Pump prices headed higher as Tropical Storm Isaac forced several major refineries along the Gulf Coast to halt production in preparation for high winds and heavy rains.
Fear of reduced gasolene supplies sent wholesale prices up US7.7 cents, or 2.4 per cent to US$3.155 per gallon Monday. The average retail price for a gallon of gasolene in the United States (US) rose to US$3.75 on Monday, and it could pass US$3.80 by Labour Day weekend, says Tom Kloza, chief oil analyst at the Oil Price Information Service.
Oil fell Monday because Gulf Coast refineries won’t be using as much in the next few days and damage to key oil and gas operations in the Gulf of Mexico seemed less likely as the storm’s winds aren’t expected to be as strong as some had feared.
Refineries should also escape damage. But refinery owners often shut down operations in advance of a storm. These facilities consume enormous amounts of electric power and generate steam to cook crude oil into gasolene, diesel, jet fuel and heating oil. If a refinery loses power suddenly, operators can’t properly clear the partially cooked oil out of pipes, and restarting the refinery can take several days or even weeks.
If refineries instead conduct what is known as an orderly shutdown, they can restart as soon as the power supply is assured again. The Gulf refineries will likely stay off line for about three days.
SEVERAL REFINERIES CLOSED
About one million barrels per day of refining capacity is expected to be shut down, roughly half of the refining capacity in the potential path of the storm. The US consumes about 19 million barrels of oil products per day.
Marathon Petroleum Corp said it is shutting down its Garyville, Louisiana, refinery. The refinery has the capacity to refine 490,000 barrels of oil per day, making it the third largest refinery in the US. Phillips 66 is closing its 247,000 barrel per day refinery in Belle Chasse, Louisiana. Chevron Corp is keeping its 330,000-barrel per day Pascagoula, Mississippi, plant running as of Monday afternoon.
The National Hurricane Centre now predicts Isaac will grow to a
THE Jamaica Public Service Company (JPS) is reporting an increase in the discovery of sophisticated meter bypass devices used in the illegal abstraction of electricity. This while the company continues to carry out regular investigations to clamp down on the activity. Just last week, investigations in separate locations, including the Corporate Area and St Catherine, led to the discovery of sophisticated bypass devices hidden in various parts of houses, including ceilings and kitchen enclosures, the utility said. Meanwhile, teams from the utility who were operating in sections of Waterhouse, St Andrew, last Thursday, discovered 17 irregularities and removed 84 TREVOR Heaven, president of the Jamaica Gasolene Retailers’ Association (JGRA), has said that service stations will be revamping their operations in a bid to save the sector from extinction. “We are facing an unprecedented financial challenge,” he told Auto. “At this point, there are four stations in the Corporate Area that are already closed. These are the Total service stations in Harbour View, Half-Way-Tree, shortwood, and Red Hills.” “I intend to seek audience with the management of the French-owned Total Jamaica to see how we can best resolve the issue,” he said. When contacted, Paula Duncan, HR manager for Total Jamaica, said she could not comment as the company’s managing director, Dr Michael Faulkner, was off the island. However, the JGRA president said he has been advised that another two service stations in St Catherine and one in Manchester were on the verge of closure, but refused to name the brands. Heaven, who met with retailers at the JGRA’s Constant Spring Road headquarters on Wednesday, attributed the current downturn in the gasolene retail business to high operational costs, shrinkage due to temperature changes, reduced gross income (low margins and reduced throughput) and increased bank and credit card charges. The JGRA president said a raft of new measures would have to be implemented. “We’ll be moving away from full service to self service. We’ll will have discussions with the unions to see how best we can transition,” he said. “While we [the dealers] develop other income streams, we can divert our employees into other areas of activities rather than dislocate them.” Heaven said dealers would discontinue accepting Master Cards and Visa Cards at service stations as the bank charges are sometimes greater than the profits made. “Only the NCB Key Card and debit cards will be accepted,” he said. Heaven said he would also be seeking a meeting with Dr Peter Phillips, minister of finance, planning and the public service, as well as Anthony Hylton, minister of industry, investment and commerce, regarding an amendment to the Weights and Measurement Regulation. The JGRA comprises 160 members and celebrated its 61st anniversary in April, 2012. Read more: NEW YORK – Oil prices dropped Friday amid renewed talk about the release of strategic reserves and as traders kept an eye on a tropical storm that could disrupt offshore operations in the Gulf of Mexico. New York‘s main contract, light sweet crude for October, shed 12 cents from Thursday to close at US$96.15 a barrel. In London, Brent North Sea crude for delivery in October dived US$1.42 to settle at US$113.59 a barrel. Rich Ilczyszyn, an analyst at iiTrader, said that New York market sentiment was tense throughout the session and in the last half-hour traders shuffled their portfolios before the weekend. Weighing on the market was a report by the Petroleum Economist that Western consumer countries could release strategic oil stocks as soon as early September in response to soaring oil prices, citing “several sources.” “The loss of supplies from sanctions-hit Iran will be used to justify the move, which could unleash as much or more oil as last year’s 60 million barrel stock releases,” the London-based industry journal said on its website. One of the sources said the International Energy Agency asked the United States not to proceed alone with a release, but to wait for IEA-wide participation to avoid undermining IEA credibility. Gulf of Mexico operators were bracing as Tropical Storm Isaac headed toward Haiti and was on track to threaten oil and gas offshore operations. BP said it was evacuating its Thunder Horse platform, the world’s largest offshore production and drilling facility. “With forecasts indicating the storm could develop into a hurricane and enter the eastern side of the Gulf in coming days, we are taking additional steps to respond,” the British oil giant said. Shell said it was preparing for evacuations of non-essential personnel from platforms and had suspended some drilling operations but that no production had been impacted. Read more: At the risk of revocation of poetic license, allow the liberty to suggest that Shakespeare’s Hamlet, faced with Jamaica’s high energy charges, would have voiced his soliloquy thus: “To conserve, or to produce: that is the question: Whether ’tis more arduous on the pocket to suffer The slings and arrows of outrageous energy bills, Or to produce from the abundance of sun and wind, And, by such deed, oppose the tide of oil importation?” A simple example will explain. If your energy consumption was 500KWh (kilo-Watt Hours) per month (equal to about 42 barrels of oil over five years) and a cost of about $220,000 annually and if, somehow, you had access to a facility of up to $1.5 million to resolve this, what are your options? A renewable energy system (RE) – solar panels and/or wind turbine using the full $1.5 million could be installed. Or, for about $450,000, the solution could be energy conservation measures (EC) such as changing out bulbs to LEDs, tinting windows, photo cell switches, insulating the roof, use of inverter technology for fridges air-conditioners and practicing stringent energy management etc. If the strictest EC measures are adopted up to 175KWh per month may be saved and so, after expenditure on EC, there would still be an annual electricity bill of about $145,000 for 325KWh (27 barrels of oil over five years) saving $75,000 annually. This is a best case (or wishful thinking) scenario which assumes flat or stable oil prices over the next five years At the end of EC however, your electricity bill may only be reduced by 35 per cent and so, when you take the inflation in energy charges into account, you may have saved some oil but you could be back to square one financially! Conservation may not therefore be the answer and so consideration must be given to another option to answer the question “to produce or to conserve”? As it is in so many instances in life, the answer is in the grey area – neither EC nor RE but a combination of both. If, after EC, consumption is reduced from 500KWh to 325KWh then install a 325KWh RE system and use a portion of the annual savings to carry out the EC measures – a combined approach. An achievable target could be to reduce consumption by an average of about 44KWh annually over five years after commissioning your RE system. Nothing would be done to attract expenditure until the end of the first year after accumulating the savings in electricity bills and the expensive EC measures would be accomplished over years two to five. After one year the consumption would be reduced from 500KWh to 455KWh. After two years consumption is reduced from 455KWh to 410 KWh while production remains at 325KWh. At the end of five years consumption equals production. At the end of year one, savings is about $140,000 and this increases annually until the end of the fifth year when the electricity bill becomes zero and $220,000 is saved that year and afterwards. In five years the energy rates would have increased and the savings would be more in dollars and cents. Oil used by this combined approach would be about 7 barrels compared to about 27 barrels if only EC were employed but after 5 years of RE plus EC no oil would be used at all! Excellent from the economic viewpoint but the financial reality is that, the combined approach demands repayment for the $1,500,000 capital cost of the RE system. At the most concessionary rate over 10 years this would be near $192,000/year. Therefore, for the first three to four years (depending on how much energy cost increases), the monthly repayment for the RE system plus energy charges from the electricity provider would significantly exceed the original electricity charge. This reason is that after five years the savings in electricity bills would be about $900,000 of which about one-half would have been expended in EC measures leaving only $450,000 to pay the $960,000 finance charges. But this does not mean that RE is not financially feasible! Now, if EC only were employed the expenditure would only be about $450,000 which, under the above conditions would attract a finance charge of under $60,000 annually against saving $75,000 each year. Financially feasible but there is still the question of the continued use of oil. This is a classic case for government intervention – brilliant economic gains (including oil savings and carbon credits) but significant negative financial consequences if attempted under conventional banking practices. The solution is a combination of creative, out-of-the-box initiatives including bulk purchases by the Government and loans with a two to three year moratorium ideally from the petrocaribe fund which appears to have been set up for just such a situation. And so, back to the revised Hamlet, who, in his time, only appeared to have bigger problems because he was not faced with Jamaica’s high energy charges. Be not be inspired by what he was talking to himself about however, as a means to escape expensive energy regimen. “Thus independence does make heroes of us all; And thus the self-generation revolution Is strengthened with creative thought, And enterprises of great pith and moment Will flourish throughout the land And doff the yolk of fossil oppressors. Be all their sins remember’d.” Robert Evans is a practicing engineer. Read more: Marcella Scarlett, THE EDITOR, Sir: I am disgruntled at the fact that I have to pay GCT for photovoltaic cells, while there is no GCT or import duty on photovoltaic panels. I am pleading that Finance Minister Peter Phillips review this matter and make the final results known to the public and members of the Customs Department, as they seem to be unaware of what is happening. L. GREEN TREVOR Heaven, president of the Jamaica Gasolene Retailers’ Association (JGRA), has said that service stations will be revamping their operations in a bid to save the sector from extinction. “We are facing an unprecedented financial challenge,” he told Auto. “At this point, there are four stations in the Corporate Area that are already closed. These are the Total service stations in Harbour View, Half-Way-Tree, shortwood, and Red Hills.” “I intend to seek audience with the management of the French-owned Total Jamaica to see how we can best resolve the issue,” he said. When contacted, Paula Duncan, HR manager for Total Jamaica, said she could not comment as the company’s managing director, Dr Michael Faulkner, was off the island. However, the JGRA president said he has been advised that another two service stations in St Catherine and one in Manchester were on the verge of closure, but refused to name the brands. Heaven, who met with retailers at the JGRA’s Constant Spring Road headquarters on Wednesday, attributed the current downturn in the gasolene retail business to high operational costs, shrinkage due to temperature changes, reduced gross income (low margins and reduced throughput) and increased bank and credit card charges. The JGRA president said a raft of new measures would have to be implemented. “We’ll be moving away from full service to self service. We’ll will have discussions with the unions to see how best we can transition,” he said. “While we [the dealers] develop other income streams, we can divert our employees into other areas of activities rather than dislocate them.” Heaven said dealers would discontinue accepting Master Cards and Visa Cards at service stations as the bank charges are sometimes greater than the profits made. “Only the NCB Key Card and debit cards will be accepted,” he said. Heaven said he would also be seeking a meeting with Dr Peter Phillips, minister of finance, planning and the public service, as well as Anthony Hylton, minister of industry, investment and commerce, regarding an amendment to the Weights and Measurement Regulation. The JGRA comprises 160 members and celebrated its 61st anniversary in April, 2012. Read more: RENEWABLE energy and technology could go a long way towards improving food security. Aside from conservation, innovation can also boost profitability and productivity of the Caribbean‘s agricultural sector. Backed by Inter-American Development Bank‘s (IDB) funding, at least three local companies, which have already set out to mix alternative energy and farming, will be better able to do just that. The Family Garden, Caribbean ESCO Limited and Echos Consulting will get US$200,000 ($18 million) apiece, as well as technical and business development support, to implement or scale up their ideas. They were awarded for their proposals, which embrace “innovative energy efficiency or renewable energy solutions that have local or regional benefits, provide jobs, and reduce greenhouse gas emissions”, under the IDB’s 2012 IDEAS Energy Innovation contest. For the Harpers JAMAICA won’t grow unless its energy cost is halved within three years, by Chris Zacca’s reckoning. The Private Sector Organisation of Jamaica (PSOJ) head aims to push national energy policy in this direction. “We are strengthening our energy committee at the PSOJ, and I will chair the new committee,” he said. “The PSOJ will need to play a mediating role in bringing all the parties together on this issue to forge an indivisible national consensus and strong action.” Zacca believes that lack of economic growth reflects a failure of national leadership, and not just politically. “We at the PSOJ must critically reflect on our motto Free Enterprise and Watch Jamaica Grow,” he said, while questioning why the lobby group has not succeeded in making our motto a reality. “This reflection must consider whether the private sector itself has not been united,” Zacca told an audience attending the panel discussion at the SALISES Fifty-Fifty conference at the Pegasus hotel on Monday. He also questioned whether some sectorial lobby groups have been pushing their agendas over national interest. “Has this contributed to an economy where there are painfully few examples of Jamaican entrepreneurship?” he asked. His response: “I think so”. Zacca proposed major steps that the group would take towards a comprehensive approach to national development, starting with efforts to unite the lobby groups towards this end. “Once united, we need to partner with the Government and civil society to promote the creation of a policy framework that enables competiveness and productivity, and a business-friendly environment,” he said. “On this front I am happy to say that the Honourable Prime Minister has told me that she intends to restart the Partnership discussions between Government, the Private Sector and Civil Society.” Other thrusts will be focused on reducing the ABCs of bad governance
One of the devices found inside a ceiling.
HEAVEN… four stations in the Corporate Area are now closed
Work crews from Turning Mill Energy install 245-watt solar panels from the ET energy company, made in China, in West Barnstable, Massachusetts (Photo: AP)
HEAVEN… four stations in the Corporate Area are now closed
Chris Zacca