Where are all the tankers? Is it REALLY fog?

[Career Prole]

I'm definitely no professional at this stuff but since like (nearly) everyone else my economic well-being is taking a shaking because of the cost of a gallon of gas, so I just watch and listen to see if I should tank up now to avoid a price increase as opposed to waiting for a possible price drop.

I was taken aback when I saw today's crude oil inventory report as I knew demand had been dropping and quite frankly I was expecting the inventory to increase and hopefully the price of oil to decrease as a result.

Judging from the news stories this crude inventory report was a surprise for the pros as well...

Oil rebounds on shock U.S. crude inventory drop

LONDON (Reuters) - Oil bounced back after U.S. data on Thursday unexpectedly showed a big drop in crude inventories.

U.S. crude briefly rose more than $2 after the data and was trading 66 cents higher at $131.69 a barrel by 11:08 a.m. EDT (1508 GMT). London Brent crude rose 77 cents to $131.70.

The U.S. government data showed a fall of 8.8 million barrels in crude oil stocks, the biggest weekly decline since September 2004.

A bit later another headline caught my eye, offering a possible reason for the "surprise" inventory drop and resultant price increase...

Oil prices flucutate on supply drop explanation

NEW YORK - Oil prices fluctuated Thursday after the Energy Department reported sharp and unexpected declines in crude oil and gasoline supplies last week, but said the drop in crude inventories was due to temporary delays in unloading oil tankers along the Gulf Coast.

Retail gas prices, meanwhile, rose to a new record above $3.95 a gallon.

In its weekly inventory report, the department's Energy Information Administration said crude oil inventories fell by 8.8 million barrels last week, while gasoline supplies fell by 3.2 million barrels. Analysts surveyed by energy research firm Platts had expected slight increases in supplies of both.

But the EIA also offered a rare explanatory note on the Gulf Coast tanker problems. Gulf ports have closed many times in recent months due to fog, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

"This is the worst year I can remember for fog," Flynn said.

This rang a bell with me and I went back to an article I'd bookmarked earlier this week entitled What's With the Price of Oil?, with a chapter on page 2 headed (interestingly enough) "Where Are All the Tankers?"...

Why has the price of oil risen so much in the past few months? Is it a supply and demand issue as some believe; or is it because of an out-of-control futures market driven by the proliferation of commodity index funds and rampant speculation, as everyone tries to get in on the rise in commodity prices? This is a very complex issue, with a lot of emotion attached to it.

<snip>

I called George at about six this evening and asked him about the Iranian situation, as that is a lot of oil that could come on the market at some point, as well as a possible reason that oil supplies are down. George has analysts on top of this situation.

He told me, "John, it's more interesting than that. It is not just Iran. Today we started checking on how many tankers Iran had, and soon discovered that there is a serious tanker shortage. Lease prices have soared in the past few weeks. It is clear there are a lot of speculators betting that oil is going to rise to $150 or so and are willing to pay very high prices for keeping the oil on the seas waiting for higher prices. It is a speculative boom."

He then told me about flying into New York in the early '80s. Outside the harbor were 30 or so tankers just sitting, waiting for prices to continue to increase as they had been doing for some time. When they did not, they all tried to get into the harbor at the same time, and of course they couldn't. It was the top of the market. Prices dropped, and the owners of the oil had to go to the futures market to hedge what they could. I had heard that story, but George saw it with his own eyes.

I can't help but wonder...was the fog actually that bad, or is this yet another case of someone pissing on my leg and telling me it's, er...fog.
Whose job is it to tell the tankers to stay out, I wonder? Is it an appointee?

[NJmaverick]

1. It's price manipulation plain and simple

it's funny there are so many intelligent people that don't see or understand that. Oil is being hoarded by investment groups and the like, to drive up the price. It's being stored in every available storage tank in the world. They figure it's a commodity that is rising in price. So it's a better investment than dollars or even gold.

[TheWraith]

3. You don't even have to actually horde it. You can just buy futures.

The investor needs no infrastructure. They play with paper, and other people store it for them.

It's true: the current situation is entirely market manipulation. Unless somebody can prove that either global demand tripled since 2000, or production fell by 2/3rds, the idea that the price is tied to demand is ludicrous.

[NJmaverick]

4. I think the biggest warning sign, of this manipulation

is exactly what was posted in this OP. Demand drops, yet supply falls. That is not a natural action.

[Career Prole]

7. Isn't this sort of the same thing the Hunt bros. tried

to do with silver in the seventies, only with more players? :shrug:

[NJmaverick]

20. Yes, only there is many more player and much more money

[Mountainman]

2. Why is gasoline that is already refined and delivered effected by the price of crude in the ground?

This whole game is rigged.

In the 70's when there was a gasoline shortage, my ex-wife's cousin worked for the Chessy system railroad as and engineer. He told us he was on loan to the Standard Oil refinery in Lima OH to move tank cars loaded with refined gas to storage tracks through out the area. The gas was kept off the market on purpose!

[Hannah Bell]

5. kick

[Possumpoint]

6. This Is Enough To Piss Off A Saint

Where is the government oversight? Stupid question, this is a republican administration.

[Career Prole]

9. Nah, it's not a stupid question if it still needs to be asked.

But let's face it, this administration seems to have gone beyond the republikan party into a whole new realm of lawlessness and greed. I'm thinkin' they broke the mold.

[LibertyLover]

11. Not just a Republican administration

but a Republican administration that was bought and paid for by the oil companies. The current administration is by, for and all about making sure their buddies in the oil industry are fat and happy, so that when they are out of office, there is some quid pro quo and money from oil continues to flow their way.

[SlicerDicer-]

8. Only thing I can figure

is the EIA is very worried about admiting peak oil. Anybody concerned here should read http://www.theoildrum.com on a daily basis and you will see a trend in numbers from EIA and how they predict and epic phail!

[Subdivisions]

10. "...was the fog actually that bad...?"

I've already done the leg work on this because I didn't buy their excuse either. Check it out:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3356941&mesg_id=3358197

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3356941&mesg_id=3358047

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3356941&mesg_id=3358302

[Career Prole]

13. I'll be double-damned, Texas Explorer.

You freakin' rock! I knew this whole thing this morning stank to high heavens! Thanks for the post and the legwork. I gave your post a kick and a rec while I was there...great work!

:yourock:

[Subdivisions]

15. I just now got of the phone with the Port Authority of Houston/Galveston and

the nice lady there said there had been NO closures of the port due to weather, and she specified fog without me bringing that up, in the past two weeks and needed to check with someone else who was on another line to see if the ports had closed due to weather/fog in the past 45 days. I didn't speak to him because I was primarily concerned with the timeframe of this EIA weekly report.

I think I'll call Lake Charles Port Authority and New Orleans too. Maybe Mobile. But that last one, I was put on hold waiting for the other guy to come online with the extended data back to April 1, and while I was waiting it occured to me that I was requesting information from a PORT AUTHORITY! I don't know why, but the DHS seal was flashing in my brain!

So, I'm kinda shaken right now.

[Career Prole]

14. Shoot. I tried to do a quick edit adding a link to your post

in my OP but I missed the deadline. :argh:

[Subdivisions]

16. Thanks! Yep, something stinks. What link did you want to post? n/t

[Career Prole]

18. I wanted to link to your post because you deserve the credit.

Yours came first. You picked up on it before I did and you've done some great work digging up the answers (which natch lead to more questions!).
I wish I could transfer the recs from mine over to yours so you'd get on the Greatest page and hopefully get this the reads it deserves. Someone sure seems to be playing fast and loose with oil like a giant-sized version of the Hunt Bros. and silver in the 70's.

[Subdivisions]

19. Thanks. I'm just glad I'm not alone in thinking about this issue.

And I'm glad I'm not the only one watching close enough to notice the big wool blanket descending over the eyes of the Sheeple.

Living in north Texas for 25 years, I'm fairly familiar with the weather patterns and I'm fairly familiar with the weather elsewhere in the state and how and under what conditions fog forms. So, when they said it was fog along the Gulf Coast, and considering the weather patterns of the past 10 days here, which fed into the system that produced tornados in Colorado, I didn't buy their excuse AT ALL. So, I fired up the cell phone =).

As for who posted what when with what recs, all I have to say is we're all in this big confusing spinner together. And, yes, what you and I have discovered does just lead to more questions, not the least of which is: Why the lies?

[Duer 157099]

12. Hmm, why does the word ENRON suddenly come to mind? n/t

[Subdivisions]

17. That's justified.

And, to all for the record, I'm not closed to the idea of speculators and dirty tricks running up the price. I don't necessarily attribute the cause to Peak Oil, which many of you know is my primary cause celeb. However, I still believe we have passed the point of peak oil production. Yes, I care very much about progressive issues and I'm not downplaying their importance, but if we ignore Peak Oil, nothing else will matter in the long term. We'll be backed into a corner and too worried about our own individual and family's survival to worry about much else.

[Career Prole]

21. If you didn't catch it up-thread a bit, DUer Texas Explorer

has actually checked and found that there was no significant fog.

See here and also here.

They claimed the inventory dropped because of fog keeping the tankers from delivering and there was no fog.

They lied. All that's left is tankers waiting offshore for the price to go up because they waited offshore...deliberate price manipulation.

Some may argue that's fair because it's their oil and if they want to withhold delivery to get a better price, well, that's the way the market goes...but the Energy Information Administration (US Dept. of Energy)...a government agency...certainly seems to be making up a false story for the reason the tankers didn't offload. That shit most certainly is not fair.

[Hell Hath No Fury]

22. K&R

Being from CA and having been fucked by Enron, I can see that this is important information.

[lildreamer316]

23. Ohhhhhhh. This post is a GOLD MINE. Thank you!!

Bookmuthafuckinmarked. Rec'd; and a major kick.
Thank you for all your hard work!

[bonito]

24. K&R n/t