet a day of natural gas, 14 percent of the total, government data show. Hurricane Katrina in 2005 closed 95 percent of regional offshore output and, along with Hurricane Rita, idled about 19 percent of U.S. refining capacity.

Valero, the largest U.S. refiner, slowed production at four refineries in Louisiana and Texas and said it may decide later today whether to shut units and evacuate staff. Three Louisiana parishes with refineries ordered mandatory evacuations today.

Refinery production slowed at some complexes owned by Shell and Motiva Enterprises LLC, its joint venture with Saudi Arabian Oil Co., Shell said in a statement on its Web site.

``The big question for the market is going to be how quickly after Gustav passes will the industry be able to recover and get back online,'' said Andy Lipow, president of Houston-based Lipow Oil Associates LLC.

Pipelines Shut
Enbridge Inc., Canada's largest pipeline company, and its U.S. affiliate began closing conduits capable of bringing ashore 6.7 billion cubic feet a day of natural gas. Evacuation of Terrebonne Parish shut 550 million cubic feet a day of gas flow into the 10,500-mile (16,900-kilometer) Transco line to the U.S. northeast, owner Williams Cos. said in a statement.

Exxon Mobil, the largest publicly traded oil company, said today it had shut platforms producing 5,000 barrels of oil and 50 million cubic feet of natural gas.

BP, Europe's second-largest oil company, said it shut Gulf production and evacuated all staff by noon local time today. Its normal production is equivalent to 290,000 barrels a day from the region.

Anadarko Petroleum Corp., the second-largest U.S. independent oil producer, said in a statement on its Web site today that it had shut the equivalent of 105,000 barrels a day of production, with all of it to be closed tomorrow night.

Shell said it would shut daily production equivalent to 510,000 barrels of oil today. Marathon Oil Corp. and ConocoPhillips said they have shut and evacuated all Gulf production platforms.

Worker Evacuations
Workers from 45 rigs and 223 production platforms were evacuated as of 12:30 p.m. today, the Minerals Management Service said in a statement on its Web site. About 998,000 barrels of daily oil production have been shutdown in preparation for the storm, as well as 2.75 billion cubic feet of gas.

Crude oil futures on the Nymex fell 13 cents to $115.46 a barrel yesterday on speculation supplies will be adequate to meet demand after the storm passes. Natural gas futures fell 10.7 cents to $7.943 per million British thermal units.

Most U.S. financial markets are closed until Sept. 2 for the Labor Day holiday. Nymex said in a statement late yesterday that electronic trading will begin at 2:30 p.m. New York time tomorrow with trades dated Sept. 2.

Valero refineries in St. Charles, Louisiana, as well as Port Arthur, Texas City and Houston in Texas are operating at reduced rates, spokesman Bill Day said today in an e-mailed message.

LOOP Shut
The Louisiana Offshore Oil Port shut at 9:30 a.m. local time today.
``It's time to get our people off the offshore platform,'' spokeswoman Barbara Hestermann said today in an interview.

Shipments to customers continue from the port's 53 million barrels of storage on shore, she said.

Hurricanes Katrina and Rita in 2005 cut supplies for months. About 27 percent of Gulf oil production and 19 percent of gas output was still shut in January 2006, the Minerals Management Service reported.

Rising waters from a Category 4 storm can cut escape routes as early as five hours before landfall, with flooding as much as six miles inland. The coastal storm surge may reach 18 feet, and the winds can rip away roofs and walls of homes, according to the National Hurricane Center.

Category 5
A Category 5 storm can destroy the roofs of industrial buildings, flatten all trees and homes, and drive a storm surge above 18 feet. Only three Category 5 storms, Andrew in 1992, Camille in 1969, and the Labor Day Hurricane of 1935, have made landfall in the U.S. since records began.

At its forecast track and intensity, Gustav would drive a 20-foot storm surge topped by heavy waves across southeastern Louisiana, Rouiller of Planalytics.com said. ``The untested levees at New Orleans will be overwhelmed and may fail.''

A second Atlantic cyclone, Tropical Storm Hanna, was moving west-northwest to the Turks and Caicos Islands of the Caribbean without intensifying, the National Hurricane Center said.

Jag

[Ryan Ruck]

``This storm will prove to be a worst-case scenario for the production region,'' Jim Rouiller, senior energy meteorologist for Planalytics.com, said today in an e-mailed message. ``This storm will be more dangerous than Katrina.''

As of Friday, most everyone even remotely following the news saw that Gustav was headed into the Gulf and into Katrina territory. But take a look at how oil closed then (from Bloomberg):

PETROLEUM ($/bbl)

PRICE* CHANGE % CHANGE TIME Nymex Crude Future 115.46 -.13 -.11 08/29 Dated Brent Spot 111.98 -.08 -.07 08/29 WTI Cushing Spot 115.46 -.13 -.11 08/29

PETROLEUM (¢/gal)

PRICE* CHANGE % CHANGE TIME Nymex Heating Oil Future 319.19 -1.02 -.32 08/29 Nymex RBOB Gasoline Future 285.42 -1.02 -.36 08/29

This tells me there is some VERY significant downward pressure on oil prices for it to actually DROP ahead of news of a significant storm in the Gulf. After all, I'm sure everyone remembers the very rapid run-up in oil before Katrina got anywhere near land.

I'm sure that once markets open we will see some upward movement. But it is very telling as to how the market closed on Friday.

[Jag]

Gasoline may be scarce for a few days



By BRETT CLANTON and KRISTEN HAYS
Copyright 2008 Houston Chronicle

Sept. 13, 2008, 7:13PM

Local residents who heeded warnings to fill up gas tanks before Hurricane Ike will likely be glad they did.

Many gas stations in the area could be closed for several days because of power outages and storm damage, while refinery and fuel terminal closures in the region could slow replenishing of fuel supplies.

"Once they open up, it's going to be a bottleneck because 95 percent of the stores are going to be wanting gas," said Mohammed Ali Dhanani, who owns a few dozen gas stations in the Houston area under the Shell, Exxon and Chevron brands.

Many area gas stations were already running on empty after thousands of residents in the region gassed up for evacuations or filled extra storage tanks in preparation for the storm. Shell Oil said half of the Shell-branded stations in Houston and Galveston were without fuel Friday; other oil companies also reported stations out of gas before Ike's arrival.

Gretchen Fox, spokeswoman for the Texas Fuel Team, said the state deployed preliminary damage assessment teams this afternoon to determine when it's safe to bring in critical personnel to get fuel infrastructure back online.

Those personnel include generator operators and tanker truck drivers on standby at Tully Stadium in Houston and Wolfe Stadium in San Antonio, as well as other locations.

"That's not something that happens in an hour," she said.

Like the state, companies also stood ready to restock gas stations.

Valero Energy Corp. was preparing to send in "loss prevention teams" equipped with generators and other equipment necessary to reopen fuel stations, company spokesman Bill Day said.

Shell said it will assess, repair and reopen its stations as quickly as possible, and will send generators to stores where needed. Exxon Mobil Corp. was moving fuel supplies from areas not affected by Ike into the Houston-Galveston region, said company spokesman Kevin Allexon.

But as recovery plans were made, gas station store owners in the area were nervously biding their time.

"If you're not generating revenue, it puts us in a big hole," said Azam Zakaria, owner of about 20 Shell and Valero stations in the Houston area.

Meanwhile, oil refiners with plants on the Texas Gulf Coast were only beginning to assess damage.

Valero, the nation's largest refiner, sent inspection crews to refineries in Texas City, Houston and Port Arthur. Spokesman Day said early this evening that they found no significant damage to production units, but the plants don't have electrical power. Day said crews are working with power providers.

Valero's refineries also are developing startup plans, but Day said they had no timetable for when startup will begin or how long those processes will take.

Exxon Mobil and other refiners also were assessing damage.
In a briefing in Washington, U.S. Homeland Security Secretary Michael Chertoff said he expects it will take another day to determine Ike's full impact on refineries,
But a report from Shell's massive Deer Park refinery and chemical complex at the Houston Ship Channel suggested damage could turn out to be less than feared.

Inspection crews discovered flooding of a low-lying dock, damage to a water cooling tower and detached insulation from storage tanks, but nothing significant, said David McKinney, a plant spokesman who spent the night at the facility as the storm moved in.

"We came out OK on everything," said McKinney, who hopes the refinery will be at least partially running by the end of the week.

Chertoff also voiced some optimism in his preliminary assessment.

"The hope is that with the surge being somewhat less than we feared we may be able to have been spared some of the worst scenarios," he said.

The U.S. Energy Department said today Ike prompted shutdowns of 14 Texas refineries in Port Arthur, Houston, Texas City and Corpus Christi.

Those plants process a combined 3.8 million barrels a day, or 22 percent of the nation's daily refining capacity. They include Exxon Mobil's Baytown refinery, the nation's largest, and BP's Texas City plant, the second-largest. Other Gulf Coast refineries were operating, though some at reduced levels.

Dow Chemical's plant in Freeport survived Ike with a small chlorine leak that was fixed within minutes, said Dow spokeswoman Tracie Copeland. She said 125 workers stayed on site through the storm, while 375 evacuated to Brenham and 4,000 more "scattered to the wind, staying safe." Early assessments showed the plant sustained no flooding, largely thanks to a 15-foot levee.

Even if damage is minimal, reopening the facilities could take days given the detailed safety protocols for restarting equipment.

For example, ConocoPhillips said on its Web site late Friday that power had been restored at its Alliance refinery in Belle Chasse, La., and it was preparing to restart. The company shut down the refinery before Hurricane Gustav came ashore nearly two weeks ago.

Offshore, nearly all oil and natural gas production from the Gulf of Mexico remained shut in as operators made plans for flyovers to assess Ike-related damage. Unlike Gustav two weeks ago, Ike didn't directly cross the bulk of Gulf infrastructure, but the storm cut a wide swath that may have touched offshore facilities.

The U.S. Minerals Management Service, which overseas offshore energy operations, and the U.S. Coast Guard said they were watching two adrift drilling rigs that came loose from their moorings.

The U.S. average price for regular gasoline jumped nearly 6 cents to $3.73 a gallon today, while Houston's average price spiked almost a nickel to $3.54 a gallon, according to AAA's Daily Fuel Gauge Report.

87 is $3.99 as of today where I'm at...Fox News was saying it could double by this week because of Ike.
Jag