What you should garner from this article is that no one in the industry, at least on the west coast thinks there will be any supply disruption at all. Duh. But then again, these are the same bright folks that brought you MTBE and outlawed SKS rifles. I have been worried for a while that LIFO would become a large impediment to refiners securing extra barrels. If there are disruptions to supply, this will prove to be one of the costliest errors in the history of mankind. You see, there is an economic (read accounting) incentive to minimize crude inventories this year.....and since most of senior management thinks Y2K is complete bullshit anyway, they are planning to blow off any extra supply in favor of accounting (read paper dollars) principles. God bless America. I want to be on record as saying that this is one of the dumbest decisions ever made. F-you to all who helped make this happen. To all you spinners and sinners, f-you.

In the interesting rumor department, try this one on for size. Sadamm Hussein is long Dec and Jan IPE Brent in a very large way. Open interest has been climbing like a mother. The plan for him is to tell the UN to shove the oil for food deal and go from exporting 3 mil bbls. per month to almost naught. He will then profit on his futures contracts, screw us in the process, gain favor with the Saudi's by making their bbls worth $5 more, and crater the US economy in the process. Nice game. Did I mention that he's probably going to the Nov. 21st Opec meeting? Oops. Look for this guy to have a car accident or catch severe lead poisoning soon if this rumor is true. I went and searched some headlines and found quite a few that indicate it's veracity. See for yourself below the stupid Platt's article.

More stupid articles on Y2K from Platt's for confirmation of stupidity, shortsightedness and research purposes only:

New York (Platt's)--8Nov1999/1257 pm EST/1757 GMT Most refineries on the US West Coast are choosing the "Last In First Out" initiative over the Y2K readiness program in preparation for the new millenium, refinery sources said.

The LIFO program advocates maximizing products supply and minimizing crude inventory, while the Y2K plan advises otherwise. One refiner said that a high product inventory is a good contingency plan for any possible refinery disruption or shipment delivery breakdown due to the Y2K computer bug. "We like to make sure that we have a steady product supply in the event something happens at the refinery," the source said."Our service stations would not be be left stranded without gasoline if something does happen." New York (Platt's)--8Nov1999/1258 pm EST/1758 GMT While seasonal demand for gasoline typically drops during the winter, a high product inventory could prepare a company for potential crude shipment delays caused by bad winter weather or discharge problems, another source said. Furthermore, most refineries are expected to cut their operating rates to about 66% for the two to three days heading into the year 2000, the first source said. "With the lower refining rates, refiners don't have to keep the crude inventory high," he said. The LIFO initiative would also allow refiners to pay less taxes due to the lower crude inventory in storage tanks at the end of the year, the source said, adding the plan also lowers the company's working capital. New York (Platt's)--8Nov1999/1259 pm EST/1759 GMT A third source said the oil industry is overreacting to the potential of a Y2K problem. "We're expected to be working normally into the new year, and everyone will say that the whole Y2K problem was overblown," he said. However, another source said that demand for gasoline is likely to go up in the last week of 1999. "People will want to store up gasoline, just in case there's a shortage...I know I'm going to do that," he said.

now fresh from the UN Sanction Tour it's the Sadamm Hussein Hour:

99/11/08 PGA 117--Iraq-Resolution 2: Changes made to appease French

99/11/08 RTR PLATT'S: New Iraq resolution should be considered next week: source

99/11/08 PGA 116--New Iraq resolution should be considered next

99/11/08 RTR Iraq says U.S., British planes bomb northern Iraq

99/11/08 RTR British MP attacks UN bids to ease Iraq sanctions

99/11/08 RTR Iraq oil exports rise 260,000 bpd in week

99/11/08 RTR IRAQ OIL EXPORTS 2.49 MLN BPD WEEK ENDED NOV 5, 4-WK AVG NOW 2.38 MLN BPD

99/11/08 RTR PLATT'S: Iraq's oil exports fall 14% in Oct to 2.01-mil b/d

99/11/08 RTR Iraqi oil exports down 300,000 bpd in October-MEES

99/11/07 RTR PLATT'S: Saudis-Iraq 2: Marked progress on islands dispute issue 99/11/07 PGA 365--Saudis-Iraq 2: Marked progress on islands dispute issue

99/11/07 PGA 364--Saudis accuse Iraq of blocking moves to lift sanctions

99/11/07 RTR PLATT'S: Saudis accuse Iraq of blocking moves to lift sanctions

99/11/07 PGA 252--Iraq sending message on oil matters to Venezuela: Chavez

99/11/07 RTR PLATT'S: Iraq sending message on oil matters to Venezuela: Chavez

99/11/07 RTR FOCUS-British MP in Iraq urges end to sanctions

99/11/07 RTR Iraq oil minister to meet Venezuela's Chavez Tues

99/11/07 PGA 117--OPEC-Job 2: Iraq proposed its own candidate

99/11/06 RTR Gore says Iraq must change for sanctions to end

99/11/06 RTR Iraq rejects UN sanctions talks, hails British MP

99/11/06 RTR Iranian minister visiting Iraq for trade talks

-- Gordon (g_gecko_69@hotmail.com), November 09, 1999

Answers

Breathtaking stupidity, yes?

We have proof of one thing in this:

Greed Is Inflexible !!!

(hitting the)

-- snooze button (alarmclock_2000@yahoo.com), November 09, 1999.

I'm holding my breath. Just another confirmation that to rise in the ranks, intelligence is not required.

-- A (A@AisA.com), November 09, 1999.

Gordon,

Terrific Post...I especially like your style on this.

However, FWIW... I know of a couple of oil companies that are not fitting the mold. They intend to take full advantage of any competitors who end up crippled. I'd say more but I'm under a gag order.

RE: Saddam -- Hey, there are also some rumbling suspicions that he might just try another invasion of Kuwait & Saudi Arabia IF the USAF and US Navy don't come thru clean on rollover. IF US military has some severe problems and Saddam's boys can still roll... I would guess that the butcher might just roll his troops southward again in a 10 year salute to the last Gulf War.

RE: Futures... well, IF Saddam were to go to war again, He'd keep his oil for himself...for the his troops. Thus if he's long on oil, the profits he'd reap would compensate for not selling any oil. Of course Gordon... were that to happen...do you suppose the West would allow their market brokers to let Saddam cash in his contracts at a profit? Somehow, I'd guess the assets would get seized.

Keep us posted.

-- R.C. (racambab@mailcity.com), November 09, 1999.

Gordon, This would have made two good seperate threads: Iraq & oil company year end inventory strategies. 1)I'm usually very skeptical of the frequent conspiracy theories that are spun on this forum but I want to lend support to Gordo's contention that Iraq could be taking large positions in the futures markets. Iraq was and is very astute in setting up offshore entities and trading. That regime did alot of this in their pre-war weapons procurements. So all of their oil export funds are subjugated to UN mandates and control. None of their futures trading funds generated through offshore accounts and entities would be. I've watched Iraq waffle, bob and weave on their oil export and UN cooperation for years, figuring they must be taking oil market positions and then jerking our chain accordingly. Not only is it plausible-I think its likely. And Gordo's right- someones trying to make a play on the Dec Brent-wheather its Iraq and/or western trading firms-it sure seems like the ol squeeze play's in the works and US oil economics are gonna hafta follow. RC, the US and UK are having enough trouble just getting the support to keep UN santions in place. I don't think we'd have the authority to prevent nebulous potentially Iraqi, potentially not, trading firms from taking oil futures positions.

2)Further if your an oil company and you hafta keep stocks low for LIFO but you have rollover concerns, how ya gonna play it? Keep physicals low and go long the futures.

Its one more reason for oil market length, not to mention the 2 very bullish inventory reports that came out on Tues- US crude and product stocks are about 50 million barrels below last year at this time and that IEA supply and demand projection was about as bullish as they come even with the lack of year-end stockpiling and rollover probs in their #s.

Gordo I also honed in on the Platts quote on the source indicating most refineries are gonna cut runs at year end. Run cuts would be a clear signal that refiners are acknowledging that maybe refinery rollovers aren't gonna be the non-event that they've been preaching. Would appreciate posts from anyone else hearing about refinery shutdowns or cutbacks at rollover.

Got length (oil market)?

-- Downstreamer (downstream@bigfoot.com), November 10, 1999.

Thanks, Gecko. You keep coming up with the most cheerful bits of intelligence. It's good to know morons are in charge of our most vital resources. I heartily agree with your FU to these greedy, short-sighted twits. Downstreamer: check out "A Graceful Scenario" over at Jim Lord's site. He discusses the strategy of powering down the large industrial complexes at rollover. Chilling. Godspeed,

-- Pinkrock (aphotonboy@aol.com), November 10, 1999.

I attended Dr. Barnett's (Naval War College) show and tell recently. Great Powerpoint presentation, movie themes, snippets of dialogue all great fun. I am sure you have looked at the scenarios that the College has up on its site. However, a snippet of information which got my attention was a statement in response to a question. Q:What would it take to create a 3% decline in imports. ( Roughly similar to the 73 oil crunch.) Ans. A slowdown in port paperwork. Hmmm.Didn't I hear that ECT in Rotterdam is working hard to fix their system.Oh, never mind that is just containers. Sure hope the oil folks are ahead of the curve. Cheers, AGF

-- Drac (Itisdifferentthistime@dowswansong.com), November 10, 1999.

Gordon, or anyone,

Can you please tell us where the rumors about Saddam's Long Crude Futures comes from. Does anyone have an internet link to such an item?

-- Rick (rick7@postmark.net), November 10, 1999.

Rick,

You aren't gonna find any news stories or internet links on it. It is indeed the rumor mill (and one I hadn't heard until Gordo's post). I'm just saying its plausible.

Tis the nature of offshore money. These offshore center's flourish on their guranteed anonymity.ie: The Iraqi funds in the Cyprus account funds the Isle of Man company which has trading accounts in the Caymans etc. And each link of the daisy chain adds another security layer. No one is gonna prove the Iraqi ownership without a few years time, tons of legal bills and an intl court order proving wanton criminal activity. These commodity exchanges and brokerage firms are doing huge volumes without ever really knowing who's behind the trading.

-- Downstreamer (downstream@bigfoot.com), November 10, 1999.

Downstreamer,

Re: Saddam & oil futures and Allied seizures of his funds...

I probably shoulda followed up on that to begin with...but my thought (and that's all it is)...IF Saddam were to invade and TAKE Kuwait and Saudi Arabia, UAE and the other gulf sheikdoms... I'd bet the rest of the world isn't going to complain too much what the USA/UK did with Saddam's funds, just like the last time. When the world is 'short' on oil, attitudes tend to change. Frankly, were that to happen and the USA/UK bogged down in a Y2K mire...it would be a long time before the West could liberate those oil fields. IMHO...

Anyway, that was the idea behind the statement. I just can't see the world joining in support of Saddam taking away their oil and then jacking up the prices to the stratosphere...were such an event to occur.

-- R.C. (racambab@mailcity.com), November 10, 1999.