Thursday, July 31, 2008

the point, again, please?

"article There was a gasoline-led rally, but now I think it's running out of puff. It seems to need constant bullish news at the moment to push it up," said Christopher Bellew, of Bache Commodities. "Everyone is talking about demand destruction."

article The White House on Wednesday made a new push for expanded offshore drilling to help lower fuel prices, days after new government data showed American petroleum product exports hit record levels. "The sooner Congress lifts the ban, the sooner we can get this oil from the ocean floor to your gas tank," Bush said. In May, U.S. oil companies shipped 183,000 barrels of gasoline a day out of the country, even as Americans saw prices at the pump steadily rise. U.S. exports of diesel fuel reached 444,000 barrels a day in May, a record for any month and four times higher than a year ago.

article The four-week average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, rose by 11,000 to 393,000 from 382,000 the week before. This was the highest reading since October 2005.

This measure has risen steadily as the U.S. housing slump chilled growth and crimped hiring.

The number of people remaining on the benefits roll after drawing an initial week of aid jumped 185,000 to a much more-than-forecast 3.282 million in the week ended July 19, the most recent week for which data is available.

article Year to date, demand for gasoline is still 2.23 percent weaker compared to the same period last year, MasterCard said. Prices for gasoline are up 37.2 percent since last year, when the national average price was $2.93 per gallon, according to MasterCard. A Reuters poll showed energy analysts forecast that the Energy Information Administration on Wednesday would report a small decrease in U.S. gasoline inventories due to a decline in production and imports.

article U.S. gasoline stocks fell by 3.5 million barrels last week, according to the U.S. Energy Information Administration, countering analyst calls for a 200,000-barrel build.

"The gasoline data showed a stronger demand than expected and support at $120 held, causing crude futures to rally," said Phil Flynn, analyst at Alaron Trading.

The EIA report also showed U.S. crude oil stocks dropped by 100,000 barrels, lower than analysts forecasts, while distillate stocks rose 2.4 million barrels, more than expected.

Additional support came from U.S. refinery problems, with BP cutting rates at its Texas City, Texas, plant due to mechanical problems. Top U.S. refiner Valero plans to cut gasoline production by an average of 330,000 barrels per day (bpd) in the third quarter at its 16 plants.

Who? Valero Energy Corporation (NYSE: VLO) is a Fortune 500 company based in San Antonio, Texas, with 21,836 employees and annual revenue of more than US$90 billion. The company owns and operates 17 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately 3.3 million barrels per day, making it the largest refiner in North America. Valero is also one of the nation's largest retail operators with more than 5,000 retail and branded wholesale outlets in the United States, Canada and the Caribbean under various brand names, including Valero, Diamond Shamrock, Ultramar, Shamrock and Beacon.

Meanwhile, Exxon Mobil made nearly $1,500 per second. Exxon Mobil once again reported the largest quarterly profit in U.S. history Thursday, posting net income of $11.68 billion on revenue of $138 billion in the second quarter. That profit works out to $1,485.55 a second. That barely beat the previous corporate record of $11.66 billion, also set by Exxon in the fourth quarter of 2007.

Face it: oil companies are more addicted to their record-breaking profit levels than Americans are to their oil. And, as the articles indicate, there is plenty of oil in production in the United States. Exports are up, production is down, and existing leases are unexplored. So, Mr. McCain, please explain to me one more time how expanded offshore drilling is supposed to help me? I seem to have missed something.