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Bob van der Valk

 
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  • Busting the Myth About Oil Company Profits [View article]
    I will take your C+ and work to get a B- on my next article. The foreign tax credit has a few quirks to it, which allows oil companies to classify taxes and royalties depending on the country in which they are operating. In other words they are on the "honor system" of reporting those expenses on their corporate tax forms.

    LIFO is alive and well as the accounting system of choice by the super-majors. It is one of the reasons oil prices typically decrease at the end of each year as they lower inventories for tax purposes. They go into reverse right after January 1st when they have to start building up inventories again and prices start going back up again.

    The two cents per gallon overall profit does not calculate since they are excluding their refinery crack spread from the calculation.

    ExxonMobil is the largest super-major vertically integrated oil company in the world.
    May 3 08:55 AM | 1 Like Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    I invite readers to clarify any of the statements made in this article, which was written from an insider's viewpoint of the oil industry. My experience includes being a pricing manager with Unocal Corp. in Los Angeles in the early stages of my career in the oil industry.

    I made comparisons between Apple's income and ExxonMobil's on purpose. It points out the public considers oil companies like a utility and should not be able to raise (or lower) their prices without scrutiny and criticism.

    After ExxonMobil's spokesman, Ken Cohen, wrote an article on their "Perspectives" blog, to blunt the expected uproar about their 1st quarter profits, I thought it needed further examination for accuracy.

    I received an email yesterday commenting about this article, which basically said: "Don't bite the hand that feeds you!". My answer: I am sharing my knowledge, obtained over 50 years worth of experience in the US petroleum industry at this stage of my career, without fear of retribution from my current and former employers.
    May 3 08:40 AM | 6 Likes Like |Link to Comment
  • Increased Visibility for Higher Oil Prices [View article]
    Only when Crane & Company located in Dalton, Massachusetts runs out of currrency paper.
    Apr 30 08:08 AM | Likes Like |Link to Comment
  • Increased Visibility for Higher Oil Prices [View article]
    The increased visibility for higher oil prices is due to people pulling up at the pump and being surprised to see the price of gasoline going up each time they fill up,

    We started out this year $1 per gallon ahead of last year's price. Then we had a perfect storm with the conflicts in NAME, the Japanese nuclear plants melt down and the seasonal switch over from winter to summer blend gasoline.

    The weakening dollar, with the Fed continuing to print money like it is going out of style, helped crude oil along to become the investment-de-jour for savvy followers of the trend between the dollar and commodities.

    Gasoline prices will come down as oil companies adjust themselves to these developments with plenty of room to increase refinery rates. The price of crude oil will also come down with lack of demand with prices reaching their new highs.

    The good news for the economy and gasoline consumers may come sooner rather than later. This year may become an instant replay of what occurred in 2008. Speculators holding the high priced paper barrels are going to get hurt with major commodity players i.e. Goldman Sachs and Morgan Stanley reaping the benefits in spades.
    Apr 29 08:25 PM | Likes Like |Link to Comment
  • $4.25 Gasoline by Memorial Day [View article]
    I consider it an honor having you suggest my writing to be worthy of comparison with Daniel Yergin's. He has an academic background compared to mine starting out working in the petroleum industry at the age of 18. I began as a grunt sweeping floors in the back of the warehouse at the Los Angeles Terminal of the Union Oil Company of California back in October 1959.

    Daniel Yergin deservedly earned his credibility and reputation on the basis of economic reports calling the markets ahead of his time by connecting the dots.

    I am still active in the refining and marketing end of the petroleum industry after over 51 years in the business. The articles and viewpoints expressed are from my on-the-job experiences during my lifetime including being the pricing analyst at Unocal in the early days of my career.

    I make myself to media and other interested personnel including students at different universities to explain and help understand the mechanics of the US oil industry.

    I appreciate the Seeking Alpha web site and its editors for allowing me to share my knowledge and those experiences.
    Apr 26 08:25 AM | Likes Like |Link to Comment
  • Oil and Gas Continue to Rise [View article]
    Good synopsis and great work on your graph about the current state of crude oil and gasoline prices.

    The West Texas Intermediate (WTI) crude oil posting has become secondary by the Brent crude oil one. Gasoline prices have been tracking with the Brent instead of the WIT posting. The WTI crude oil price is expected to come down in the next few weeks with inventories at Cushing, OK at an all time high. Investment banks with large amounts money in crude oil at Cushing are holding on to inventories expecting prices to increase after the summer driving season starts and the U.S. economy continues to improve.
    Apr 11 08:30 AM | Likes Like |Link to Comment
  • War in Libya May Boost Gasoline Prices [View article]
    Your comment is well taken, however the news media are in the business of reporting the news not making it. Importing crude oil from areas like the Middle East and North Africa has been going on for over 100 years. Oil companies explore for oil and have to go where they may find it.

    The US has the capability to be energy sufficient without importing oil but we have political considerations standing in the way of realizing that goal.

    We can get behind the T. Boone Pickens plan to use natural gas as a domestic fuel that will free us from importing foreign oil.

    I would suggest verifying the price of the car you have for sale in Kelley Blue Book. Unfortunately for the US we do not have the same option when it comes to the price for crude oil.
    Mar 22 09:03 AM | Likes Like |Link to Comment
  • War in Libya May Boost Gasoline Prices [View article]
    For the moment oil firms have pulled out their staffs and shut down operations in Libya, which is Africa's third-largest crude oil producer and potentially has the continent's largest oil reserves.

    But it was business as usual for BP Plc and Eni even as the United Nations was contemplating the no-fly zone over Libya.

    On Thursday, March 17, 2011 a BP spokesman was quoted as saying: "At the moment we just have to wait and see. We're monitoring the situation. We have a contract with the National Oil Company of Libya (seekingalpha.com/symbo...) and as far as we know it is still in place".

    BP sees its contract with the NOC as still valid, a day after Italy's Eni became the first Western oil and gas firm to try to rebuild bridges with NOC.

    On Wednesday Eni, which produces oil and gas in Libya, called on Europe to abandon sanctions against Libya and Austria's OMV (originally ÖMV for "Österreichische Mineralölverwaltung), who is also an important player in Libya, said it still saw Libya's NOC as its partner.

    The head of NOC, Shirk Ghanem, signaled Libya’s willingness to keep negotiating even as the clouds of war were forming over his country. On Wednesday, March 17, 2011 he was quoted that Libya's government would honor existing contracts with Western oil companies.
    Mar 21 08:11 AM | 1 Like Like |Link to Comment
  • Japan Earthquake Could Test U.S. With $5 Gasoline Prices [View article]
    Germany already shut down their nuclear power plants and other countries will be doing the same thing. The Japan officials are not being forthright with the news about the meltdown at four of their nuclear power plants. Putting our heads in the sand like an ostrich is not the way to take precautions to not have the same thing happen in the U.S.
    Mar 16 09:05 AM | 2 Likes Like |Link to Comment
  • Japan Earthquake Could Test U.S. With $5 Gasoline Prices [View article]
    Temporary electrical power plants were built with the shortage of electricity during the California energy crisis in the early 1990's. Those and more can be build to be transported almost immediately to Japan to take care of their emergency needs. They run on diesel fuel and natural gas, which cannot be supplies by their local refineries (see my previous comment)

    Any Saudi Arabia unrest will cause the price of crude oil to spike adding additional pressure to fuel prices in the U.S.
    Mar 16 09:02 AM | 2 Likes Like |Link to Comment
  • Japan Earthquake Could Test U.S. With $5 Gasoline Prices [View article]
    Dian Chu and I co-wrote this article. Hope your sense of humor does not cause you to lose your sense of reality.
    Mar 16 08:55 AM | 2 Likes Like |Link to Comment
  • Japan Earthquake Could Test U.S. With $5 Gasoline Prices [View article]
    Gasoline prices are currently being driven by the annual switchover by U.S. refineries from winter to summer grade gasoline, which causes a reduction in supply of about 10%. Refineries typically produce about 80% of gasoline out of a barrel (42 gallons) of crude oil. The remainder of the barrel is refined into middle distillates including diesel fuel, jet fuel and heating oil with the bottom of the barrel going into bunker fuel oil.

    The middle distillate demand was already expected to increase and refiners switched to those products when economics make sense. It takes less refining to produce middle distillates but it has also been the most competitive during the recession. One of the reasons Valero re-opened their Aruba refinery in March was the anticipated increase in export demand of middle distillates backed by robust distillate crack spreads.

    The Gulf Coast refineries had already been producing more middle distillates based on the improved economics putting some more pressure on gasoline prices.

    The Japan earthquake, tsunami and now the nuclear plant meltdown are putting uncertainties into the equation. The wet barrel traders (as of opposed to paper traders) are ready to react to the immediate opportunities coming out of the unfortunate natural disaster in Japan.

    Japan's Cosmo Oil is in the Gulf Coast spot market looking to buy ultra-low-sulfur diesel and jet for early April loading.

    Cosmo Oil 's oil refinery in Chiba, Japan was still burning today due to the earthquake. They have contracts to supply at least one diesel cargo to Chile per month. They have declared a force majeure on that contract and are looking to supply those cargoes from U.S. Gulf Coast refineries.

    Spot market wholesale fuel prices in the U.S. have been gyrating wildly since the market opened this week Monday based on the latest news flashes from Japan and the Middle East.

    Crude oil prices are more related to the unrest in North Africa and the Middle East.

    Gasoline and diesel prices are caught in a perfect storm between crude oil prices, the Japan disaster and the refinery switchover to summer gasoline.

    $5 per gallon for gasoline in the U.S. by the middle of this summer is a definite possibility with the anticipated hurricane season affecting the Gulf Coast refineries.
    Mar 16 08:53 AM | 2 Likes Like |Link to Comment
  • The Fuel Price Breaking Point [View article]
    The West Coast (PADD 5) is traditionally isolated from other U.S. supply regions. Growing population continues to increase demand for energy. Washington state rural areas and some urban areas are still being supplied by expensive heating oil and natural gas.

    The demand from the citizens for cleaner air and mandating to have refiners retrofit to meet those standards makes gasoline more expensive to manufacture.

    Crude oil has be imported into the region from other areas of the world to supply the thirst an automobile driven economy. As long as we continue to rely upon those overseas crude oil imports we will be at their mercy on what we would be willing to pay before we park our cars and start walking again.

    The $5 price for gasoline and diesel may be reached this summer then ebb down again towards the winter.
    Mar 8 08:59 AM | 2 Likes Like |Link to Comment
  • Apple May Become Sirius Radio's Next Biggest Threat [View article]
    I don't own Sirius stock and have no intentions of doing so now or any time in the future.

    But this article's headline got my attention since I am a loyal subscriber to their services and have been for over five years.

    I have been a Seeking Alpha contributor and write articles for them about the U.S. petroleum industry as an active participant for over 50 years. I resent the remarks made by some of the commenters about Seeking Alpha's editors pick of contributors. I enjoy writing for them and have found them to be very selective and fair. Some of my submissions to SA have been rejected in the past but I consider it comes with the territory of being a citizen journalist.

    I own two cars, two Droid phones and two iPhones all set up with Sirius radios. My wife and I listen to various stations from around the country on them from our home in Terry, Montana. I have also purchased Sirius radios for my office in town as well as my daughter's home so we can listen to clear radio reception, which is hard to get in this area. Long drives on business or pleasure, including one I took from Las Vegas to Portland in one day, would have been dreary without Sirius.

    Sirius/XM has been through some financial doldrums but seems to be pulling out of them since the merger. The market just does not have enough room for two competitors offering the same basic services.

    Apple can make improvements to Pandora and become another way to get you to download and pay more of their iTunes content. The two markets are totally different and we use our iTunes account for different reasons and different ways than our Sirius radios.

    My recommendation is to go long on Sirius and Apple and enjoy the different good quality products and services they offer as well.
    Mar 8 08:41 AM | 2 Likes Like |Link to Comment
  • Go North, Young Man, For Energy Security [View article]
    I have been in the downstream end of the petroleum business for over 50 years and did not have to deal direct with our upstream people while working for a major oil company in California during that tiem

    Living in Eastern Montana makes me appreciate that end of the business with the boom and bust cycles between the 1950's and now having the locals jaded about this current boom.

    The Keystone XL pipeline will be build even with the additional environmental impact statement requirements.
    Feb 16 09:06 AM | 1 Like Like |Link to Comment
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