Sen. Murkowski warns of winter fuel problems


Washington, DC�Frank Murkowski (R-Alas.), the Senate Energy Committee chairman, last week warned the Clinton administration it needs to remedy US energy supply problems.

Murkowski said, "The recent price spikes and dislocations we have seen, and the others we know we will see soon, are like 'canaries in a coal mine'�they are the early warning signs of a system that is reaching its breaking point. I think the Midwest [gasoline price problem] is just part of an overall energy delivery system in the US that has deteriorated to an unhealthy level."

Murkowski spoke during a Senate Energy and Natural Resources Committee hearing on US gasoline supply problems Thursday. Government and industry officials testified.

The Alaska senator said, "I think we are heading for serious problems after years of neglect. Last winter, Northeast heating oil prices hit the roof when cold weather caused supply problems which couldn't be offset by imported heating oil with a higher sulfur content.

"There is a coming price shock for consumers this winter when they start using natural gas. Even though demand has skyrocketed for this fuel, supply has remained constant. Prices for natural gas are reaching historic highs and storage, which is usually high during the summer months, is extremely low this summer.

"Since 50% of Americans heat their home with natural gas, the Northeast's heating oil problems last year may look like a picnic compared to the howling we will hear this winter."

EIA concerned
John Cook, director of the Energy Information Administration's petroleum division, echoed those concerns. He said distillate stocks remain well below normal.

"Even with a typical inventory build this summer, we likely will enter the winter heating season with lower-than-normal stocks. Strong gasoline and diesel demand this summer will effectively limit heating oil stock building as refinery production is used to meet consumption."

Cook said, "Partly for the same reasons, natural gas has yet to show signs of building adequate inventories ahead of next winter.

"Not only does this mean industrial and utility consumption of more distillate this winter," said Cook, "it suggests utilities may use more distillate this summer to meet peak cooling needs, if natural gas prices remain high through the summer months. This could further reduce distillate stock building, resulting in very low distillate inventories before winter begins."

Cook said the gasoline problems may not be over yet either.

"Midwest stocks are recovering, but East Coast gasoline stocks at the end of June were 8% below their 5-year average, with reformulated gasoline 13% below average. California gasoline stocks were 6% below average.

�Consumers are not expected to reduce consumption much in the short term. As we enter the peak gasoline season, refiners will be pushed to just meet demand. With low stocks and refineries operating at very high levels, supply disruptions could trigger another price run-up."

Industry confident
Red Cavaney, American Petroleum Institute president, said there is no cause for alarm yet about winter fuel supplies.

He said diesel fuel and home heating oil inventories are 8% below average nationally because refiners have been meting summer demand for gasoline rather than building distillate inventories.

He said, "Five months remain for these inventories to build before the beginning of the heating season, and more than 90% of the home heating oil is shipped directly from refineries to consumers�it does not come from inventories.

"In addition, the industry has shown it is able to produce substantial amounts of distillate when the need arises. Accordingly, summertime distillate inventories are not necessarily a significant indicator of fuel availability once the season begins."

Cavaney noted that severe weather, not low inventories, was the principal reason for last winter's home heating oil supply problems in the Northeast.

Related Articles

UKCS report cites need for deep cost cuts

02/24/2015

The struggling producing industry on the UK Continental Shelf needs deep cost cuts, according to the Oil & Gas UK’s Activity Survey 2015.

IHS: Crude transported by Keystone XL would be consumed in US

02/24/2015 Most, if not all, of the crude oil that would be transported via the proposed Keystone XL pipeline to the US Gulf Coast would not be exported, and ...

MARKET WATCH: NYMEX crude oil prices retreat to below $50/bbl

02/24/2015 US light, sweet crude oil prices for April delivery settled below $50/bbl on the New York market Feb. 23, and analyst said oversupply fears were li...

API: US oil product demand reached highest January level since 2008

02/23/2015 US oil product demand rose 1.5% year-to-year to an average 19.2 million b/d in January, its highest level for the month since 2008, the American Pe...

MARKET WATCH: NYMEX crude oil prices slip on ample oil supply

02/23/2015 US light, sweet crude oil prices for March delivery fell during Feb. 20 trading and settled above $50/bbl on the New York market. Some analysts sug...

EOG Resources’ budget down 40% to $4.9-5.1 billion

02/20/2015 EOG Resources Inc., Houston, plans a capital budget of $4.9-5.1 billion in 2015 including production facilities and midstream expenditures, represe...

BHI’s rig count reaches 5-year low; forecast projects more losses

02/20/2015 The US drilling rig count fell 48 units—markedly fewer compared with declines in recent weeks—to settle at 1,310 rigs working during the week ended...

More pragmatism urged for developing Eastern Mediterranean gas

02/20/2015 Eastern Mediterranean nations should abandon inflated expectations and adopt more realistic approaches to developing their natural gas resources, s...

MARKET WATCH: NYMEX crude oil prices down on US supply build

02/20/2015 US light, sweet crude oil prices for March delivery settled at slightly above $51/bbl on the New York market Feb. 19 after a government weekly repo...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Cognitive Solutions for Upstream Oil and Gas

When Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected