Archive for April, 2012

Mr. President, Now That We Need It, Give Us Our Oil Back

Posted in Gas Industry, Oil Drilling with tags , , , , , on April 13, 2012 by amandarandjtech

Raymond J. Learsy

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Columnist

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Friday, April 13, 2012

  • Iran is cheering
  • Speculators are profiting
  • Oil producers celebrating
  • Our nascent economy tottering
  • Household budgets being ripped apart
  • Home owners in Maine freezing

You are sitting on some 700 million barrels of oil in our Strategic Petroleum Reserve (SPR) bought and paid by both the 99% and even the 1%.

Here we are living an economic and political emergency while the tool we have to deal with this issue remains untapped.

A reasonable release from the SPR would immediately drop the price of oil significantly and in turn keep gasoline prices from rising further in the months ahead and very possibly keep the economic recovery on track. In June 2011, when the Department of Energy announced it would be releasing 30 million barrels of oil, the price of oil dropped almost immediately by $4.00/barrel (“White House to release 30M barrels of oil” Politico 06.23.11) sending the speculators running for the hills.

Back then when the release was announced Speaker of the House John Boehner bridled:

Everyone wants to help the American people and lower prices at the pump — especially now, in tough economic times. And it is good that the Obama Administration is conceding that increased supply will lower those costs. But by tapping the Strategic Petroleum Reserve, the President is using a national security instrument to address his domestic political problems. The SPR was created to mitigate sudden supply disruptions. This action threatens our ability to respond to a genuine national security crisis and means we must ultimately find the resources to replenish the reserve — at significant cost to taxpayers.

This time around Mr. Boehner and everyone else should understand high, ever higher, oil prices are Iran’s most effective weapon. It will help the mullahs realize the cash flow they need to maintain their authoritarian rule while playing nuclear roulette. Embargoing swaths of their oil exports will have little or no impact if their saber rattling, together with the help of the oil speculators, pushes oil prices to ever higher highs.

Mr. President, pull the plug on the SPR now, and let the oil flow.

Raymond J. Learsy is the author of Oil and Finance: The Epic Corruption Continues and Over a Barrel: Breaking Oil’s Grip on Our Future. He has worked as a commodities trader, private investor and is currently a member of the Woodrow Wilson International Center for Scholars. Learn more at www.raymondlearsy.com.

Original article found here

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A Look at Past Oil Projections and Where It Could Be Headed

Posted in Oil Drilling with tags , , , on April 6, 2012 by amandarandjtech
A Look at Past Oil Projections and Where It Could Be Headed

Rigzone published an article in November 2011 that noted Auto Delinquency Rates (ADR), as tracked by TransUnion, were not suggesting the United States would enter another recession anytime soon. We also pointed to a historical pattern highlighted in an earlier article that was dichotomous regarding oil prices and demand. Specifically, this article posited that based on trading patterns from mid-Summer to early October, crude prices would likely rise while demand would fall as we entered calendar year 2012.

Following Up on Rigzone’s Past Predictions:

First, TransUnion reported last month that the fourth quarter national auto delinquency rates continued to drop on a year over year basis. So, we now have another quarter under our belts with historically low ADRs sustaining. When you add on top of this an industry consensus calling for a strong year in auto sales, incrementally additional new loans will likely help ADRs remain low throughout 2012.

A Look at Past Oil Projections and Where It Could Be Headed

Second, one would have to have been in total seclusion to not know that oil prices have risen over the past six months. Specifically, since October 7, 2012 (the time of our first article noting the pattern at play), WTI front-month futures are approximately 25 percent higher, even better than the average 15 percent return that our analysis projected. When looking at month average oil prices, the front month contract averaged $106 per barrel during March 2012, up 24 percent from September 2011 average.

Third, global demand for crude oil is in fact lower. According to the U.S. Energy Information Administration (EIA), average crude consumption was 89.33 million barrels per day (MMbopd) during September 2011. For February 2012, the most recent month of reported data, crude consumption was 89.23 million barrels. We note that March demand has seasonally fallen relative to February levels. Over the past three years, the average drop from month-to-month was 0.56 MMbopd. Combining these two observations implies that March demand could fall by 0.66 million barrels or seven-tenths of a percent drop over six months.

A Look at Past Oil Projections and Where It Could Be Headed

Due to all the uncertainties surrounding the embargo with Iran, Rigzone does not have a near-term projection on future crude prices at this time.

The Wall Street Journal surveys some of the world’s leading economist to get their views. In the most recently conducted WSJ survey from March 2012, 34 economists pegged the price of oil at $104 per barrel upon exiting 2012. Thus, signaling a consensus of little expectation for oil prices to end the year higher than current levels.

 
by  Trey Cowan
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Rigzone Staff

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Wednesday, April 04, 2012

 
Original article found here