The En-Pro Blog

Recently the media have asked us why the BP gusher in the Gulf of Mexico has not spiked crude oil prices.

ANSWER: The leak does not represent any measureable level of loss of crude oil inventories. Lately the price of crude has not been driven by physical supply and demand of crude oil or its derivatives such as gasoline and diesel, but by the stock markets and the swooning of the Euro as opposed to the strength of the U.S. dollar. I know it’s hard to empathize with BP executives, but most would be reluctant to trade places with any senior BP official at this point in time with the laser beam media attention being directed their way and the political water bucket pressure being held over their heads. Needless to say the “Top Kill” failed and now they are going to cut a pipe and fit a cover over the cut. This sounds rather easy, but it’s a 20 inch diameter pipe and the cover they want to fit over it is 21 inches. All this at a depth of 1,500 meters (or one mile) from surface to the sea bed. Over the last few days engineers have been working tirelessly to at least slow the leak; let’s hope for all involved that it doesn’t drag out much longer. Moving to a less sensational and painful subject, as the above data indicates, the demand for all petroleum products is on the rise and we draw your attention once again to the numbers for distillates, which were up an impressive 17.8% compared to the previous week’s increase o f 15.8%. Normally we would just say that we are comparing this year with the depth of recession numbers from this time last year, but double digit increases are hard to ignore and we can only reinforce our comments of last week, those being that this recession is now history. And what’s happening locally?

By: Roger McKnight, Senior Petroleum Advisor

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