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Chevron: production low, but profits hit the roof October 28, 2011

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Chevron’s profits more than doubled in the third quarter, powered by rising prices for crude oil, eventhough production sliped.

San Ramon-based Chevron earned $7.83 billion, up 108 percent from the $3.77 billion Chevron earned in the year-ago quarter. Revenue jumped 29.6 percent and totaled $64.43 billion in the July-September quarter.

Profits topped Wall Street’s predictions. The company earned $3.92 a share, while a FactSet Research survey of analysts projected $3.47 a share. Revenue, though, fell short of the expectations of $70.4 billion.

Chevron’s shares rose slightly, 0.2 percent, during the first two hours of trading.

The company’s energy production slipped in the quarter. Chevron product 2.6 million barrels a day in the 2011 third quarter, down 5 percent from a year ago.

“We had another successful quarter,” CEO John Watson said.

The company said the trend of rising oil prices bolstered its exploration, development and production operations, also known as the upstream business. Asset sales and improved margins at its refiners boosted its refining, retail and transportation activities, known as the downstream operations.

Profits from the upstream operations totaled $6.2 billion, up 74 percent from the year before. Downstream profits totaled $1.99 billion, more than triple, or a 252 percent increase from the year-ago quarter.

The company’s refinery operations in the U.S. appear to be faring better. U.S. downstream profits doubled and increased 102 percent, totaling $704 million. The company said margins improved for sales of refined products such as gasoline.

Downstream results in the U.S. also benefitted from lower operating expenses, Chevron said. The company has been trimming its staff in locations such as San Ramon, Concord, Richmond and Houston.

In recent days, Exxon Mobil, Royal Dutch Shell and BP reported a surge in quarterly profits even though they’re producing less oil from fields around the world. Although oil companies, including Chevron, are spending billions to develop new oil and natural gas fields, it could take years or even decades before the fields produce energy and revenue.

Chevron said it continues to make strides in its major capital projects, such as those in Australia.

“The Wheatstone and Gorgon liquefied natural gas projects are expected to provide substantial new energy supplies to meet growing demand in the Asia-Pacific region,” Watson said.


Glencore sells naphta, Hin Leong buys gasoil October 19, 2011

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Glencore International AG sold naphtha for a third day in Singapore, Asia’s biggest oil-trading center. Hin Leong Trading Pte paid a higher premium for two gasoil cargoes.

Light Distillates Glencore, the world’s largest commodities trader, sold a 25,000 metric-ton, open-specification naphtha contract for the first half of December, according to a Bloomberg survey of traders monitoring transactions on the Platts window.

The company received $907 a ton from BP Plc. Naphtha’s premium to London-traded Brent crude futures increased 83 cents from yesterday to $67.42 a ton at 6 p.m. Singapore time, based on data compiled by Bloomberg.

This crack spread, a measure of refining profit, widened for the second time in three days.

Middle Distillates Hin Leong bought gasoil, or diesel, with 0.5 percent sulfur for a second day in Singapore, according to the Bloomberg survey. The closely held trader paid 40 cents a barrel over benchmark quotes to ConocoPhillips and BP for 170,000 barrels each.

That’s a higher premium than 10 cents in yesterday’s transactions. Gasoil’s premium to Asian marker Dubai crude fell 91 cents to $15.22 a barrel at 2:31 p.m. Singapore time, based on data from PVM Oil Associates Ltd.

Oil volatility: will the Fed make its effect? September 21, 2011

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Oil options volatility slipped as the underlying futures rose for the first time in three days on speculation the Federal Reserve will take steps to bolster the U.S. economy, increasing fuel consumption.

Implied volatility for at-the-money options expiring in November, a measure of expected price swings in futures and a gauge of options prices, was 40.9 percent at 1:18 p.m. in New York, down from 42 percent yesterday.

Oil for October delivery gained $1.02, or 1.2 percent, to $86.72 a barrel on the New York Mercantile Exchange. Prices have fallen 5.1 percent this year. October futures expire at the close of floor trading today. The more active November contract advanced $1.09 to $86.90 a barrel.

The most active contract in electronic trading today was November $70 puts, with 1,473 lots changing hands. The options fell 12 cents to $1.43 a barrel. December $85 puts, the next- most-active options, slipped 36 cents to $5.12 a barrel on volume of 1,449 lots. One contract covers 1,000 barrels of crude.

The volume of puts outnumbered calls by more than two to one in electronic trading.

The exchange distributes real-time data for electronic trading and releases information on floor trading, where the bulk of options trading occur the next business day.

November $105 calls were the most active options traded in the previous session, with 7,374 lots changing hands. They fell 3 cents to 14 cents a barrel. The next-most active options, November $75 puts, gained 33 cents to $1.20 a barrel on volume of 4,664.

Open interest was highest for December $100 calls with 52,308 contracts. Next were December $70 puts with 45,925 and December $50 puts with 45,258.

Oil demand should remain strong, oil getting higher July 13, 2011

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Oil rose Tuesday after the Organization of Petroleum Exporting Countries said global demand will be the highest ever this year, although the “unsteady” global economy may slow demand more than previously thought.

Benchmark West Texas Intermediate crude for August delivery rose 45 cents to $95.58 per barrel in morning trading on the New York Mercantile Exchange. Brent crude, which is used to price many international oil varieties, fell 54 cents to $116.70 per barrel on the ICE Futures exchange in London.

Analysts and investors pay special attention to world demand forecasts. The expectation that China and other developing nations will keep using more crude has supported prices this year despite weak gasoline consumption in the U.S. and a festering credit crisis in Europe that has raised concerns about international demand for oil.

While OPEC thinks global demand will continue to increase this year to the highest levels ever, the monthly report it released Tuesday said that demand won’t grow as much as it previously expected. The cartel said daily world consumption will increase this year by 1.36 million barrels — down from a previous estimate of 1.38 million barrels — to an average 88.18 million barrels.

OPEC said it cut demand expectations “as the unsteady global economy has added risks to the forecast.” The report also said it’s hard to estimate how much oil the U.S. will consume this year. Gasoline consumption fell ahead of the summer driving season as retail prices approached a national average of $4 per gallon. A gallon of regular has since dropped by nearly 35 cents to a national average of $3.636 on Tuesday, according to AAA, Wright Express and Oil Price Information Service. It’s still 92.1 cents higher than the same time last year.

Meanwhile, the Labor Department said Tuesday that job openings were flat in May, suggesting that hiring may not pick up this summer. The U.S. trade deficit also jumped in May to the highest level since October 2008, primarily because of a surge in the price of oil imports at that time.

In Europe markets slumped on fears that Greece’s financial crisis would spread to Italy and Spain. The dollar continued to rise against other major currencies. Oil, which is priced in U.S. currency, tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money.

In other Nymex trading for August contracts, heating oil fell 2 cents to $3.0657 per gallon and gasoline futures lost 2 cents at $3.0515 per gallon. Natural gas gained 1 cents at $4.291 per 1,000 cubic feet.

Is IEA oil release a stimulus measure for consumers? June 27, 2011

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The International Energy Agency’s planned release of oil from reserves is being used as an economic stimulus measure that will serve as a “tax cut” for consumers if it’s successful in driving down prices, according to a report today from IHS-Cambridge Energy Research Associates.

The release from emergency stockpiles of 60 million barrels of oil, or 2 million barrels a day for 30 days beginning next week, follows a disruption in supplies from Libya and could boost both consumer spending power and confidence, according to IHS-CERA’s Daniel Yergin and James Burkhard.

“Although oil prices have come down since Brent reached $126 per barrel in April, worries about the potential for another economic slowdown have grown,” the report said. “The oil release signals that IEA members are taking into account the broader macroeconomic environment to decide on using strategic reserves.”

Oil for August delivery declined 25 cents to $90.77 a barrel at 2:04 p.m. on the New York Mercantile Exchange. Prices have fallen 2.8 percent this week and gained 19 percent in the past year.

Oil companies profits : problem or solution? May 25, 2011

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A very interesting analysis of the usual critics of oil companies major by the republican blog Red State. Read, think about it, and let me know what you think about this…

Left to its own devices, the oil industry is its own worst enemy. Relatively low barriers to entry have made the industry freely competitive. The reward goes to the quickest and the most efficient companies; just like in a Gold Rush, we remember the big winners and quickly forget the also-rans. Since the days of Colonel Drake, Patillo Higgins and Dad Joiner, twas ever thus.

The consumer ultimately benefits from a profitable and efficient energy business in the form of affordable and abundant energy supplies. This is because energy is essentially a “grow or die” business. An oil company that does not efficiently replace its production with new reserves is essentially holding a “going out of business sale” with every barrel of oil it produces.

The effort to replace reserves is funded out of profits.To hear the press or Leftist politicians speak, you would think that oil industry profits are a problem, a problem that desperately needs a government solution (read: higher taxes). (more…)

The myths about oil companies profits May 2, 2011

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As every year at this time of the year, journalists start to comment oil companies mega profits… What’s the truth behind these reports… Here is an interesting article to make up your mind from a different perspective.
What can we do to stop commodity speculators from causing the rapid hike in gasoline prices? Arrest them, put them in jail, and try them before a jury before we hang them?
Early last week, President Obama started that ball rolling by telling U.S. Attorney General Eric Holder to stop oil market fraud. Holder promptly announced he was appointing a “working group” focused on rooting out the cases of fraud in the oil markets that might affect gasoline prices. This might work in any other business, but the petroleum industry is not going to be simple to control.
Later in the week Exxon Mobil (XOM) reported first quarter profits went up a whopping 69% to $10.7 billion from the same quarter a year ago. This ignited a firestorm almost immediately, raising the ire of politicians and activists alike who accused the oil industry of profiteering while Americans pay nearly $4 a gallon for gasoline.
Instead of being good news, it was reported as bad news on the front page of major newspapers and became the lead off story on most TV and radio news broadcasts.
On the other hand Apple (AAPL), which showed a 95% increase in net profits in its quarter, from $3 billion to $6 billion, had Steve Jobs proudly announce those results in his April 20, 2011 news conference.
No one screamed “off with their heads” about Apple’s profits, so why all the brouhaha about Exxon Mobil and the other oil company’s profits? Surely they are both stalwart organizations making the capitalistic system work for their shareholders, expecting to receive a fair return on monies invested in those companies. They should be allowed to make a profit with products everyone either wants or needs and you can charge for them according to what the market will bear.
Exxon Mobil sent out Ken Cohen, Vice President of Public and Government Affairs, to face skeptic reporters at a news conference on April 28, 2011. He launched a preemptive public relations strike to blunt expected criticism from politicians and the public about of seeing gasoline pump prices increase along with Exxon Mobil’s profits.
The following graph from the U.S. Energy Information Agency (EIA) shows the results of what happens to oil company profits when crude oil prices increase:
Click to enlarge
Ken Cohen wrote an article entitled: “Gas prices and industry earnings: A few things to think about”, which can be read it in full on the Exxon Mobil Perspectives blog.
Exxon Mobil does not own the patents to the iPhone or iPad franchise but they have something even better by being the largest company in an oligopoly made of oil companies producing a product we cannot do without, fuel.
A few of the talking points used in Ken Cohen’s article need closer scrutiny and examination since they are now been repeated almost verbatim by pundits and analysts alike:
  • Point: We don’t own 95% of our station, and therefore we don’t set the price.
  • Counterpoint: The first part is correct; however the retail pricing manager for Exxon Mobil checks the spot market regularly during the day and makes wholesale pricing decisions dependent on the area of the country. The methods used by Exxon Mobil are rack and zone pricing giving them the ability charge whatever the market will bear. The competitive pricing data is gathered for them by third parties such as Oil Price Information Service and The Lundberg Survey. The latter is the most important one since Lundberg gathers Dealer Tank Wagon (DTW) prices for each locale in which ExxonMobil has retail operations. Rack pricing is used to set the wholesale prices for either branded or unbranded gasoline. The DTW prices are charged to those dealers that have branded supply contracts direct with Exxon Mobil. These are not the prices posted on the pumps at the station and are the most secretive part of gasoline retailing. Zone pricing, or a Temporary Voluntary Allowance (TVA) method of pricing, controls almost 85% of all the branded-contracted gasoline sold in the U.S. with the difference sold to unbranded non-contracted stations.
  • Point: Local stations are often owned by a businessman or businesswoman in your community, and they set their own prices based on local market conditions.
  • Counterpoint: The owner or dealer of a local station receives deliveries of gasoline with the new wholesale price set by the oil companies, and then adds a margin to the gallon of gasoline. They are contractually obligated with long term supply agreements to only buy from the “branded” supplier with whom they signed up.
  • Point: For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon.
  • Counterpoint: Adding all the oil company profits together including their upstream, downstream and chemical divisions and then dividing that amount by the total gallons of fuel sold is somewhat misleading. Each one of those is separate profit centers and not the only products sold by the oil company. The following Energy Information Agency graphs shows the breakdown of the average price for a gallon of gasoline paid at the pump in March 2011:
  • Point: Crude oil is a commodity, and like all other commodities – such as corn, wheat or sugar – the price is determined by buyers and sellers in a global market.
  • Counterpoint: Exxon Mobil is one of five “super major” vertically integrated oil companies in the U.S. controlling the process of refining gasoline from the wellhead to the pump. Crude oil, the raw material from which gasoline is refined, is either purchased or obtained from company owned or controlled wells with prices set according to the gravity of the crude oil. Exxon Mobil utilizes the “Last In/First Out” method of accounting and the last price at which crude oil was obtained establishes the posted price for crude oil delivered to their refinery gates.
  • Point: Exxon Mobil owns less than 1% of the world’s oil reserves, and it produces less than 3% of the world’s daily oil supply.
  • Counterpoint: Exxon Mobil is the largest oil company in the world and when the elephant in the jungle trumpets, the market listens. The throughput of its refineries and percentage of market share have a big influence on the other oil companies’ reaction on how they in turn price their products.
  • Point: Last year, our total taxes and duties to the U.S. government topped $9.8 billion, which includes an income tax expense of $1.6 billion.
  • Counterpoint: This is a somewhat misleading statement since taxes and duties include tax credits allowed on payment to foreign governments. It is another subsidy, devised by the U.S. State Department in the 1950s, which allows U.S. based oil companies to reclassify the royalties they are charged by foreign governments as taxes. Those can then be deducted dollar-for-dollar from their domestic tax bill. That provision alone will cost the federal government $8.2 billion over the next decade, according to the Treasury Department. These are currently allowed to be reported as taxes paid to the U.S. government. The following opinion re-printed from the Harvard Law Review gives a more detailed explanation on how this works:
BP (BP), Chevron (CVX), ConocoPhillips (COP) and Shell (RDS.A), the other four super-major oil companies, said their profits rose in the first quarter because of soaring crude prices and other factors.
Members of Congress and President Obama used the record setting earnings reports to step up calls for the repeal of the $4 billion in annual depletion allowance tax breaks for oil producers. John Boehner (R-Ohio), Speaker of the House, first seemed to want to go along with eliminating this tax break only for the large oil companies, but then changed his mind.
Jeff Sheets, Chief Financial Officer of ConocoPhillips, said that while the industry’s profits are higher, the margins are still slim compared to the amount of assets oil companies maintain, and profits haven’t risen as fast as gasoline prices. “When critics focus only on the bottom-line number, they lose the scope of what’s required to produce that profit,” Sheets said.
The industry further argues that ending tax breaks would cut investment in new oil and natural gas projects, cost new jobs and decrease oil and natural gas production.
Senate Majority Leader Harry Reid (D-Nev.) said the Senate as early as next week could take up Obama’s proposal to halt the tax breaks, and Obama said the $4 billion a year in oil subsidies would be spent on alternative energy investments.
Holding a commodity off the market and then selling it after the price goes up is only one form of speculation, and it’s not one that works very well in the oil market. Simply put when gasoline prices increase so do profits for the oil companies.

Commodity traders make final stand March 30, 2011

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A global push to damp down wild swings in oil and other commodity prices reached a pivotal point Monday as big traders mounted their last attack on a U.S. plan to limit the role of speculators.

Many of the world’s biggest commodity market participants such as U.S. agribusiness giant Cargill Inc are resisting new rules that would cap how many futures and related swaps contracts any one company can control.

The plan to impose “position limits”, which has been under debate since prices first surged to records in 2007 and 2008, is now reaching its culmination, with companies rushing to submit their views to the U.S. Commodity Futures Trading Commission by Monday’s deadline.

So far, most are reframing familiar complaints: Banks, traders and exchanges opposing the CFTC plan say it would make it harder for them to hedge risk, and that it would reduce liquidity and increase costs for consumers. If the proposed rules are adopted with no change, “there is a substantial risk that they would undermine the efficiency of the markets for hedgers, by reducing liquidity and disrupting markets which currently function well”, Linda Cutler, a Cargill vice president, said in a letter to the agency.

But at a time when oil, grain and metal prices have again shot up, some reaching new heights, consumers too are looking for some regulatory relief. Politicians are stepping up pressure for action.

“The banks think this rule is too strong. Commercial end users, consumers, unions … think it’s far too weak,” Michael Greenberger, a University of Maryland law professor and former senior CFTC staffer, told Reuters Insider.
“As the American public starts suffering from $4 a gallon gasoline … the issue becomes more visible, the debate between the consumer and the big banks is more highlighted,” he said.

From Chicago and New York to London and Paris, the commodities markets influence prices for energy, metals, food and other products that hit consumers in areas such as the gas pump and the kitchen table, and so are politically volatile.

The CFTC polices the markets and is under orders from Congress to address perceptions that speculators periodically drive sharp swings in commodity prices that hurt consumers and producers. The CFTC plan would apply to exchange-traded futures and related over-the-counter swaps in 28 energy, metals and agricultural markets.

A 60-day period for public comment on it ends Monday. The CFTC must next read the comments and decide whether to change the proposal. Its five commissioners must then vote. Support for the plan is uncertain within the CFTC. The agency’s chairman, Gary Gensler, may have trouble mustering the three votes needed to finalize it. A final vote may not come for some time.

The “position limits” fight comes as regulators worldwide are working to draw up and implement hundreds of new rules for banks and markets following the 2007-2009 financial crisis, which unleashed a wave of reform efforts.

France favors a crackdown on commodity market speculation in its role as 2011 chair of the Group of 20 major economies. French officials blame speculation for worsening a surge in food prices last year amid fears that such swings fuel political unrest, particularly in the developing world.

“While the Europeans, and particularly the French, share CFTC Chairman Gensler’s concern about commodity prices, there is some skepticism among EU regulators that hard position limits are the right answer,” said Joseph Engelhard, a policy analyst at advisory firm Capital Alpha Partners. “The U.S. hard position limit approach leaves open the possibility that the regulators might overshoot their target levels and actually increase volatility.”

Although it is meant primarily to limit holdings by the funds and investors who have diversified into commodities over the past decade, the CFTC’s plan threatens business models that have generated profits for years for some of the financial world’s biggest players.

The market leaders include firms such as Goldman Sachs and JP Morgan Chase & Co. U.S. banks took in $5.5 billion in revenues trading in commodity markets last year, versus a record $11 billion in 2009, the U.S. Office of the Comptroller of the Currency said.

The 2010 figures represented just under 10 percent of the industry’s trading revenues. The decline from 2009 was due largely to decreased volatility and reduced hedging, officials have said, but also reflected less risk-taking by the banks.

Traders argue there is no evidence that speculators inflate prices, and say curbs could make prices more volatile. The CFTC’s economists have not found a causal link between speculation and price volatility, with one study showing commodity index traders are not causing price volatility, but may actually be helping to reduce it.

The agency’s effort was mandated by Congress in the Dodd-Frank financial regulation reforms made law in July 2010. But as in many other parts of that sprawling legislation, Congress left it up to regulators to hammer out the details.

“We challenge the fundamental premise upon which the CFTC argues that it has authority to impose position limits under Dodd-Frank,” said the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association, both industry groups, in a letter to the CFTC. “The proposed rules do not set forth why the proposed limits are necessary or appropriate.”

Earlier this month, Democratic Senator Maria Cantwell urged the CFTC to crack down on oil speculation that she said was likely contributing to recent gas price spikes. In a letter to Gensler, Cantwell and 11 other senators urged him to use his Dodd-Frank authority against “excessive speculation”.

“While oil speculators on Wall Street may be profiting from Middle East turmoil … families and businesses on Main Street are footing the bill at the gas pump,” Cantwell said in a statement on Friday.

How Eni is facing the Arab revolutions March 16, 2011

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The calling card of Italian oil and gas giant Eni has always been its diplomatic fluency – an ability to negotiate for exploration deals in parts of the world that have been closed off to American oil companies. Lately, however, what had been the greatest strength of Eni (ticker: E) has become a liability.

Eni has fully one-third of its production volumes generated in North Africa, including exposure to both Egypt and Libya. Protests against the Egyptian government which began in late January led to the forced resignation of Egyptian President Hosni Mubarak. And in Libya, a widespread revolt threatens to end the four-decade reign of Col. Moammar Gadhafi.

Libya – once an Italian colony – accounts for 14% of the Eni’s oil production.

It’s small wonder that the market sees risk in Eni shares.

Whereas shares of most major global energy producers have risen on the spike in energy prices in the past two weeks – Chevron (CVX), for instance, is up 8% since protests began in Libya – Eni’s shares have fallen 2%.

”The deteriorating situation in Libya is having two countervailing effects on energy stocks,” Morningstar wrote in a recent note.

First, producers with Libyan exposure are selling off, none worse than Eni. Second, the threat to production has boosted oil prices worldwide, sending Brent crude to over $115 a barrel, and West Texas Intermediate crude – commonly traded in the U.S. – to over $100 in recent trading.

But Eni’s stock selloff isn’t supported by the fundamentals, bulls say.

Morningstar, for instance, is still holding to its fair-value estimates on the company, despite the developments in Libya.

To be sure, the developments in Libya – especially the supply disruption that’s trimmed nearly half the country’s nearly 1.6 million barrels a day of output – are ”very relevant to the market,” said BofA Merrill Lynch Global Research in a recent report.

Libya is the 13th largest oil exporter in the world. It’s also a producer of the kind of light sweet blends that are easily refined into gasoline.

But investors who step up to buy Eni shares now will be getting a cheap stock: Its enterprise value to debt-adjusted cash flow – a common measure for oil stocks – is just 5.6 times for 2011. Compare that with Royal Dutch Shell at six times EV-to-DACF, or Exxon Mobil (XOM) at 8.2 times.

And they’ll be getting paid for the privilege: Eni is throwing off a dividend yield of 5.5% in 2011, easily the highest in the sector. Exxon is paying 2.3%, Chevron just 2.8%.

Fundamentally, Eni has been performing well. When it reported fourth-quarter results last month, the Italian oil giant posted adjusted income that came in 11% above consensus – ahead of its historical performance, which has seen it beat estimates by around 8% since the first quarter of 2005.

Its cash flow from its exploration and production operations, which represent about three-quarters of the company’s business, came in 8% above forecasts.

The company has several new ventures that analysts describe as intriguing – if sometimes seemingly risky. It recently landed a contract to develop Iraq’s Zubair oil field, and agreed to purchase Heritage Oil’s interest in Uganda oil assets.

Of course, investors in Eni shares aren’t trading on intriguing new projects. They are trading on worries about Libya. Those worries, however, have been overstated, at least in terms of Eni’s underperformance.

As has been the threat to Libya’s productions. For one thing, global monetary policy provides something of a cushion for any oil shocks.

Meanwhile, there’s little sign that Libya’s unrest threatens oil supply. While the chaos created by civil unrest has disrupted production briefly – nearly half of Libya’s 1.6 million barrels a day of production have been halted during the protests – the infrastructure itself remains intact. In fact, production at some of Libya’s key facilities in the eastern region of the nation resumed production this week.

While the outcome of Liby’s unrest remains uncertain, the fortunes of Eni appear more predictable.

Could climbing oil prices destroy economical recovery? March 5, 2011

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Libya today. Tomorrow the whole arabic peninsula? Oil trading analysts are scared of what could become a major problem for a recvoering world economy. With $200 a barrel, ain’t we doomed for a new recession?

Oil has been trading at more than $100 a barrel in the U.S. the past couple of days, largely because of fighting in Libya. That has gasoline prices up, too.

The Energy Information Administration says last week the average price for regular gasoline across the country jumped nearly 19.4 cents to $3.34 a gallon. That was the steepest one-week rise since Hurricane Katrina disrupted oil production in the Gulf of Mexico in 2005.

Now there are concerns higher gas prices could stall a recovering economy. You can count Joe Occhipinti of Portland, Ore., among the concerned.

“I’m getting $20 worth of gas,” Occhipinti said, standing near his white work van at an Arco station. “I can’t afford to fill it up.”

Occhipinti, a cabinetmaker, estimates he’s spending about $100 a week on gasoline. That makes it difficult to keep his costs down and his jobs profitable.

“Lumber — all that other stuff — I can factor in, but this thing happens with Libya and now all of the sudden gas prices are raised up, but I made my bid three months ago,” he said.

Occhipinti also is relearning a lesson from 2008 when gas sold for $4 a gallon: Spending more on gas means you have less to spend elsewhere.

“One of the things that I miss a lot [is] taking my wife out to dinner,” he said.

Instability in the Middle East is largely blamed for the most recent jump in oil prices. But government data show a steady increase since September. That’s because demand for oil has been going up in the U.S. after declines during the recession. Then the fighting in Libya prompted traders to worry about supply.

“If you were to remove some of that oil supply, we’d be in a situation where demand could exceed supply, and that’s just a scary moment in economics,” says Patrick DeHaan, senior petroleum analyst at GasBuddy.com.