Export of North American crude, Oil imports, Oil Industry, Oil prices

Nationwide trend: oil imports slowing down

Repost from Bloomberg Business Week

Oil Import Decline to U.S. Revealed by Louisiana as Truth

By Dan Murtaugh, Zain Shauk and Lynn Doan, Nov. 05, 2014
Oil
A four-decade ban on exporting most U.S. crude has stranded the bulk of America’s surging production within the nation’s borders, blocking inbound global shipments. Some cargoes permitted for export, such as those from Alaska, have begun moving overseas. South Korea last month received its first shipment of Alaskan oil in more than a decade. Photographer: Curtis Tate/MCT via Getty Images

Things are slowing down at the U.S.’s largest oil-import hub.

Just six years after importing more than 1 million barrels a day from countries including Saudi Arabia, Nigeria and Iraq, the Louisiana Offshore Oil Port is receiving just half of that from overseas, highlighting a nationwide trend at harbors from Mississippi to Pennsylvania. What’s more, with U.S. output soaring to a 31-year high, neighboring Texas has become the port’s second-biggest supplier.

“U.S. oil production has significantly changed the flows of oil around the world and LOOP is at the fulcrum,” Jamie Webster, head of global oil markets at IHS Inc., said by telephone from Washington Nov. 3. “We’re now essentially receiving nothing from Nigeria. This is a huge change. I’m an oil markets man and not an economist, but in general, this is a big stimulus” for the U.S.

Oil Prices

Booming oil and gas production created more than 159,000 jobs between 2007 and 2013, Bureau of Labor Statistics data show. The country will be self-sufficient in energy by 2030, BP Plc says.

A four-decade ban on exporting most U.S. crude has stranded the bulk of America’s surging production within the nation’s borders, blocking inbound global shipments. Some cargoes permitted for export, such as those from Alaska, have begun moving overseas. South Korea last month received its first shipment of Alaskan oil in more than a decade.

U.S. Consumers Benefit

Oil that the U.S. once imported now floods world markets, driving down prices 28 percent since June. That’s helped bring $3 gasoline back to U.S. pumps and provided what Citigroup Inc. describes as a $1.1 trillion boost to the global economy. Lower energy prices will translate into savings for Americans and will probably boost spending, said Amy Myers Jaffe, executive director of energy and sustainability at the University of California at Davis.

“It’s not just that people will have this benefit of lower gasoline prices, they’ll have this whole benefit of having a stronger U.S. economy and more jobs,” Myers Jaffe said.

Oil prices have maintained their decline as OPEC, the supplier of 40 percent of the world’s oil, resists pressure to curb production and help eliminate a global surplus. On Nov. 3, Saudi Arabian Oil Co. cut prices for all of its crude grades to the U.S., an e-mailed statement from the company showed.

WTI for December delivery rose $1.49 to settle at $78.68 a barrel on the New York Mercantile Exchange. Brent gained 13 cents to $82.95.

Lower Prices

A sustained stretch of low prices is unlikely to stop soaring output from major U.S. fields, with executives of oil companies including Continental Resources Inc. Chairman Harold Hamm and Occidental Petroleum Corp. Chief Executive Officer Stephen Chazen saying last month that production could be sustained even if prices fall lower.

“Oil prices are lower, but they’re not low enough to really put a big pinch on that activity,” said Ken Medlock, senior director of the Center for Energy Studies at Rice University’s Baker Institute in Houston. “You probably would need to see oil prices come off another $10 to $20 to see that fade.”

Horizontal drilling and hydraulic fracturing have drawn crude from previously inaccessible formations in Texas and North Dakota, propelling U.S. output to 8.97 million barrels a day, the highest level since 1983. Restrictions on exports have made U.S. oil cheaper than global crudes, so imports have fallen 31 percent since 2005 to 7.5 million barrels a day.

Supertanker Port

“Why is oil $80 instead of $95?” said David Hackett, president of Stillwater Associates LLC in Irvine, California. “All of a sudden all this oil is getting to the coast and pushing back world supplies.”

The shift is being felt 20 miles (32 kilometers) offshore in the Gulf of Mexico at the LOOP. Built in 1981, it’s the only U.S. port that can unload the world’s largest supertankers.

Shipments into the port peaked in 2005 at 1.18 million barrels a day, according to Louisiana state records. Imports have fallen to 510,000 barrels a day this year, and since May the port has received more oil from Texas than any country other than Saudi Arabia.

The U.S. Customs district in Morgan City, Louisiana, where the LOOP’s barrels are tallied, had 46 percent less petroleum import tonnage in September than the year before, according to Datamyne Inc.

Refining Profits

Morgan City has plenty of company. Philadelphia, home to the East Coast’s largest refining complex, had a 31 percent drop. Pascagoula, Mississippi, shipments declined 35 percent. Port Arthur, Texas, which brings in oil for some of the oldest refineries in the U.S., saw a 32 percent decline.

Returning to its roots, Exxon Mobil Corp. (XOM:US)’s Beaumont refinery is now processing more domestic crude. It imported 32,000 barrels of oil a day in July, down from around 220,000 in 2012. The refinery was built in 1903 by John D. Rockefeller’s Standard Oil Co. to process crude from the Spindletop gusher 4 miles away.

Third-quarter refining profit climbed to $1.02 billion from $592 million a year earlier, the Irving, Texas-based company reported (XOM:US) Oct. 31. That more than offset a $297 million decline in earnings from oil and gas production.

American refiners from Marathon Petroleum Corp. (MPC:US) to Phillips 66 have said in conference calls within the past week that they’re buying fewer expensive foreign crudes and more oil from the Bakken in North Dakota and Eagle Ford in Texas.

Domestic Crude

Instead of bringing in oil by ship, refiners have turned to pipelines and rail. Phillips 66 used 3,200 rail cars to get more of its crude from U.S. sources.

The company said 95 percent of its oil in the third quarter was either domestic or heavy oil priced below benchmarks. Phillips 66 will add 500 rail cars to its fleet by early next year, and expects to use only the less expensive crudes by the end of 2015, CEO Greg Garland said on an Oct. 29 conference call.

Back at LOOP, Terry Coleman, the port’s vice president for business development, said equipment has been reconfigured to accommodate smaller tankers and the shift in flows. On top of tanker unloadings and receipts from offshore drilling platforms, the company is now linked to an onshore pipeline operated by Royal Dutch Shell Plc, he said by phone yesterday.

“Given its size and its historical importance, LOOP is really the bellwether of the structural change that has taken place,” Darryl Anderson, managing director of Wave Point Consulting in Victoria, Canada, said by phone Nov. 3. “What it’s telling us is that there has been a fundamental change in U.S. energy sources.”

Oil prices

Oil prices tumble as OPEC gives U.S. discount

Repost from The Columbian

World economy gets unexpected stimulus

By Pan Pylas, Associated Press, November 4, 2014

LONDON — Oil prices slumped to multi-year lows on Tuesday after Saudi Arabia cut the price of oil sold to the U.S., a move that is shaking an already volatile market but will likely give the world economy an unexpected stimulus.

The 25 percent or so slide in oil prices since the summer could boost consumer spending and business investment in many economies around the world as fuel bills fall.

But not everyone’s a winner. Oil-producing countries such as Russia and Venezuela, which have high extraction costs and whose budgets rely on assumptions of relatively high energy prices, stand to lose out. And lower prices could eventually slow down booming production in the U.S., offsetting the benefit of lower energy costs for consumers and businesses.

U.S. oil dropped another 2 percent Tuesday to $77.19, at one point falling to $75.84, the lowest level since October 2011. It was trading at $100 a barrel as recently as July. Brent, the international benchmark, declined 2.3 percent, to $82.82, having earlier fallen to $82.08, its lowest level in just over four years.

Adam Slater, senior economist at Oxford Economics, reckons the recent fall in oil prices, if sustained, could add around 0.4 percent to gross domestic product in the U.S. in two years, and a little less in Europe. China, which is the second-largest oil consumer and on track to become the largest net importer of oil, could see GDP 0.8 percent higher than it otherwise would have been.

“This is similar to a surprise stimulus,” said Slater.

Though a drop in demand is a factor in the current slump amid concerns over global growth, Slater says supply-side factors are having a much bigger impact than back in 2008, when demand plummeted as the global economy tanked. The rise of fracking in the U.S., the return of oil output from Iraq and Libya, and Saudi Arabia’s willingness to resist production cuts have combined to weigh on prices.

On Monday, Saudi Arabia, OPEC’s largest oil producer, cut prices for customers in the U.S. The move has been interpreted as an attempt by the country to maintain its market share in the world’s largest economy against supplies from the likes of Canada, Mexico and Venezuela and U.S. shale oil producers.

Phil Flynn, senior market analyst for the Price Futures Group, said Saudi Arabia’s move was directly aimed at those U.S. producers, who have boosted U.S. oil output to the highest level in decades. As a result, U.S. imports of crude oil from Saudi Arabia dropped to 894,000 barrels a day in August, down from 1.3 million barrels a day in the same month a year ago.

Saudi Arabia is “threatened by U.S. oil production and they are acting to try to break the U.S. producers’ back,” Flynn wrote in a daily newsletter to clients.

The drop in oil reverberated in the U.S. stock market. The Dow Jones transportation average rose to a new high of 8,870.90 in morning trading. Airline stocks such as American Airlines and United Continental gained close to 2 percent. Meanwhile, major oil companies such as Exxon Mobil and Chevron fell about 1 percent, while Continental Resources, which primarily operates in the U.S., fell 7 percent.

Russia and Venezuela are two countries that are considered particularly vulnerable to a sustained fall in prices as their economies are highly dependent on oil. And because their costs of production are high and baseline budget plans are considered optimistic, analysts say they stand to lose more than, say, the Gulf states.

Lower tax revenue from the fall in prices could derail public finances, potentially prompting government spending cuts or tax increases that can hurt growth.

OPEC members are due to meet on Nov. 27 in Vienna, Austria, but investors doubt the cartel will be able to agree to any reduction in production quotas given Saudi Arabia’s actions. That is another reason why oil prices have remained under pressure and why many analysts think this oil price retreat may be longer-lasting than a previous bout of weakness seen in 2012.

“This time, the fall should stick a little bit more,” said Slater.

Climate Change, Electoral politics

2014 Elections: environment wins and losses

Repost from Grist

3 climate hawks who won their races

By Lisa Hymas, 5 Nov 2014

There were a few wins for the climate movement on Tuesday night. And, alas, a greater number of losses. Here are results from a handful of the most interesting races with the most hawkiest candidates.

Winners:

Gary Peters
Gary Peters | The Henry Ford

Gary Peters, won Michigan Senate race

Gary Peters, a Democrat who’s served in the U.S. House for the past six years, won the open Michigan Senate seat in part by emphasizing the issue of climate change. “Michigan is on the front lines of climate change with our Great Lakes and economic system,” Peters told The Washington Post this spring. “This is something elected officials should be talking about — we have to be concerned about it.” Peters also fought the Koch brothers when one of their companies dumped huge piles of filthy petcoke, or tar-sands residue, along the Detroit River; he’s credited with helping to get the piles removed.

—–

Brian Schatz
Brian Schatz | Schatz for Hawaii

Brian Schatz, won Hawaii Senate race

Democrat Brian Schatz was appointed to the Senate in 2012 to take the place of deceased Sen. Daniel Inouye, and in Tuesday’s special election the voters gave him the seat for another two years. While many Senate Dems say the right things and take the right votes on climate change, Schatz has emerged as a real leader on the issue. In March, he co-organized an all-night climate talkathon on the Senate floor, to raise the issue’s profile and get his fellow senators more engaged. And he wants to get average Americans more riled up about climate change too: “We need more passionate enthusiasm and engagement from the public,” he told Grist earlier this year.

—–

Jeanne Shaheen
Jeanne Shaheen | Mark Nozell

Jeanne Shaheen, won New Hampshire Senate race

Democrat Jeanne Shaheen beat back carpetbagger and climate flip-flopper Scott Brown to win a second Senate term. She’s repeatedly spoken out about the need for climate action, and has cosponsored a bill that would create a national renewable energy standard. “Climate change is very real, and here in New Hampshire we are already seeing consequences,” she said earlier this year. She’s also gotten props from greens for tirelessly pushing energy efficiency, specifically an efficiency bill she’s cosponsored with Republican Rob Portman.

Losers

Rick Weiland
Rick Weiland | Rickweiland.com

Rick Weiland, lost South Dakota Senate race

Democrat Rick Weiland never had much of a chance in conservative South Dakota, where he was up against former Gov. Mike Rounds (R). But he put up a good fight. And unlike other Democrats running in red states, Weiland offered an aggressively green agenda. As Ben Adler reported last week, Weiland called for a carbon price, opposed the Keystone XL pipeline, and argued that we need campaign finance reform to tamp down the influence of Big Oil and other polluters on our elections.

—–

Mark Udall
Mark Udall | Mark Udall

Mark Udall, lost Colorado Senate race

After serving one term in the Senate, Democrat Mark Udall, a climate hawk, got beat by Republican Rep. Cory Gardner, a climate wobbler. As Ben Adler noted earlier this year, Udall “unequivocally supports efforts to address climate change, and he’s pushing to renew tax credits for wind energy.” At the same time, “he also backs his state’s fossil fuel industries, including the booming fracking sector.” That carefully calibrated moderation — and more than $12 million of spending by green groups — didn’t help him keep his seat.

—–

Shenna Bellows
Shenna Bellows

Shenna Bellows, lost Maine Senate race

Democrat Shenna Bellows waged an unsuccessful long-shot campaign against popular incumbent Susan Collins, arguably the most moderate Republican in the Senate. Even the mainstream environmental groups backed Collins, who has called for climate action and in 2010 sponsored a cap-and-dividend bill. But Bellows was clearly the greener candidate, which is why she got the backing of the Climate Hawks Vote PAC. As the PAC explained in its endorsement, “She will seek limits on carbon emissions. She opposes the Keystone XL pipeline. And — unlike Collins — she’s taken a firm stand [against] the proposed Portland Montreal Pipeline Reversal, a plan to re-engineer an existing pipeline to carry carbon-intensive tar sands from Canada to Portland, Maine and then to the global marketplace.”

—–

Paul Clements
Paul Clements | Paul Clements for Congress

Paul Clements, lost House race in Michigan’s 6th district

“Climate change is the greatest threat to Michigan and to the world in the 21st century,” said Paul Clements, the Democrat who challenged Rep. Fred Upton. Clements campaigned on creating clean energy jobs. “Clements is a bona fide climate hawk,” David Roberts wrote last week — and, indeed, he won an endorsement from the Climate Hawks Vote PAC. Upton, chair of the House Energy and Commerce Committee, used to say sane things about climate change, then turned tail after the Tea Party rose up. Starting late last month, it looked like Clements might pose a real threat, but ultimately the voters sent Upton back to the House, where he’ll keep on serving the interests of Big Fossil Fuels.

—–

Charlie Crist
Charlie Crist | Kelly Walker

Charlie Crist, lost Florida governor’s race

Back when Charlie Crist was the Republican governor of Florida, from 2007-2010, he was quite good on climate change and energy issues. That, among other things, meant he was too liberal for the Republican Party; he left to become an Independent, then a Democrat. He became even more outspoken on climate change as he mounted a challenge this year against incumbent Republican Gov. Rick Scott, who’s been terrible on enviromental issues. But even though climate change poses a particularly huge threat to Florida, that didn’t sway enough voters to Crist’s side; Scott squeaked through with a reelection win.

 

 

 

Electoral politics, Oil Industry

Richmond California to Chevron’s $3 million campaign, loud and clear: NO THANKS!

[Editor: After Election Day on Nov. 4 , local and national news media covered the incredible David and Goliath story out of Richmond, California.  I will link to several here.  My favorite was the Rachel Maddow story about Richmond’s new Mayor, Tom Butt.  Apologies for the video’s commercial ad.  – RS]

RACHEL MADDOW:
Small victories, silver linings seen in lopsided election

COMMON DREAMS:
Voters Reject Oil Titan Chevron, Elect Progressive Bloc in Richmond, California
Tom Butt elected mayor and slate of progressive candidates all win city council seats after grim battle with corporate power  [MORE]

CONTRA COSTA TIMES
Anti-Chevron candidates sweep to victory in Richmond races
In a race that received national attention thanks to big money from Chevron, a slate of candidates on shoestring budgets swept their oil titan-backed opponents on Tuesday night in a resounding political defeat for the company and its campaign tactics.   [MORE]

COUNTERPUNCH:
Big Oil’s “Air War” Fails to Sink Richmond Progressives
Election day, 2014, was not ending well for Nat Bates, a mayoral candidate in this largely non-white city of 100,000 long dominated by Chevron.  [MORE]

BILL MOYERS / PETER DREIER
Corporate Triumphs, Progressive Victories and the Roadmap for a Democratic Revival
Tuesday’s Republican wave of election victories did not reflect public opinion or the public mood….One of the most significant victories occurred in Richmond, California, where progressives defeated a slate funded by Chevron, the nation’s third largest corporation, which poured at least $3 million (about $150 for each likely voter) into this municipal election in this working class Bay Area city of 105,000 people.  [MORE] Two more stories on BillMoyers.com: “Bernie Sanders: Stand Up to Corporations Like Chevron” and “Chevron’s ‘Company Town’ Fights Back: An Interview with Gayle McLaughlin”

 

For safe and healthy communities…