Gas prices still are not really coming down in Chicago or in China. Chicago, the city with the highest gas prices in the nation, also has some of the highest paid public school teachers in the nation. It just makes this Chicagoan feel proud! Well gas prices are going up on yet another pipeline problem, this time the Magellan. That comes as word that refiners in the Gulf Coast are still battling the aftermath of Hurricane Isaac. Gas will continue to be strong and will be the strong part of the energy sector.
Barbara Powell of Bloomberg News reported that Motiva Enterprises LLC expects to need another week to get the main production units running at its Convent, La. refinery, for the first time since shutting Aug. 28 in advance of Hurricane Isaac, according to two people familiar with operations. The effort has been hampered by floodwaters and mechanical issues that prevented the fluid catalytic cracker from being restarted. The two crude units and the H-Oil unit, or heavy-oil cracker, are started and on idle. The alkylation unit, which works in association with the catalytic cracker, is shut because an offsite storage facility for propane produced at that unit is flooded. The Convent refinery is 50 miles (80 kilometers) west of New Orleans. Motiva is a refining and marketing joint venture of Saudi Refining Inc., a subsidiary of Saudi Arabian Oil Co., and Shell Oil Co., a unit of Royal Dutch Shell Plc. Motiva operates two refineries in Louisiana and one in Texas. Kayla Macke, a Houston-based spokeswoman for Shell, said today she doesn’t have an update on the two refineries.
In China the state controlled refineries are desperately trying to catch up with crude prices. Reuters News reports that China is raising the retail price of gasoline and diesel by 6 percent and 6.5 percent respectively to track climbing crude prices, the government said, a move that could help pare refining losses at oil firms. The increase, the second in about a month and the fourth this year, would bring fuel prices close to an all-time high reached in late March. China, the world's second-largest fuel user, cut prices three times in a row between May and July. The higher pump rates may help top refiner Sinopec Corp and number two Petro China trim huge losses incurred earlier in the year.
But they could also dampen demand after the world's second-largest oil user recorded the lowest consumption in 22 months in August as industrial activity in China slowed.
Market Watch reported that China's diesel production in August shrank for a third month, providing further evidence that the world's second-largest economy is slowing as downstream demand weakens for refined oil products. China's diesel output in August, which fell 0.5% to 13.74 million metric tons, corresponds with weaker Chinese value-added industrial output, which grew in August at its slowest pace since May 2009, and the country's crude-oil imports, which fell to a 22-month low in August. Although diesel is a main component of refinery output, China still processed 37.74 million tons of crude oil in August, up 1.5% from a year earlier. Overall processing volumes were higher because of year-on-year increases in other fuels such as gasoline and kerosene, which rose 5.8% and 7.2% to 7.47 million tons and 1.85 million tons, respectively. China's fuel oil output also rose to 1.66 million tons, up 17.8% on year.
DTN is reporting that Organization of the Petroleum Exporting Countries firmed its expectations for global oil demand in 2012 even after revising its year-on-year growth forecast down slightly from an increase in demand at 900,000 bpd to 850,000 bpd in its Monthly Oil Market Report for September released this morning. Although lowering 2012's year-on-year growth rate, OPEC revised higher world oil demand for 2011 by 70,000 bpd to 87.89 million bpd, forecasting this year's consumption rate at 88.74 million bpd. Global economic turbulence has not slowed oil consumption seasonality from its summer trend," said OPEC in its report. In 2013, OPEC forecasts world oil demand growth from this year at 800,000 bpd, unchanged from prior month. OPEC shows world oil demand peaking in the fourth quarter at 89.92 million bpd, rising from global oil consumption in the third quarter at 89.61 million bpd. An increase in world oil demand in July would lead to year-on-year growth of 1.1 million bpd for the third quarter projects OPEC. Driving the July increase was oil demand of 42.9 million bpd from developing countries that are not part of the Organization for Economic Cooperation and Development, up 1.0 million bpd from July 2011.
We can’t forget the Fed. Germany called out the US over its debt as it looks for cover in case the courts rule against the ECB bond buying plan. The pressure is rising on the Fed to stand and deliver!
Today we remember the Sep. 11 attacks with moments of silence across all of the exchanges. The day that freedom was attacked and a day that changed our lives forever, and while the battle against hate and ignorance still rages, you can rest assure that the values of freedom and human dignity that this country stands for will long endure and outlive the emptiness and evil of our enemy. God bless all of the military that have fought to defend our freedom and all those whose lives were changed that terrible day.