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 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: James McNish, Brace for higher fuel prices. That’s the warning from the Jamaica Gasoline Retailers Association, JGRA. It comes as consumers face the seventh consecutive week of The price of oil dropped a bit Wednesday after three days of increases. Benchmark oil fell 53 cents to $93.14 per barrel Wednesday in New York. Oil prices had increased more than $6 per barrel since Thursday following a positive report on the US job market. In addition, quarterly earnings for many companies have been stronger than expected. Yet, the overall economy continues to struggle, which has fuelled speculation that the Federal Reserve may take action to promote economic growth. A stronger economy means more demand for oil and other energy products. Oil demand is better than it was earlier in the year but hasn’t recovered to year-ago levels, said Michael Lynch, president of Strategic Energy & Economic Research. Oil got a temporary boost Wednesday from a bigger-than-expected decline in US stockpiles. The Energy Department said oil inventories fell 3.7 million barrels last week to 369.9 million barrels. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a much smaller decline of 300,000 barrels. But the economic news from Europe remains grim. The Banque de France said it expects the French economy to slip into recession in the third quarter. German industrial production and exports fell in June. Traders will closely watch fresh economic data from China Thursday on inflation, factory production and retail sales. China is the world’s second-biggest economy and a huge importer of oil. At the pump, the national average price of gasolene rose about one penny to $3.647 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That’s up nearly 27 cents from a month ago. It’s about two cents less than a year ago. Brent crude, which is used to price international varieties of oil, gained 28 cents to $112.26 per barrel in London. – AP http://jamaica-gleaner.com/gleaner/20120809/business/business1.html There’s more worrying sign that Jamaicans will be seeing higher prices at the pumps. Oil prices rose for a second straight session yesterday, closing at the highest level in 11 weeks, as U.S stock markets rallied to a three-month high and traders eyed ongoing turmoil in the Middle East. The gains extended Friday’s strong rally after U.S. jobs data calmed concerns about a slowing economy and on hopes that Europe can address its debt crisis. In London, Brent September crude rose 61 cents to settle at 109 dollars 55 cents, the highest close since May 16. U.S. September crude also closed higher for a second straight session, gaining 80 cents at 92 dollars 20 cents, the highest since July 11. The prices of ELECTRICITY conservation may yield higher savings than including liquefied natural gas (LNG) in the energy mix. High capital requirements to set up infrastructure, heavy supply contract obligations and fierce competition among buyers of LNG could result in little savings, according to a recent World Bank report.
Jamaica hopes to save US$300 million ($27 billion) annually from switching from oil to gas. But that’s if it can get cheaper LNG. On the other hand, lowering electricity consumption by 10 per cent could save $13.8 billion a year. And using fatter power lines as well as switching off transformers in periods of low demand could save another $5.7 billion. The Government has initiated a US$90 million ($7.8 billion) energy-saving programme aimed at improving efficiency across the public sector. Electricity consumption in the public sector is set to exceed $13.4 billion this year, but the new programme is expected to save $3.2 billion annually. The first phase, which will cost US$20 million, is to be implemented over the next four years. Meanwhile, local distributor Jamaica Public Service Company (JPS) has already ordered a 360 megawatt electricity generation plant that will be fired by natural gas. And the LNG Steering Committee last month selected Samsung C&T to build a floating regasification and storage facility in Old Harbour, St Catherine. Both have set 2014 as the deadline to introduce LNG in Jamaica. The World Bank report identified Haiti, Jamaica, and Barbados as the countries within the region with the greatest potential for LNG consumption. The Eastern Caribbean Gas Pipeline Company (ECGPC) is well advanced in plans to build a 300-kilometre natural gas pipeline to connect Trinidad to Barbados. But importing natural gas, which is cheaper than oil, is not without its constraints. The substantial investments in pipelines and receiving terminals, as well as tankers and other infrastructure, will have to be amortised over many years and recovered from end-user prices. Moreover, “gas supply contracts normally include substantial take-or-pay obligations covering 80 per cent or more of the contracted volume”. “As a result, the commercial structure of import projects can be highly complex, and the credit capacity of buyers a key limitation,” wrote World Bank energy specialists. “In addition, competition for long-term LNG supply is intense, and most LNG is traded at prices that, unlike in the United States, are closely tied to those of oil or petroleum products.” Essentially, the World Bank believes that until supply increases, buyers may find that natural gas does not generate substantial cost savings compared to oil. At the same time, the energy specialists also said that for creditworthy buyers who are able to “aggregate markets of sufficient size to realise economies of scale, natural gas can bring about important diversification in fuel supply”. The experts did not say how big the demand would have to be to benefit from economies of scale. The Government has approved the establishment of the Jamaica Gas Trust (JGT), which will handle the purchase and sale of LNG in Jamaica. It plans to capitalise JGT with at least US$100 million of cash, in addition to standby letters of credit totalling another US$100 million from the end users, in order to establish its creditworthines. For the time being, Jamaica consumes just under 20 million barrels of oil annually. Last year, it cost the country US$2.4 billion to import. The World Bank suggested that Jamaica could cut 1.7 million barrels out of its import bill if users improved the efficiency of their energy use by 10 per cent. Lower energy use results in lower peak and non-peak demand, which results in a reduction in the generation capacity and transmission and distribution assets needed to supply the system. “Measures to reduce peak demand tend to be more popular with utilities than energy-efficiency measures per se since the former reduce their costs while the latter also reduce their income,” said the report. More specifically, energy-efficiency measures would include the promotion of compact fluorescent lamps (CFLs), instead of costly incandescent lights, and would encourage consumers to replace outdated and inefficient equipment and appliances. Lack of access to commercial financing has also been a major impediment to expanding the market for energy-efficiency retrofitting projects in Latin America and the Caribbean. “A step-by-step process is needed to familiarise banks with this market to reduce perceived risk, which can enable the adaptation of loan-evaluation criteria and possibly the design of appropriate instruments,” said the World Bank. On the supply side, the energy specialists at the multilateral agency believe Jamaica can save another 700,000 barrels of oil a year by reducing electricity losses. Increasing the cross-sectional area of lines and cables that make up the national grid, results in decreased losses, which leads to a direct trade-off between the cost of losses and capital expenditure. The level of fixed losses in a transformer depends, in large part, on the quantity and quality of the raw materials in the core. “Transformers with more expensive core materials, such as special steel or amorphous iron cores, incur lower losses.,” said the report. “Thus, in selecting transformers, there is a direct trade-off between capital expenditure and cost of losses.” The biggest challenge in reducing losses comes from commercial losses, which occur for a variety of social, economic, and cultural reasons. Such losses JAMAICA’S energy and financial sectors are two of the areas that are to be offered assistance by the United States Government in the immediate future, US Ambassador Pamela Bridgewater said Wednesday. In an exclusive interview with the Jamaica Observer, Ambassador Bridgewater reflected on the close relationship between the two countries as the nation marks its 50th anniversary of Independence, and indicated that the partnership would continue to deepen.
She said that the development of renewable energy sources such as wind and sun could be an area in which the US would partner with Jamaica. “We know there are problems with energy sources in Jamaica and the importance of trying to find new sources of energy to take advantage of the natural elements in Jamaica
One of the devices found inside a ceiling.
An LNG offshore terminal designed for unloading, storage and regasifying liquefied natural gas. High capital requirements to set up infrastructure, heavy supply contract obligations and fierce competition among buyers of LNG could result in little savings, according to a recent World Bank report.
An artist sketches the portrait of a young boy at the Freedom Festival at Emancipation Park in Kingston, on Wednesday. (Photo: Marlon Reid)