In case anyone has forgotten, CPR predicted an "OIL PRICE CRASH SOON!" in January. It's now almost June, and not only is oil at $30 a barrel, but unleaded gasoline prices are at all-time highs. Furthermore, the "crack spread", which is a measure of the profitability of converting crude oil into refined products, is at an abnormally high level. Ordinarily, refineries would be operating at full capacity to take advantage of this very high profit potential. For some reason, though, they haven't increased their output accordingly. The simplest explanation is that they cannot operate at any higher capacity than they already are.

Why can't they operate at any higher capacity? I can't prove it, but I think it's because they're having Y2K related problems. Otherwise, it's a tremendous coincidence that this should happen this year.

I expected something like this to happen, and placed a bet, in the form of an unleaded gasoline call option, in January. Even though I bought at a very high premium, I about doubled my money when I sold the option a couple of weeks ago.

Oddly enough, we haven't heard anything from CPR about his ridiculously wrong prediction. Of course, he can always claim that "SOON" isn't over yet. He would be the first to jump on any Y2K "doomer" who said "well, we just haven't seen the effects yet". But somehow he is exempt from criticism for trying to wiggle out of a firm prediction, almost as though he were Bill Clinton. I wonder why?

-- Sergeant Friday (Just.The@facts.maam), May 28, 2000

Answers

Shove it,. Sgt. Idiot, good try but another failure. The market DID crack even as you morons were talking about "$35/bbl" Oil.

And why don't you take delivery now of the June Crude and ship it to me next June, 2001?

Here is the picture that even the Math impaired can "interpret".

http://futures.tradingcharts.com/chart/CO/600

And if you are long still, you may find yourself whipsawed again as the Arab Traders pound crude down to the level they want to to be. (See Friday's trading.) The oil, ht. oil and unleaded markets are STILL inverted and if you think such futures are good for "long term investments", I suggest you would do far better in Las Vegas or Atlantic City. Better yet, just spend it all on next weeks' Lottery wherever you are and shoot your whole load.

The best play was not in oil but rather in Natural Gas which is almost straight line up. Did Y2k "embedded problems" escape all the Y2k Doom Zombies because I have yet to see one of them use Natural Gas as "proof" of their weird speculations.

Sgt. Idiot, the market in crude, heating oil and unleaded fell over 30% from the "debate" you refer to and my prediction. That eliminated all the Conspiracy Theorists of Y2k predicting and even stating that serious problems were being covered up.

FACT: OPEC said they would keep production/supply at a level that would sustain a range in the Mid-20s (22-28/bbl).

From a high over $30, US crude fell down to $24 in March / April and then started to rise after the OPEC announcements.

http://futures.tradingcharts.com/chart/CO/60

Meanwhile, Natural Gas goes up nicely in an almost unbroken uptrend week after week which is very nice for the USA considering the many decades even centuries supplies of NG we have aside from the surplus found coming from the mouths of people like "Sgt. Idiot".

-- cpr (buytexas@swbell.net), May 28, 2000.

My Dear CPR...

The only imbecile I have seen posting on this thread is you.

Sgt, F...Feel honored sir! When this type of mentality runs out of reasoned respondses; they attack by using tactics of an Englsh teacher (pointing out that you misspell words, do not put punation in correct etc). It is rather esay to get them flustered! Just suggest that they can be mistaken about something.

And incidently, the refineries cannot increase their production! No matter how low crude goes, gasoline it's self will continue at these prices ( or higher ones) for the forseeable future! And natural gas will continue to be a "factor" also. And both gasoline and natural gas must face the pipe line problems...

"As for me...I shall finish the Game"!

~~~~~~~~~~~~~~~~~~~~~Shakey~~~~~~~~~~~~~~~

-- Shakey (in_a_bunker@forty.feet), May 28, 2000.

>Oddly enough, we haven't heard anything from CPR

I heard that CPR had a heart attack. I also heard that D.D. FirstLight got shipped out to the edge of the planet for her prior Y2K comments. I don't expect that we'll hear from either for awhile. The one I want to find is InfoMagic. Mr. Big claims Info is still in Pittsburgh at Lucent, but I've found no evidence of that.

Lady Buckeye, if you're out there anywhere, I need your talents. I'm in Columbus at your red headed friend's house. Tks.

-- (hungover@home.now), May 28, 2000.

I think CPR should contact the analysts on the site that he refers to and explain to them how oil is in a down trend. According to their analysis on the weekly chart, it is quite bullish. Also, I notice that he didn't address my comments about the crack spread.

By the way, I don't trade futures, only options, so I can't get whipsawed. The most that can happen is that I lose the relatively modest premium I pay for the option.

Now I have a challenge for him. I'll buy another unleaded gas call option this week, this time for a later month than the August one I bought before. I'll have to check which one has some liquidity, but I think it's probably going to be September or October. I'm betting real money that gasoline prices aren't going down as much as the professional traders think they are by the time the option expires. I'll post my buy price when I get my order filled, and my sell price when I sell the option. Let's see him trade the short side, either with futures options as he prefers, and make some money, if he's so sure. That should tell us who is the idiot, assuming we can't tell yet.

-- Sergeant Friday (just.The@facts.Maam), May 28, 2000.

We can all speculate about future oil price trends, and many will. And as always, some smart people will get burned and some dumb people will get lucky.

But ringing in "hidden" y2k problems, somehow unique to oil, and somehow kept secret by everyone, is silly. Not even remotely plausible. You could make a somewhat stronger case for the tooth fairy.

-- Flint (flintc@mindspring.com), May 28, 2000.

I don't think that "hidden Y2K" issues have anything to do with the price hike.

IMO, Saudi Arabia is the one to watch. Right now, Saudi Arabia has serious internal problems to deal with, if the House of Saud want to remain in power. If Saud falls, then the entire Middle East will go the way of 1970's Iran. Then watch the oil prices skyrocket - $30/barrel would seem like a fairytale...

-- Deb M. (vmcclell@columbus.rr.com), May 28, 2000.

Sergeant Friday,

Thought you might be interested in seeing the following thread from the Grassroots Information Coordination Center (GICC) (5/27/2000):

"Refinery problems" figure into soaring gasoline prices

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=003EcY greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

9:05 AM - May 26, 2000 CST "Refinery problems" figure into soaring gasoline prices

From Pro Farmer

We're posting the daily AP commodity roundup below because there's a quiet zinger tossed into Dave Carpenter's comments about gasoline price rises: "problems at refineries" figured into concerns about gasoline prices. Our sources suspect that many of these persistent problems trace back to old process controllers with embedded chips -- which were time sensitive and never replaced during the petroleum industry's massive effort to retool for Y2K -- Year 2000 -- rollover. Although those concerns are largely forgotten, they're not really gone.

A significant fraction of the processors used on assembly lines and process control equipment were stock items which depended on Y2K-sensitive timing logic. Although nobody's focusing on Y2K specifically, these bugs are now cropping up, seemingly at random, causing occasional hassles and chipping into production-line efficiency. That's especially significant in oil refining, which is now crowding its maximum effective capacity. Just a few percentage points of lost efficiency can mean a substantial jump in price. Gasoline prices, like pork prices, are fairly "inelastic:" A 1% shortage raises the price substantially more than 1%. Here's the AP commodities report:

---------------------------------------------------------------------

Associated Press Online // By Dave Carpenter

Unleaded gasoline prices zoomed higher Thursday on the New York Mercantile Exchange, pushing to nearly a nine-year high on the eve of the U.S. summer driving season, which traditionally begins this weekend.

Natural gas futures and crude both joined the bull market for energy products -- natural gas hitting its highest levels in four years, crude its priciest in nine weeks.

In other commodity markets, gold futures tumbled and so did prices for America's top two crops, corn and soybeans.

Gasoline futures topped the $1-a-gallon mark and pushed to within a penny of the nine-year high of $1.025 set in March, just before OPEC countries raised production. Gasoline for June delivery settled 3.19 cents higher at $1.0121 a gallon.

The latest surge comes just as demand is expected to start soaring on Memorial Day weekend, when American motorists hit the roads en masse. Thirty-four million people are expected to travel 100 miles or more over the weekend.

``It's reality setting in,'' said Phil Flynn, energy analyst for Alaron Trading Corp. in Chicago. ``Traders are realizing we're coming into the summer driving season with the tightest supplies in years.

``We're really in a situation where refiners are going to have to refine at a 97 percent clip just to keep up with demand,'' he said.

The latest figures from the American Petroleum Institute, released Tuesday, showed refiners operating at 94.5 percent of capacity last week.

Two other factors buoyed the gasoline market Thursday.

Specifications for reformulated gasoline, a cleaner-burning brand of fuel that represents about a third of the nation's supply, are changing at retail pumps as of June 1, now less than a week away. Refinery problems also exacerbated concerns about low supplies.

Valero confirmed that a sulfur plant at its 80,000 barrel-a-day Houston refinery experienced an unplanned shutdown Thursday. And Venezuela's state oil company was reported to have shut down a 90,000 barrel-a-day facility at its Amuay refinery for 30 days of routine maintenance.

June natural gas rose 16.3 cents to $4.236 per 1,000 cubic feet amid doubts that storage facilities will be replenished by next winter.

July crude settled 58 cents higher at $30.51 a gallon after peaking at $30.55. Also, June heating oil rose .58 cent to 79.09 cents a gallon.

In London, July Brent crude from the North Sea rose 58 cents to $29.19 a barrel on the International Petroleum Exchange.

Gold prices slid in what market watchers described as a technical slide. Dealers said buying interest has dried up in the wake of Tuesday's British gold auction, which produced lackluster results.

June gold settled down $3.10 at $270.70 an ounce on the Comex division of the New York Merc.

Soybean prices dove after the National Oceanic and Atmospheric Administration called for a significant reduction in drought conditions in the western Midwest.

Most of the Midwest is expected to receive 1 to 3 inches of rain in the next five days, with the hardest rains falling on the center of the worst-hit drought area. Three to five inches of rain are forecast for eastern and southern Iowa.

July soybeans fell 15 cents to $5.27 1/4 a bushel.

http://www.agweb.com/news/news.cfm?id=6317&breakingnews=1

-- Martin Thompson (mthom1927@aol.com), May 27, 2000 ________________________________

Answers

The story about the connection between the refinery outages and embedded chips will be the Y2K story of the year.

-- spider (spider0@usa.net), May 28, 2000.

__________________________

Here is a related article from IEE:

The Institution of Electrical Engineers

The Millennium Problem in Embedded Systems

Embedded Systems Fault Casebook (May 1999)

EXAMPLE NO EG-07

Equipment Type DCS

Industry Sector Oil & Gas

PC or Computer based No

System Age 6 years

Application DCS control system control for petrochemical plant

Description of the Problem Online rollover to Year 2000

How was it Identified During testing. Offsite testing on a testbed was performed with satisfactory results. Upon testing of stations on site, control was no longer possible after the system had rolled over to Year 2000. It was not until this problem was evident on three of the four operating stations was testing aborted.

What was the Solution No known workaround. Plant had to be operated from one station until problem could be rectified

Consequences for the SYSTEM System Stops

Consequences of failure to the BUSINESS Near catastrophic. Limited reliability and operability of plant. Reduced production

The Institution of Electrical Engineers

-- spider (spider0@usa.net), May 28, 2000.

___________________________

Martin: Thanks so very much for the post.

Thanks, Spider, for the IEE material.

I am attaching an excerpt from a report of the International Energy Agency that serves as a perfect complement to your posts.

FORWARDED MATERIAL (This material was posted on the web in May of 1999. The actual report may predate that posting.)

Oil Refineries Are at Risk, Says IEA Report

Link: http://www.iea.org/ieay2k/html/refine.htm

Refineries are by design highly complex relying heavily on computers for smooth operation. An extensive survey of a refinery in the UK identified 94 systems requiring investigation for Y2K compliance. Of the systems assessed it was found that three would fail and that two of these three failures would cause a shutdown.

Attempting to trace even a small number of potential Y2K problems at a refinery is undeniably a major undertaking.

Refining is but a part of the general problem facing oil companies trying to address Y2K issues. It is a technologically intensive industry and companies are likely to operate myriad date sensitive integrated systems.

Embedded processors are the main source of this sensitivity and are found in devices such as flow meters, transmitters and smart valves. They are found throughout the oil industry and in all sectors, including drilling platforms, production platforms, pipelines and process plants. In the case of process plants, the devices containing embedded chips are interconnected, making the problem even more complex and increasing the possibility of Y2K failure.

A pilot inventory and assessment of a catalytic cracker and co-generation plant in the US revealed 1,035 systems of which 21% were not Y2K compliant and 6% that would lead to serious plant shutdowns or reduced production capabilities. The catalytic cracker would fail, rendering the refinery incapable of making gasoline. Given the widespread use of catalytic crackers in modern refineries, questions must inevitably be raised about their reliability in other refineries. For the co-generation plant 19% of the hardware, 36% of the software and 24% of the custom code was found to be non-compliant.

In late 1997 one oil companys engineers testing valve control equipment in their refineries discovered thousands of terminals controlling the dispensation of oil to have microchips with Y2K problems. All of the chips required replacement, however it was discovered that the replacement chips would not fit on the existing motherboards. It was therefore necessary to order both new chips and motherboards. Worse still, the replacement motherboards were found not to fit the old valves so the valves themselves had to be replaced. This example demonstrates how a Y2K problem can escalate beyond the original fault to include systems that may actually be compliant. An items Y2K compliancy is therefore no guarantee that its replacement will not be necessitated by problems arising in other equipment. End of forwarded material

-- Paula Gordon (pgordon@erols.com), May 28, 2000.

[End of forwarded GICC post.]

_________

-- Paula Gordon (pgordon@erols.com), May 28, 2000.

Hey,CPR,Hoodlum,what do You mean Natural Gas is going up "nicely".Are You one of them fucking Leaches that tell the Consumers,there is no Inflation.You are the Cause that spawn Hitler Regimes,Wall Street Gangsters and Corporate Criminals,Predators,that need to be curbed one Way or the other.

-- Seeing Eye (keep it up@scum.com), May 28, 2000.

Paula:

Why not post a LINK to this same long post you pasted into another thread? Spamming this forum with speculation based on obsolete test reports doesn't help your cause any more than the lack of REAL problems you can point to.

-- Flint (flintc@mindspring.com), May 28, 2000.

CPR said...

Shove it,. Sgt. Idiot, good try but another failure. The market DID crack even as you morons were talking about "$35/bbl" Oil.

Prices did fall after the promise of increased production from OPEC. The promise apparently hasn't been enough to calm oil markets, and prices are on the rise again.

-- Just (my@2or3.cents), May 28, 2000.

Two can play your game of posting the same info 2 or more times:

Paula Gordon:

Good show but no sale. You are a disgrace to any academic community that you associate with. A review by peers at GWU might be in order if you continue to make a jerk of yourself.

Now you are just trying to "keep your name in play". But, you continue to make a total fool of yourself in public.

A Ph. D. degree presumes that someone has enough education to know when to KEEP HER MOUTH SHUT OUT OF HER OWN FIELD. Even Gary North began to modify and waffle his Y2k views long before 1/1/2000.

You continue to use old data that was never information much less "knowledge".

You have proven you are a totally IGNORANT ASSHOLE about technical matters without the common sense to let this big judgement error on your part simply be forgotten.

Many gave you the benefit of the doubt because it was assumed you were grossly mislead by people like Lord Dumbo of the Navy Papers, Dr. Markie who should have stayed in his field of Quantum Physics and Michael Harden who should have known better.

In fact, the only bigger asshole than you re: Y2k matters was Ed Yourdon.

You make a lovely couple.

-- The Shadow (shadow@knows.org), May 28, 2000.

I wonder what The Shadow's field of expertise is that leads him/her to think it's OK to call someone else an 'IGNORANT ASSHOLE.' Real jerks are those who resort to name calling during a civil discussion.

-- More information please and (less@name.calling), May 28, 2000.

Nice arguements everyone,

You just have to love that oil business with all it's naughty phrases,-- Sergeant Friday (Just.The@facts.maam) seems to relish "crack spread". There are many more like this. My personal favourite was that great drilling documentary, Makin' hole in the eighties.

Sorry if I've offended...:)

-- Will (righthere@home.now), May 28, 2000.

"The Shadow" is another of CPR's multiple personalities. He likes to write under different names to try to fool people into believing that someone agrees with him. As for his area of expertise: he's a real estate broker and amateur commodity analyst.

-- Sergeant Friday (just.The@facts.Maam), May 29, 2000.