BIKE: Future of Texas transportation

[Roger Baker]

Oil is now selling at the highest price ever in its history. There  
are now multiple and worsening bottlenecks blocking the path to cheap  
oil and gas.

All the Saudis can do is pump more sour crude, but for which there is  
no refining capacity. Thus we are likely to see fuel prices spike  
about this October. If we don't see all-time historic high gasoline  
prices, even counting for inflation (that would be $75 per barrel, as  
per below), reached this year then we likely will next year, etc.

The Austin convention and hotel business are going to be in trouble,  
and the deficit-financed toll roads like SH 130 are going to be in  
trouble from the day they open up.

We live in an era of blatant political corruption in which the  
special interests tied to growth and real estate act freely bankroll  
politicians in Texas, no matter how short-sighted the resulting  
transportation and land use policy.

Thus Brewster McCracken and Will Wynne voted for the $22 billion  
CAMPO plan on June 6. During his power point presentation on the  
plan, CAMPO Director Mike Aulick explicitly said that this giant plan  
(officially authorizing the spending of federal funds) assumes there  
would be no fuel supply problems at any time during the full 25 year  
life of the plan!!! -- Roger



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Rumors Put Oil Traders on Edge

By SIMON ROMERO
Published: June 18, 2005
HOUSTON, June 17 - A hint of a terrorist threat in Nigeria, a major  
supplier of crude oil to the United States, and worries about a lack  
of refining capacity drove energy markets into a frenzy on Friday,  
pushing oil over $58 a barrel, a record.

Crude oil for July delivery climbed to $58.60 a barrel before  
settling at $58.47, up $1.89. Some traders said oil might reach $70 a  
barrel, driven primarily by demand in China and the United States.  
Fears over what might affect the supply, rather than what is actually  
affecting it, appeared to inject anxiety into the market.

"In this environment, we cannot afford to have any disruptions," said  
Thomas Bentz, senior energy analyst at BNP Paribas Commodity Futures.  
"We are still in the uptrend." The closing on Friday of the  
consulates of the United States, Britain and Germany in Lagos,  
Nigeria's largest city, because of reports of threats from Islamic  
militants put traders on edge. Nigeria supplied the United States  
with more than 1.1 million barrels of oil a day in April.

The possibility of a terrorist attack in Nigeria was enough to tap  
the oil market's fear that demand-driven pressure on prices might  
evolve into a full-blown supply-driven crisis.

A sudden restriction of supplies led to the oil shocks of the 1970's,  
and the lack of spare production capacity, particularly of the types  
of crude oil easy to refine into gasoline, has made the markets  
vulnerable to whispers of any potential disruption.

So do the opinions that oil is still relatively cheap. Adjusted for  
inflation, oil is less expensive than it was in 1981, when Iran  
choked off oil exports. The average cost of oil used by American  
refineries at that time was $35.24 a barrel, or $75.44 in current  
dollars, according to Bloomberg.

One of OPEC's concerns is that oil prices will quickly climb to a  
level where many car owners decide to switch from sport utility  
vehicles to compact cars, or possibly, to public transportation or  
carpooling. Such a change in driving habits, while still considered  
unlikely, might produce a scary outcome for oil-producing countries:  
a crash in oil prices.

"When I go to neighborhood parties, people are always asking me when  
gasoline prices are coming down," said David Pursell, a principal  
with Pickering Energy Partners, an energy investment firm in Houston.  
"Well, I always reply, 'When are you going to start riding the bus?'  
There's lots of angst, but not enough to keep us from $60 oil."

Not everyone is convinced oil prices will continue to soar. Andy Xie,  
the greater China economist for Morgan Stanley in Hong Kong,  
predicted a sharp decline in prices, citing signs of softer demand in  
China, the second-largest petroleum consumer after America; Chinese  
oil imports fell 1.2 percent in the first five months of this year.