Sound Work For Americans On The Keystone Pipeline? WAIT

Keystone Oil Pipeline

A controversial pipeline from Canada that the White House delayed last month would bring jobs and increase energy security in the United States.

Alexander J. Pourbaix

Time is absolutely of the essence to obtain the approvals needed so Americans can begin to experience the benefits of Keystone,” Alexander J. Pourbaix, president of energy and oil pipelines for TransCanada TRP -0.02% – the company that proposed the pipeline.

Brent Booker (L)

Brent Booker head of the construction arm of Laborers International Union of North America said that because of the jobs it would bring “this project is not just a pipeline, it is in fact a lifeline,” for his members.

Construction industry unemployment reached 27% in 2010 and hovered around 20% for much of last two years, he said. The pipeline would create 20,000 immediate jobs, and an additional 2.5 million jobs in the not-so-distant future Pourbaix and union members said.

“They would have started a couple months from now” without the delay, Pourbaix said. “Americans were hired and are "Very" ready to go to work.”

The pipeline would dramatically increase TransCanada’s capacity to bring tar sand oil from Canada to Texas and would ease crude oil gluts in Cushing, Okla. and North Dakota.

Opponents have protested the pipeline’s potential environmental impact to wetlands and higher levels of greenhouse gas produced by burning tar sands. A State Department report estimated an increase of between “3 and 21 million metric tons of carbon dioxide emissions annually” from burning fuel from tar sand instead of crude oil.

Last month President Barack Obama backed the decision by his State Department to delay a ruling on a permit for the Keystone XL pipeline until 2013 to study alternatives to the environmentally sensitive Sand Hills area in Nebraska.

Gov. Dave Heineman

Last week Nebraska Gov. Dave Heineman signed a law ordering the state pay for a new environmental assessment to consider alternatives to the Sand Hills.

Wednesday a House Republican introduced a bill that would force the Obama administration approve the project.

committee chairman Ed Whitfield

“Since the president did not, Congress in my view must act,” said committee chairman Ed Whitfield, Republican from Kentucky. Obama’s decision to review the project “appears to be blatantly political,” he said. “This is the most technologically advanced and safest pipeline ever proposed.”

The State Department had already reviewed the project, Pourbaix said. With 27,000 monitoring points and the ability to remotely shut values, “Keystone will be safe,” he said.

Jane Fleming Kleeb

Jane Fleming Kleeb, head of nonprofit group Bold Nebraska that opposes the project as it stands, argued that tar sands had not been fully studied and cited problems cleaning up 800,000 gallons of tar sands oil that spilled into the Kalamazoo River in Michigan last year.

Kleeb said she stood with Obama in wanting to study the project further.

Look At The Bright Side



Signs of the recession; Falling oil prices 



Oil futures fell as the impasse over the U.S. debt ceiling hardened, while a surprise drop in U.S. durable-goods orders also weighed.

Later today, market participants should shift their attention to the U.S. Department of Energy's weekly report on U.S. oil and fuel inventories.

Light, sweet crude for September delivery was down 97 cents, or 1%, to $98.63 a barrel in early trade on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange fell seven cents, or 0.1%, to $118.21 a barrel.

U.S. Congress and Senate are still far from an agreement to raise the U.S. debt ceiling before Aug. 2, a date when the U.S. Treasury Department has said the government will run out of cash to pay its bills. Republican leaders have put forth a plan in the House of Representatives to raise the country's borrowing limit, but they delayed a vote on the bill until Thursday. 

AAA Credit Rating



If the government fails to reach an agreement, the three major ratings agencies have said they will downgrade the U.S.'s triple-A credit rating. That could raise the cost of borrowing and possibly slow the economic recovery in the world's biggest crude consumer. An actual default on U.S. obligations could be even more disastrous, some analysts warn.

"Ratings agencies can already easily make the case for a downgrade of the U.S. credit rating from AAA to AA," analysts at JBC Energy, a consultancy based in Vienna, said in a research report. "We think this is going to happen, reflecting not only the relatively dire state of the U.S. economy, but also the inability of the political system to cope with the current situation in a responsible manner."

Crude futures extended their losses following a surprise drop in U.S. durable-goods orders last month. The decline signals the sluggish economy is weighing on the country's manufacturing sector, a major user of energy.

Manufacturer's orders for goods like transportation, computers and machinery fell 2.1% to a seasonally adjusted $191.8 billion, the Commerce Department said. Economists surveyed by Dow Jones Newswires had expected orders would rise 0.4%.

Attention is likely to shift to the Energy Department's weekly report at 10:30 a.m. EDT. A similar report from the American Petroleum Institute late Tuesday showed a surprise increase in inventories, sending crude futures lower in after-hours trading.

The industry group said oil stockpiles rose four million barrels last week. A rise in stockpiles can signal weaker demand from refiners and can weigh on oil futures. 

I'm not playing fair but more people are using public transportation



Analysts are expecting the DOE to report a 1.4 million-barrel drop in U.S. oil inventories, according to a survey by Dow Jones Newswires. Gasoline stocks are seen rising 400,000 barrels, while inventories of distillates, including heating oil and diesel, are seen rising 1.7 million barrels.

Oil Ends Higher After Upbeat US Jobs Data

Oil futures jumped Thursday, as traders looked past a smaller-than-expected draw in U.S. oil inventories to focus on a pair of upbeat readings on U.S. employment levels.

Light, sweet crude for August delivery settled up $2.02, or 2.1%, to $98.67 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange doubled that gain, settling up $4.97, or 4.4%, to $118.59 a barrel.

Futures surged after giant Automatic Data Processing Inc. (ADP) said the U.S. private sector added 157,000 jobs last month, above the 95,000 that had been expected by economists polled by Dow Jones Newswires. That report was quickly followed by a reading from the Labor Department showing new claims for unemployment benefits fell last week for the first time in three weeks. The figure fell 14,000 to a seasonally adjusted 418,000. Economists had expected a drop of 3,000.

Crude market participants closely watch U.S. employment data, which correlate closely with demand for oil, gasoline and other refined products.

"Both domestically and globally ... the economies are in better shape than we're led to believe," said Jay Levine, president of Energy LLC, a Portland, Maine, brokerage and consultancy. "The oil market in general has been looking better."

 Jay Levine, president of Energy LLC,



Following the upbeat reports, several economists raised their forecasts for the change in June non-farm payrolls, due Friday from the Bureau of Labor Statistics.

Thursday's employment data sent Nymex crude rallying as high as $99.42 in intraday trading, the contract's highest level since June 15. Traders pared its gains, however, after the Department of Energy posted a smaller-than-expected decline in U.S. oil inventories last week.

The Department of Energy said oil inventories fell 900,000 barrels, less than the 2.4-million-barrel decline forecast by analysts surveyed by Dow Jones Newswires.

U.S. crude inventories have fallen for five straight weeks, a sign that demand remains strong from refiners. Inventories, however, are still above last year's levels amid the backdrop of a weak economic recovery.

The DOE said gasoline inventories last week fell 600,000 barrels. Distillate stocks, including heating oil and diesel, declined 200,000 barrels. Analysts had expected gasoline and distillate stockpiles to climb 900,000 and 200,000 barrels, respectively.

The report was delayed by a day due to the Independence Day holiday Monday.

Gains in Brent, the European benchmark, sharply outpaced the Nymex contract. Analysts attributed Brent's steep gains to several factors, including a decision by the European Central Bank to continue lending against Portuguese debt.

They also pointed to a technical explanation: a $2 "continuation gap" around $115 a barrel that the front-month contract skipped when July futures expired in mid-June. Technical traders quickly filled the gap by boosting the price of August futures when they approached $115 again, sending the front-month Brent contract surging.

"The market always goes back to fill those gaps," said Tom Bentz, director at BNP Paribas Commodity Futures. "Once the market punched through it, it exploded another dollar like nothing."

Refined product futures largely tracked the Brent contract. Front-month August reformulated gasoline blendstock, or RBOB, settled up 12.94 cents, or 4.3%, to $3.1270 a gallon. August heating oil settled up 13.87 cents, or 4.7%, to $3.1020 a gallon.

My Kingdom For; Let's Say 30 Million Barrels Of Oil

The U.S. Department of Energy announced today that it would release 30 million barrels of crude oil from the Strategic Petroleum Reserve (SPR), the country’s emergency energy storage facility, over the next month. The release is being conducted in concert with other developed states of Europe and East Asia that will collectively match the American release. The SPR is stored in a series of massive underground salt domes on the U.S. Gulf Coast, immediately adjacent to several internal energy transport hubs. The oil released will be used almost exclusively in the United States.

The move raises a number of questions; the economics and the politics underlying the issue are questionable. I believes there is no pressing need for the release — at least according to the legislative guidelines that govern the reserve.

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Officially, the release has been billed by the Department of Energy as a response to the disruptions in Libya’s oil supply. The ongoing conflict there has resulted in the removal from global markets of roughly 1.6 million barrels per day of light, sweet high-quality crude oil — a total of more than 150 million barrels displaced since the conflict began. Hardly any of that crude ever makes it to the United States — it is consumed mostly in Europe, specifically in Italy and France — but loss of that supply has indeed strained global sourcing. The Energy Department also noted that U.S. oil demand normally peaks in July and August, the height of American vacation season, and that the release should help alleviate the seasonal price spike somewhat. However, oil was priced at $95 a barrel just before the release was announced, well below the $115 per barrel it reached at the onset of the Libyan conflict and much less than the $140 per barrel in mid-2008. Prices quickly plunged by $5 per barrel following the announcement.

This is the first time the SPR has been tapped explicitly in response to high prices. Normally the SPR is an emergency account, only used when there are genuine, direct interruptions to U.S. energy interests. It has therefore traditionally been tapped only in the aftermath of major hurricanes or during military conflicts. There are a few exceptions, most of which are tied to domestic political developments, such as budget talks in Washington or technical shifts in the SPR’s makeup — shifting its fill to higher-grade crude, for example. We do not see this release as related to current budget talks because there are similar releases from 28 other countries. The expected proceeds from this release would only be sufficient to fund the U.S. federal government for one day.

The U.S. Congress recently altered the SPR’s regulations, empowering the administration to take a somewhat more liberal stance as to what constitutes an emergency situation, explicitly noting that high oil prices could justify releases. Currently the SPR is the fullest it has ever been, with 727 million barrels of mostly light, sweet crude in storage. The objective of the current legislation is to, in time, increase that volume to 1 billion barrels.

Oil prices are indeed uncomfortably high, but they are not straining the U.S. economy, especially compared to the price activity of the past three years. Gasoline prices are indeed at record highs, but crude oil accounts for less than half of gasoline prices — and this release is international in nature, so it is not likely tied to a U.S. domestic issue either. Any effort to modify global prices over a sustained period will most likely fail without substantial changes in the mechanics of supply and demand. As large as the SPR and other similar reserves elsewhere in the developed world are, they are necessarily finite, and they do not equate to fresh production.

The economics and the politics behind the issue do not make sense. That the entire developed world is involved suggests that this is neither a domestic American issue nor one that requires any degree of secrecy, rendering the reasons behind the move unclear.

Are oil refineries manipulating gas prices?



Oil Refinery



Gas prices are continuing their steady decline, although not at the rate many would expect. Now, some federal lawmakers are suggesting that refineries may partly be to blame.

Senator Charles Schumer


The average price per gallon of regular gasoline in the Syracuse area is $3.93 Monday, down about six cents from a week ago. Still, U.S. Senator Charles Schumer thinks it should be lower and is calling for refineries to be investigated for possible price manipulation.

Gas prices skyrocket when oil prices rise, but when oil prices fall the price at the pump declines only slightly. That sequence appears to be repeating itself once again, since oil has fallen below $100 per barrel.

Senator Schumer was in town to call on the Federal Trade Commission to investigate what part oil refineries might play in the disparity. He and other lawmakers believe refineries cut back on their stockpiles to keep supply down and the prices at the pump high.

"If they're all holding back deliberately to keep the price up and each one is sort of looking at the other and winking they can be held accountable," Senator Schumer said.

A report released by the Energy Information Administration shows refiners are producing at just 81 percent of capacity, a decrease of 900,000 barrels per day compared to last year.

"81 percent capacity at a time when the price is at a record high? There seems to be something really wrong," Schumer said.

Even as demand for gasoline drops, Schumer says another disturbing trend is emerging. "Refiners' profits are dramatically increasing and there's no good explanation according to the free market," he said.

The Senator believes big oil may be exploiting every single link in their supply chain to keep prices up. Residents of CNY don't seem to doubt that for a second.

"It seems like they're managing the price," Ed Robicheau said. "Especially on the way down."

"Most everybody thinks that's the case and nobody has been really able to prove it," said Tom Roehm. "It would be nice if Congress would do a little more oversight."

When asked if this call to action will in fact lead to an actual investigation, Schumer said he'll keep banging away at the FTC until it does. He adds that a few years ago when prices were at similar levels, he visited CNY to call for the release of the Strategic Petroleum Reserve three times. It eventually happened and prices then dropped 25 percent.

The New York State Attorney General is currently in the middle of a price gouging investigation in Central New York. His office says it should have the results in the next few weeks.

So,

Strategic Petroleum Reserve

Is ittime to tap US oil reserve?

I’m sure that many Americans are unaware, as I was, that 727 million barrels of oil, bought and paid for with billions of American dollars, lie in more than 500 salt domes located along the Gulf of Mexico.

With crude oil prices hovering around $100 a barrel, this is a $70-plus billion U.S. asset that is bought and paid for. This is known as the Strategic Petroleum Reserve, and its creation was set into motion by President Gerald Ford when he signed the Energy Policy & Conservation Act on Dec. 2, 1975, as a result of the 1973-74 oil embargo.

Freeing up these reserves is an emergency response tool the president can use should the U.S. be “confronted with an economically threatening disruption in oil supplies.”

Perhaps that definition should be expanded by Congress to include the current state of conditions that has driven the cost of gasoline at the pump to around $4 per gallon, robbing Americans of a good chunk of their discretionary income. And for those who say those 727 million barrels of SPR are best saved for a rainy day, well, take a look outside — it’s raining like hell.

Use of the reserves is not unprecedented.

In an effort to ensure that the $22 billion investment ($5 billion in facilities, and $17 billion in crude purchases) would work in times of need, we have authorized, from time to time, test sales and “exchanges” (selling to acquire new or different types of crude oil, which has happened 10 times) to test the readiness of the reserve and its personnel to carry out a presidentially ordered drawdown.

These actual emergency releases have occurred only twice since the SPR inception.

The first was in 1991, at the direction of President George H.W. Bush at the beginning of Operation Desert Storm, to ensure an uninterrupted flow of oil during the confrontation.

The second was in September 2005, at the direction of President George W. Bush as a result of the devastation to oil production, distribution and refining caused by Hurricane Katrina.

Given that we may be waiting a long time for another Bush to become president, it is time for President Obama to send a signal that he is serious about solving this economically crippling issue, and release upward of 10 percent of the SPR.

This will require him to think outside the box, something we have only seen him do as it relates to spending taxpayer money thus far in his presidency.

In each case, where the U.S. government basically sold some of the SPR, there have been upward of 33 companies that responded to the Energy Department’s solicitations, so there should be no shortage of interested bidders.

The last purchase we made of crude oil for the SPR was in January 2009, when we spent $553 million on 10.7 million barrels of crude at $51.68 per barrel. It stands to reason that we would get more in May 2011 than what we paid in 2009, and 10 percent (72 million barrels) could pump some $40 billion back into the economy in some way, shape or form.

This action would signal to the oil companies and oil-producing “partners” — it seems like a one-way partnership much of the time — that we are serious about addressing this issue, and that the average American is tired of lining the pockets of oil magnates, and going broke in the process. Were this drastic step implemented, I believe we’d start to see immediate decreases at the pump as a result. 

U.S. Reps. Richard Neal



We should all call on U.S. Reps. Richard Neal, James P. McGovern and the rest of our Massachusetts delegation to pressure the president to think outside the box on this issue. As small business owners forced into our own austerity measures I, for one, am tired of seeing this delegation rubber- stamp every spending initiative President Obama has come up with, while at the same time offering nothing concrete to address the mounting debt and poor economic conditions.


U.S. Reps James P. McGovern


Yes, renewable energy sources, new domestic drilling options, energy conservation measures and the like should all be pursued with vigor. Perhaps one of the answers is lying in salt domes on our own soil.

First come, first served for Libyan oil

International energy companies backing Libyan rebels will come out ahead in a post-Gadahfi environment, a Libyan energy adviser said.

The conflict in Libya, one of Africa's top oil producers, helped push oil prices to two-year highs. Libyan oil is trickling out of rebel ports, though the Libyan government said much of the production is shut by the war.

Libyan oil plays a dominant role in southern European markets. Italian company Eni said it was working with the rebels shortly after Rome recognized a transitional council as the legitimate leadership.

Youssef Rahim Sharif, an adviser to rebel-held Agoco oil company, was quoted by Voice of America as saying the rebel leadership will handle the energy sector after Gadahfi's regime has collapsed.

"We have all the technical staff -- all Libyans who will be able to run the oil industry and run it (well)," he said.

A post-Gadahfi Libya, he added, would work primarily with the international companies that supported the Libyan revolution.

"And these will be the ones who will be given the first benefits to be our partners in rebuilding Libya in the best way," he said.

Energy Experts Demand That Press Blame Obama For Gas Prices.

With gasoline prices nearly $1/gallon higher than they were a year ago, some media outlets -- echoing Republican politicians -- have sought to place the blame on the Obama administration's energy policies, pointing to the temporary ban on deep-water drilling (but not production) imposed for several months following the BP oil spill. It's an easy enough claim to make: Obama restricted oil drilling, and now prices are higher. The only problem is that no credible economists -- including those who favor expanded U.S. drilling -- will say this claim is valid.

But the Media Research Center is so certain of Obama's culpability that its Business and Media Institute produced a study criticizing network news outlets for failing to blame Obama's drilling policies while reporting on high gas prices. 

Brent Bozell


MRC president Brent Bozell appeared on Fox News to promote the study, saying that "drilling is down 13 percent in the last year. That is a huge, huge contributor to the problem that we have now of rising gas prices." He said "huge" twice, which is almost like providing support for his claim.

According to its website, the MRC's Business and Media Institute exists to give journalists "a helping hand to have an informed understanding of our nation's free enterprise system."

So how's that going?

The Wall Street Journal reported that U.S. offshore oil production is expected to be 13 percent lower this year, in part due to the Gulf drilling moratorium. But just 32 percent of American oil comes from offshore sources, and total U.S. production of crude oil and liquid fuels in 2011 is expected to stay near 2010 levels, which were higher than any other year in the past decade. According to the Financial Times, private forecasters think total U.S. production will actually rise this year due to increases in onshore output.

More to the point, energy experts say that given the scale of the world oil market, any decrease in U.S. oil production resulting from the deep-water moratorium cannot be blamed for the high oil and gasoline prices that we're seeing.

For instance: It's Not Credible To Blame The Obama Administration's Drilling Policies For Today's High Prices." Michael Canes, a distinguished fellow at the Logistics Management Institute and former chief economist of the American Petroleum Institute, disagrees with Obama's drilling policies. Still, he said: "It's not credible to blame the Obama Administration's drilling policies for today's high prices because of the relative scales involved." He further stated that "world oil prices are determined in a market of around 85 million barrels per day of production and consumption, while the consequences of domestic drilling, particularly in the Gulf, likely would be more in the range of several hundred thousand to one million barrels per day, and most of that production would not occur for a number of years."

Severin Borenstein



 Moratorium Has had "A Miniscule Impact On The Price Of Oil." Severin Borenstein, director of the University of California Energy Institute and business professor at the Haas School of Business, said that "the economic value lost from reduced production is real, especially when the price is so high," adding, "BUT these numbers are very small relative to the world oil market and have a miniscule impact on the price of oil. The best estimates are generally that even a very short run output decline of 1% raises world oil prices by about 5%. Even that is probably overstated given the slack capacity that other producers have. So, the changes we're talking about here, probably are raising oil prices no more than 1%-2%, which is 2-5 cents at the pump."

Fadel Gheit

 "It Doesn't Even Move The Needle." Fadel Gheit, energy analyst at Oppenheimer & Co. told FactCheck.org that "[o]only the naïve will think that" the deep-water moratorium "will have a direct impact." He added: "It doesn't even move the needle. Is 100,000 barrels (a day) going to make a difference? It's not. A cent or two per gallon? It might. But there are much bigger factors."

 "The Loss Of A Small Amount Of Domestic Production Has Had A Minimal Effect On Gasoline Prices." Chris Lafakis, economist at Moody's Analytics, said: "If we take the EIA and Makenzie at their word, the effect of this lost production has been an increase in gasoline prices of anywhere from 3 to 5 cents per gallon." He added: "Given that gasoline prices have jumped by 68 cents per gallon just since late February (which is largely the result of turmoil in Libya), it is safe to say that the loss of a small amount of domestic production has had a minimal effect on gasoline prices compared to other factors such as the loss of oil and natural gas liquid production in the Middle East and North Africa, the depreciation of the U.S. dollar and the expansion of the oil supply uncertainty premium. You can call this last factor the rise in oil prices related to non-fundamental factors (fear of further unrest, speculation, financial demand)."

 "Americans Tend To Exaggerate The Price Effects Of Fluctuations In Domestic Production." Joseph Dukert, independent energy analyst and former president of the U.S. Association for Energy Economics, said in an email: "The dip in offshore production brought about by the partial moratorium will more likely be felt 8 to 10 years down the road because of the interruption to exploratory efforts as a result of uncertainty. Overall, though, Americans tend to exaggerate the price effects of fluctuations in domestic production in relation to the total amount of oil in global trade. On the larger stage, the perception of geopolitical risks is more important." Dukert added, "Over the next few years, decreases in demand for gasoline (whatever the reason for this possible factor) could also have greater impact -- a favorable one for consumers in that this would restrain pump-price increases."

 It's A "Total Stretch" To Blame The Moratorium For Spike In Gasoline Prices. John Kingston, director of news at energy information firm Platts, stressed that all oil produced in the U.S. "goes into the great big world supply" where "nobody could hide" from events around the world that affect the price of gasoline. He said that while the U.S. can and should work to increase the global supply of oil, it's a "total stretch" to say that the deep-water moratorium has had a significant impact on gasoline prices. 


"Gasoline Prices At The Pump Would Be Higher Either Way." Lou Crandall, chief economist of Wrightson ICAP LLC, said: "Higher oil prices today are a global phenomenon, and the additional supply from increased drilling by the U.S. would not alter the global balance of supply and demand greatly. Gasoline prices at the pump would be higher either way. The only difference is that a somewhat larger share of the revenue would accrue to domestic interests (governmental and private) rather than to foreign suppliers."

 So there you have it: a purported media watchdog organization calling for news outlets to report a false talking point as fact.