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Major Surge Is Unlikely for Prices of U.S. Gas

August 30, 2013 by

But energy experts say that a major jump is unlikely for the 29.2 million Americans whom AAA expects to travel 50 miles or more on the road this weekend — up from 28 million last year — despite the summer of unrest across the Middle East and North Africa.

In fact, Americans will pay considerably less for gasoline than they did last Labor Day weekend, when refinery shutdowns and Hurricane Isaac, which hit the coast of the Gulf of Mexico, heightened fears of gasoline shortages.

“Gasoline prices are going to be surprisingly temperate,” said Tom Kloza, chief oil analyst at GasBuddy.com. “In California drivers will be spending 30 to 40 cents less than last Labor Day weekend for a gallon of regular and much of the rest of the country will be between 5 and 15 cents lower than last year.”

According to the AAA daily fuel gauge report, the national average price of a gallon of regular gasoline on Friday was just over $3.58, still only 5 cents higher than a week ago and 4 cents cheaper than a month ago. Gasoline prices are just beginning to catch up with the rise in global crude oil prices, which had climbed roughly $6 a barrel in just a few days as the United States and allies prepared to attack Syria in retaliation for what they suspect was a government chemical weapons attack on Syrian civilians.

Oil prices retreated by about $2 a barrel on Thursday and slumped a bit more on Friday. Experts said prices could easily jump back up after an expected attack on Syria.

Oil experts say gasoline prices could rise as much as 10 cents a gallon over the next week or two, as higher oil prices gradually push up wholesale and retail prices. But few expect a big, lasting jump unless there is a major expansion of conflict across the Middle East that seriously threatens oil production and shipments.

The Energy Information Administration projects that the national average price for a regular gallon of gasoline will be $3.59 during the third quarter and $3.52 for the entire year, 11 cents below the average 2012 price. It expects an even lower 2014 annual price of $3.37 a gallon.

“Gas prices are probably going to be spiking over the next few days,” said Michael Green, a spokesman for AAA. But he added: “It’s not horrendous. We’re looking at the lowest Labor Day gas prices since 2010.”

One reason, according to a report by the Energy Department on Wednesday, is a surprise weekly jump of three million barrels in national oil inventories. The report also showed a much lower-than-expected drop in inventories of gasoline, which remained particularly well supplied on the heavily populated East Coast. Several East Coast refineries that curtailed operations last week for unplanned maintenance are expected to be back up in the next few days, which should further increase supplies.

Summer driving normally tapers off after the Labor Day weekend, and that should help keep a lid on prices. Demand for gasoline should drop by about 15 million gallons a day in September from August levels, according to government statistics.

Most important, the country is better prepared for any shocks if the instability in the Middle East and North Africa escalates much further. United States gasoline inventories are up nearly 10 percent from a year ago, while demand is up by only about 1 percent.

Mostly because of a frenzy of shale drilling and expansion of oil sands production, the United States and Canada are producing two million barrels of oil a day more than when the turmoil in the Middle East and North Africa broke out two years ago. That, along with the decline in consumption since 2007, has meant that the Strategic Petroleum Reserve and other inventories now have the capacity to replace about nine months of imports, about 40 percent more than only five years ago.

Article source: http://www.nytimes.com/2013/08/31/business/energy-environment/moderate-rises-in-us-gasoline-prices-expected.html?partner=rss&emc=rss

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Uganda Welcomes Oil, but Fears Graft It Attracts

November 26, 2011 by Leave a Comment

Despite Ugandans’ dreams of industrialization, the country’s most lucrative export is coffee, and fish is second. Nearly 40 percent of the population survives on less than $1.25 a day, according to the World Bank. But when oil starts pumping within the next several years, the expected revenue of up to $2 billion a year could propel Uganda into the strata of middle-income countries, where few sub-Saharan African countries rank. A refinery will be built; infrastructure is promised.

Yet there are growing worries that the oil may prove to be more of a curse than a gift, similar to the fates of other countries in sub-Saharan Africa that have joined the petroleum bonanza. Uganda is considered by international experts to be among the most corrupt nations in the world, and even before oil production has begun, several senior government officials, including the prime minister, have been accused of pocketing millions of dollars in bribes from oil companies, forcing at least one of the politicians to resign.

The web of scandals may delay the much-anticipated starting date of oil production, adding to the already volatile politics in Uganda, which has recently been the scene of one of the most active protest movements in sub-Saharan Africa. Uganda’s Parliament voted in an emergency session in mid-October to freeze all oil contracts and begin investigations of the country’s prime minister, internal affairs minister and foreign minister, all of whom are close to the president and have been accused of taking money from Tullow Oil, a British company in Uganda that was scheduled to complete a $2.9 billion deal with the Ugandan government and two other companies to produce Uganda’s oil. Tullow has denied the accusations.

Despite governing for nearly 26 years and handily winning re-election again this year, President Yoweri Museveni now finds that his popularity seems to be waning, along with his grip on the economy and his own party. Many here say that the bribery allegations are part of a campaign by some politicians to determine who comes next.

“Most obviously, the jockeying is for positions,” said Mahmood Mamdani, an anthropology professor at Columbia and Makerere University in Uganda, “especially given the expectation that Museveni will not run the next time.”

Mr. Museveni’s rise, from rebel to leader of a regional power, has paralleled Uganda’s. In the capital, Kampala, vendors sell posters of the president’s image edited into Terminator outfits, next to dictionaries and Bibles. He is prickly about criticism and refers to himself at times in the third person.

“Museveni can never be given money by anybody,” the president said at an impromptu news conference he held last month in Kampala, lashing out when the bribery allegations were publicized. “General Yoweri Museveni. To get money from a Muzungu, or anybody, for my personal use, is contempt of the highest order,” he said, using Ugandan slang for Westerner.

What could happen in Uganda has happened before in Angola, Gabon and Nigeria, all countries with deep corruption where oil intensified class disparities.

“The next generation of Ugandans could grow up in a very different country to that of their parents and grandparents,” the advocacy organization Global Witness said in a 2010 report. “But the risk of the resource curse phenomenon taking hold in Uganda cannot be ignored.”

Uganda has been rocked by a series of demonstrations over surging commodity prices — particularly petroleum — as inflation has hit 30 percent. Protesters say they are inspired by the Arab Spring revolts.

It is not just the decreasing value of Uganda’s currency that critics are complaining about; it is the way the money is being spent. The government was criticized in April for buying fighter jets from Russia for approximately $740 million, which some analysts saw as being costly status symbols rather than useful weaponry. According to the director of the Bank of Uganda, Mr. Museveni ordered the bank to release millions of dollars to pay for the fighter jets, which Mr. Museveni promised would be reimbursed with oil money, a prominent Ugandan newspaper reported.

Uganda’s oil lies underneath the forests and lakes lining the border with its troubled neighbor Congo. Oil industry and government officials estimate that Uganda will be able to pump about 200,000 barrels a day. But Uganda’s oil is waxy, difficult to pump and expensive to refine.

Still, the country has stated its intention to build a pipeline through Kenya to the port of Mombasa, and lawmakers have already accused Mr. Museveni of secretly selling off some crude oil to foreign nations.

As private investors come and go from Uganda, there are worries that hundreds of millions of dollars are up for grabs in kickbacks and secret deals.

According to American diplomatic cables published by WikiLeaks, Tullow Oil accused the Italian company ENI of trying to bribe Ugandan politicians, including Mr. Museveni and the prime minister, with more than $200 million to secure oil rights held by Tullow’s onetime partner, Heritage Oil, a British company. One cable cites a Ugandan intelligence report given to the American Embassy by Tullow. But Tullow Oil itself helped write the intelligence report, the cable said.

As for the new bribery allegations, there are questions about their veracity, and some analysts believe that the politicians singled out — all close to Mr. Museveni (the foreign minister is an in-law) — are victims of a smear campaign to hurt their chances of succeeding Mr. Museveni.

“I have never let Uganda down,” Mr. Museveni said during the news conference. “Uganda will not lose, and cannot lose under my leadership. O.K.?”

Article source: http://www.nytimes.com/2011/11/26/world/africa/uganda-welcomes-oil-but-fears-graft-it-attracts.html?partner=rss&emc=rss

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Oil Production Rises Quickly in Libyan Fields

November 16, 2011 by Leave a Comment

Oil production is quickly being restored in Zawiyah and around the country, in large part because both the Qaddafi regime and the former rebels, now the interim leaders of Libya, took pains to avoid permanently crippling the country’s most important industry during their six-month civil war.

“Qaddafi wanted to keep the refinery going because he needed the fuel, and the rebels wanted the refinery safe because it belongs to the Libyan people,” said Khaled Rashed, shift coordinator at the Zawiyah refinery’s control room.

Libya’s oil production remains at about 40 percent of the level that it was before the revolution began. But none of the country’s 40 critical oil and gas fields were seriously damaged in the war, according to Libyan officials and international oil experts. Now, most of the important oil ports and refineries, virtually idled by international sanctions and months of fighting, are ramping back up.

Officials boldly predict that by June, the country will once again be pumping 1.6 million barrels of oil a day, although independent experts say that is conceivable only if the country can avoid a relapse into violence.

The industry’s rapid pace of recovery is a beacon of hope at a time when the interim government is struggling to disarm militias, prevent competing tribes from fighting each other, and rebuild shattered cities.

Oil is the mother’s milk of Libya’s economy — before the war, it accounted for about one-quarter of the country’s economic output, 80 percent of government revenue and 95 percent of export earnings, according to United States government estimates.

“In a country like Libya, oil is everything,” said Paolo Scaroni, the chief executive of Eni, the Italian oil company that is by far the biggest foreign producer here. “At the end of the day, the government spends most of its time taking care of oil.”

Unless oil production returns to preconflict levels, the country’s economy and political stability will suffer. Conversely, if oil output increases substantially, Libya’s 6.6 million people could become quite wealthy — unlike those in poorer countries whose governments toppled during the Arab Spring. Egypt’s economy, for example, has stagnated since the collapse of the Mubarak regime.

Corruption remains a risk. Members of the new Libyan government accuse Col. Muammar el-Qaddafi of stealing billions of dollars in oil revenue. The acting oil minister, Ali Tarhouni, said authorities were investigating more than 20 bank accounts of the National Oil Company for fraud. “We will follow every penny,” he said.

With world oil prices near $100 a barrel, restoring Libyan oil production would also ease supply pressures on global markets.

Foreign oil experts caution that even to get production back over a million barrels a day, Libya’s interim leaders must end the violence that is deterring foreign oil companies from bringing back expatriate technicians. In a report last week, the International Energy Agency predicted that Libyan oil production would be only 1.2 million barrels a day by the end of 2012.

Last week, at least six people were killed in a firefight between two rival militias that occurred around Zawiyah. In the southwestern desert, where some of the largest oil fields are, there was a standoff recently between one militia and Tuareg tribesmen who raided a Qaddafi arms depot and stole some mortars.

Eni, Total of France and Repsol of Spain have begun to send in a trickle of staff, mostly to restart offshore Mediterranean fields far from any violence. BP, which had planned promising exploration projects, has so far declined to send anyone back.

Article source: http://www.nytimes.com/2011/11/16/business/global/oil-production-rises-quickly-in-libyan-fields.html?partner=rss&emc=rss

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Italian Company Resumes Oil Production in Libya

September 26, 2011 by Leave a Comment

PARIS — Eni, the Italian oil company, said Monday that it had restarted oil production in some of its Libyan oil wells, the first time it has done so since Western companies fled the turmoil that followed the uprising this year against Col. Muammar el-Qaddafi.

The move by Eni, the largest foreign player in the Libyan oil industry, marks an important step toward the stabilization of the country’s economy, which relies heavily on oil revenue. Eni’s French rival, Total, said Friday that it was resuming production from an offshore oil platform.

Eni said in a statement on Monday that its Mellitah Oil Gas venture had brought 15 wells back online in in Abu-Attifel, about 300 kilometers, or 185 miles, south of Benghazi.

Production is currently at about 31,900 barrels per day, Eni said, adding: “In the coming days, other wells will be re-activated in order to reach the required volumes to fill the pipeline connecting the field to the Zuetina terminal.”

Libyan companies had already restarted output in some areas, though the scale has necessarily been limited by the chaos of recent months and a lack of access to overseas markets amid fear for the safety of ships and crews.

Mahmoud Jebril, an official with Libya’s National Transitional Council, announced a resumption of production on Sept. 11, a message followed a day later by an attack on an oil refinery at the coastal town of Ras Lanuf. Colonel Qaddafi, and troops loyal to him, remain at large.

Libya’s output is relatively small, at 2 percent or less of global production, but the oil is of high quality and the loss of that supply had raised fears that rising oil prices would further weaken an already limping global economy.

Saudi Arabia and other OPEC members agreed during the summer to pump more to make up for the lost supply. They are expected to gradually withdraw the additional output as Libya comes fully online within the next year or so.

Abdalla el-Badri, the head of the Organization of the Petroleum Exporting Countries, has said Libyan oil production should reach about one million barrels a day within six months and be back to normal within 18 months.

Libyan oil facilities have not suffered the kind of damage that Iraq’s fields underwent during the first Gulf War, with fields owned by Repsol, a Spanish company, and Total essentially unscathed. Central Libyan facilities have suffered more damage.

Article source: http://www.nytimes.com/2011/09/27/business/global/italian-company-resumes-oil-production-in-libya.html?partner=rss&emc=rss

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Stocks Fall Sharply, Then Cut Losses

June 23, 2011 by Leave a Comment

Analysts could point to no single reason for the wide swing, but signs of a sluggish American economy and continued European debt troubles have unsettled investors for months. On Thursday, investors got an added surprise when the International Energy Agency announced its members would release oil into the market from reserves.

In the oil market, crude oil prices fell in the wake of the announcement by the I.E.A. that the United States would provide half of the 60 million barrels of petroleum reserves being released to world markets, with other nations releasing the rest, to replace some of the oil production lost due to the conflict in Libya. On Wall Street, shares in energy companies stocks in the broader market took a hit, declining more than 2.5 percent in late afternoon trading.

By day’s end, the Dow Jones industrial average closed off 59.67 points, a loss of 0.49 percent, to 12,050.00. The Standard Poor’s 500-stock index ended at 1,283.50, off 3.64 points, or 0.28 percent, while the Nasdaq composite index actually rose by the close of trading, adding 17.56 points, or 0.66 percent, to 2,686.75.

While some analysts attributed the declines to developments related to the economy in the United States, others said the I.E.A announcement had made the market nervous about the reasons behind it.

“It shocked the market,” said Doug Cote, the chief market strategist for ING Investment Management. “What it indicates to me was that the problems were worse than my data suggests. My data suggests we are in a relatively normal recovery.”

In recent months, statistics have trickled out suggesting the challenges to the United States economy, including a slowdown in hiring in May and a housing sector that is still trying to recover.

On Wednesday, the Federal Reserve said the economy was not expanding as quickly as predicted and forecast a growth rate of 2.7 percent to 2.9 percent this year and 3.3 percent to 3.7 percent next year, below previous forecasts.

The nation’s central bank also said it would complete the planned purchase of $600 billion in Treasury securities next week, then pause in its economic rescue efforts, doing nothing new for now to push forward growth.

Mr. Cote said the markets had already priced in the pace of the economic growth in the United States and the euro zone problems, and that the reason for the market declines, which lasted most of the day, could be the uncertainty behind the I.E.A. statement.

“This looks like thinly veiled stimulus,” Mr. Cote said. “The big question weighing on the market is why now?”

The energy secretary, Steven Chu, said in a statement that the action was being taken “in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery.”

But several analysts said that the market had already responded to the lack of Libyan oil.

“The market had already been moving lower in terms of price,” said Mark Routt, a senior consultant for KBC Energy Economics. “All these questions come to the point of ‘Why now?’”

European markets were down, in some cases more than 2 percent. Concerns about Greek debt troubles have continued to weigh on the markets, and bank stocks were down nearly 2 percent in the United States.

Jean-Claude Trichet, president of the European Central Bank, said late on Wednesday that the link between the debt problem and banks was “the most serious threat” to financial stability in the European Union, according to Bloomberg News.

“Investors are worried about the same things that have been worrying them for some months,” said Adrian Darley, head of European equities at Ignis Asset Management in London. “It’s the weak U.S. data, a consensus of overheating in China and concerns about Europe. The Greek situation is still unsolved and markets are going to remain very nervous.” 

Stanley Nabi, the chief strategist at Silvercrest Asset Management Group, said the Europe debt troubles were only one of the factors affecting the market on Thursday.

Julia Werdigier contributed reporting from London.

Article source: http://feeds.nytimes.com/click.phdo?i=1f512193048acfd5d729a477f67eb131

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I.E.A. Says World Will Increasingly Turn to Americas for Oil

June 16, 2011 by Leave a Comment

The Paris-based organization estimated that the world would increase total oil production every year between 2010 and 2016 by an average 1.1 million barrels a day — roughly 100,000 barrels short of the expected increase in global demand over the period.

“After the sharp increase in oil demand in the second part of 2010 as the global economy recovered more quickly than anticipated from the recession, we now foresee higher mid-decade demand,” the report said.

Tightening oil markets along with spreading unrest in the Middle East have driven oil prices 25 percent higher in the last year. But on Wednesday, concerns about a weakening economy sent prices sharply lower. The benchmark light sweet crude oil in the United States fell $4.56 a barrel to close at $94.81. If a major global downturn occurs and begins a more lasting decline in energy demand and prices, as happened in late 2008 and 2009, it could throw off forecasts.

The report warned that high oil prices “are weighing down on an already-fragile macroeconomic and financial situation” in the developed countries, while burdening the financial health of developing countries and pushing up inflation.

The energy agency predicts that 40 percent of demand growth over the next few years will come from China, with most of the rest coming from elsewhere in Asia and the Middle East. The agency expects Europe and the United States to have generally flat energy demand, in large part because their economies are expected to grow less robustly than those in the developing world, while their vehicles should become increasingly efficient.

Saudi Arabia and a handful of other mostly Middle Eastern countries with excess production capacity will have to supply more oil, but global markets will need to rely increasingly on producers outside the Organization of the Petroleum Exporting Countries. With production declining in Mexico and the North Sea, the energy agency suggested that Canada, Brazil, the United States and Colombia would need to take up the slack.

The report projected that by 2016, Canada, already the most important source for United States oil imports, would produce 1.3 million additional barrels a day as it expanded production from the oil sands in Alberta. Brazil is projected to increase production by a million barrels a day because of major new offshore fields in deep waters.

The United States, despite the slowdown in oil drilling in the Gulf of Mexico after the Deepwater Horizon disaster last year and declining production in Alaska, will produce an additional 500,000 barrels a day largely from expanded drilling in oil shale fields in North Dakota and Texas, the agency said.

And Colombia is expected to increase production by 300,000 barrels a day, as a guerrilla insurgency’s decline encourages international oil companies to return.

The energy agency cautioned that its optimistic outlook for Canada depended partly on the United States government’s approval of the Keystone XL pipeline, which would take more than 500,000 barrels a day of partly refined Canadian crude from the oil sands to Texas and Louisiana refineries for eventual distribution to the Northeast. Canada will most likely sell the excess crude to China if the pipeline is not approved, but the switch could produce years of delays.

Environmentalists oppose the pipeline because they argue that production of oil from oil sands, which requires the burning of large amounts of natural gas, emits more greenhouse gases than production of most oil products used in the United States.

OPEC will remain a vital source of world oil, the report said, noting that Iraq in particular held the potential to significantly increase exports over the next several years.

In a separate report released last week, BP noted that world oil production rose 1.8 million barrels a day last year, with OPEC and non-OPEC producers each roughly responsible for half the growth.

In a projection for 2030 made earlier in the year, BP said OPEC would be “primarily” responsible for meeting growing demand for liquid fuels, although it mentioned Canadian oil sands, deepwater drilling off Brazil, and the countries that made up the former Soviet Union as promising sources of future supplies.

Article source: http://feeds.nytimes.com/click.phdo?i=fa58d0afc61198321cbdbb00a28e5bf0

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