OPEC Slashes Production; Crude Continues to Tumble
By John HornerOctober 24, 2008 -
The AP reports on the ongoing oil price collapse. “OPEC said at an emergency meeting Friday that it will slash oil production by 1.5 million barrels to stem the ‘dramatic collapse’ of oil prices, but crude prices plunged 7 percent anyway as financial markets spiraled downward across the globe.” In the face of OPEC’s proclamation, oil opening below $64/barrel this morning; down over half from the $140 highs of just a few short months ago. Even with the growth in China, India and the rest of Asia, the US still consumes a fourth of the world’s oil burn, and “U.S. demand is down nearly 10 percent during the past four weeks year on year.” OPEC hopes to talk Russia into playing along with a supply squeeze, but Russia has problems of it’s own and typically goes her own way on these matters. Other oil producers are singing the blues (’cause they never thought they’d lose). “Iran, Venezuela and other OPEC members having suggested that for them, selling oil under $80 was a loss-maker, and Iraq on Thursday said it would have to rethink next year’s national budget if prices remain under that level.” OPEC’s El-Badri is unsympathetic: “OPEC cannot bail out the problems of others.” Words to live by.
Posted in Big Oil | News Blog | 9 comments 
Wild Ass Rumour of the Day: ExxonMobil to Buy GM and Become an Integrated Producer/Consumer
By John HornerOctober 7, 2008 -
The Wall Street Journal is calling attention to the massive cash piles sitting around the offices of big oil re: falling stock prices. The solution to this problem? “Mr. Flannery argues that Big Oil will need to put cash into acquisitions to restore the battered share prices.” ExxonMobil alone is sitting on $39b despite buying back its own stock at a rate of $8b per quarter (it’s repurchased $218b of its shares over the past several years). General Motors’ total market capitalization of under $5b, and falling, makes it a target. OK, they have a few liability “issues.” But what’s good for GM is good for ExxonMobil. By deferring two months of its own stock buy backs ExxonMobil could gobble-up the world’s once and future king of cars. Think of the synergy! From exploration through production, marketing and finally right out the tailpipe; a truly global and integrated oil monster. Chevron, never one to be outdone by its sister company (both were once part of Standard Oil), is said to be eyeing Ford. With plunging demand dragging oil prices from $140 per barrel down to around $90, something must be done! Or not.
Posted in Big Oil | High Finance | News Blog | Wild Ass Rumor of the Day | 19 comments
Wal-Mart Ripe For The Pickens?
By Edward NiedermeyerSeptember 18, 2008 -
Say what you want about oil tycoon-cum alt-energy evangelist T. Boone Pickens, the man has some instincts on him. Wal-Mart has been studying ways to reduce its energy usage (for purely altruistic reasons, of course) and Pickens smells blood in the water. Reuters reports that the Texan CNG honcho has convinced Wal-Mart CEO Lee Scott to consider retrofitting its entire diesel truck fleet with CNG power as an energy-saving, cost-cutting measure. Wal-Mart currently operates some 8,500 diesel trucks in its supply-chain network, and a presentation by Pickens to a Wal-Mart associates meeting has convinced Scott to consider the retrofit. According to a weekly Pickens email, Scott was “impressed by the Pickens Plan.” The email continues, “to have America’s largest retailer looking into shifting their trucking fleet to run on natural gas is a major step towards our country’s energy independence.” And a major step towards making Mr Pickens a boatload of cash. Pickens has invested his oil fortune in wind power and CNG, and a Wal-Mart retrofit could mean a huge contract and increased media exposure for CNG as a transportation alternative. Like Pickens though, every decision at Wal-Mart comes down to dollars and cents. We still don’t know how much a CNG fleet conversion would cost or save Wal-Mart. Until we do, there’s no telling whether Pickens’ CNG revolution will get off the ground.
Posted in Big Oil | Fuel Economy | Green | News Blog | 25 comments
NYT: Drill, Baby, Drill
By Edward NiedermeyerSeptember 15, 2008 -
From a crowd-pleasing chant at the Republican National Convention to op-eds at the New York Times, the refrain “Drill, Baby, Drill” is looming large in the American psyche. In the Gray Lady’s pages, Robert Hahn of the American Enterprise Institute and Peter Passel of the Milkin Institute (motto: Milkin’ The Issues) investigate the idea of penetrating mother Earth for more of that sweet, sweet dino juice. Opponents of drilling offshore and oil extraction in the Arctic National Wildlife Preserve (ANWR) argue that the benefits would be marginal. Hahn and Passel don’t necessarily disagree. They reckon 7b barrels could be pulled from ANWR, with another 11b available offshore, Hahn and Passel estimate the U.S. could thusly increase output by six percent, resulting in a 1.3 percent drop in worldwide prices. Meh. But the two argue that at $100/barrel, that oil would be worth nearly $2t not including the benefits of reduced pump prices for consumers. Development costs including environmental clean-ups would cost only $400b, making drilling an “economic no-brainer.” Hahn and Passel estimate the “non-use value” of ANWR at “only” $11b. The authors could “imagine a political bargain in which several hundred billion dollars went into a fund with a charter to preserve wilderness in the United States, or climate-stabilizing rainforests in Africa and Latin America.” In short, to protect the environment we must defile the environment. In reality, drlling is one of those idealism vs. pragmatism issues where win-win is a no-no. As long as the “Drill, Baby, Drill” refrain is still echoing out of St Paul, this kind of compromise is a long way off.
Posted in Big Oil | Fuel Economy | Green | News Blog | 32 comments
Gustav Already Affecting Oil Prices
By Frank WilliamsAugust 28, 2008 -
Tropical Storm Gustav, which some experts say will be the worst Gulf of Mexico hurricane since Katrina, is projected to hit the Louisiana Gulf Coast early next week. After the Katrina fiasco, you can count on three things: 1. Residents of New Orleans will evacuate when they're told to; 2. FEMA will be on full alert; and 3. Gasoline prices will go up. Bloomberg reports Royal Dutch Shell Plc, BP Plc and ConocoPhillips are already cutting production and evacuating workers from their off-shore platforms along the Louisiana coast. If Gustav follows the predicted path (there's a 70-75 percent likelihood it will), it could halt production of 1.2m barrels of crude per day. Crude oil for October delivery has already gone up 1.5 percent; overall, oil has gained 3.3 percent since Gustav formed on August 25. The price of natural gas for September delivery also went up, with a 4.9 gain so far. Even if Gustav changes course, it could still affect prices because 42 percent of U.S. refining capacity is located along the Louisiana and Texas Gulf Coasts. Hold onto your wallets, folks. It's going to be a bumpy ride.
Posted in Big Oil | News Blog | 31 comments
Memo to Detroit: Gas Prices Could Go Up!
By Robert FaragoAugust 19, 2008 -
GM CEO Rick Wagoner and his Motown pals maintain that "nobody could have predicted" the recent surge in gas prices. You know, the price hike that's driven a stake through the heart of their high profit light truck biz. Never mind the fact that TTAC and others were bemoaning The General's re-investment in their GMT900 trucks back in '03. Well, guys, here's an article in The New York Times that says that nationalization of oil resources around the globe could lead to a drop in supply. (Maybe we should drill nearer to home? Nah.) OK, it's kind of funny (ironic) that the Gray Lady's piece paints Big Oil as the good guy. But that's not the point. Now pay attention: this trend could mean oil prices will go up again. Which would raise the price of gas. Now there's many a slip between the well and the ship, but do NOT tell us that you're surprised if pump prices go up again. That is all.
Posted in Big Oil | News Blog | Overseas | 26 comments
Power of Prayer Pummels Pump Prices
By Frank WilliamsAugust 18, 2008 -
According to the Bible, God toppled the walls of Jericho, parted the Red Sea and made the sun move backwards in the sky. Now He's taken a few minutes out of working on world peace and a few other projects to drop the price of gas in the U.S. by 20 cents a gallon. Rocky Twyman, described by BBC News as a "veteran community campaigner," has been holding "Pray at the Pumps" meetings all over the country since April. Twyman told BBC when they prayed in Huntsville, Alabama, "immediately the owners came out and changed the gas prices. They brought it down." They're not resting on their laurels, though. They plan to continue their prayer meetings to drive gas prices down even more. Hopefully the group won't stop until gas is back down around $1/gallon. Only then can every American exercise their God-given Constitutional right to drive the biggest, gas-suckingest SUV or pickup the automakers can screw together. Then we can all say with the poet, "God's in his Heaven - All's right with the world." Can I get an "Amen"? [thanks to KatiePuckrick for the link]
Posted in Big Oil | News Blog | 40 comments
Volt Birth Watch 70 / Tesla Death Watch 14 / Karma Birth Watch 2: Toyota’s Death Watch
By Paul NiedermeyerAugust 4, 2008 -
Turns out TTAC isn't alone with its Tesla Death Watch and Volt Birth Watch series: Toyota has its own going. EV World's (sub) Bill Moore got this and a few other juicy tidbits from a casual conversation with Toyota's "grumpy old man" Bill Reinert, National Manager of the Advanced Technology Group. Toyota has a Death Watch going on Fisker , Tesla, and…the Chevy Volt. Toyota doesn't think any of them will ever be built in large volumes, because their Li-Ion batteries are simply too expensive to be cost-effective. He also cited concerns over global supplies of lithium. Meanwhile, Toyota is hard at work on next-generation batteries , especially air battery chemistry, including zinc-air, as well as stepping up production of NiMH packs and starting Li-Ion factories. What's the line about not "having all your eggs in one basket"? Reinert also thinks it's unrealistic to expect owners of plug-in to only tap the mains at night. Utilities are going to have to step up capacity. And forget about all the 2010 Prius spy shots floating around the web, they're just cobbled-up mules based on the current Prius. Toyota is famous for keeping their final products under wraps (just one of the many differences with GM). And one more goodie from the grumpy Toyota brain trust: "liquid peak" (every conceivable liquid fuel from petroleum, coal and biofuel) arrives in 2018. That's when global demand will outstrip capacity to produce them all.
Posted in Big Oil | Bio-fuels | Electric Vehicles | Green | Hybrid | Industry | Karma Birth Watch | News Blog | Tesla Death Watch | Volt Birth Watch | 27 comments
Gas Prices Plummet in Oklahoma City
By Mike SolowiowJuly 31, 2008 -
The day before I left in my jet for an exercise in Goldsboro, North Carolina on the 18th of this month, I filled my ancient Audi Quattro's 25 gallon tank to the tune of $98, with gas on-base hovering around $3.94. I then staggered into the station to get Swedish Fish and Tequila to drown my sorrows, as a 25 year-old Audi with AWD only gets 25mpg at best. Upon landing yesterday, the 30th, I drove past the pumps, and saw prices are now $3.34, a drop of $0.60 in 15 days. I would have only saved about $13 or so, but that buys at least three overpriced coffees at Starbucks. Are the plummeting gas prices in the most oil-cheap of states a portent of things to come? I believe so, as my father, an engineer for Occidental Petroleum in Texas has started analyzing all oil wells that cost more than $100 per barrel to extract the dino-juice from the Earth. Oxy is starting to prepare for a crash, as are the other oil companies (per rumor). The rumors flying around the offices in Midland, Texas are saying middle of 2009 to early 2010. Regardless of whether an oil crash occurs, who ever predicts the crash, or the rise in prices will surely make a lot of money.
Posted in Big Oil | News Blog | 40 comments
And While We’re on the Subject of Oil Subsidies…
By Robert FaragoJuly 28, 2008 -
Our previous blog post made the connection between China's increasing demand for imported oil, The People's Republic's subsidies for the black gold ($40b p.a.) and the policy's inflationary effect on U.S. gas prices. Common sense (and The New York Times) suggest that other "managed economies" are using the same pro-growth strategy, amplifying the inflationary effect on world oil prices. "The oil company BP, known for thorough statistical analysis of energy markets [excellent hat tip to Big Oil!], estimates that countries with subsidies accounted for 96 percent of the world’s increase in oil use last year — growth that has helped drive prices to record levels." Hey, what happened to "Let's all blame the evil speculators?" Anyway, you think the U.S. is "addicted to oil?" Malaysia spent 7.5 percent of its economic output on oil subsidies. Indonesia shelled-out $20b this year to keep prices down. And where there's no political will to let the free market do its thing, there's no way they'll stop. "You talk about subsidies, you’re not only talking about the economy," asserts Purnomo Yusgiantoro, Indonesia’s minister of energy and mineral resources. "You’re talking about politics.” I.e. his job. So they're damned if they do, damned if they don't. And for this you pay at the pump. [thanks to OldDavid for the link]
Posted in Big Oil | China | News Blog | Overseas | 16 comments
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