What's driving the price of oil? This is a multiple choice question; there are no wrong answers.
- Libya: 500,000 bbls/day lost to the European market (the actual number has fluctuated from 400K to 1.5 million based on agenda of the journalist reporting)
- Bahrain: unrest spreading and closing in on Saudi Arabia
- Japan: acknowledging that it needs to increase refining capacity
- China: suspending plans for 28 nuclear reactors (40 percent of the world's nuclear capacity); China had planned on building 110 reactors
- Offshore Alaska -- decreasing production and new fields out of the question
- Onshore federal lands: bureaucratic delays in issuing permits
- Onshore non-federal lands: lawsuits to prevent development
- Gulf of Mexico: permitorium continues
- Converting 40% of corn (food) to ethanol
But short term, the story that the Japanese government is asking its refiners to increase production speaks volumes:
Japan’s government is pursuing a number of emergency measures to deal with fuel shortages that include shipping 38,000 kl (about 10,000 gallons) of oil products by sea from refineries in Hokkaido and western Japan to the Tohoku region, hard-hit by the recent earthquake and tsunami.Increasing refinery operating rates from 80 percent to full capacity is remarkable.
Minister of Economy, Trade, and Industry Banri Kaieda called on the Petroleum Association of Japan (PAJ) to implement the emergency steps after earlier urging oil distributors to release 1.26 million kl for supply to the market.
Kaieda also called for the operating rates of refineries in western Japan, which stand at around 80%, to be raised to at least 95%.
Nordic American Tanker sent a letter to its shareholders with the following paragraph (this link is dynamic and may break):
(On Japan) As far as the impact on our industry goes, it is too early to tell, but if nuclear power becomes less attractive, then it is reasonable to assume that the demand for other energy sources such as oil will increase..."Meanwhile, from Washington, I get a sense of "business as usual":
- A trip to Brazil (I still don't know why) [Update: here's the reason]
- Weekend radio addresses on education reform
- Supreme Court agrees that list of banks receiving bailout dollars must be released
I hope the price of oil doesn't get to $110. It will be blamed on speculators.
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