Subject: Thursday Oil Report Date: 20 Jan 2000 15:42:33 -0000 From: "Y2K People Finding People" Y2K People Finding People - http://www.webpal.org/list.htm

Here we are at Thursday already. The day that I said I would try to evaluate the OIL situation.

The picture is still cloudy. In fact, you might say cloudier. Even darker.

We were looking to see if the price increases were a mere blip or whether they were really going up and were going to go over $28 this week.

Well, they did. They are even over $28.60 as I write at this moment.

Then there was the matter of reported refinery problems. Were they a blip? Or within the parameters of usual problems. Nope, they weren't a blip either. There were a number more problems since friday, and 4 of them were serious. One VERY serious. This far exceeds being any statistical accident. It is Y2K.

BUT, how serious is it? We STILL can't tell. If it continues the way it is going it is going to be pretty serious and can have VERY serious effects for the economy.

What I have felt would be the BIG oil report out of Russia is still cloudy also. There were two positive reports about the Russian pipeline.

However, it is verified that the Russian Missile Warning System is highly dysfunctional. A worry to the West, because we don't want them becoming paranoid. The question is whether there could be other systems like OIL, that are likewise having problems but are still being covered up.

If you are following them, the rumour mills are in full voice this morning about Saudi Arabia. You can, however, discount by 50% the key statement from the Yourdon Report. If you read between the lines, it was made BEFORE the rollover. However, enough Saudi info is coming out to cause some real edginess.

Before Y2K the Saudi's had promised that they would take up any slack. Now, they are saying they are cutting back production to OPEC quotas. One interpretation is - No Y2K problem - no need to provide more than quota. Another interpretation (supported by some technical reports/rumours) is that they CAN'T supply more. (Similar reports coming out of Iraq). And we KNOW about Venesuala - the largest South American exporter to the U.S.

The only REAL barometer of all this is OIL prices and gasoline prices. It takes a while for the oil prices to filter through the refineries and to the gas pump but it looks like it is coming.

Before Y2K rollover, I said, (because most oil watchers said), we will have to wait 6 weeks (mid-February) to tell what happened. That still seems to be the case. It doesn't seem as bad as orignally feared but still, the possibility appears that it could be very serious. We have to keep watching.

THIS is important news right now. The Cuban boy in Florida is not really that important. But how much are you hearing about these refineries, and related matters, on the evening news?

Peace and love, Bruce Beach survival@webpal.org

-- Charli (claypool@belatlantic.net), January 20, 2000

Answers

Small clarification here: there is no such thing as "the Yourdon Report." I've got a discussion forum running over on eGroups (more info available on my web site at www.yourdon.com), and back on Tuesday, a private individual posted a note about his assessment of the Saudi situation. Someone else on my forum then decided to repost it elsewhere, and it popped up on THIS forum last night. I don't think the original poster on my forum intended for his statement to be taken as a "I-swear-on-a-stack-of-Bibles-that-this-is-true" statement.

As Mr. Beach says in the quoted material above, "We have to keep watching." As a non-expert, and non-participant, in the oil industry, that's all I'm capable of doing at this point.

Ed

-- Ed Yourdon (ed@yourdon.com), January 20, 2000.

Charli,

Thank you for this post. Ed, thanks for this forum. It seems that this is the only place one can hear news about Y2K and oil. Again, the Cuban boy was on the news last night, but not a WORD of the refinery problem in Venezuela, or even about the price of oil climbing in the economic report. Likewise, our local paper ran nothing. It's no wonder "Joe Sixpack" is in the dark.

-- No Polly (nopolly@hotmail.com), January 20, 2000.

Americans are mesmerized by the Cuban boy. He's their "Dali Lama child" apparently. They would think the Ven situation to be insignificant. After all, its "just a software problem."

-- Fidel (@ .), January 20, 2000.

They have always kept "Joe Sixpack" in the dark about these important issues. My guess is that the media is being paid big bucks by the oil industry to keep things quiet. That's the only explanation.

-- (paulG31@sestor.net), January 20, 2000.

I work for a large domestic independent oil company. I can't speak for any other company, and particularly not regarding foreign operations, although I do have some industry contacts. But just speaking for my company, if we are having problems, it's not apparent to the employees. I am not in executive management, but I think I would know if problems existed.

We went into rollover with over 50 mission-critical embedded systems that were deemed non-compliant, all of which involved offshore oil platforms. My database shows them all to be online and producing normally.

It's not a conspiracy. Some of us got through rollover with no major problems. So far.

-- Dog Gone (dawgawn@yahoo.com), January 20, 2000.

My guess is that you're just one of the lucky ones or they really are keeping you in the dark.

-- (paulG31@sestor.net), January 20, 2000.

Thanks Dog Gone.

I don't have problems with the USA or UK per se. Funny how the only problems other thn Ven we are hearing about are in the North Americas.

I do have problems with Mexico, Nigeria, Saudi Arabia, Iran, Iraq, Venezuela, Russia et al. Especially with their reporting, as in, lack of it.

-- Andy (2000EOD@prodigy.net), January 20, 2000.

My guess is that you're just one of the lucky ones or they really are keeping you in the dark.

I'll concede lucky so far, but the company would not hide the truth from those employees, including me, who would be responsible for reacting to a problem and solving it. That makes no sense at all. Why would we pretend to have no Y2K problems rather than fix them? We'd only be hurting ourselves.

Believe it or not, most oil companies are not run by sinister J.R. Ewing types. We don't set prices, the market does. There is no grand conspiracy among companies, we are fiercely competitive. (OTOH, there is ample evidence that the US Government has "conspired" with key OPEC nations to provide security in exchange for low oil costs.)

The fact that prices are rising and the Department of Energy is hollering about these levels is a key clue that shortages are developing (or that at least the markets are anticipating one). Foreign countries might well have a political reason for a news blackout of problems with production and/or refining. But the market will be the best indication. It can't be fooled for very long. Remember that just about every country built up its domestic stockpiles of crude and refined products BEFORE rollover. If supply remained constant after rollover, you would expect prices to drop, as existing stockpiles were drawn down. That hasn't happened, and that is powerful evidence that there are problems somewhere.

Just not at my company. Yet. (fingers crossed for good luck)

-- Dog Gone (dawgawn@yahoo.com), January 20, 2000.

Why would we pretend to have no Y2K problems rather than fix them? We'd only be hurting ourselves.

Indeed. This has been the whole problem behind Y2K and why we have all known how serious it really was. Denial until the very end, and then it's too late.

-- (paulG31@sestor.net), January 20, 2000.

Dog Gone,

Thanks for your input. It is good to hear that your company is not yet having problems. You mentioned oil platforms as not having problems. Does your company refine or just drill and pump? I know of two majors that didn't invest heavily in embeddeds and their refineries are doing okay, so far. It does NOT appear that they will have problems. A source with one of those companies told me that his company (prior to rollover) was positioning themselves because their top people had intelligence reports indicating that some competitors were most likely going to have serious problems and they wanted to be in a position to take advantage of it, by attempting to devote extra resources to produce more Jet Fuel, Kero and Heating oil than normal, as they believed some of the players in those products would have difficulty maintaining supply for an indeterminate period of time. These two companies' only real concerns were would they have power, phones and water/sewer during rollover. They figured if they survived rollover they would be in a position to take advantage in these other markets where they had not been so prominent. I've not heard further from this one key source as to how that strategy is working. Plus, it may be too soon for him to know. The markets are now in turmoil in some of these key products, so if these 2 companies were able to produce extra product, then they'll be in a good position to pick up market share and I'm sure they're hoping they could retain that share after things get back to normal, which they surely will sooner or later.

-- RC (racambab@mailcity.com), January 20, 2000.