Not many have investigated the history of oil prices on this forum, or the disturbances [refinery fires, etc.] that were responsible for shortages in past years. I ran across an article on the internet the other day that reflected what I've seen posted here regarding refinery fires, increasing prices, etc. Unfortunately, on looking again today, I couldn't find the very same article. However, I DID find a few others in which you may be interested.

The first describes a similar situation that occurred in 1996:

Letter describing increased prices and shortages

In the above letter, it was suggested that oil was NOT immediately being purchased to replace supplies because the oil industry felt that they could obtain better prices by waiting. To demonstrate that the same thing may be happening now, I offer the following:

Oil look-ahead

I found even more graphic data on the history of crude oil at this link

For those interested in exploring patterns such as refinery fires, etc., there's PLENTY available if you search by year. 1996 seemed to be a high year for refinery fires across the globe.

-- Anita (notgiving@anymore.com), January 26, 2000

Answers

Great post. This kind of balanced reporting feels like a cold drink on a long hot day. Thanks for digging this out.

-- futureshock (gray@matter.com), January 26, 2000.

If responses are a measure of interest, it sure looks like few are interested in past experiences that could explain current experiences.

-- Anita (notgiving@anymore.com), January 26, 2000.

Anita, relax. Thousands of folks read this forum. I sometimes read 20 or 30 postings at a sitting, print out various links for reference, and never respond to any of them. Especially when a server is slow, to personally thank every person who goes to the trouble to post in a good link would take a lot of precious time away from one's family responsibilities. Many replies share information asked for, differing opinions, or raise related issues. Most folks who post links here know they are offering good service and are content to add to the archives without expecting a thousand thank you's. In all of life, if you do good deeds and give, hoping for certain responses in return, you will end up a very disappointed person, and probably become a controlling woman. Do what is right and lay down all expectations from others, in all of life. Give without demanding return- the only way to happiness.

-- lyn (lynhettler@hotmail.com), January 26, 2000.

Thanks Anita!

-- River Soma (riversoma@aol.com), January 26, 2000.

Lyn [I think...actually I already forgot your name.]

I wasn't looking for THANKS. I was actually looking for ANYTHING that indicated that folks had even LOOKED at the links. Rebuttals would have been great also. This is only the second time I've posted a new thread at TB2000, and the last one was probably in June of 1999. Many here know that I'm optimistic regarding the unfolding of Y2k, and I feared that the thread would be totally ignored.

(((River!)) I didn't even know you were still LURKING!

-- Anita (notgiving@anymore.com), January 26, 2000.

Anita, your post is quite helpful indeed.

Question: you say that "1996 seemed to be a high year for refinery fires across the globe", right? Could you please expand on that ?

I read through the linked documents rather quickly (granted) and only remember mention of 2 (two) California refineries, which is far less important than what we should be talking about.

Thanks. Take care.

-- George (jvilches@sminter.com.ar), January 26, 2000.

George:

Correct. The links I provided only mentioned the one refinery in California. However, I did a Google search using "1996 Refinery Fires" and learned that 1996 had many fires at other refineries. As I said, PICK A YEAR, do a search, and you may be amazed at what you find. Oh...that's www.google.com if you've never heard of google.

-- Anita (notgiving@anymore.com), January 26, 2000.

Good find Anita!

Still, even after inflation, the current prices are higher than in 1996 and we are in the slow month of January, not revving up for the summer driving months yet.

While all of the reasons given in the 1996 letter are plausible, any "proof" would require a statistical regression estimation of the supply and demand factors which have raised the price. It would be interesting to see data from 1996 compared with today's data to see how much more variation there is today and how much of it can be explained by # of SUV's per capita, etc.

Also, 1996 may have been a high year for refinery fires, but how many of them occured in January?

Finally, I disagree with Judith Merchant who wrote the 1996 letter in that the SPR could be used (even as a bargaining chip) to dampen the highs through selling during price spikes and to take advantage of the lows by buying during dips.

-- nothere nothere (notherethere@hotmail.com), January 26, 2000.

Anita, thanks for your quick response.

Now then, taking a look at the graphs and charts you linked, it would definetly seem that whatever we are facing today is equivalent to

(1) the Iran hostages crises plus (2) the Iran-Irak war

or

(3) Desert Storm

as these are the three events that caused oil to go as high as it is today.

Take care

-- George (jvilches@sminter.com.ar), January 26, 2000.

George:

I didn't quite see the graph the same way you did. I think you'd benefit from checking out the fires, etc. that unfold when one searches via google.

I'll be back in a few days. I DO try to limit my Y2k exploration these days, and every 3rd day or so seems to be enough. Hope to see you then.

Anita

-- Anita (notgiving@anymore.com), January 26, 2000.

Perhaps, something is going on. Took grandson to karate tonight and found that diesel fuel is $1.99 at one gas station and $1.79 at another. Regular gas is 1.39 to 1.45 a gallon. Perhaps all the truckers will just park their rigs. Diesel was 1.65 just 2 days ago.

-- janet marsh (jmarsh4185@aol.com), January 26, 2000.

Anita- sorry I misunderstood. keep posting!......Lyn

-- lyn (lynhettler@hotmail.com), January 26, 2000.

It is certainly possible that all of the recent oil industry problems are not related to Y2K. The large number of problems we are seeing in January could be a wierd coincidence. Perhaps more information will become available in coming weeks, but on the other hand, we may never know for sure. If the problems end in a few weeks, it really won't matter what caused them.

-- Dave (dannco@hotmail.com), January 26, 2000.

Anita, quite frankly I believe we should ALL agree in that there is only one way to "see" the graph you linked us to. Good graph by the way, which clearly and unequivocally shows that in the last 20 years the price of oil has always remained below $20/barrell, except in two instances during which the price of oil exceeded $30 for some months, i.e.,

(1)the Iran hostages crisis plus (2)the Iran-Irak war or

(3) Desert Storm.

This is easy to "see", isn't it?

So whatever we are facing today, Y2K or not Y2K has an equivalent importance, doesn't it ?, and equivalent consequences, i.e., worldwide inflation (stagflation maybe? remember?), unemployment, etc.

Of course, $50-60 dollar oil would come about if production has been hindered for a longer period of time, be it by Y2K or whatever, it doesn't really matter. Now that would make the world economy blow up in the air, but let's hope that doesn't happen.

Take care

-- George (jvilches@sminter.com.ar), January 26, 2000.

Dave, you say:

(1) "If the problems end up in a few weeks it won't really matter what caused them"

Only if they are 'mild' problems Dave. Because if they are 'bad' problems, although they may last only a 'few weeks', still they could cause permanent damage to the world economy, as flimsy as it stands today, interrupting JIT, kicking production cycles out of whack, etc. Furthermore, the individuals that froze to death, or the truck drivers that went broke, or the entrepreneurs that lost business,etc. etc., probably would be pretty much affected.

(2) You are also assuming a big IF. "If" the problems last only a few weeks... Obviously enough, things would be different if problems last a few months or a few years instead, right?

(3) Then you also say that "the large number of problems in January could be a weird coincidence". Yeah, whatever. If Y2K doesn't make you feel comfortable as an explanation, let's just call it

"SHSIOAAFOUOSMBACDC"

which stands for "Statistically High Significant Incidence Of Accidents And Failures Of Unknown Origin Some Months Before And After The Century Date Change"

Take care

-- George (jvilches@sminter.com.ar), January 27, 2000.

Hi, George.

A storm woke me early and I thought I'd spend some time exploring this 1996 situation again.

I'm not quite sure I'm reading this correctly, but I THINK the chart below reflects the price of crude in previous years expressed in 1996 dollars. It was easy to look at the graph I presented earlier and say, "Look...oil was at $3.00 in 1970 and it's up to $X now, but $3.00 in 1970 was worth a lot more than $3.00 today. I'll let you be the judge on this one.

Past crude prices adjusted for inflation in 1996

It also looks like the second chart in the above link compares the same prices to 1998 dollars, but AGAIN, I'm not sure I'm reading this correctly. For instance, 1973 prices remain essentially unchanged, while 1975 prices go up substantially.

Here's another letter reflecting the 1996 oil crisis [which seemed most prevalent in California versus the crisis on the East Coast today.]

Regarding looking at the graph differently, George, your concentration was on how many years were spent in the under $20 range and my concentration was on how many years were spent in the higher ranges before this year. I suspect that once you've incorporated inflation into the prices on the original graph, you'll notice that the over $20 years far exceed the under $20 years.

-- Anita (notgiving@anymore.com), January 27, 2000.

I seem to have a talent for screwing up HTML, but if you click on the last paragraph, you WILL see the letter to which I refer.

-- Anita (notgiving@anymore.com), January 27, 2000.

nothere:

You may very well be correct. I haven't faithfully followed inflation. Perhaps you could check the recent figures given and see if they seem plausible?

Regarding the author of the article, I have NO CLUE who that person is, nor am I familiar with the guy who wrote the latest letter. My point in posting the letter at all was to indicate that there seemed to be shortages and increased prices in California in 1996 that somewhat mirror the shortages and increased prices on the east coast that we're seeing today. It's just food for thought. I'm not suggesting it's right or anything. Take a few bites, chew it, and spit out anything that doesn't taste right. [grin]

-- Anita (notgiving@anymore.com), January 27, 2000.

Anita, we both agree on the importance of deflated dollar analysis of relative prices for different commodities at different points in time, and the corresponding purchasing power for different income brackets both here and abroad.

But, if what we end up implying is that the price of oil is really not 'that high' today ($28) because in deflated dollars it should actually be still higher in comparison to X dollars in year Y ... well then we should all be aware that when oil gets its "equivalent price" in comparison to any specific period of time, we might end up with an explosive cost for the world economy, i.e., anything above $45-50 is unbearable under current financial conditions (debt included) of the globalization process.

Same could be said for gas, kero, diesel, etc., etc.

Now then the problem also is the definition of 'price'. We in the West insist that it's in "dollars" (deflated dollars, upflated dollars, future dollars, eurodollars, real dollars, etc.). Arabs, holders of 75% of oil reserves, only want to measure 'price' in terms of ounces of gold. Now then, this is an entirely new ball game Anita.

Take care. (Hey, where is Andy BTW?)

-- George (jvilches@sminter.com.ar), January 28, 2000.

Well, George...I see you responded [after throwing the "under $20 for 20 years" thing across every thread you could find.] Is this what you do when you think I'm not watching, George? [grin]

You mention all sorts of 'flations, George, but wouldn't we all agree that dollars in 1970 or 1980 were worth less in 2000 than they were in those years? No one is using gold to buy things, George, so I don't know WHY you brought that into the discussion. Why are you calling Andy? I'm not a formidable opponent, George. I simply think that we've perhaps been down this path before.

-- Anita (notgiving@anymore.com), January 28, 2000.