The Brilliantly Profitable Timing of the Alaska Oil Pipeline Shutdown
by Greg Palast
"Why shut the pipe now? The timing of a sudden inspection and fix of a decade-long problem has a suspicious smell. A precipitous shutdown in mid-summer, in the middle of Middle East war(s), is guaranteed to raise prices and reap monster profits for BP. The price of crude jumped $2.22 a barrel on the shutdown news to over $76. How lucky for BP which sells four million barrels of oil a day. Had BP completed its inspection and repairs a couple years back — say, after Dan Lawn’s tenth warning — the oil market would have hardly noticed.
But $2 a barrel is just the beginning of BP’s shut-down bonus. The Alaskan oil was destined for the California market which now faces a supply crisis at the very height of the summer travel season. The big winner is ARCO petroleum, the largest retailer in the Golden State. ARCO is a 100%-owned subsidiary of … British Petroleum."
When I heard about the Alaskan shutdown my bullshit antenna started quivering. Aside from reaping a bonanza by choking the supply, a little digging shows that output was drastically declining from the oil fields up there.
"By Justin Blum
Washington Post Staff WriterTuesday, June 7, 2005;
PRUDHOE BAY, Alaska -- Oil keeps flowing through a maze of aging wells, pumps and pipelines that poke through the snow on this desolate North Slope tundra.
But this vast field is ailing: Output has fallen by nearly 75 percent from its peak in 1987 and is expected to continue dropping.
So it appears that BP, knowing that output was falling rapidly, tried to milk their aging and deteriorating piping system without instituting needed maintenance and repairs right up to the point of catastrophic failure. Lax goverment oversight never cared to look for corrosion problems.
Shutting it down now seems like a wonderful win - win marketing strategy, doesn't it? And let me venture a guess that after waiting for the middle east to explode in flames, BP will once again turn on the spigots and reap yet more monstrous profits.
"Why shut the pipe now? The timing of a sudden inspection and fix of a decade-long problem has a suspicious smell. A precipitous shutdown in mid-summer, in the middle of Middle East war(s), is guaranteed to raise prices and reap monster profits for BP. The price of crude jumped $2.22 a barrel on the shutdown news to over $76. How lucky for BP which sells four million barrels of oil a day. Had BP completed its inspection and repairs a couple years back — say, after Dan Lawn’s tenth warning — the oil market would have hardly noticed.
But $2 a barrel is just the beginning of BP’s shut-down bonus. The Alaskan oil was destined for the California market which now faces a supply crisis at the very height of the summer travel season. The big winner is ARCO petroleum, the largest retailer in the Golden State. ARCO is a 100%-owned subsidiary of … British Petroleum."
When I heard about the Alaskan shutdown my bullshit antenna started quivering. Aside from reaping a bonanza by choking the supply, a little digging shows that output was drastically declining from the oil fields up there.
"By Justin Blum
Washington Post Staff WriterTuesday, June 7, 2005;
PRUDHOE BAY, Alaska -- Oil keeps flowing through a maze of aging wells, pumps and pipelines that poke through the snow on this desolate North Slope tundra.
But this vast field is ailing: Output has fallen by nearly 75 percent from its peak in 1987 and is expected to continue dropping.
So it appears that BP, knowing that output was falling rapidly, tried to milk their aging and deteriorating piping system without instituting needed maintenance and repairs right up to the point of catastrophic failure. Lax goverment oversight never cared to look for corrosion problems.
Shutting it down now seems like a wonderful win - win marketing strategy, doesn't it? And let me venture a guess that after waiting for the middle east to explode in flames, BP will once again turn on the spigots and reap yet more monstrous profits.
posted by nolocontendere at 6:06 PM
1 Comments:
Are you giving BP too much credit for this kind of strategic forward thinking? I worked at a major integrated oil company for six years, and my guess is that when oil was at $18/barrel (e.g., 1999-2003), BP couldn't meet its numbers if they did the required maintenance. So, they simply delayed and delayed incurring the capital costs of repair in favor of capital expenditures on the E&P side. Pretty common in the oil industry.
Just asking . . .
Post a Comment
<< Home