Skip to comments.32:1? Today Show's Curry Hopes for Worst in Wake of BP Shutdown
Posted on 08/07/2006 5:27:11 AM PDT by governsleastgovernsbest
view edit Posted by Mark Finkelstein on August 7, 2006 - 08:10. A price spike 32 times larger than the proportion of oil production lost? It's what NBC's Ann Curry imagined on this morning's Today show. 'Soaring Gas Prices' is one of the Today show's longest-running hits. This morning's episode brought us Ann Curry trying to induce CNBC financial reporter Ron Insana to paint the gloomiest possible picture in the wake of the news that BP has shut down an Alaskan oilfield. BP shut the Prudhoe Bay field indefinitely due to the discovery of severe corrosion and a very small spill from a Prudhoe Bay oil transit line. The 400,000 represents 8% of US domestic oil output and about 2.6% of US supply, including imports.
Curry: "First - new fears of a spike in gas prices now that BP is shutting down their oil field. Ron Insana is here to explain what it means. Major developments?"
Insana: "Absolutely. If you think about the size of this shut down and what it means to the world oil market. 400,000 barrels a day are coming off line. 2.6% of US oil consumption. While we worry about disruptions from the Middle East because of what is going on between israel and lebanon, this is a disruption at a time when prices are already high."
Curry: "Overseas markets $77. Higher?"
So far, so fair. Clearly the loss of 400,000 barrels a day is not good news. But it was then that Curry started pushing the envelope.
Curry: "How much? $10 [per barrel]?"
And understated Insana: "In a single day that would be a lot."
I'll say! As mentioned, the 400,000 barrels represents only 2.6% of US supply. But remember - the crude oil market is international. The lost 400,000 represents less than 0.4% of total global daily crude oil production of about 84 million barrels. Yet Curry was envisioning a 13% price increase! Now, it's true that negative events can disproportionately impact prices. But by a factor of 32 times?
Ann wasn't done: "What about the economy? What happens to oil affects the economy?"
Insana: "If it's above the $78 a barrel level, gas prices will go up. Retail sales could be hurt and the consumer will get pinched more. It could slow down an already weaker consumer whom we have seen stop spending at walmart and restaurants because they are feeling the pain at the pump."
Curry saved her fondest wish for last: "A game changer in the economy?"
Ron played along: "Yes. Because it puts more pressure on the inflation picture. It may keep the Federal Reserve raising rates longer. That's an open question. If it slows the economy too much, it may take the fed out of the game and rates may come down."
Curry wasn't finished beating the higher-prices horse: "One way the economy is [slowed] is the price of gas. What do you think will happen to the price of gas?"
Well, Ann, what do you think would happen to price of gas if your prediction of a $10/barrel increase in the price of crude came true?
Curry closed by telling Insana to "come back when you have good news." Somehow you sensed she didn't mean it.
A recalculation indicates Ann was suggesting a price hike 'only' 28 times greater than the proportion of global crude oil production lost.
As far as infobabes go, Ann Curry doesn't do anything for me.
You could bet the farm on this one. No way Curry/NBC/MSM are looking for any good news.
Thanks for watching GLGB. I still cannot bear to watch, but am most appreciative of you doing so.
Thanks, Chuck - my pleasure. Curry's rooting-for-the-worst was so blatant.
Why has no one seen the obvious. This is a stunt by BP, no doubt at the behest of the oil industry AS A WHOLE, to force oil prices even higher on some lame pretext. If you believe that BP really is shutting down that line because of corrosion, I have a summer home in Al-Anbar Province I can sell you for a song!
Merely common sense and an understanding of human nature. When I was a young person like you, I, too, had total faith in the market.
She could have said $100 [per barrel]... and Insana would have said the same thing.
Looks Democrats were lying when they said oil from Alaska would be a mere drop in the bucket.
I thought OIL was not the real issue, the real issue is REFINERIES.
At first, I thought what you're saying was silly. But, on further thought,,,,,
How could these pipes have corroded so quickly? I 'm the operator of a small water company, and our tanks have been in use for almost 50 years. They were inspected last year, and the inspector said they were good for another forty years at least. And they're full of rising and falling water, not a lubricant type material. What did they make these pipes out of? Tinfoil?
Great point!! Except that for the MSM, 400,000 barrels/day is only a lot when it's being subtracted from the market, not added ;-)
I really think your point here is brilliant. I've added it to the original NewsBusters item and given you a big hat tip.
Thanks for the compliment, but I'm two years younger than dirt, having taught university-level economics for over 20 years. Anyway, please don't fall into the "we ought to punish the oil companies and levy an excess profits tax on them!" crowd. Which would you rather do: 1) levy an excess profits tax and have Washington get a windfall income increase, or 2) let the companies who produce oil have the profits and use them to find more (profitable) oil? Oil companies during the last quarter made a 10% profit on gross sales. Given that the "easy" oil is already being drilled, they need the extra income to absorb the greater costs and risks associated with current exploration. This is even more true because of the "tree huggers" opposition to less expensive exploration (e.g., the Gulf of Mexico).
As to giving the govt more income via an excess profits tax, Congress levied an "alternative fuel tax" in the mid-1970's to pay for alternative fuel sources. I don't know about where you are, but they don't seem to be selling any of that alternative fuel in my neighborhood, but they're still collecting the tax.
No...the market can solve a billion simultaneous equations per day a heck of a lot better than some money-grubbing politician in Washington. I will always trust free markets more than politicians or tree-huggers.