Bob van der Valk

Don't Believe Long-Term Oil Forecasts

And they will!


On Nov 09 08:32 AM John Eickholt wrote:

> I hope these oil traders will have to drink the oil for their New
> Years EVE drink.

World Series of Crude Oil: Winner Decides Winter Gasoline Prices

Oct 28 01:53 PM Jack Walker wrote:

> Some of the major oil companies, such as BP, also have trading operations.
> How do we know they are not complicit and participating with Goldman
> and Morgan on the long side regardless of the supply and demand fundamentals?

Jack:

In August 2009 Oklahoma State Attorney General Drew Edmondson filed a lawsuit against BP/Arco (BP). He is accusing them of gaming the price of gasoline and crude oil since 2002. This alleged scheme had previously been brought to the attention of the Federal Trade Commission but Edmondson claims to have found fresh evidence that BP was able to manipulate gas prices by hoarding short-term motor fuel and crude oil supplies.

Bob van der Valk

Gasoline and Diesel Fuel Prices: Scaring Investors in Time for Halloween

On Oct 21 10:17 AM G. L. Turner wrote:

Once again the name gov sachs jumps up in an article as the "culprit" behind a sinister group that is 'messing with the markets', moving them away form fundamentals and controlling them for personal gain.
Where is our CFTC regs we were promised byObama?....Getting short on patience with that dude too, now.

Bob van der Valk response - Goldman Sachs paid $14 million in taxes worldwide for 2008 compared with $6 billion in 2007. The company’s effective income tax rate dropped to 1 percent from 34.1 percent. According to Robert Willens, president and chief executive officer of tax and accounting advisory firm Robert Willens LLC: “Clearly they have taken steps to ensure that a lot of their income is earned in lower tax-jurisdictions”

Flattening Oil Contango: Is It a Bullish Sign?

Dian Chu - You stated that based purely on market fundamentals, crude oil should be priced around $40 a barrel without explaining what those are.

Today forecasting crude oil prices is like trying to drive a car while looking out of the back window. The latest number of what it costs to drill for and bring crude oil to the surface in the deepest part of the Gulf of Mexico is around $40 a barrel. Any price above that is pure speculation depending on demand.

The domestic petroleum industry has been going through boom and bust cycle since I have been involved in it for almost 50 years. This year has been a normal year for the oil companies and with the big money investors on the sidelines the invisible hand of competion should have its way. I have now been joined by some big name analysts i.e. Philip Verleger in calling the crude oil market in the 40's just based on the supply exceeding demand.

Prepare for a Drop in Diesel and Gasoline Prices

Yank - Before passing judgment on my forecasts please read my articles published on Seeking Alpha earlier this year. My theory that gasoline prices are now driving crude oil prices has been true since about a year ago. The US refineries are now in the middle of switching from producing summer to making winter gasoline. That puts an extra 10% of gasoline supply into the market, which is currently running flat on demand. Major oil companies are stuck with the Last In/First Out method of accounting for finished inventories by the end of each year. The same thing occurred at this time last year and the rest as they say is history. Crude oil eventually followed the free fall in gasoline prices and after bottoming out in the early part of this year regained strength in March when - guess what? - US refineries have to switch to making summer gasoline

Get ready for a drop in diesel and gasoline prices

Yank - Before passing judgment on my forecasts please read my articles published on Seeking Alpha earlier this year. My theory that gasoline prices are now driving crude oil prices has been true since about a year ago. The US refineries are now in the middle of switching from producing summer to making winter gasoline. That puts an extra 10% of gasoline supply into the market, which is currently running flat on demand. Major oil companies are stuck with the Last In/First Out method of accounting for finished inventories by the end of each year. The same thing occurred at this time last year and the rest as they say is history. Crude oil eventually followed the free fall in gasoline prices and after bottoming out in the early part of this year regained strength in March when - guess what? - US refineries have to switch to making summer gasoline.

Tiber Oilfield Spells Major Upside for Prices

The Americian oil companies are happy sitting on their crude oil reserves while importing most of the raw materials to run their refineries from abroad. The Petrobas and BP (stands for British Petroleum not Beyond Petroleum) are foreign owned oil companies investing capital into exploring and producing new oil fields.

Another hugh factor will be the fact that the Alberta Canada oil sands companies are gearing up to increase pipeline capacity to pump more crude oil to the US Gulf oil company refineries.

Good information in this article just the wrong headline. Crude oil prices will continue to fluctuate and follow the price of gasoline at the pump instead of in reverse. That is not the case with distillates with prices in lockstep with the price of crude oil. Diesel and jet fuel will move 2.5 cents per gallon for every $1 a barrel of crude oil.

BP's former chairman Sir John Browne divulged during an interview for 60 Minutes in November 2006 that the crude oil in deepest part of the Gulf of Mexico could be brought in for $40 a barrel. Any price they fetch over that will be pure profit.

Gas Prices Will Fizzle Out by October

I am spending Labor day working (now there is a concept) on my article to explain why gasoline prices will dip back down in the fall of this year. It will be posted and submitted to Seeking Alpha as soon as it has been completed.

Gas Prices Will Fizzle Out by October

John Bowman:

You can track my articles and quotes in various US and Canadian newspapers by Googling my name. I correctly called the petroleum market crude oil and fuel price adjustment in August 2008 for the fall and winter of 2008. Since then I have also called the upward movement this year.

In March 2001 I picked up early on the petroleum industry switching to pricing their raw material and finished products with the spot market. This was right after the CFTC had removed the volume limits on trading for international commodity investors.

I am still active after almost 50 years in the refining and marketing end of the petroleum industr and currently analyze fuel pricing for various clients who depend on me short term forecasts to purchase their supplies.

Lull Before the Storm for Gasoline Prices

My professional experience, which continues to this day, has all been in the refining and marketing end of the petroleum business for almost 50 years serving in various management capacities. That includes a stint as the pricing manager for Unocal Corp. in the 70's during which time I learned about the ins and outs of fuel pricing. I have written about those methods in previous articles for Seeking Alpha.

I have learned that the petroleum business runs in cycles during my time in the industry. We are currently in a down cycle but that will change as soon as our economy fully recovers.

No Clunkers for Labor Day Gas Pump Prices

It boils down to pricing at the pump being controlled by an oligopoly and they will price gasoline on the street to what the market will bear. We are awash in crude oil but most of it still in the ground waiting to be explored and produced. The extra barrels of crude oil floating on the ocean in Very Large Crude Carriers are only going to make the traders money.


On Aug 24 03:30 PM The Greatest Rip Off of our Time wrote:

> By now anyone who every considered the supply and demand theory as
> a viable reason for the huge fluctuations in the oil and gas industry
> pricing must now come to terms that is was (and still is) bogus.
> The world is a washed in crude oil today. And yet, still the price
> goes up just in time for Labor Day week-in.

The Real Price of Crude Oil

I follow the logic in your article as well as the plotting on your graphs and they are very impressive. But where in this article does it mention that supply and demand at the pump is what has been driving crude oil prices first down then up since last a year ago?

From an insider's to the petroleum industry perspective that is exactly what is happening now and will continue to happen in the absence of rampant market speculation in crude oil futures.

In a study published earlier this month Dr. Phil Verleger predicted that crude oil will get down to $20 a barrel by the end of this year. I am a little more optimistic and have posted an article on Seeking Alpha predicting $40 a barrel for WTI crude oil and under $2 per gallon pump price for gas by Thanksgiving.

Energy Trends: Crude Oil, Products and the Refining Sector

Your article does leave out the political anti-capatalist atmosphere running rampant in this country as a factor on the future trends in the petroleum industry. They have been painted with a broad brush by the current administration as being greedy and not out for the public good. Alternative energy is being taunted as the panacea to have the US become energy independent by 2020. It will become so with federal support and the carbon cap and trade tax being placed on the refiners. That does not give an incentive to build or improve refineries with the downside being that their products may not have a market. Presiden Obama expects to have that in place by 2012—and he's got high expectations. Obama's administration projects that $645 billion in cap and trade revenue from the likes of oil and electric companies would flow in over the next ten years. That cost cannot be absorbed by the oil refiners and will be passed along to the consumer in higher fuel prices depressing demand even more.

Why the FCC Wants to Smash Open the iPhone

The following email was sent to Randall Stephenson, CEO of AT & T, and Tim Cook, Acting CEO of Apple:

I moved to Montana from Washington in May 2009 and AT & T notified me on July 2, 2009 that they will be cancelling my service as I am in violation of my contract with them. I use my iPhone for business and travel to other parts of the country but apparently Montana is one of the states AT & T which they cannot service iPhone data economically. It was explained to me by your representatives that the cost for access to other carriers exceeds what I pay on the AT & T flat rate data program.

AT & T cell service in Terry, Montana is about the same as Verizon Wireless. Dropped calls, not receiving calls and voice mail messages not received are the rigor with my iPhone. I had great service in Seattle, Washington where I purchased the phone in September 2008.

An email to each of you resulted in a call back from a representative in the Office of the President of AT & T and Apple. But all I received was sympathy and lots of apologies with no solution. The first customer service representative I contacted offered to switch my account to Verizon for me and suggested buying a Blackberry phone. I have just done so without her help and am waving AT & T goodbye.

The following article from Bloomberg tells the story on how exclusive arrangements like the one between AT & T and Apple is good for you but not good for the consumers is being investigated by the FCC.

“IPhone Probe to Focus on Markets Without Service, FCC Head Says
By Todd Shields
July 31 (Bloomberg) — U.S. regulators probing wireless- phone contracts will focus on markets where Apple Inc.’s iPhone and Palm Inc.’s Pre aren’t available to consumers, the chairman of the Federal Communications Commission said.
“There are markets in the country where if you wanted an iPhone, if you wanted a Pre, you just couldn’t get it — from anyone,” Julius Genachowski said in an interview yesterday. “So one question is, is that consistent with broad consumer interests?”
The agency also will consider if innovation is promoted or hindered by exclusive arrangements such as those that limit the iPhone to customers of AT&T Inc. and the Pre to Sprint Nextel Corp. subscribers, Genachowski said.
Genachowski, 46, declined to say what the next steps will be in the investigation, which the agency announced last month after four U.S. senators asked it to examine the exclusive deals. An AT&T executive told a June 17 hearing the deals spur innovation and help lower prices. Verizon Wireless said this month that new deals with handset makers will last no longer than six months, down from one to two years for most contracts.
“Promoting competition is absolutely a main function of the FCC,” said Genachowski.
He took office June 29 as the Obama administration’s choice to head the independent agency that sets rules for telephone, cable and broadcast companies.
Fostering high-speed Internet connections, or broadband, is a priority for the FCC, Genachowski said.
“There’s absolutely a sense of urgency in Congress, the White House, here at the agency, that we need to make sure that the United States communications infrastructure is appropriate for the 21st century,” he said.
Preparing Broadband Plan
Genachowski declined to say whether the agency would seek to write new rules to ensure that Web companies treat content providers equally as it readies a national broadband plan that is due to Congress by February.
The FCC last year censured Comcast Corp. after concluding the largest U.S. cable company had interfered with subscribers’ Web traffic. A lawsuit by Comcast seeking to overturn the decision awaits oral arguments in the U.S. Court of Appeals in Washington.
“We expect to prevail,” Genachowski said.
“There shouldn’t be any doubt that the FCC will enforce non-discrimination,” he said. “The Internet needs to remain open.”
Genachowski said he has devoted time to meeting with FCC staff.
“My visits around the agency have convinced me that the agency needs to be retooled and revitalized, and that that’s not a controversial proposition inside the FCC,” Genachowski said.
‘Shortchanged’ Consumers
At Genachowski’s June 16 nomination hearing, West Virginia Senator Jay Rockefeller, the Democrat who heads the Commerce Committee that oversees the FCC, said the agency has “shortchanged” consumers. Rockefeller told Genachowski to “fix” the agency.
Genachowski said yesterday that he didn’t want to comment “on where the agency has been.”
In December, congressional Democrats said his predecessor, Kevin Martin, a Republican, abused his powers and created a “climate of fear” at the agency. Martin followed the same procedures by Democratic and Republican chairman alike, an FCC spokesman said at the time.
Genachowski attended Harvard Law School with President Barack Obama and helped shape his technology agenda. He was an adviser to IAC/InterActiveCorp Chief Executive Officer Barry Diller, and earlier served as an attorney at the FCC and a Supreme Court clerk.”

Last Thursday while I was in Billings dropping off my daughter at the airport I checked with the Best Buy store in Billings on iPhone availability in Montana. After the clerk told me that their store was not allowed to carry the iPhone he proudly told me that he has a family member in town who had obtained one by using his cousin’s Denver home address to get one and sign up with AT & T. So it’s legal to own and wear a gun on your hip in Montana but AT & T forbids you to use the iPhone there!

Hello Blackberry Storm, goodbye Apple iPhone.

AT&T: The iPhone's Achilles' Heel

This article and the one previously written by MG Siegler were very timely. I too have been having issues with my wireless service from AT & T but not for the same reasons. In fact not receiving my phone messages is the least of my problems although I now have my home phone set up as my base for doing business.

I wrote the following email to Randall Stephenson, CEO of AT & T, after contacting their customer service as well as posting my laments on their networking web site:

"Mr. Stephenson:

I am contacting you direct since I have been unable to obtain satisfactory answers to my question about the lack of service in the area to which I recently moved.

It seems like my wife and I, both of us own iPhones, have entered Dark Territory insofar AT & T is concerned. We purchased our cell phone in Issaquah, Washington back in August and Septermber 2008 after receiving satisfactory service from your company in Las Vegas, Portland - OR, and Seattle since November 2006. We especially liked the fact that you offer roll-over minutes on your program. Verizon had been our carrier for twenty years prior and did not respond to my inquiry as to why did not offer a similar rate program for their cell service.

My complaint with your company is that your customer service is more interested in telling me chapter and verse according to AT & T policy rather than dealing with me as a valued customer. Both customer representatives, whom I am copying with this email, kept apologizing profusely for not being able to help me keep AT & T as my carrier in Montana. The policy and the contract I signed was explained to me in every detail, something your sales people at the your store neglected to do, and offered to set up an account for us with Verizon Wireless. I objected to that only because it will make my iPhone useless other than as a mini-laptop with no access to email etc.

My real complaint is that your marketing strategy has only now become very obvious to me. You are only interested in providing service in areas where you are a direct carrier. The hardware used towards that purpose has become secondary and as your exclusive with Apple is expiring soon will not be your main driving force to obtain profit for your stockholders.

Thanks for listening to me and would appreciate a response (hopefully positive) back from you as soon as possible.

Bob van der Valk
Terry, MT 59349
[phone] cell (this number might be cut off any day by AT & T)"

I received a call back almost immediately from Justin K. (last name withheld) in the Office of the President. He was able to get me the answer I was looking for within two days after calling their customer service department several times. When you violate your agreement with AT & T, they will give you 90 days from date of notification to either get your act together or change carriers. They will allow you to cancel without penalty but you are not allowed to keep the phone number.

I asked Justin to convey a message to Mr. Stehenson from my wife and myself. Put up a sign at each border crossing into Montana with a drop box next to it that says "iPhones are not allowed in Montana. Please drop them in the box. They will be returned on your way back home". I also have a new slogan for the State of Montana "Big Sky Country" they can use "No iPhone Country" instead. Good bye from Montana where it is legal to carry a gun on your hip but iPhones are outlawed by AT & T.