,a href="http://www.egroups.com/group/roleigh_for_web/2008.html?"Roleigh Martin's postings

Y2k Related Web Posts by Roleigh Martin

4:58 PM

Wed 19 Jan

Subject: Fwd: What happened with oil? More Y2k impact?
From: Roleigh Martin

complete repost

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>Subject: What happened with oil? More Y2k impact?
>Date: Wed, 19 Jan 2000 15:40:06 -0500
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[The following is from an "oil industry insider" who chooses not to be identified. Although we usually do not post anonymous items, I have been corresponding with this person for awhile and the reports seem credible. Further, the comments on oil are being confirmed by other sources now hitting the media. After the lack of any dramatic Y2k events, I asked "What happened with oil? The response is below in two parts. NK]

>==============

Part I 1/15/00

From what I understand, some systems came thru okay because they
postponed the problems...by rolling back their clocks. Others simply lucked out because they had fewer embedded systems and less complicated also. Then there are the others out there who are indeed experiencing problems albeit minor but growing. Will these problems develope into a cascade? I don't know but I can say that what is NOT being reported to you are the number of refineries having some series production lapses, restarts and re-shutdowns. All are potentially dangerous. We've had some fires too. Plus, have you noticed how many gas explosions there have been? A bunch. Two food plants blew out one in Michigan and the other in Wisconsin. The national media have not bothered to comment on this because the companies don't want the stigma of admitting to a Y2K problem and have it affect their stock valuations negatively. >

BUT... NORMAN... the big aspect for oil here that lets us know that something is amiss...skyrocketing prices and sudden drops in refining capacity. That's right, capacity is dropping...prices set a record high for contracts on Friday...superceding the GULF WAR RECORD HIGHS! Now, you tell me, what gives?

Officially the story is that Opec is thinking ... thinking about retaining crude oil production limits. As a result, oil has shot up $4.00 a barrel in the last 5 or 6 trading sessions. Actually I suspect that Opec is only "considering" this because some or most of them are indeed having production problems to the point that they can't readily open the spigots any wider anyway.

As a couple of professional oil traders told me... "something doesn't smell quite right." Oh and to top it off, we're supposed to have all this excess gasoline sitting around... well in Louisiana, oil refineries are buying extra surplus at a price that only gives them a 1.8 cent margin of profit...in order to fulfill jobber contracts to their wholesalers. Now why would they be doing that unless they were having problems??? Hmmm...??? The reason is those refineries are indeed experiencing somesevere production problems at a time when the industry doesn't see many problems unless related to extremely cold temperatures.

Now, from what I've been able to gather...and again this is SPARSE news as inside news has become hard to gather now. No one wants to talk much if at all. From what I've been able to gather the problems ARE INCREASING... it would seem that we may indeed be moving to a cascading events scenario. I hope not. So far, folks on the scene seem to have been able to deal with most issues okay. Anyway...it has been premature to think that Y2k is over and was a non-event. It is shaping up to be a real headache if not nightmare for the oil industry. I've heard for instance that some wells did snap but not shut down... instead they pumped oil for free to their customers!!!

FOR FREE!!! Well at least they didn't shut down. BUT SOME DID SHUT DOWN. How many is hard to say at this point... most of this is still top secret. Any admissions given will lay blame elsewhere on anything but Y2K.

Now we're moving out of the beginning stages of the problem. It will be early February before will have a better idea of how bad the embedded systems problems are/were. I still see strong potential for the oil Y2K problems to shoot oil to as much as $60 per barrel... although I'm currently thinking more likely is $30.00 and a distinct possibility of $40.00 a barrel oil. This could translate into $3.00 a gallon gasoline as a real needle that bursts the bubble on the economy and the stock market.

We'll just have to see what developes. It could be that the embeddeds problem is actually peaking right now as we speak and that within a week or two we'll see that reflected in a lack of reports. Frankly though I expect it will be the first of Feb before a lot of these monthly embedded systems blow out, and it will take us one or two weeks to start getting the stories leaked out.

Anyway, that's how I see it for now. We're already past a "1" and moving towards a "2" with ultimately a possible "5" as the maximum potential here for oil...(5= 6 months of problems leading to soaring prices that take 6mo to a year to subside)...

>=================

>Part II 1/19/00

You might want to start monitoring the TB2000 forum. There is also an oil forum that is keeping things updated.

Further updates since my last response...

More refineries are going up. The latest came out to newswires about noon Tuesday... The 2nd largest refinery in the western hemisphere blew out its cat-cracker unit. Latest wire story indications are that it will be out for 20 to 35 days. This is a MAJOR event. In all likelihood it won't get back up near what is estimated, most never do.

We've still got refineries down that were supposed to be back up on Jan 6th from rollover problems that never got reported in the media and were never classified as Y2k related but they were.

Latest on Venzuela situation is that they've just declared a Force Majeuvre (sic?) [act of God type of event for which they are allowed to renege on contracts as an event out of their control] Now the latest on the Force declaration is that it covers not only that refinery but all gasoline production period as well as all crude oil!

Now how can just one refinery blow-out do damage to all else? IF this is indeed true...then all of Venzuela oil ops are experiencing Y2K related matters. Oh, early wire stories said the refinery blast was due to mechanical problems, later revised to systems problems. A fancy PR way of dodging that 4-letter word = Y2K (I know its 3 letters but its treated as if it were 4).

In addition to that, we've got a Pennzoil refinery in Louisiana that also blew up late Tue afternoon just before the 6pm local news. TV CBS affiliate reporting major explosion destroying the Naptha processing section of the plant.

We've got a BP Amoco plant still down plus a Modiva NJ plant still down. I've also got word from an eyewitness that oil tankers coming to NJ/NYC ports are being stopped and inspected for some sort of problems with tainted oil. I've no details but one fellow on TB2000 has been giving daily harbor reports from his backyard vantage point overlooking the ports and listening to harbor radio conversations. He's been a great and reliable source and not giving us hyped stories. IF it's a dull day he states it. Things seemed to have been going well until the last couple of days...though the first week of Jan was dead with no ships coming in. One ship apparently had probs last week and kept going around in circles.

Overall, from what I see/hear things seem to be deteriorating in oil. Pipeline problems are still popping up. We just got late word of a big pipeline blowout in Brazil, Rio de Janeiro. No details yet. There is a wire story on it somewhere.

Meanwhile Crude oil continues to climb as does gasoline on the NY Mercantile Exchange. The big boys are buying up everything in sight. They KNOW something. I just don't know what but it appears to be Y2k.

I can't remember if I commented or not on natural gas, but there are more reports of pipeline problems. I heard one whole field was cutoff the other day. Don't know if its back online now or not.

One commodity trading house firm is indicating Y2k is the problem with oil refineries, no word on oil wells though.

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-- Ed (ed@lizzardranch.com), January 21, 2000

Answers

Sorry for the messed up link. Hope this works.

Roleigh Martin's postings

-- Ed (ed@lizzardranch.com), January 21, 2000.

Thanks Ed, worth the read!

-- Hokie (Hokie_@hotmail.com), January 21, 2000.

Thanks Ed!

-- Andy (2000EOD@prodigy.net), January 21, 2000.

Thank you for the post Ed. =)

-- Dee (T1Colt556@aol.com), January 21, 2000.

Critical mass approaching, re: oil.

Got Carpooling plans mapped out?

-- lisa (lisa@work.now), January 21, 2000.

"I've no details but one fellow on TB2000..."

So much for an "oil industry insider", lol. You guys need to listen to your own Dog Gone, I find him much more credible than the above "source".

-- FactFinder (FactFinder@bzn.com), January 22, 2000.

Factfinder:

I noticed that also. It's the circular thing again. Folks on TB2000 quote Paula Gordon who quotes the folks on TB2000. The Senate quoted folks who testified before them and the folks who testified before them quote the senate.

-- Anita (notgiving@anymore.com), January 22, 2000.

Yeah, especially when "the guy" on TBY2000 isn't quoted accurately.

-- Harbor Guy (HarborGuy@OnThe.Waterfront), January 22, 2000.

Here's a quote for factfinder

"for no reason at all".

On the Channel 5 News (Fox in NYC) tonite they ran a story about home heating oil shortages on Long Island. It said people were being rationed (their word not mine) to 200 gallons per home. The oil guy they interviewed (from a small oil company) said the situation is worse than it was during the Gulf War. He said they couldn't even quote prices for tomorrow because they were changing so fast (even commented that prices rarely change over the weekend but this weekend they were). When asked why prices were going up and why they couldn't get oil he said "for no reason at all".

-- Andy (2000EOD@prodigy.net), January 22, 2000.

Heres another quote for factfinder

,b.``We haven't seen trade and volatility on the oil market like this in non wartime conditions for 15 years,'',/b.

NEW YORK, Jan 21 (Reuters)

- U.S. oil prices spiralled higher again on Friday as buyers scrambled to take out insurance against the prospect of a deepening shortage of supply on the world petroleum market.

Oil buyers are taking no chances that the Organization of the Petroleum Exporting Countries might relent and ease the output limits which have forced oil prices to nine-year highs.

In near panic scenes on the New York Mercantile Exchange, reminiscent of the 1990-1991 Gulf crisis, crude jumped another 60 cents to $28.57 a barrel for March delivery. February crude had peaked at $29.95 before expiry on Thursday.

``We haven't seen trade and volatility on the oil market like this in non wartime conditions for 15 years,'' said Peter Gignoux of Salomon Smith Barney.

``OPEC seems to have adopted a very aggressive strategy and appears set to increase production only if there are no alternatives to preventing markets from overheating,'' said Washington's Petroleum Finance Corp. in a note to clients.

Many traders think that point already has been reached.

``The heating oil market now is most definitely overheated,'' said Nauman Barakat of ABN Amro in New York.

U.S. home heating oil rose most sharply on Friday, propelled by a lengthening cold snap in the U.S. Northeast, the world's largest single market for the petroleum product.

Weather forecasters expect the week-old cold spell in the Northeast to continue until the end of January, acclerating a drain on already lean heating oil stocks.

NYMEX February heating oil futures were up nearly 10 cents a gallon in late morning trade at 96.25 cents. Cash heating oil in New York Harbor cost a further 35 cents a gallon. Cash prices have more than doubled in nine days, futures are up 50 percent.

While some OPEC watchers still suspect that the cartel may pull a surprise and shortly ease its output restrictions, ministers show no public sign of changing their strategy.

A year-long agreement among OPEC and non-OPEC allies Mexico and Norway keeping nearly five million barrels daily from the 75 million bpd world market is due to expire at the end of March.

But oil ministers from three OPEC countries reiterated after a meeting on Friday that the cartel has no intention of letting its customers off the hook. ,b.[because they can't, they have y2k problems and are playing HIGH STAKES POKER imho - Andy],/b.

Libya's Oil Minister Abdullah al-Badri told Reuters from Tripoli that he and his counterparts from Iran and Algeria had agreed to propose to OPEC's March 27 conference that the export limits be kept in place until September.

Energy economists say that will drag inventories below commercial minimum operating levels.

The International Energy Agency in Paris on Thursday warned that commercial inventories of crude and petroleum products now at 10-year lows would suffer another 2.5 million barrel a day shortfall during the first quarter.

Oil's swift rise has raised concerns in the finance ministries of the world's industrialised powers that dormant inflationary pressures might be reignited.

European Central Bank Chief Economist Otmar Issing said he now fears that a temporary rise in inflation could become more permanent if it leads to higher wage settlements.

``We see developments in headline inflation heavily impacted by oil prices, which have tripled in 12 months,'' Issing said in London.

Quite soon inflationary pressures affecting crude oil will overflow into the precious metals market, especially gold.

The rise in Black Gold will eventually beget a surge in Yellow Gold values.

-- Andy (2000EOD@prodigy.net), January 22, 2000.

Dear Pollys,

Frankly, I don't care if the current oil crisis is Y2K related or not. So lets just debate/discuss and share information on the effects, severity, duration and personal/corporate/community preparedness for a SYFUR - System Failure Unspecified Reason.

Do any of you deny that we are seeing a SYFUR in oil???

-- Bill P (porterwn@one.net), January 22, 2000.