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By Robert Rapier on Jun 7, 2007 with no responses

Why I Sat Out the Feeding Frenzy

I have gotten several e-mails about Cyclone Gonu in which I was asked to comment. Some asked why I haven’t written about it, or why I haven’t participated in the discussions about it. I was content to let this episode fade into history, because addressing it will offend some people who are friends of mine. But I have gotten enough e-mails about it that I will address the issue. The fact is, I feel that there is a lesson to be learned here. I have been criticized by some for my cautious approach toward Saudi Arabian and world oil production. For the record, I don’t believe that their oil production has peaked. (However, I want to emphasize that I don’t… Continue»

By Robert Rapier on Jun 5, 2007 with no responses

This Week in Petroleum 6-6-07

Update: The numbers are out. Gasoline made a strong gain this week, as imports remained high. Demand remains well above last year’s numbers. Given that imports were down slightly over the previous week (but still near all-time high levels), and refinery utilization was down sharply, I am going to have to look at this a bit more to figure out why gasoline inventories made such a strong move up. At a cursory glance, they don’t seem to add up. I would also note that while overall inventories rose, inventories on the East Coast – already incredibly low as noted below – fell again this week. The highlights (as I see them): Refineries operated at 89.6 percent of their operable capacity… Continue»

By Robert Rapier on with no responses

Chuck Schumer’s Fabrications

I have never cared for Chuck Schumer. In my opinion he is a classic example of a demagogue. He tells half-truths, or sometimes untruths, in order to push his agenda. And he did so again yesterday with a letter to the Washington Post. In response to an editorial by Robert J. Samuelson – “A Full Tank of Hypocrisy” – Senator Schumer responded in his standard style by omitting key facts and providing misleading information. Here are some excerpts from the Samuelson editorial, followed by Senator Schumer’s response and my comments: It’s one of those delicious moments when Washington’s hypocrisy is on full and unembarrassed display. On the one hand, some of America’s leading politicians condemn high gasoline prices and contend… Continue»

By Robert Rapier on Jun 4, 2007 with no responses

Gasoline Prices – Part I: Immediate Causes

Note: This essay was published at Financial Sense on May 31, 2007. Introduction As of this writing in late May 2007, gasoline prices have increased by over $0.70 per gallon since March. This is great news if you bought gasoline futures in March, but bad news for most consumers, and the politicians that answer to them. If you knew where to look, there were early indications of trouble brewing last winter. By February to early March there were definite signs pointing toward an impending problem – over 2 months before this became a “crisis” in the view of the public. On March 9, 2007 I warned that gasoline supplies “could pose problems in the coming weeks” and “higher gasoline prices… Continue»

By Robert Rapier on Jun 1, 2007 with no responses

Edwards Calls for Anti-Trust Investigation

Sometimes, the targets are simply too easy. There’s hardly any sport to this one: Edwards contends with Big Oil Democratic presidential hopeful John Edwards took on the oil companies Thursday while campaigning in Menlo Park, with the help of a San Jose teenager who says his friends can barely afford to fill up their SUVs and a Hummer. I mean, enough is enough. When a person can’t afford to fill their Hummer – well, something has to be done. One thing may lead to another, and it may eventually get to the point that Edwards can no longer afford to heat his 28,000 square foot mansion. He brought along Brandon Li, 18, and his mother, Wendy, to underscore how high… Continue»

By Robert Rapier on with no responses

The Cost of Environmental Regulations

That title will immediately raise some eyebrows, but I am not suggesting that we don’t need the environmental regulations we have. Rather, I just want people to understand that this is part of the cost for gasoline. I want them to understand that they aren’t getting a free lunch here. But by no means do I condone the watering down of environmental regulations in order to make gasoline cheaper. Rather, I want to reiterate something I wrote in a previous essay. When politicians enact new regulations, they need to have an understanding of what this means. First, this necessarily redirects capital that might have gone into expanding refining facilities. Second, it increases the costs of producing the fuel. Third, this… Continue»

By Robert Rapier on May 31, 2007 with no responses

The Crumbling Ethanol Facade

I have seen it all now. When the biggest ethanol boosters are starting to suggest that maybe we have a problem, you know we have a problem. And that is exactly what is happening. I can remember U.S. Sen. Chuck Grassley’s giddiness as President Bush talked about his strong support for ethanol during the 2007 State of the Union Address (discussed here). This is a man who has ethanol in his veins (no, I don’t mean he is an alcoholic). So, you can imagine my surprise when I read yesterday’s OPIS report in which he admitted to cracks in the coalition: U.S. Sen. Chuck Grassley (R-Iowa), one of ethanol’s most ardent supporters, said he is beginning to see “cracks” in… Continue»

By Robert Rapier on May 29, 2007 with no responses

This Week in Petroleum 5-30-07

2nd Update: The data have been released: Summary of Weekly Petroleum Data for the Week Ending May 25, 2007 As I have been predicting, this was an all-time record low gasoline inventory for Memorial Day Weekend. This is 2.7 million barrels lower than the previous low inventory mark for Memorial Day. Woo-hoo? U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell by 2.0 million barrels compared to the previous week. At 342.2 million barrels, U.S. crude oil inventories are at the upper end of the average range for this time of year. Total motor gasoline inventories increased by 1.3 million barrels last week, but remain well below the lower end of the average range. Distillate fuel… Continue»

By Robert Rapier on May 27, 2007 with no responses

The Mythical Ethanol Threat

There have been many claims in recent years that ethanol is going to help wean us off of fossil fuels. In fact, many of our political leaders claim that as long as we just keep subsidizing the ethanol industry, eventually cellulosic ethanol will take over and we will all motor happily along on E85. We are making energy policy decisions based on this assumption. As this analysis will show, the data we have to date don’t support those kinds of projections. Let’s consider the effect to date of the explosive growth in grain ethanol production. The difficulty in producing ethanol from cellulose is probably an order of magnitude greater than it is for producing ethanol from corn. Therefore, it is… Continue»

By Robert Rapier on May 25, 2007 with no responses

Record Prices = Record Profits?

So, I am running through some of my daily news searches – things like “gas prices”, “gas gouging”, “alternative energy”, etc. I ran across this gem: Gas price gouging becomes even more obvious It is basically just another ignorant screed from someone who apparently thinks oil companies can just raise and lower prices at a whim: As long as no significant gasoline retailer breaks ranks and the price at the pump remains fairly constant from one street corner to the next within a region, there is no reason for any oil company not to raise prices. So they do. An absolutely abysmal understanding of the issues. It is funny that people seem to understand that when the price of gold… Continue»