September 16, 2019 8:07 AM
Morning Reads for Monday, September 16, 2019
It may be Monday, but it feels like SEPTEMBER Monday morning where I am. It’ll be 100 degrees in a few hours, but whatever.
- Also…hope you filled up over the weekend.
- Dekalb County had to boil water this weekend after they lost power.
- This whole budget thing is going to be fun to watch.
- Who’s going to the Shrimp and Grits festival this weekend?
- U.S. Sen. Johnny Isakson is demanding answers from the U.S. Department of Veterans Affairs after a Georgia woman said her father was bitten more than 100 times by ants at a veterans’ home in Decatur.
- Lieutenant Governor Geoff Duncan is aiming to make Georgia the “technology capital” of the East Coast.
- Georgia officials find spiked CBD products sold in the state.
- 10 tips from Georgia Power to help bring your bill down when the temp hits 100 degrees later today.
About Author
Theresa Garcia Robertson
Wife. Mama. Foodie. Political Junkie. Southern Enthusiast. Taco Lover.
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RE: The Saudi Arabian refinery attack. Okay, I’m just a bit mystified here. The recent drone attack was on a refinery, which is a facility that converts raw petroleum into saleable products. This drone attack has cut that refinery’s capacity by 50%. In my feeble bear brain, this should mean that the refined product prices should be going up because there is less supply. Yet, it is the raw material, petroleum, which is enjoying a price increase. Presumably there will be a downstream increase in refined product pricing, but there still is raw material in the pipeline. One would assume that less demand for the raw material would result in a lower the price of that raw material. And, for those who are curious, I do know what “crack spread” means, at least in this context.
Discuss.
Pure speculation. A chance to increase prices.
“In a statement carried by the Saudi Press Agency (SPA), Prince Abdulaziz said the attacks “resulted in a temporary suspension of production at Abqaiq and Khurais plants”.
He said that part of the reduction would be compensated for by drawing on Aramco’s oil stocks.
The situation was under control at both facilities, Aramco CEO Amin Nasser said, adding that no casualties had been reported in the attacks.”
https://www.bbc.com/news/world-middle-east-49703143
OPEC was going to cut supply anyway to boost prices.
“ABU DHABI (Reuters) – OPEC agreed on Thursday to trim oil output by asking over-producing members Iraq and Nigeria to bring production in line with their targets as the group strives to prevent a glut amid soaring U.S. production and a slowing global economy.”
https://www.reuters.com/article/us-energy-wec-saudi-oil/opec-members-iraq-nigeria-agree-to-cut-oil-output-idUSKCN1VX0IJ
US shale oil will be the beneficiary next year but they have to increase infrastructure.
“If the attacks lead to sustained U.S. oil prices in the mid-$60-a-barrel range, it could cause U.S. output to grow by about 2 million barrels per day (bpd) next year, from about 1 million bpd this year, Johnson said.”
https://www.reuters.com/article/us-saudi-aramco-attacks-shale/u-s-shale-seen-unlikely-to-quickly-replace-barrels-lost-in-attack-on-saudi-facilities-idUSKBN1W00TE
The statements don’t match the circumstances.
Consider: “He said that part of the reduction would be compensated for by drawing on Aramco’s oil stocks.“. He’s presumably talking about using their raw petroleum reserves, which does not reflect the reality that the physical capacity of the refinery has been reduced and will take time to replace. I suppose that they’re stockpiling gasoline and other fuels, but the price which is currently soaring is for raw petroleum.
I don’t deny the speculative aspects that are in operation here. And, higher West Texas Intermediate gives the frackers more opportunity to actually make a profit and have some money for future development. It’s just that the published statements by Aramco and others don’t seem to reflect the reality of what has happened.
Now, if there had been a drone attack upon an oil field, then you’re talking about something different since you would be cutting the supply of raw materials. Then, a major increase in the the price of petroleum would be justified. Fortunately, this is less likely because oil fields are spread over thousands of acres unlike the concentrated area of a refinery.
In the end, the only price that most people care about is for a gallon of gasoline. So, I’m guessing that we’re being primed for such an increase.
https://www.bloomberg.com/news/articles/2019-09-15/oil-prices-jump-19-after-attack-cuts-saudi-arabian-supplies
The spike in oil is due to the markets factoring in the risks associated with a destabilized middle east. This is political premium the world will pay for a erratic foreign policy.
The Saudi statement is pure PR, i.e. “Everything is fine”. Last Thursday OPEC said they were going to cut production-so they were already planning on lower output.
If you read about the shale oil business, they cut infrastructure spending last year to increase investor returns.
There was no reason to raise prices, it was an opportunity to increase “investor returns”.
I just filled up today and it was 1.34/gallon. I imagine next week it will be back in the 1.20’s.
“As international energy policy expert Professor Nick Butler explains, “the direct impact of the attacks could be short-lived. The market has adjusted without blinking over the last two years to the loss for political reasons of over two millions barrels a day of production from Venezuela and Iran”.
https://www.bbc.com/news/business-49708220
Oil is also a fungible commodity. (I’ll let you look that up yourself.) Besides gas and LNG going up, I except plastics, pharmaceuticals, paraffin wax for food shipping and agricultural fertilizers to go up too. Most likely some metal and glass ceramics (fiberoptic and fire rated glass) will increase in price or lead time, since they use petcoke for the anode bake furnaces in their production.
The GOP eked out a win in the NC-9 special election, increasing its margin by one point relative to 2018 midterms. The Economist suggests that everyone voted for the candidate of the party they voted for in 2018.
But the GOP typically has better turnout in special elections. And the thing is, Trump won NC-9 by 12%, and the GOP NC-9 candidate won it by 17% in 2016. There are currently 32 GOP seats in Congress than Trump won by less than 12%.
https://www.economist.com/united-states/2019/09/12/what-a-republican-victory-in-north-carolina-means-for-2020
Maybe a flight to International Falls would have been in order today—68 degrees. If there is any place to escape 90s this time of year, that is one sure place!
Here is your monday morning reader. Links, tweets, historic pictures, and a poem.
The fine law enforcement apparatus of Chattooga county weighs in….
Mark Schader, the sheriff of neighboring Chattooga County, posted a Facebook picture of himself and three other armed-to-the-teeth law enforcement officials with this caption: “Doing our part to help our friends in Lumpkin County (Dahlonega) with the antifa protests,” read the post, which was later taken down.
Dahlonega held a Trump rally organized by a known group of white supremacists, yet a Georgia sheriff deemed it appropriate to only name call the counter protesters.
Stay classy Chattooga county.