Archives for August 2017

Anti-Fossil Fuel Dem Begs Trump To Flood Oil Markets With Strategic Reserves

August 31, 2017 by Justin Williams

The Daily Caller | Chris White | August 30, 2017

An anti-fossil fuel senator from Massachusetts urged President Donald Trump Wednesday to open U.S. oil reserves to limit the affects Tropical Storm Harvey is having on gas prices.

Democratic Sen. Ed Markey is pushing the president to flood the energy market with crude so oil prices will drop below where they were before Harvey made landfall in Texas. The storm, which began as a Category 4 hurricane but was later downgraded, has wreaked havoc on the country’s oil market and caused billions of dollars in losses.

“An immediate release of gasoline or crude oil, if also warranted, from the SPR would help protect consumers from price spikes at the pump and tame any market speculation that could be unduly affecting markets and harming consumers,” Markey wrote in his letter to Trump.

Harvey has so far knocked out nearly 3 million barrels of oil per day, totaling a fifth of the U.S. oil refining capacity and severely limiting the country’s natural gas production. Markey cited the price increase as one of the reasons for opening the strategic petroleum reserve. However, the senator has a reputation as an anti-oil firebrand.

Markey has been a proponent of climate policies targeting fossil fuel production for elimination. He demanded 100 energy and free market groups in 2015 disclose their funding of climate science.

Read the full story here.

Democrat Ed Markey presses Trump to head off fuel shortages

August 31, 2017 by Justin Williams

Washington Examiner | John Siciliano | August 30, 2017

Democratic Sen. Ed Markey warned President Trump on Wednesday about coming gasoline shortages in the Northeast in the wake of Hurricane Harvey, while pressing him to open the nation's strategic oil reserve in order to avoid shortages and price spikes.

"As Hurricane Harvey impacts refineries located along the Gulf Coast, I urge you to tap the Strategic Petroleum Reserve (SPR) to help consumers and mitigate upward pressure on refined product markets," the Massachusetts senator wrote in a letter to Trump.

"The hurricane has forced the shutdown of nearly 20 percent of our nation's oil refining capacity, including America's largest refinery — Motiva Port Arthur — and this could put significant additional pressure on our nation's gasoline supply in the days ahead," he wrote. "In the Mid-Atlantic and Northeast region, refineries remain fully operational, but gasoline inventories were already nearly 10 percent below last year's level before the storm."

The SPR includes a number of federal underground storage facilities around the Gulf Coast that maintain primarily crude oil, not gasoline or other refined fuels, to be used in the event of significant supply disruption. It is unclear how those facilities have been impacted. The president can order the Energy Department to conduct a sale of the oil to U.S. refiners. The reserve holds hundreds of millions of barrels of crude oil.

"An immediate release of gasoline or crude oil, if also warranted, from the SPR would help protect consumers from price spikes at the pump and tame any market speculation that could be unduly affecting markets and harming consumers," Markey wrote.

There were proposals to update the reserve to include gasoline under the Obama administration, but those ideas were never implemented. Therefore, crude oil is the only option.

The senator explained that gasoline prices are not responding to the price of crude oil, which has gone down, rather than up, in recent days. Instead, prices for gasoline futures "surged earlier this week by more than eight percent" to levels not seen for two years, he wrote.

Read the full story here.

How Hurricane Harvey will impact prices at the gas pump

August 30, 2017 by Justin Williams

The Washington Post | Steven Mufson | August 27, 2017

Hurricane Harvey has barreled into the heart of the U.S. oil and gas industry, prompting the sudden evacuation of workers. Spot prices for gasoline are expected to jump Monday, but the full extent of damage will not be clear for days, companies and experts said.

Oil and gas companies have shut down about a quarter of oil and gas production in the Gulf of Mexico, according to a U.S. Bureau of Safety and Environmental Enforcement survey Saturday. That would be about 5 percent of nationwide output.

Companies have also been shutting down much of their refinery operations onshore, idling about 10 percent or more of the nation’s refinery capacity. That might not only raise prices and create temporary shortages in the Gulf Coast area but could also boost prices in places as far away as the Northeast, where a portion of gasoline supplies are delivered by pipeline from the Gulf.

S&P Global Platts estimated Saturday that about 900,000 barrels a day of refinery capacity had been closed, about 5 percent of nationwide capacity.

More plants closed Sunday, including two of the country’s biggest — Shell’s Deer Park and ExxonMobil’s Baytown, with about a million barrels a day of capacity between them.

Initially, companies were closing facilities in Corpus Christi, but the latest closings were on the Houston ship channel.

How long the shutdowns will last wasn’t clear Sunday.

Craig Pirrong, professor of finance and director of the Global Energy Management Institute at Bauer College of Business at the University of Houston, said in an email that it was “too early to tell re oil and gas. Gulf operations shut down, and they won’t be able to assess until they go back. Refineries should be OK as long as they have power.”

He said that “with most people and companies hunkered down, it’s hard to get a comprehensive picture.”

Read the full story here.

Harvey’s Lessons for America’s Stretched Energy Infrastructure

August 30, 2017 by Justin Williams

Wall Street Journal | Spencer Jakab | August 28, 2017

For more than 40 years, the U.S. has worried about the security of its oil supply. Hurricane Harvey is another reminder that the infrastructure that processes and delivers oil is in many ways more important.

After the Arab oil embargo, the U.S. began filling its Strategic Petroleum Reserve, which holds enough oil to offset 94 days of imports, according to the Energy Department. Yet it is a case of the generals fighting the last war. The U.S. imports about 25% less oil than it did a decade ago and exports over a million barrels a day, up from virtually nothing.

Harvey’s hitting the Gulf Coast of Texas highlighted another potentially significant change. The U.S. relies on fewer facilities, run closer to their physical limits, to turn that crude into fuel and get it to consumers.

The U.S. has 141 operable oil refineries today, which is 79 fewer than 30 years ago. Those refineries have nearly 30% more capacity and are used much more heavily, about 90% on average over the past 12 months. The heaviest concentration is along the Gulf Coast where the industry has deep roots and has been allowed to expand. Harvey has temporarily knocked out about 15% of U.S. refining capacity.

Moving the refined product to customers also falls disproportionately on a few pieces of infrastructure. The Colonial Pipeline carries over 2.5 million barrels a day, or about half the refined product consumed along the entire East Coast. Last year saw severe disruptions to gasoline supply in the Southeast due to construction accidents along one of its sections.

Read the full story here.

US becoming a ‘swing producer’ after oil crash woke ‘sleeping giant,’ says Pioneer CEO

August 24, 2017 by Justin Williams

CNBC | Elizabeth Gurdus | August 24, 2017

US becoming 'swing producer' after oil crash: Pioneer CEO from CNBC.

Wall Street traders are all to familiar with oil's recent trajectory — trading in a tight range and struggling to break out above $50 a barrel.

But if oil's 2014 crash was an obstacle for Pioneer Natural Resources chief Timothy Dove, it was hardly enough to eradicate the U.S. oil industry altogether, he told CNBC on Wednesday.

"It's a bit like waking the sleeping giant," Pioneer's president and CEO told "Mad Money" host Jim Cramer. "In other words, challenging U.S. industry to improve in the face of adversity, in this case price adversity, is something that we all stood up to and accepted."

During the crash, oil prices tumbled from over $100 to the $40s in about a year. But rather than letting the fall shutter the oil industry altogether, Dove said it actually spurred innovation.

"We've both been able to have our cost reduced somewhat by our service companies, but at the same time, by our own productivity increases, by our own ingenuity, improving how the wells were drilled and completed and increasing the amount that each oil well produces," Dove said. "And so what happens is our economics are very strong at $45 to $50. Our returns are strong. It's a return-based industry. And so therefore we're drilling wells that make money. And that's going to continue."

And while commodity watchers may have initially balked at the idea of drillers and producers recovering from the crash, Dove told Cramer that his drilling giant has adjusted.

Read the full story here.