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.
Wow! The black helicopter told me that too!
It was stated on another thread yesterday that sand is pumped out of the ground along with the oil. Over time, it corrodes, or creates thin spots along the pipeline.
What kind of maintenence does one do to prevent corrosion of this nature from happening?
Exactly. Karl Rove commanded a fleet of Halliburton black helicopters to fly over Prudhoe Bay and corrode the pipeline, so that the neo-cons of Exxon/BP running the White House could profit from their . . . ;-)
LOL! What I don't understand is if some folks really believe this, why would BP need a pretext to withhold oil from the market to raise prices? Just do it.
LOL. The new DNC math.
I hope you don't mind that I bookmarked your post. You did a great job of presenting the facts.
...somehow making money by NOT selling the oil, which is stuck at the far-end of the pipeline and in the ground. It's just scary that basic stuff like economics is not taught in schools today, but putting-condoms-on-bananas is.
As I look up at the TV screen, oil is up $1.49 and natural gas is actually down, so it appears that Ms. Market is kinda yawning at this news.
Thanks for the kind words...I appreciate it!
Well, sand is certainly very corrosive. That must be the answer. However, I would think that some fairly high-tech coatings would be used in this instance. Do you remember when this pipeline was put in?
I believe they said the pipeline was put in in 1968.
If losing such a small percentage of our oil production has such a bad effect wouldn't adding that much production have a like effect in the positive direction?
The anti-drillers have told us that US production has no effect on oil prices, Riiiiiight.
Can you believe it...way back when I was in high school (I think Gutenberg was still printing books), I had the choice of taking Economics or Civics, and I took Civics 'cause I heard econ was too hard. (I went on to major in econ in college...go figure.) Anyway, I think too many people opted for the same choices I did and we're paying the costs now.
Interesting experiment I used to ask in-coming Freshmen: What is the average profit of a US corporation? The most-often given answer: 50%. When pressed for their source of this "nugget" of information, they said "my parents". We're in deep trouble, people, if this is what the average US citizen thinks. The long-run profit rate for the average US corporation is 3.2%. Indeed, most companies would earn more if they sold their company and put the money in CD's. (There might be a few unemployemnt problems, however, if every corporation did this!)
Like they say: "If you think education is expensive, try ignorance."
Well, that's a pretty long time! I'll accept your facts! You came, you saw, you shot me down!
LOL! I just regurgitated. The sand sounds right. Even the date of the pipeline sounds right but I haven't seen date/timestamps on them myself ;)
" but I haven't seen date/time stamps"
Ya know, there are some reuters pics floatin' around and I'd like to see the
date/times stamps on them!
I appreciate the convenience of having a well-written argument, like yours, available.
The Trans-Alaska Pipeline System was designed and constructed to move oil from the North Slope of Alaska to the northern most ice- free port- Valdez, Alaska. Construction began on March 27, 1975 and was completed on May 31, 1977.
Seems to be! Discovered in '68 and flowing in '77.
So it's only 30 years old.
My husband is a pipeline inspector and has worked on repairs or replacements for the major oil companies on lines that were not as old as this one and some that were older. The acceleration of corrosion can be caused by a number of factors, and this shutdown is not likely to be a plot by BP to drive up prices, as some are asserting here.
I agree. The pipe is an average of 3 1/2 inches thick.
As I recall, most of the Alaska pipeline was built with an expected lifespan of about 30 yrs., which seemed very far off in the late 60's/early 70's.
Weren'tt they also saying that our oil would run out in 1990 or 2000? They probably figured they had the system beat ;)
There's apic of a pipe section on Drudge right. Completely shot. They will replace 73% of the pipeline. Going to be closed for a loooong time!
from reuters "Democrats call on Congress to probe BP shutdown"
--this shutdown is not likely to be a plot by BP to drive up prices, as some are asserting here--
Hear now this, O foolish people, and without understanding; which have eyes, and see not; which have ears, and hear not.
Jer. 5:21 KJV
--why would BP need a pretext to withhold oil from the market to raise prices? Just do it--
Such a bonehead move would only inflame public (and congressional) passions against the oil industry further. The oil industry still has not forgotten the late, great, conservative senator Henry (Scoop) Jackson, who suggested back in the 1970s that the oil industry be nationalized. From his lips to Gods ears, as the saying goes. Anyhow, this gives BP a pretext to shut down the pipeline in the name of preventing an oil spill that would harm Mother Earth. Clever!
Uh-oh, if I read the story on Drudge correctly, they haven't even pigged the line, and I'll bet they will find more damage.