Better Fill up today

[frawin]

From the latest weather reports, Hurricane Edouard could come in somewhere around the Galveston and  Texas City area,  it may shut down some production, also there is a lot of Refining  just East of Galveston in the Texas City, TX area. The crude and product markets may move up in anticipation of interruptions in both production and refining.

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Sept -08 Crude is trading at $124.15, down $$0.95, September -08 Natural Gas is trading at $8.97, down $0.419.

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Sept-08 Crude Closed yesterday at $121.41, down $3.69 on the day, Sept-08 Crude is trading this morning at $119.40 Down $2.019, Sept-08 Natural Gas closed yesterday at $8.726, down $0.663, Sept-08 Natural Gas is trading this morning at $8.52, down $0.206.

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Sept -08 Crude settled at $119.17, down $2.24 on the day, and Sept -08 Natural Gas setteled at $8.726, unchanged on the day.

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Sept -08 Crude is trading at $119.35 range, up $0.18, Sept -08 natural Gas is trading at $8.695, down $0.031. EIA Crude and Petroleum Inventories come ot today.

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Crue oil is trading at $120.70, up $2.12 in overnite night trading and Nautral Gas is trading at $8.90, up $0.127.

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I have advocated a similar plan for the US for several years. With our "DO NOTHING" Congress we will be on fuel rationing while they continue to argue amongst themselves. Nancy Pelosi is the worst excuse, in my lifetime, for a "House Speaker" . Scary Harry is right behind her.
China Raises Taxes on Large Cars to Cut Fuel Usage 

By Tian Ying

Aug. 13 (Bloomberg) -- China's finance ministry said it will raise taxes on large automobiles while cutting rates for smaller cars in an effort to spur demand for fuel-efficient vehicles in the world's second-largest oil-consumer.

The government will double the tax rate to 40 percent for automobiles with engines larger than 4 liters in capacity starting Sept. 1, the finance ministry said on its Web site. The tax on vehicles between 3 liters and 4 liters in engine size will be raised to 25 percent from 15 percent, the ministry said.

Automobiles account for about half of China's total oil consumption, and this may rise to 60 percent by 2020, according to the Development Research Center of the State Council. China, the world's second-largest auto market, raised the price of gasoline, diesel and other fuels in June to cool its economy and reduce energy use.

``The move is part of government's efforts of cutting energy consumption,'' said Yu Bing, an analyst with Pingan Securities Co. in Shanghai. ``It will help increase sales of small cars and damp demand for bigger vehicles.''

Cars with engines of 1 liter capacity or less will become cheaper, with a 1 percent tax rate instead of the current 3 percent, the finance ministry said.

Sedans with engines between 3 and 4 liters were the fastest- selling models last year in China, with sales rising almost six- fold to 12,100 units, according to the China Association of Automobile Manufacturers. Sales of cars with engines less than 1 liter fell 31 percent to 251,700 units last year.

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Last Updated: August 13, 2008: 2:20 PM EDT

NEW YORK (CNNMoney.com) -- Oil prices soared Wednesday after the government reported a surprisingly sharp decline in the nation's petroleum inventories.

U.S. crude for September delivery was up $4.37 to $117.38 a barrel in electronic trading. Oil had traded up just 88 cents to $113.89 a barrel just before the report's release at 10:35 ET.

The Energy Department said crude supplies fell by 400,000 barrels during the week ended Aug. 8. The report also said gasoline supplies fell by 6.4 million barrels, while distillates, which are used to make diesel fuel, fell by 1.7 million barrels.

Economists polled by Platts, a division of McGraw Hill Cos., had expected the government to report a 500,000 barrel rise in crude stocks, a 2.2 million barrel decline in gasoline stockpiles, and a rise in distillates of 1.9 million barrels.

Refineries were operating at 85.9% of capacity, down from last week, and a sharper drop than the 86.25% predicted by the Platts poll.

Concerns that high fuel prices are cutting into demand have sent crude prices sharply lower in recent weeks.

Oil has been trending lower since the end of July and is down about $32, or 21%, from its all-time high.

However, the larger-than-expected decline in supplies suggested that demand may not have been as low as many investors had thought.

"This suggests that refiners are cutting back and that should bring gasoline and, to a lesser extent, distillates back up," said Michael Lynch, president of Stretegic Energy and Economic Research in Massachusetts.

The reduced supplies came as fighting continued in a strategically important region of Eastern Europe.

Georgian conflict: Fighting between Russia and Georgia over the breakaway regions of South Ossetia and Abkhazia continued Wednesday, despite a cease-fire brokered by French President Nicolas Sarkozy. According to reports, Russian troops raided the strategically important city of Gori and pressed on in the direction of Tbilisi, the nation's capital.

"The combination of the inventory [decline] and the war in Georgia gave people the incentive to buy [oil]," said Lynch.

Georgia serves as an important hub for transporting oil and natural gas between Europe and Asia.

The oil market has largely ignored threats to international supplies over the past few weeks as investors were more concerned about demand. Georgia's largest oil pipeline had been shut down before the fighting began due to a fire along its Turkish span, and worries about supply disruption failed to significantly rattle investors a day earlier.

However Tom Orr, head of research for Weeden & Co. said he believes the oil market has been undervalued, and expressed concern about a disruption in supplies due to the conflict between Russia and Georgia that flared up this week.

"It amazes me how little attention crude oil traders have paid to the conflict between Russia and Georgia. A month ago crude would have shot up $5 or maybe even $10 per barrel if it looked like we might lose a million barrels per day of supply," wrote Orr in a research report.

Fuel-price pinch: Many investors believe the high price of fuel has been taking a toll on U.S. consumers.

The most recent evidence comes in a report on retail sales released Wednesday by the Commerce Department.

The report showed that retail sales had fallen slightly in July, but that sales of gasoline had grown nearly a percent due to higher prices at the pump.

"You strip out the gasoline and there's not much growth in what [consumers] are buying," said Rachel Ziemba, energy analyst at RGE Monitor.

Demand forecast: Many investors also believe the rising price of crude oil and gasoline has begun to cut demand in the United States, the world's largest oil consumer.

Gas prices remain more than a dollar higher than where they were 12 months ago. However, the average price of retail gas in the United States has fallen more than 8% to $3.787 gallon at the pump over the past 27 days, according to motorist group AAA.

Prices have fallen below the psychological barrier of $4 a gallon in all but 8 states, according to AAA data. But that might be causing a slight uptick in demand.

"With the prices being down at the pump, I think people are starting to drive a little bit more," said Mark Waggoner, president of Excel Futures in California.

Dollar: Mixed view: Also adding to investor concerns was a mixed U.S. dollar.

The dollar sent conflicting signals to investors on Wednesday, turning slightly lower against the 15-nation euro, but rising versus the Japanese yen.

The U.S. currency has been steadily gaining strength amid worries about slowing economic growth outside the United States.

Oil is traded in dollars, so when the dollar strengthens, crude oil becomes relatively more expensive for foreign investors. Oil and other commodities are also commonly used as a hedge against inflation.

 




©

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Oil: What the drilling advocates say
Supporters say there could be much more oil offshore than the government predicts as they fight for access to new supplies to lower the price of oil.
Subscribe to Economy
     

Last Updated: August 13, 2008: 1:51 PM EDT



NEW YORK (CNNMoney.com) -- Support for more U.S. oil drilling is on the rise, despite the opinions of many analysts who say the potential supply is too small to significantly lower the price.

Government estimates assume that drilling off the east and west coasts offers just over 1 million barrels a day. Even John McCain - who has made offshore drilling a cornerstone of his energy platform - doesn't dispute that figure which is dwarfed by worldwide production. Currently world production stands at about 73 million barrels of oil each day.

Drilling in Alaska's Arctic National Wildlife Refuge could kick in another million barrels, though many drilling advocates - including McCain - don't support lifting the ban there.

Republicans were first to make the case for drilling saying that more domestic supply would significantly bring down global prices despite government experts who say it would only shave two or three cents off the price of a gallon of gas.

Now Democrats, including Barack Obama and House Speaker Nancy Pelosi, are grudgingly getting on board - as a part of a compromise to push through a comprehensive energy policy in congress.

Polls show that Americans are overwhelmingly in favor of expanded drilling too.

The current debate over drilling is holding up other energy fixes in Congress. They include tax breaks that are essential for further investments in renewable energy and other measures to help Americans use less oil.

Given the seeming futility of expanded drilling to lower prices, how do drilling's boosters support their argument?

Hoping for more oil
For starters, they think there could be more oil than the government says.

"We think the estimates are extremely conservative," said Brian Kennedy, a spokesman for the Institute for Energy Research, a Washington, D.C.-based think tank that supports more drilling.

Kennedy said the government thought Alaska's Prudhoe Bay field originally held 6 billion barrels of oil. Since the field began producing in 1977, Kennedy said it has provided about 14 billion barrels of oil.

Other reports have shown the discrepancy between estimated production and actual production in Prudhoe Bay to be smaller, but still it ended up producing more oil than initial projections.

"They have a bit of a weatherman's track record when it comes to forecasting," Kennedy said.

Boosting spare capacity is important
Kennedy also said more drilling would increase the world's spare production capacity - the difference between what the world currently produces and what it could produce if all the spigots were turned on.

Spare production capacity is currently about 1.5 million barrels a day, most of which is held by Saudi Arabia. But just a few years ago, spare production capacity was 4 or 5 million barrels a day. That tight margin today is one reason why oil prices are so high - there is less surplus crude available to cover a disruption in supplies.

But while Kennedy believes additional drilling may double spare production capacity, the U.S. Energy Information Administration says the Saudis would simply invest less in new fields if the United States increased its own investment, leaving spare production capacity little changed.

A safer supply source
Kennedy said another reason to drill is that a million barrels of oil a day - or whatever the final number is - means a million barrels we don't have to buy from a foreign country.

That, he said, would help our trade deficit and create jobs at home.

"It would protect the U.S. from supply shocks elsewhere, and it's probably the best stimulus we could come up with," said Kennedy.

We need all the oil we can get
Taylor Griffin, a spokesman for the McCain campaign, said that any extra oil is needed in a tight market. "You're talking about a million barrels day coming online, the additional supply is a big deal."

'It's part of a comprehensive solution, you can't do just one thing," Griffin said, noting that McCain is calling for more drilling offshore but not in Alaska's wildlife refuge, and is championing other energy initiatives including a suspension of the federal gas tax and a big push in nuclear power.

That sentiment is echoed by the oil industry, which has consistently told Congress that among the many things lawmakers could do to lower gas prices one is to open up more areas of the country for drilling.

"Let's do everything," said Rayola Dougher, senior economic advisor for the American Petroleum Institute, noting that the discussion doesn't have to be either drilling or renewables, but can be both. "No one knows what impact it's going to have 10 years down the road, but we're still going to need more oil and gas."

If everyone agrees that we should do everything, why is it that we're spending so much time talking about drilling, and less time on other measures like conservation and alternatives?

Griffen said because drilling is one area in energy policy where Obama and McCain disagree.

"We're not talking about alternatives because we both support alternatives," he said.

People against more drilling cite the estimates from the government - EIA says opening Alaska's wildlife refuge would cause gasoline prices to fall by 2 or 3 cents a gallon by 2020 - and say Republicans are keeping the issue alive simply to use against the Democrats in the November election.

"The Republicans think they've identified an issue they can win on," said Karen Wayland, legislative director for the natural Resources Defense Council. "This is just about making it a wedge issue."

Wayland, channeling similar sentiments from many Democrats and citing numbers showing the oil industry already has access to nearly 80% of the oil reserves in North America, called the whole debate about expanding offshore drilling "a distraction from the real solutions." 

First Published: August 13, 2008: 3:57 AM EDT

America's untapped oil

Alaska: Energy fix meets political pandering

Offshore oil: What's really out there?

[flo]

Frank, did you happen to catch Pelosi on Larry King Live a few nights ago? Interesting