Bill Cara: Crude reality, Tuesday, August 30, 2005, 11:47 AM

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August 30, 2005

Crude reality, Tuesday, August 30, 2005, 11:47 AM

October-05 Crude Oil futures just hit a high of $70.90 a barrel on NYMEX. That beats the all-time record set early yesterday. Oil traders are just now getting hurricane damage reports that look worse than forecast earlier.

The futures contract for unleaded gas is up almost 20 pct to $2.345. It could go much higher if people actually want to drive their vehicles. Katrina has caused widespread production shutdowns, and slowdowns, at U.S. refineries. Offshore platforms have been shut down. Port shipping has been shut down at the two major ports that receive foreign oil.

This is a most serious problem, and is not speculation driven.

Crude Oil is now close to $71; it could soon go past $75, or even higher. This is an emergency.

The Dow 30 is now down -100 pts on the morning.

Of course, picking the worst time possible, or maybe the best (depending on his motives), Steve Forbes of Forbes Magazine opined today that oil prices have been driven by speculation, and would soon fall to $35. I presume Steve gets access to the best possible info, but, today, if there is no new fuel getting to the pumps, consumers will have to pay a heck of a lot more to get what precious little is available.

That's a fact.

Posted by Posted by Bill Cara on August 30, 2005 11:48:22 AM | Category: 10 Energy

Discourse

I sure hope Steve Forbes is not right, because the only way oil hits $35 in the near future is if we slide into a recession.

Honestly, I think Mr. Forbes should take a closer look at gasoline supplies. The government figures are here, along with a graph in the middle of the page vs. 5-yr. averages. It is not good, and this is before the hurricane:
http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html

Natural gas stocks are also at a point which will prove difficult if there is a serious supply disruption. Distillate stocks, fortunately, are in a comfortable surplus.

Posted by: josh at August 30, 2005 12:55 PM [link]

I think Mr. Forbes maybe at least partially right. If there is a severe shortage of oil, I certainly don't see it. Except for higher prices, there seems to be plenty of gasoline to go around. I have not heard of any gas station that is even close to running out of gas. It is normal that the supply varies within a zone as in the inventory level. I suspect quite a bit of the price hike is speculation.

Posted by: Dennis at August 30, 2005 3:42 PM [link]