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Alaska Pipeline Service, which operates the Trans Alaska Pipeline, on Saturday told BP (BP) and other producers to reduce their output by 95%. An extended shutdown could drive oil prices to $100 per barrel.
This is a nasty situation coming in the middle of winter. The Wall Street Journal quoted BP spokeman Steve Rinehart who said that this is a "significant event." He further added: that the latest shutdown means "a big reduction" in the middle of winter "when we have temperature and weather challenges."
We're looking at a 600,000 barrels per day shortfall. Ed Morse of Credit Suisse said: "You can't replace 600,000 barrels per day overnight, especially when there's no other production close by."
The pipeline supplies oil mainly to the West Coast. There is some oil held in storage at the Valdez terminal and refineries could buy more from the Middle East, Russia and Latin America.
The outcome of this mess depends on how quickly the oil flow in the pipeline can be restored. For now, it's a wait and see attitude.
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Reader Comments (Page 1 of 1)
1-10-2011 @ 3:18PM
j said...
The "shut down" if true is just a "reason to increase gas prices and increase oil company profits wake up we are being manipulated that it in a nutshell
We would be paying 1.75 a gallon IF WE STOOD UP and refused to pay what they are charging but we dont they have us by the short hairs and untill the government steps in we are going to comtinue to get the shaft.
Remember John Rockefeller became a BILLIONAIRE selling gasoline for 5 cents a gallon.
remember Henry Ford became a millionaire selling cars for 495 dollars.
we dont have to pay these high prices if we get together a refuse.
1-10-2011 @ 5:07PM
Bill said...
Henry Ford paid $5 per day and did not have to comply with all the current safety standards. I would hate to be in the room when someone trys to get the UAW to go back to $5 per day.
Rockefeller did not have to deal with the EPA and greenies.
1-10-2011 @ 11:43PM
j said...
that is what I am talking about TOO much regulation
the steel plants ran for a hundred years unfortunately causing pollution. Wheras pollution is bad in the long run, the regulaters, EPA, would NOT compomise & those high paying steel worker jobs left town for good; bad for America we as a country are paying for all this regulation now in the fact that NOTHING is manufactured in the US anymore and what is manufactured is being done for wages that no one can live on. We need jobs in this country where a one person wage earner can support their home their spouce and their kids, where iF the spouse chooses to work that is extra income not required income.