Oil May Rise as BP Shutdown Shows Industry Distress (20% increase)

[swag]

http://www.bloomberg.com/apps/news?pid=20601109&sid=adARbdjLfRBA&refer=news

Aug. 21 (Bloomberg) -- BP Plc's shutdown of the largest U.S. oil field may be the first of many, as decaying pipelines threaten to add 20 percent to energy prices in the next decade.

``We'll look back on this event as the Pearl Harbor Day in energy,'' said Matthew Simmons, chairman of energy investment bank Simmons & Co. International in Houston. The chance that the leaks and corrosion found at Prudhoe Bay by BP, Europe's second- largest oil company, are an isolated occurrence is ``zero,'' said Simmons, who's writing a book on aging oil infrastructure.

A growing minority of analysts, oil executives and government officials say the current system for producing and transporting crude will be unable to deliver the energy needed in the next 10 years. Repairs and replacement of pipes, valves and refineries will help push oil to $93 a barrel by 2015, from a high of $72.08 today, says Barclays Capital analyst Kevin Norrish in London, the most accurate price forecaster in a survey by Bloomberg News last year.

Internal corrosion is the biggest reason for pipeline spills in the U.S. this year, causing 16 percent of all accidents through Aug. 9, according to U.S. Department of Transportation's Office of Pipeline Safety. Since 1990, the portion of oil lost because the inside of a pipe has been eaten away has grown to 78 percent from 4.7 percent, with 68,624 barrels spilled this year, the agency said.

. . . more at the link

[swag]

1. On the other hand, I've heard ISI and others recently

predicting near-term oil in the $45-$50/barrel range, declaring themselves "not in the peak oil camp."

The Bloomberg article points to other non-peak oil problems, specifically neglect of infrastructure.

[niallmac]

4. I have a hat and If oil ever again hits $45 a barrel I will attempt

to eat it and I will post the pictures. (I said attempt) but I don't think
I'm in danger of having to follow through on this promise.

[w4rma]

2. Their profits are high enough to build any blasted type of transportation

system that anyone on the planet could ever imagine. And they don't, because they get more profits when prices are higher. They have an incentive to build absolutely nothing and repair the absolute minimum, because they know that as long as Republicans have control they will be protected.

[truthisfreedom]

3. heh. they're making alternative energy INEVITABLE. they've sealed their

own doom with their quest for more profits and procrastination of repairing the pipeline problems for so long.

[poverlay]

5. I just saw another headline regarding 7 cent gas relief. That will

make us sooo much more forgiving when they spike 15-45 cents in a month or two. $93 a barrel by 2015? Riiight, try 2010 or sooner...

[Skink]

6. The less oil on the market the better for rising prices.

If you need to fix pipelines it is in your interest to keep prices high.

[acmavm]

7. Well, that's what you get for doing no maintenance for years and years

Just shoving the money into the CEO's pockets.

Once again I will point out that this oil does not belong to the oil companies. IT BELONGS TO THE PEOPLE of this country.

Time to nationalize.

[rman]

8. decaying pipelines, hm?

And all of a sudden it's no longer worth it to repair those. Surely they would not consider it worth it to even build that pipeline today, since the cost of building it is significantly higher that maintaining it. Once upon a time it used to be worth it to make that investment - but not any more apparently, in spite of the high price of oil these days. I wonder why. Of course it has nothing to do with the quantity of oil that's still in those fields...

[Gin]

9. Here in Virginia Beach...regular gas was around $2.60 a gallon.....

all 3 blends are under $3.00 as of last night.

[sidpleasant]

10. Don't forget the 10% "Bush premium" on oil

Juan Cole mentioned a few months back that oil traders blame about 10% of the price of a barrel of oil on worries that Bush and the neocons will attack Iran. That's a good point to remember when discussing politics with a Republican: "if it weren't for Bush's sword rattling over Iran gas would be 30 cents a gallon cheaper."