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Bob van der Valk  

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  • Will Strategic Reserves Release Provide Gas Price Relief? [View article]
    Caymagnate - The IEA is located in Paris and the US is a member. The data gathered by them from their members is distributed publicly on their web site. They do not have direct control on petroleum inventories and members like the US, who have their own SPR's, vote on releasing any of it on the market. They have now decided to make their European members come up with about half of the 30 million barrels in finished products instead of crude oil. The US will be selling their 30 million barrels of crude oil to the highest bidder. Restrictions on the sale include not having the crude oil exported unless it is for finished petroleum products in exchange. The proceeds of the sale will go back into the trust fund set up to refill the SPR when the DOE decides to do so.
    Jun 29, 2011. 08:09 AM | 1 Like Like |Link to Comment
  • OPEC: Duel in the Desert [View article]
    The US cannot afford to have world crude oil prices being determined by a cartel. In the US it would be considered illegal if the super major vertically integrated oil companies met together to set a price for their products. We have enough crude oil and natural gas in the Americas to offset any of the current imports from the Middle East and North Africa.
    Jun 13, 2011. 07:59 AM | Likes Like |Link to Comment
  • OPEC: Duel in the Desert [View article]
    It was Iran, who made the mistake to take on Saudi Arabia "The biggest camel in the desert" 30 years ago, with the other members of OPEC having no choice in having to go along with the low crude oil prices.

    The fight about who actually controls OPEC also has a religious tinge with Shiites and Sunnis factions in Muslim countries at odds with each other. The minority Shiites have the money and run the monarchies with an iron fist over the majority Sunnis in some of the countries in the Middle East.
    Jun 12, 2011. 08:45 AM | 1 Like Like |Link to Comment
  • OPEC: Duel in the Desert [View article]
    Ben Gee - Saudi Arabia has already upped the ante by increasing their crude oil exports by 500,000 barrels so far this year to make up for some of the Libyan shortfall. They can increase their exports another 1 million barrels without a problem. The amount of increase by Saudi Arabia will supplement the Libyan crude oil. Quality of the extra crude oil production is not the same as the Libyan and will be more suitable for export to the US refineries than ones in Europe and Asia.

    Saudi Arabia can flood the market as they did 30 years ago when they punished Iran for not falling in line with OPEC production quotas. The price of crude oil in 1981 was $38 versus a low reached in October of 1988 of $12.50 a barrel.
    Jun 11, 2011. 08:58 AM | 2 Likes Like |Link to Comment
  • OPEC: Duel in the Desert [View article]
    Ben Gee - The information in this article was reviewed by an 'official' observer from OPEC, who attended the June 8th meeting. I ran this article by my 'source', including the information attributed to Reuters, before publication on Seeking Alpha. The only correction made was my quote about the seating of the Libyan oil minister,Omran I M Abukraa.

    I am not closely following the EU controversy but with the European countries, including Spain, Greece and Ireland, in severe financial crises it would not surprise me they are on the verge of going it alone.

    Since you are likening OPEC to the EU why not throw in NATO as well? The US is paying 75% of the cost to fight Gadaffi by supporting the Libyan opposition. But France is taking most of the credit for the current stalemate in Libya. Only seven of the 13 NATO countries have actually supported the effort with either troops, supplies or monies even though it was an unanimous decision, based on human rights violations by Gadaffi, to enter the Libyan civil war.

    OPEC, NATO and the EU are all throwbacks to the cold war years. This is the Spring of Democracy around the world and we no longer need to build walls around us and continue to have exclusive organizations to protect us from our enemies.
    Jun 11, 2011. 08:44 AM | 3 Likes Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    You apparently would like to have the oil companies be regulated like a utility company supplying their critically needed products. Presidents Ford and Carter tried to do it with creation of the Federal Energy Office (FEO), which eventually leading to gasoline allocation and even rationing back in the 1970's.

    You can read all about it in this Time magazine article:
    May 30, 2011. 08:57 AM | Likes Like |Link to Comment
  • The Great Cross Market Crude Oil Speculation Scheme of 2008 [View article]
    Mr. Fredriksen's attorneys are probably feverishly working behind the scenes to work out a settlement with the CFTC. BP ended up settling a similar case involving these two people in 2003 not admitting to any wrongdoing and paying a substantial fine. Nick Wildgoose and Jim Dyer were "let go" and then went to work Mr. Fredriksen, the deep pocket in this case, keeping the same scheme intact.

    The CFTC has not been paying much attention to the physical crude oil traders but have now been brought into the real of the real world of oil trading. Whoever controls the WTI crude oil posting can do some major damage to the normal course of trading physical crude oil barrels.

    In a speech at the Los Angeles Petroleum Club in March of 1982 Fred Hartley, the CEO of Unocal, warned of this very thing could happen. The timing of his speech coincided with the Nymex starting its crude oil and gasoline trading.

    The question remaining is whether we should go back to the good old days of trusting oil companies to post their own crude oil prices at fields with prices dependent on the gravity and cost for exploration and production of the crude oil?

    Stay tuned for more action by the CFTC on the oil speculation front. This lawsuit was just a puff of smoke on the horizon warning bigger players of being investigated in their dealings.

    Nick Wildgoose and James Dyer may be used as pawns in this game and be asked to turn on their previous employers for smaller fines by giving inside information on how their scheme was able to work for such a long time without much scrutiny from the regulators
    May 27, 2011. 07:54 AM | 3 Likes Like |Link to Comment
  • Oil and Gas Prices Down for Memorial Day - But Afterwards? [View article]
    Me estimate on the exact gasoline price is based on information available at the time I write my articles. My current forecast on the "trend" will be for gasoline prices to stabilize and go back up after Memorial Day and stay up until after Labor Day due to summer driving demand and the hurricane season coming upon us.

    Oil refineries, starting in California, switch back to producing winter grade gasoline in the middle of September with additional supplies of gasoline dampening prices.
    May 24, 2011. 09:40 AM | Likes Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    The statement made by ExxonMobil's Ken Cohen about paying taxes did not elaborate this point very well. The bottom line is those taxes or royalties paid to foreign countries are not being paid to the US treasury. They simply become a cost of doing business in those countries and should be declared as expenses. Current law allows the oil companies to declare them as taxes paid to the US government by allowing them a dollar for dollar reduction on taxes owed on their corporate tax returns.
    May 12, 2011. 08:18 AM | 1 Like Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    The currently much maligned oil depletion allowance assists independent oil producers, the wildcatters in the business, more than the oil majors in exploring for much need domestic crude oil. They are vertically integrated oil and gas companies involved in all stages of the oil industry - exploration, production, refining, trading, marketing, and, sometimes, transportation.

    The supermajors are the five largest oil companies, formed during the consolidation of the oil industry during the mid-1990s:

    Royal Dutch Shell

    Elimination of the depletion allowance will eliminate some of the wildcatters exploring and drilling for oil in areas of the country often overlooked by the supermajors.
    May 11, 2011. 08:32 AM | 2 Likes Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    Caymagnate - You are correct there is no collusion between oil companies to fix rack or DTW prices in any area. In response to your statement about being in an area of the country where Brand A was consistently higher than Brand B; On the West Coast BP-Arco has the lowest with Chevron typically having the highest pump prices at their retail stations. Arco prices are ignored on pump price surveys taken by the other major oil companies in the area. My experience includes being a major oil company dealer operating three 24-hour gas stations for almost 12 years in the Ventura County, CA area. Major oil companies obtain Dealer Tank Wagon (DTW) pricing data from the Lundberg Survey and are able to obtain the most secretive part of the retail gasoline business without being accused of any price collusion. Pricing managers at the oil companies have the ability to set their DTW and rack prices according to their ability to supply the percentage of the market they can handle with their refineries. Rack prices are more accessible and obtained through commercial publications like the highly regarded Oil Price Information Service (OPIS).
    May 10, 2011. 07:46 PM | Likes Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    Your reponse to my article is appreciated and I agree with most of your comments.

    My over 50 years career in the oil industry includes working for Unocal in Los Angeles for twenty years with the remainder on the independent refining and marketing side of the business.

    I did not observe or hear of any price collusion for fuel during those years in either the Exploration & Production (E & P) or Refining & Marketing (R & M) side of the business. My articles are intended to give the reader a perspective from the fuel side of the business. I agree crude oil, being the raw material from which all fuels are refined, plays a very important role in determining the final price paid for fuel at the pump or delivered to commercial accounts.

    The US petroleum industry in an oligopoly with companies watching each others production very closely.

    Gasoline zone and fuel rack pricing play a very important part of the R & M side of the business making the difference between showing a profit or a loss in those separately accounted for profit centers at the super-major oil companies.
    May 10, 2011. 08:55 AM | Likes Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    The prices charged for gasoline in each part of the country is tied to supplies available from the refineries in that area. Some areas are supplied by pipeline and identify with pricing from the refinery from which the fuel is shipped.

    Branded major oil company stations receive gasoline from those racks are charged a Dealer Tank Wagon (DTW) price by their suppliers. Those prices do not necessarily follow the unbranded non-contracted station prices.

    DTW gasoline prices are tracked by the Lundberg Survey, a privately held petroleum pricing data gathering company, located in Camarillo, CA. Trilby Lundberg is their major shareholder and her bi-weekly statistical gasoline pricing report is widely distributed and reported on by the media.

    The Lundberg DTW pricing is available by subscription only and the major oil companies access to this information in the process of making pricing decisions.

    I have already outlined the method on how major oil companies control their DTW prices in my article. Major oil companies mirror each other's gasoline prices, not only by comparing checking prices on the pump, but also use the Lundberg Survey data in determining their competitive posture in each community in which they have retail stations.
    May 5, 2011. 08:21 AM | Likes Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    I will take that B and settle for what I can get. You have been a good wall to bounce off with my knowledge about the innerworkings at a big oil company.

    Once the oil company decides to go with the LIFO system, they have no choice but to stick to it unless they want to incur a big all at once tax liability. Tom Kloza at Oil Price Information Service has written extensively on this system of accounting by the US oil companies and the articles can be accessed on his personal blog.

    Nigeria is an example of where ExxonMobil has been forced to pay off corrupt government officials under the guise of paying taxes instead of royalties. They then get to declare those as taxes paid on their US corporate tax return.
    May 4, 2011. 09:04 AM | 2 Likes Like |Link to Comment
  • Busting the Myth About Oil Company Profits [View article]
    At least read my article before making up your mind. Everyone is entitled to an opinion even if we don't agree with them
    May 3, 2011. 12:48 PM | 1 Like Like |Link to Comment