Dependency = vulnerability | Arkansas Blog

Monday, August 7, 2006

Dependency = vulnerability

Posted By on Mon, Aug 7, 2006 at 12:36 PM

How volatile (read: fragile) is the global oil market?

All it takes is one little pipeline problem ....

Oil prices shot up this morning as BP began shutting down the huge Prudhoe Bay oil field in northern Alaska after finding “unexpectedly severe corrosion” in a pipeline serving the field.

Taking the field off line will reduce domestic oil production by 400,000 barrels a day, or 8 percent — equivalent to about one-third as much as the United States imports daily from Venezuela. With demand for energy now high and production capacity already stretched, the shutdown raises the possibility that the Energy Department may release oil from the nation’s strategic petroleum reserve. ...

Word of the shutdown rattled global commodities and equities markets. In the United States, oil prices rose more than a dollar a barrel in early trading, with the benchmark contract for light, sweet crude delivered next month rising above $76 a barrel. In London, spot prices rose as much as 2 percent on the news, to nearly $78 a barrel.


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