“None of us have a great sense for where oil prices are going,” said Al Walker, CEO ofAnadarko Petroleum APC +0.00%. So for some perspective Walker talked to his friend Jim Flores, CEO of Freeport FCX +0.00% McMoRan’s oil and gas business. “I asked him,” Walker said, “Jim, where are we going?”
Flores’ response: “Baby, it’s raining. It’s going to rain for a long time and we’re all going to get wet. A few people are going to drown.”
Anadarko will be one of the survivors, said Walker. “We’re capable of handling whatever the market gives us.”
Walker was speaking Wednesday at the Barclays oil and gas conference in New York. In a half-hour presentation he made a convincing case for why Anadarko was not going to be one of the companies to drown in this storm of plunging oil prices. And he presented some thoughts on how the global oil industry is set to evolve in the years to come. My takeaway from his comments: once the industry emerges from these doldrums, America’s tight oil producers are set to have a lot more influence on global oil pricing than is commonly appreciated.
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There has been no shortage of petroleum in the last 50+ years, even when gasoline rationing in the 1970's was going on. I know because the Delaware bay was so full of tankers waiting to unload at the Sun Oil refinery at Marcus Hook, Pa. instead gave their crew time off by sending them in to shore by small boat at Delaware City and after 72 hours we returned to Delaware City and got back on a full tanker of crude and waited many days to unload in Marcus Hook along with 20+ tankers. There was no product shortage, just a stall tactic to raise prices to consumers and the gas rationing was a ploy to elevate price. That was the beginning of collusion/price fixing between U.S. oil companies. What's about to take place is decades overdue. Many of the bloated greedy major oil companies could easily sink because they're accustomed to large profit and have structured their survival around it. That's now disappearing 45+ years after it started. All politicians in Washington, D.C. were in on the fix because of the higher gas taxes we paid in to federal/state governments which will diminish substantially. Bad for them, long overdue for us, the screwed consumer.
ReplyDeleteHopefully the only ones to "drown" are just the ones who can afford to float.
ReplyDelete5:45 AM
ReplyDeleteYou left out one little tidbit in your synopsis of events in the seventies. You are correct in that there was no shortage of fuel during the period of rationing. When supply and demand forces were in play over the "oil embargo," Richard Nixon enacted price controls on the fuel distributors. And THAT is what led to to rationing and shortages. If the market had been allowed to operate unfettered, the would have been no lines, and no rationing. All those that could have afforded it, would have had all they wanted. Price controls did not create any more supply, and actually dried up the available supply as distributors withheld their product. Only when the price controls were lifted and prices were allowed to rise, did the market return to normal and supply met the demand, at markets prices (not government controlled pricing).