All’s Quiet on the Oil Rally
Another choppy, light volume day and if you were not paying close attention, you might not realize that oil is going higher. In fact, led by Brent Crude on concerns surrounding North Sea production and of course those pesky geo-political worries, oil is rising step by step. North Sea blend production is near record lows due to maintenance. Weak Eurozone growth, but in line with expectations and Chinese data, are also keeping hopes and oil high with the belief that China or some other nation will provide some stimulation for the floundering global economy. There is nothing like fear and stimuli to provide support for oil. Yet a hotter than expected U.S. PPI may cool market expectations just a bit.
There is also nothing like politics to try and reinvent yourself. As gasoline prices rise, along with the anger, it appears the Obama administration is embracing more oil production! And you would never guess where! Alaska! Run Caribou! The Wall Street Journal, in a must read, said that, “The Obama administration proposed opening up 12 million acres of Alaska's 23 million-acre National Petroleum Reserve for oil and natural-gas drilling, while restricting energy production on the rest of the acreage.” What?! How could you dare drill in that pristine, mosquito infested natural wilderness? Was this not the same man that vehemently opposed George W. Bush’s plan to drill baby drill? The man of the party of high fives when a similar Bush proposal was defeated!
Yet the Journal says that “Secretary Ken Salazar said the proposal strikes "an important balance" between energy production and environmental conservation. The National Petroleum Reserve, a swath of land on Alaska's North Slope, is home to bears, wolves and falcons, as well as caribou herds used by Alaska native villages for subsistence!
Of course the plan is not perfect and, “The plan quickly attracted critics who say the proposal is too restrictive.” This decision denies U.S. taxpayers both revenue and jobs at a time when our nation faces record debt and chronic unemployment," said Sen. Lisa Murkowski (R., Alaska). Mr. Salazar said the proposal targets areas that hold the majority of energy resources. The areas targeted for oil and natural-gas leasing are thought to hold 550 million barrels of economically recoverable oil and 8.7 trillion cubic feet of economically recoverable natural gas, the Interior Department said. Stay tuned, this is going to be fun!
On the West Coast the news is not good as it appears that the Chevron refinery will be impacted for many months due to the fire. While other refineries try to make up the difference, the fear is that this is just asking for more trouble. In other California refinery news, Tesoro Corp. agreed to buy BP PLC's California oil refinery and 800 gasoline stations in the Southwest for $1.18 billion.