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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: WWS who wrote (74825)	9/27/2000 12:02:44 PM
From: dfloydr	Read Replies (1) \| Respond to of 95453

Woke up at 03:00 this am and found Senator Murkowski (R/Alaska) holding hearings on heating oil on CSPAN. Very interesting to see that someone is talking sense to Congress and that one Senator "gets it". Had to take notes on the back of a magazine, so the following are cryptic and can not attribute a given comment to a particular speaker. Speakers I caught included: Paul Vermylen ??? John Huber, Petroleum Marketing Association John Felmy, API Lawrence Downs, N.J Resources (?) 1. There is presently an $8.00 margin in heating oil. That is plenty of incentive for refiners to produce all they can. 2. We see nothing that suggests the industry can not handle this winter, but I have no idea how to stop this public hysteria. 3. Low present inventories are not a disaster. Refineries are running flat out to make heating oil now. Remember this summer the government was pushing them to make gasoline. 4. Distributors have suspected there would be an SPR release about now and being unsure of the impact on price have been reluctant to stock up on oil at prices that might collapse. 5. Most N.E distributors have entered into long term contracts for the oil they need and it will be there when needed. 6. Cant point finger at one thing. Problem is all energy sources are now tight and a demand for one affects them all. 7. The SPR release will have no effect on the amount of heating oil available in the NE, but we are concerned about the unintended consequences. The problem with energy supply is long term and this sends exactly the wrong message. Intervention disrupts the market. 8. Long term we need: a policy that produces more energy. Access to drilling opportunities. 60% of the overthrust belt is off limits as are opportunities in Alaska and Florida and California. a sane international diplomatic policy. (Senator Murkowski pointed out that we buy 750,000 bbls of oil a day from Iraq some of which which we use to bomb Iraq.) a coordination of domestic policies to encourage conservation. Many present policies actually prevent conservation. 9. The DOE man pointed out that refineries are running at above normal levels ... historically operating rates drop to 90% at this time of year as they conduct maintenance and switch over their product mix. There are dangers associated with running above 100% capacity, as there are with continuing these abnormally high operating rates at this time. 10. We do not see a pipeline problem in the north east. One is under construction in Maine which will help in the future. Otherwise, seaborn deliveries have worked fine for 85 years and for 85 years oil has been available when needed although sometimes it has been expensive. 11. Heating oil consumed in the NE = 50% domestic. Rest is imported. 12. Pricing mechanism works. 13. Various states mandated suppliers add to inventories and many have already done so. 14. Future demands continue to soar. Meeting them is going to be very, very expensive. Various estimates ranging from $150 billion to $1 trillion were thrown around by various sources. 15. BP etc. presently have access to huge gas resources in Alaska but it will cost $10 billion to pipe it to markets and only recently has the price of gas made it economical to consider. Price declines would table that idea. 16 Gas in storage is down ... this winter will be serious but not critical. For a number of years demand has been growing at 3% and that is continuing or accelerating. Meanwhile last year's low prices discouraged drilling and production is down. We believe the resources are there to meet future demand if restrictions can be removed to allow access to them. 17. $150 billion estimate to repair and build the infrastructure to deliver products over then next ten years. I missed some of the hearing, but it seemed that overall the presentations were sane and realistic. I really liked the one speaker who pleadingly pointed out that he does not have a degree in suppressing mass hysteria. I think to stop the hysteria we should start by taping shut the mouths of a few hundred politicians who are trying to get elected at this time.