 |
Oil Prices Approach Historic High
Author: Richard Stoyeck  | Posted: 12-08-2006 | Comments: 0 | Views: 244 | Rating: (52)  (?) 
It has been announced that British Petroleum had to shut down an Alaskan oil field providing 8% of US crude oil production. Oil prices on the world market immediately surged to within pennies of their all-time high. What's really going on? For an answer I look back to former President Richard Nixon. Privately Nixon who was smart, and as shrewd a man as any President in history use to talk to his friends about if there is a dollar to be made somewhere, than somebody is making it.
It does seem strange that for two consecutive years, the large multinational oil companies have had greater earnings, and free cash flow than in any period in history. At the same time, giant British Petroleum is clueless that they have corroded pipes that are about to take down 8% of America's oil production. There is a dis-connect here of massive proportions, and nobody is thinking about it.
We all know the airlines are suffering. When you are hemorrhaging money, and the revenue just isn't coming in, it's really tough for a company financially to maintain the maintenance programs that are vital to keep an airplane flying. This however is not the situation that British Petroleum or the other major multinationals find themselves in. The oil companies are PRINTING MONEY. They don't call oil "BLACK GOLD" for nothing.
Why would any oil company choose to skimp on maintenance? Why would BP be this dumb in their managerial policies? They have allowed a massive, and important pipeline to experience corrosion to the point where it has to be shut down? Listen up, when airlines fly a 747 airplane; each and every plane has to have its oil changed every so many miles or hours. The engines have to taken off the plane, and rebuilt every so many miles or flight hours. This is why planes are far more reliable than cars. The airlines make sure that this maintenance gets done or the Federal Aviation Agency will shut them down, no questions asked.
The President of the United States tours the world in Air Force One, which is a glorified version of a 747. The President actually has two of these planes identical to one another.
The President's planes are put on what's called a "White Glove" maintenance program. What this means is that the manufacturer, in this case Boeing wants the oil changed, and the engines ripped down every so flight hours. There are also scores of other items that must be done as well. Whatever the schedule is for whatever procedure, White Glove maintenance means the schedule is chopped in half. If Boeing wants an engine ripped apart every 500 hours, for Air Force One it's every 250 hours.
What's British Petroleum's excuse for not maintaining the pipeline in a period of unprecedented earnings power, and monstrous unrestricted FREE CASH FLOW? It's certainly not stupidity. I have been involved with oil and oil stocks since 1978, and I am telling you that the people in the oil business are some of the smartest people on earth. Do you know how much oil a supertanker holds? These tankers can hold up to 2 million barrels (that's barrels, not gallons) of oil. The typical loss or spillage loading, and unloading a 2 million barrel tanker is no more than ONE TEASPOON of crude, that's how efficient these processes are.
It is unthinkable that a modern management team would allow a segment of the Alaskan pipeline to corrode. Corrosion is like metal fatigue in a helicopter. You don't wait for metal fatigue to become critical before dealing with replacing parts on helicopters. Today's chemical engineers know exactly how long it takes a pipe to corrode. The oil industry has more PhD chemical engineers than any industry on earth, and these guys are not asleep at the switch. It is up to you the reader to figure out how this happened, or could have been permitted to happen?
Oil is priced at the margin. This means, today's price is determined by the price of the last barrel that needs to be sold. It is not an average price, it is a marginal price. We are right now at the cusp of where demand equals supply. Even if you could bring another ten million barrels onto the market daily, we don't have the refining capacity to refine it. The last refinery in this country was built in the 1970's.
The Wall Street Journal reported in its cover story of August 8, 2006, that the oil industry "....has been stymied in putting in ....new refineries, by intense public opposition". This is absolutely untrue. I have not met an oil man (including CEO's of the majors) in the last ten years, who has expressed any interest whatsoever in creating a new refinery in this country. Big oil doesn't want to create new refineries.
As far as our leadership in Washington DC is concerned, this country has not had an oil policy in 30 years, thank you very much. If anything, America's policies on oil, have been dictated by oil lobbyists paid to do oil's bidding. The oil companies are not responsible for the high price of oil. OPEC sets the price, and big oil just tacks on their piece, and oh what a piece.
Rate this Article:
Current: 0 / 5 stars - 0 vote(s).
Article Source: http://www.articlesbase.com/advice-articles/oil-prices-approach-historic-high-47752.html
About the Author:Richard Stoyeck's background includes being a limited partner at Bear Stearns, Senior VP at Lehman Brothers, Kuhn Loeb, Arthur Andersen, and KPMG. Educated at Pace University, NYU, and Harvard University, today he runs Rockefeller Capital Partners and http://StocksAtBottom.com http://www.stocksatbottom.com
|
Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free! |
|
Related Articles
How to Run Your Car on Water+fuel – Burning Water for Fuel and Gas to Save Money
By: Robert Kamau | 19/08/2008 | Cars
Is it possible to run your car on water as gas or fuel? Download DIY manual, articles, information, facts, instructions, schematics, guides, and plans on using water for fuel in my car. Can your car really run on water to save money? Is this water for gas really true?
Untapped: the Scramble for Africa's Oil
By: John Ghazvinian | 02/04/2007 | News and Society
Since 1990 alone, the petroleum industry has invested more than $20 billion in exploration and production activity in Africa . A further $50 billion will be spent between now and the end of the decade, the largest investment in the continent's history -- and around one-third of it will come from the United States . Three of the world's largest oil companies -- the British-Dutch consortium Shell, France's Total, and America's Chevron -- are spending 15 percent, 30 percent, and 35 percent respectively of their global exploration and production budgets in Africa. Chevron alone is in the process of rolling out $20 billion in African projects over a five-year period.
Oil Spikes Due to Fundamentals, not Speculation
By: j polins | 16/06/2008 | Investing
In my opinion, oil prices are going to spike higher, at least in the long run.
Water Fuel Car- Can You Really Run Your Car on Water + Hydrogen + Gas
By: Robert Kamau | 19/08/2008 | Cars
Water powered car illustrated DIY manual to fix at home. Save money, reduce emissions and global warming by using oxygen + hydrogen driven car to increase you Miles Per Gallon MPG. Save on fuel costs by water burning car engine to boost efficiency and reduce engine tear and wear.
An Analysis of the Exxon Valdez Incident
By: H.silistre | 08/10/2007 | Corporate
An Analysis of the Exxon Valdez Incident from a earth sciences and business perspective. how Exxon got into the incident and how it was able to continue its business presence after the incident.
Oil Discovery In Republic Of The Congo
By: Dave Gosine | 30/03/2006 | Technology
Total announces an oil discovery in the Mer Très Profonde Sud (MTPS) block, located around 180 kilometres southwest of Pointe Noire in the Republic of the Congo.
Reduce Risk or Increase Certainty to your E&p Operations? Utilization of Risk Assessment to Optimize the Decisionmaking
By: Stig Kristoffersen | 20/02/2008 | Business
Oil & Gas exploration deals with many unknowns, with high risk and uncertainty an inherent part. The management of risk in oil and gas exploration has always been a difficult subject, and it is even more important in these days of high capital investment.
Oil! a Leaking Bubble
By: 104inc.com | 05/09/2008 | Economics
The beauty of the market, whether it’s commodities, mutual funds, or just plain ‘ol stocks, is that they never fail to surprise me. Only a month ago, I wrote an article about oil and why (based on analyst’s opinions) the price has increased so much, going up to $147 per barrel back in July. Well, just four short weeks later, oil has come down to under $108 per barrel. How in the world does oil spike up so quickly? More importantly, how does it plummet so drastically?
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
Why oil price rising?
By: YURI | 05-08-2008
Why are oil prices rising in 2008?
Hydro car
By: Osdhero | 02-08-2008
I have build my hydro cell for my car and it works find on the table but when i install in my car it draws to much current, blows a 30amp fuse.... What can i use to limit my voltage so i dont blow my fuse. I have it wired to my battery and swithched.\, WHAT DO I NEED
What is the threshold for evinrude 2-stroke ...
By: Lindsey Fisher | 02-08-2008
what is the threshold for evinrude 2-stroke engines regarding over or under mixing your oil and gas?
What hot places do penguins live in
By: nod | 01-08-2008
what hot places do penguins live in
Used engine oil test
By: tbahemuka | 01-08-2008
What indication is obtained when Ethlyne glycol is detected on testing used engine oil
I used murphy's oil soap and orange glo on my new ...
By: jayson | 31-07-2008
i used murphy's oil soap and orange glo on my new dura luster bruce urethane hardwood floors. The builder never warned me and I had no idea it would leave a cloud that will not come out. I tried vinegar. No luck. I order a product called IFT by basic coatings. I hope it works. If it doesn't can I apply a new coat of urethane myself . How difficult is it? I should probably make the builder do it because they never told me anything.
Q&A Powered by: 
Latest Advice Articles
10 Tips for Better Communication
By: William Lee | 05/09/2008
We all know that being uncomfortable speaking in groups, or for that matter being uncomfortable speaking to anyone at all is never a good feeling. It can make the working day go by so much worse and make you dread and stress times when you will need to use your communication skills.
Here are just a few ways for you to improve your communication skills, just by knowing they person closest to you: yourself.
The Benefits of Customer Service Training
By: sheila Mulrennan | 04/09/2008
There are a growing number of business services that offer customer service training for other companies and establishments. Some of these trainings are done in an actual institutional setting. Others are available as a purely virtual learning experience via the Internet.
What to Expect in a Customer Service Course
By: sheila Mulrennan | 04/09/2008
Businesses that allow their personnel to undergo a customer service course have an advantage over those that do not bother to provide adequate training to their customer service staff.
9 Ways to a Successful Mindset
By: David Schaefer | 03/09/2008
Learning how to focus and nurture the mind to achieve goals is a primary path for successful results. Understanding and implementing proper techniques for a success mindset can reap huge benefits. Learn about the 9 ways to achieve a mindset for success.
Escaping Meditation?? Here’s the Door to Bliss
By: Vijay kumar Raisinghani | 02/09/2008
Who said Meditation was easy? Meditation is not easy. It takes time and it takes energy also, lots of it initially. Besides that, it also demands grit, determination and discipline. Why bother about meditation after all?
How Boomers Can Sing Rock & Roll Instead of the Blues
By: Phyllis Goldberg | 01/09/2008
The new Pew Research Center Social and Demographic Trends survey measured dissatisfaction and pessimism in close to 2500 participants. The data indicates that Baby Boomers worry more than any other generation.
The Straight and Narrow
By: Bill Nelson | 01/09/2008
Over the last few months I have been working with a lot of our clients in the area of accountability for their team. Specifically how to develop a system of accountability that allows the job to be done where the leader is not playing police person 24 hours a day and the team takes responsibility and accountability for what they are required to do.
What Do You Do When Your Best Plans Don’t Happen?
By: Bo Sanchez | 01/09/2008
That’s my hard question to you.
More from Richard Stoyeck
Stock Research - Another Hedge Fund Warns- Basis Capital - This Is Just The Beginning!!!!
By: Richard Stoyeck | 26/07/2007 | Finance
Wow, it's just starting and it's not going to stop. Basis Capital is an Australian hedge fund. They run about a billion dollars under management. What you have to keep in mind however is that hedge funds use LEVERAGE, big leverage. The average hedge fund manager in the United States...
Tock Research - As Hedge Fund Industry
By: Richard Stoyeck | 25/07/2007 | Finance
Both the hedge fund and private equity industry had free rides during George Bush's Administration when the Congress was safely in Republican hands. All that changed in November 06 when the Democrats swept the Congress, and with the change in control came new Democratic responsibilities to address the fiscal deficits...
Stock Investing - Bank Of America, Morgan Stanley, UBS, and Bear Stearns Swept up in latest INSIDER
By: Richard Stoyeck | 20/07/2007 | Non-Fiction
Insider stock trading at UBS, Bear Stearns, Bank of America, Mongan Stanley and its consequences
Stock Investing - Bank Of America, Morgan Stanley, Ubs, And Bear Stearns Swept Up In Latest Insider Trading Scandal
By: Richard Stoyeck | 11/03/2007 | Finance
In the biggest Insider Trader scandal in two decades, members of four prominent firms were implicated in the developing scandal. The firms included Bank of America (BAC.N), Morgan Stanley (MS.N), UBS (UBS.N), and Bear Stearns (BSC.N). To begin with, a little history is in order. Insider trading in this country...
Stock Investing - Chrysler Up For Sale - What Is Daimlerchrysler Thinking?
By: Richard Stoyeck | 02/03/2007 | Finance
DaimlerChrysler has basically thrown in the towel by hiring J.P. Morgan Chase to find a way for the luxury German auto maker to divest itself of the Chrysler automobile company here in America. We went back and took a look at our stock research on the original German purchase of...
Stock Research - Hedge Fund Fraud Leads To $160 Million Bear Stearns Settlement
By: Richard Stoyeck | 28/02/2007 | Finance
It was announced recently that a Federal Bankruptcy court judge ordered Bear Stearns, one of America's top tier trading firms to pay $160 million to investors who lost money with a hedge fund that cleared through Bear Stearns. While doing stock research on publicly traded brokerage corporations, we came across...
Investing - Home Prices Fall In Majority Of The Biggest Markets
By: Richard Stoyeck | 28/02/2007 | Finance
If you have owned a home, or any piece of residential real estate including condos, and vacation homes than you are aware of the run up in prices that occurred for a five year period that ended more than a year ago. In terms of investing, owning a home for...
Investing - Tax Shelters Equals Big Fine For Kpmg
By: Richard Stoyeck | 28/02/2007 | Finance
What happens when a world renowned accounting firm decides to market tax shelters to its elite clientele? The first thing that happens is that the client buys them because of the source. In this case the source is utterly reliable; KPMG is one of the oldest and biggest Public Accounting...
|
|
Self Improvement 
