The VFDA Fuel Line

September 12, 2008

 

This newsletter is sponsored by the New Engalnd Fuel Institute 
www.NEFI.com

 

Contact VFDA to find out how you can sponsor VFDA mailings and e-communications.  802-223-7750 or info@vermontfuel.com 
 

 

 

  Education and Training

 Thursday, September 18 

 

IKE'S IMPACT ON OIL
As Hurricane Ike churns up the Gulf and heads to Texas the impact on oil is clear.   At least twenty-five percent of US refining capacity is affected by the hurricane.  Twenty-five percent of U.S. crude oil import facilities are closed.   The impact on inventories of both crude and products will be significant for at least the next two weeks, depending on the storm surge (up to 20 feet).  Flooding and sustained power outages could result in a longer impact.   President Bush signaled his willingness last week to tap into the nation’s emergency crude supply to prevent gasoline shortages and price spikes due to recent hurricane activity.   In the past, the President has been unwilling to release crude from the Strategic Petroleum Reserve (SPR) unless necessitated by a national emergency. The Department of Energy, which administers the SPR, said last week that it will grant a request from Citgo Petroleum for a drawdown of 250,000 barrels of crude oil from the SPR. Citgo made the request for the drawdown after a key shipping channel was closed due to the storm.   Citgo is the first to be approved among several refiners, including Marathon who may ask for SPR supply to restart their refineries.

SPECULATION REPORT

Federal regulators said Thursday they could not determine after a lengthy review how much speculators have influenced commodity prices, especially the run-up earlier this year in oil prices.  The Commodity Futures Trading Commission released a much-anticipated report examining the activities of large index investors and so-called "swap" traders — those who trade on behalf of banks or wealthy individuals — in the commodity futures markets including crude oil.   "This preliminary survey is not able to accurately answer and quantify the amount of speculative trading occurring in the futures markets," the report said.  Once CFTC Commissioner refused to sign off on the report.  Commissioner Bart Chilton has supported efforts to increase regulatory oversight in the commodities markets to ensure "paper oil" traders are not allowed to unfairly influence the market.

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