My father retired from Exxon Corp. a few years ago to become a slumlord in a western state. During his professional career he managed exploration/venture efforts all around the world, including the Middle East. I asked him to critique the series by RC concerning oil supplies and he did so. I asked him if the writer seemed credible, etc, did the article make sense. Then I asked him to listen to the Bloomberg piece which quotes the UN saying the Arabs may not be equal to the task of Y2K remediation (read it to him over the phone). With respect to the RC posts, Dad was put off by the anonymity of the submission, and referred to a certain amount of BS, especially at the beginning, but acknowledged that if RC is real and the information true, it could mean catastrophe. With respect to the Bloomberg article, he noted that nearly every statement in it was couched in terms of "maybe" and "might". He remains at least tentatively satisfied that some very smart people with huge personal interests at stake are hard at work to control or solve this problem. (I wouldn't try to convice him otherwise; it is a fact.) But neither Dad nor I have a good grasp of imbedded chips and their role in product refining and delivery. He and I would have been better served to have heard from primary sources (RC is admittedly not a primary source, nor is the journalist who wrote the piece for Bloomberg, although his quotes are quite valuable). Even now, on the eve of the rollover, we may be weeks away from a serious petroleum supply disruption. If we are to institute rationing, let's do it tomorrow, while we can still stand it. And let's hear from somebody besides Dale Way. Lets hear from somebody else with a real name.

-- james hyde (hydesci@gte.net), December 28, 1999

Answers

James,

Good post.

I've contended in RC's Part III that if rollover developments deteriorate substantially in the oil production, transportation and refining segments, most of the industry won't be expecting it domesticly. Has RC scooped the oil industry? I don't know. This forum thinks he has.

I continue to contend the best analogy with this unfolding senario is the old Jan 15th, '90 deadline in Desert Storm. After the invasion of Kuwait we had a 5 1/2 month build up to Bush's promise to move in and kick some Iraqi ass. Crude rallied to $40 by Oct 1 and then bounced lower up until the night of the deadline. Back then stock market equities demonstrated a dislike for uncertainty and the Dow gave up 20%. No such case this holiday time frame. But the crude has been gyrating, and its rallied over the last 2 weeks of '99 on legitimate ultra strong demand in spite of above average temps in most heating oil areas. Mother nature has helped us out on this hoardfest. The public has also been surprisingly complacent.

But the big surprise back in '90/'91 was the post Jan 15 deadline. The oil industry elite consensus thought oil would shoot past $50 /bl. like a errant scud, but no such rally developed. Crude fell $10 / bl overnight on the most lopsided military assault in modern times. A lot of big oil and futures industry players lost their butts. Maybe we're gonna see industry consensus take a hit again next week...

Either way, I'm loving the drama. Good luck all!

-- Downstreamer (downstream@bigfoot.com), December 28, 1999.

Don't worry. IF embeddeds actually cause problems... rationing will start very shortly. If it looks REALLY bad, a whole buncha fuel will be reserved for military use.

-- (...@.......), December 28, 1999.

....and furthermore, where's DiEtER when we need him. First the Lone Ranger and now DiETeR...

-- Downstreamer (downstream@bigfoot.com), December 28, 1999.

Maybe the Lone Rangers was DiETeR.

-- (Here@today.com), December 28, 1999.

Many companies in the oil industry relied upon vendor compliance statements. This strategy has already proved to be faulty. There is simply no way we will avoid some rather signifigant failures.

Sorry folks, don't buy the spin.

-- Gordon (g_gecko_69@hotmail.com), December 28, 1999.

February oil futures aren't doing much. What's up with that?

-- james hyde (hydesci@gte.net), December 30, 1999.