BIKE: Energy update

[rcbaker]

Energy supplies are TIGHT TIGHT TIGHT, (see second article) which is why oil is now 
over $34 dollars per barrel and gas is over $7 per thousand (but soared to $14 today in NYC). 
Maybe we should have invaded the Saudis instead of Iraq.
 
But meanwhile, Jim Kunstler put it all in colorful perspective by explaining what 
happens when America hears the the bad news, as per the Clusterfuck nation 
Commentary link just below. -- Roger

http://www.kunstler.com/mags_diary9.html
                

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Oil Price Information Service...

1/9 - - (1:00 P.M. EST) - A five syllable word - - "Interruptible" - - has spooked oil 
sellers to the sidelines today and energized prices for diesel, heating oil and kerosene 
on the East Coast and elsewhere. . For the first time this Winter, OPIS is hearing 
evidence of some buying from utilities that need distillate for cogen plants 
and other purposes, while they face some temporary "interruptions" of natural gas 
supplies. 

Sources say some large buying of red dyed diesel fuel and kerosene has taken place in 
the last 24 hours, at points like the Delaware River and N.Y. Harbor.  It's nothing on the 
order of the panic buying that gripped markets in 2002-2003 when 
casinos, factories, and large commercial businesses were ready to buy fuel at any price 
because of lengthy gas interruptions, but it's enough to catalyze what are already frothy 
prices.  OPIS has confirmed that at least two utilities are looking for kerosene, diesel, 
and residual fuel, and one large government entity has just contacted suppliers for fuel. 
One of the largest East Coast utilities, Con Edison, notified commercial customers this 
morning that they would not receive natural gas until Monday morning unless conditions 
moderate. Some of those buyers are now scrambling for alternate fuel.

Discounts for diesel look are disappearing in N.Y. Harbor, and bidders for kerosene are 
now trying to find that product for 8cts gal over the NYMEX. Futures prices have 
ascended to $1.018 gal for heating oil, so that equates to diesel prices of 
the same number, and kero is approaching  $1.10 gal. Kerosene is particularly scarce 
downstream, and some rack suppliers are charging 20cts gal over the Merc for the few 
bbls on hand.

If these numbers seem lofty, they are nothing compared to some of 
the downstream "city gate" prices for spot natural gas that are being bandied around for 
the weekend. New York prices for natural gas are quoted in the $14-$16 plus MMBTU 
neighborhood, which equates to well over $2.00 gal oil equivalent.

There is another item impacting distillate markets - - uncertainty over whether a "smooth 
hand-off" will take place between El Paso and Sun. El Paso has 
notified customers that it will cease selling bbls at its Eagle Point refinery at midday on 
Monday, but it's not clear if that's when Sun will take title to the plant. Against the 
backdrop of very tight regional supply, there's no tolerance for any days of diminished 
production, sources stress.

Gasoline is getting tugged higher on Winter fuels' coattails and a sense that refiners 
will have to heavily tilt production toward distillate. Gasoline futures were up at midday 
by 3.99cts gal to $1.03 gal and the Gulf Coast spot market was even above this NYMEX 
quote.

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