View Full Version : US heating oil, coffee and cotton prices all going up in wake of Katrina

08-31-2005, 07:58 PM
If someone could explain to me how this futures trading thing works, I'd really appreciate it.


By Chris Flood
Published: August 31 2005 11:48 | Last updated: August 31 2005 20:34

US gasoline futures surged to a record high on Wednesday after the Department of Energy reported a 500,000 barrel drop in gasoline inventories to 194.4m barrels as stocks fell for a ninth week in succession.

The September Nymex gasoline contract rose 17.2 per cent to $2.90, its highest level since opening in 1984.

“US gasoline prices are now in the process of the most dramatic spike ever seen,” said Kevin Norrish, analyst at Barclays Capital.

The inventory data covered the week to August 26 and does not reflect the impact of Hurricane Katrina. Although the US government attempted to calm the market by saying it would tap the strategic petroleum reserve, this move was seen as largely ineffective after the disruption to refining capacity caused by Katrina.

Traders fear gasoline prices could spike higher, as Katrina has left nine refineries idle and four operating at reduced rates. Analysts said reduced refinery output would present a major problem, with estimates of losses of between 20m and 40m barrels of refinery throughput.

Crude oil prices continued to trade close to record highs after a larger than expected decline in crude inventories of 1.5m barrels to 321.4m.

The October West Texas Intermediate contract traded at $68.94 a barrel, a loss of 87 cents, but IPE Brent for October delivery moved 55 cents lower to $67.02.

US heating oil prices also pushed to a new record high, with September Nymex heating oil futures trading at $2.0749 a gallon from the previous record of $2.06 set on Tuesday. US natural gas prices moved higher, with October Nymex henry hub up 3.6 per cent to $12.08 per million British thermal units from $11.659 on Tuesday.

Coffee prices are expected to rise amid fears that 8 per cent of global coffee supply could be disrupted. In London, the November robusta coffee contract hit $1,005 per tonne before settling 2.4 per cent up at $975 per tonne.

Traders also remained concerned about disruption to US soft commodity production by Katrina. The December cotton futures price eased 9 cents to $50.19/lb after reaching a 3-week high on Tuesday.

Gold prices rose to $434.20/$434.50 a troy ounce in London, helped by Japanese buying, from $429.80/$431.60. Traders said the key issue was whether gold would hold above the support level of $430 if funds continue to liquidate long positions.

Goldman Sachs upwardly revised its forecast for copper prices next year, with the benchmark three month copper price expected to average $2,785 per tonne in 2006, almost a 15 per cent increase on its previous forecast of $2,425 per tonne.

In London, the benchmark three-month copper price traded $10 lower at $3,637 per tonne.

08-31-2005, 08:06 PM
If someone could explain to me how this futures trading thing works, I'd really appreciate it.

TIAA-CREF has a much better explanation than I could come up with Sava


Commodity Futures - Contracts for future delivery of certain products like wheat, soybeans, pork bellies, metals, and Financial instruments or indices of Financial instruments. Commodity futures specify both prices and delivery dates and are traded on special exchanges, such as the Chicago Mercantile Exchange.

Anyway, if your ever interested in it, the Government's Commodity Future website is a good resource for research on it


Or the National Futures Association


08-31-2005, 08:26 PM
I have no expertise whatsoever in economics so my opinion means diddly-squat, but I think the economic impact of Katrina is going to be worse than it was from 9/11.

08-31-2005, 08:36 PM
I thought about buying some gold as the hurricane approached but then thought it was creepy. Well, it is up and will continue to climb as gas lines form and the housing market collapses in October.

08-31-2005, 11:06 PM
Gas was 2.56/gal this morning here. This afternoon - 3.08/gal.

08-31-2005, 11:08 PM
US heating oil prices also pushed to a new record high, with September Nymex heating oil futures trading at $2.0749 a gallon from the previous record of $2.06 set on Tuesday. US natural gas prices moved higher, with October Nymex henry hub up 3.6 per cent to $12.08 per million British thermal units from $11.659 on Tuesday.

I'm officially going Bio-Diesel this year.

08-31-2005, 11:33 PM
I'm officially going Bio-Diesel this year.

Have fun paying for that, the US Soybean crop is not looking too good.

08-31-2005, 11:39 PM
link (http://www.eastoregonian.info/Main.asp?SectionID=13&SubSectionID=350&ArticleID=38119)

How about $1 per gallon?

By DEAN BRICKEY of the East Oregonian

Bob Mansfield says his 1976 Mercedes-Benz performs well and smells better while running on a biodiesel mixture. Staff photo by Dean Brickey
PENDLETON — With the price of diesel at record highs and the price of gasoline not far behind, Bob Mansfield’s backyard pastime might become more popular.

Mansfield and two partners, Bob Fowler and Robin Harris, brew their own biodiesel. Mansfield burns it in his 1976 Mercedes-Benz sedan.

A sixth-grade science teacher at Sandstone Middle School in Hermiston, Mansfield spends a lot of time on the road. In late spring and early fall, he commutes from Pendleton on his motorcycle, but when the weather’s colder he’s burning a mixture of diesel and his own biodiesel as he travels to and from work.

Armed with books and other literature from people who pioneered the process, Mansfield and his partners fashioned a biodiesel processor from a used 52-gallon electric water heater. After attaching a pump and assorted plumbing fittings, most of which they had around the house, they were ready for their first batch last summer.

The biggest investments were the pump, which cost less than $100, and a 55-gallon drum of methanol, which cost about $200.

The trio makes biodiesel from used cooking oil and grease, which they collect — with permission — from area restaurants. They figure the cost of their product is about $1 per gallon. That’s less than a third of the cost of commercial biodiesel, which sells for $3.50 per gallon. regular diesel sells for about $2.60 per gallon.

Mansfield said the added cost and time involved in using biodiesel is offset because biodiesel is manufactured in the United States.

“We are buying a product produced by Americans who are living here and contributing to our economy,” he said. “We are not truly a free nation when we rely on other countries for our sources of energy. We need to start looking at alternatives now to help us become less reliant on the oil-producing nations in the future.”

As China, India and other nations increase their oil consumption, American will find itself sending more men and women into conflicts to secure America’s oil interests, he believes.

“We need America to be a leader in renewable energy resources,” he said. “Americans need to be more far-sighted than we’ve been in the last 30 years. I can remember the gas lines in the 1970s and thinking to myself that something must be done. Well, very little has been done by our leaders during that time, so I personally thought that I and other like-minded individuals must take action on our own to ensure change now. Hence, I became involved in the production of biodiesel.”

The production process is relatively simple, as Mansfield describes it. He and his partners use 40 to 45 gallons of recycled fryer oil, trickle in 5 gallons of methanol and a little lye as a catalyst. They heat the mixture to 120 degrees for a couple of hours, which produces 35-40 gallons of biodiesel and 5-10 gallons of glycerin.

“I haven’t found a market for the glycerin,” Mansfield said.

He mixes one part of the biodiesel brew with three parts diesel and burns it in his car. He’s noticed no particular change in performance, and still gets about 28 miles per gallon.

Biodiesel also has the blessing of the state.

“Biodiesel is a great product to use for a number of reasons,” said Kevin Downing of Portland, clean diesel program coordinator for the Oregon Department of Environmental Quality. “If your concerns are about reducing global warming influences, improving energy security, promoting energy renewability, creating jobs in rural/farm economies, then biodiesel can’t be beat.”

Downing said biodiesel also has significant environmental benefits with reduced concerns about ill effects from spills and fewer emissions from most of the pollutants typically emitted by a diesel engine.

“From an air quality perspective, biodiesel is a significant, but not complete step toward reducing the air pollution impacts associated with diesel engine exhaust,” Downing said.

For the user, he added, biodiesel is a relatively straightforward and easy way to improve operations.

“In fact, some users have found niche applications that surpass previous practice,” Downing said. “In Hood River County, for instance, they have found that biodiesel, with its enhanced solvent qualities, improves the operation of their road paving equipment.

Mansfield said some biodiesel users burn it exclusively, but he and his partners haven’t produced enough to do that. The process is time-consuming, particularly considering that Mansfield’s team spends weekends collecting used oil and grease. Collecting the raw material is easier during warm weather than when it’s cold, he said. Besides, congealed cooking oil and hardened grease are impossible to pump into the processing chamber, as they discovered in October. Not only that, but biodiesel itself gels at a higher temperature than diesel.

“That’s a bad thing,” he said, adding that he didn’t have any problems with his mixed fuel congealing last winter.

“If I can brew in the summer and run in the winter, that would be good for me,” Mansfield said, noting that he doesn’t intend to do anything but make biodiesel for personal use. “It’s kinda become a little cause for me.”

08-31-2005, 11:47 PM
Have fun paying for that, the US Soybean crop is not looking too good.

Yeah, I just saw that it's up to 3 bucks a gallon here.

I have about 75 gallons now and I bet I won't turn it on until October.

09-01-2005, 08:10 AM


09-01-2005, 08:13 AM
I blame Jimmy Carter.

09-01-2005, 08:17 AM
I blame Jimmy Carter.

Nah,Bob Boone is to blame. ;)

09-01-2005, 08:34 AM

By Sidney Blumenthal

In 2001, FEMA warned that a hurricane striking New Orleans was one of the three most likely disasters in the U.S. But the Bush administration cut New Orleans flood control funding by 44 percent to pay for the Iraq war.

Biblical in its uncontrolled rage and scope, Hurricane Katrina has left millions of Americans to scavenge for food and shelter and hundreds to thousands reportedly dead. With its main levee broken, the evacuated city of New Orleans has become part of the Gulf of Mexico. But the damage wrought by the hurricane may not entirely be the result of an act of nature.

A year ago the U.S. Army Corps of Engineers proposed to study how New Orleans could be protected from a catastrophic hurricane, but the Bush administration ordered that the research not be undertaken. After a flood killed six people in 1995, Congress created the Southeast Louisiana Urban Flood Control Project, in which the Corps of Engineers strengthened and renovated levees and pumping stations. In early 2001, the Federal Emergency Management Agency issued a report stating that a hurricane striking New Orleans was one of the three most likely disasters in the U.S., including a terrorist attack on New York City. But by 2003 the federal funding for the flood control project essentially dried up as it was drained into the Iraq war. In 2004, the Bush administration cut funding requested by the New Orleans district of the U.S. Army Corps of Engineers for holding back the waters of Lake Pontchartrain by more than 80 percent. Additional cuts at the beginning of this year (for a total reduction in funding of 44.2 percent since 2001) forced the New Orleans district of the Corps to impose a hiring freeze. The Senate had debated adding funds for fixing New Orleans' levees, but it was too late.

The New Orleans Times-Picayune, which before the hurricane published a series on the federal funding problem, and whose presses are now underwater, reported online: "No one can say they didn't see it coming ... Now in the wake of one of the worst storms ever, serious questions are being asked about the lack of preparation."

The Bush administration's policy of turning over wetlands to developers almost certainly also contributed to the heightened level of the storm surge. In 1990, a federal task force began restoring lost wetlands surrounding New Orleans. Every two miles of wetland between the Crescent City and the Gulf reduces a surge by half a foot. Bush had promised "no net loss" of wetlands, a policy launched by his father's administration and bolstered by President Clinton. But he reversed his approach in 2003, unleashing the developers. The Army Corps of Engineers and the Environmental Protection Agency then announced they could no longer protect wetlands unless they were somehow related to interstate commerce.

In response to this potential crisis, four leading environmental groups conducted a joint expert study, concluding in 2004 that without wetlands protection New Orleans could be devastated by an ordinary, much less a Category 4 or 5, hurricane. "There's no way to describe how mindless a policy that is when it comes to wetlands protection," said one of the report's authors. The chairman of the White House's Council on Environmental Quality dismissed the study as "highly questionable," and boasted, "Everybody loves what we're doing."

"My administration's climate change policy will be science based," President Bush declared in June 2001. But in 2002, when the Environmental Protection Agency submitted a study on global warming to the United Nations reflecting its expert research, Bush derided it as "a report put out by a bureaucracy," and excised the climate change assessment from the agency's annual report. The next year, when the EPA issued its first comprehensive "Report on the Environment," stating, "Climate change has global consequences for human health and the environment," the White House simply demanded removal of the line and all similar conclusions. At the G-8 meeting in Scotland this year, Bush successfully stymied any common action on global warming. Scientists, meanwhile, have continued to accumulate impressive data on the rising temperature of the oceans, which has produced more severe hurricanes.

In February 2004, 60 of the nation's leading scientists, including 20 Nobel laureates, warned in a statement, "Restoring Scientific Integrity in Policymaking": "Successful application of science has played a large part in the policies that have made the United States of America the world's most powerful nation and its citizens increasingly prosperous and healthy ... Indeed, this principle has long been adhered to by presidents and administrations of both parties in forming and implementing policies. The administration of George W. Bush has, however, disregarded this principle ... The distortion of scientific knowledge for partisan political ends must cease." Bush completely ignored this statement.

In the two weeks preceding the storm in the Gulf, the trumping of science by ideology and expertise by special interests accelerated. The Federal Drug Administration announced that it was postponing sale of the morning-after contraceptive pill, despite overwhelming scientific evidence of its safety and its approval by the FDA's scientific advisory board. The United Nations special envoy for HIV/AIDS in Africa accused the Bush administration of responsibility for a condom shortage in Uganda -- the result of the administration's evangelical Christian agenda of "abstinence." When the chief of the Bureau of Justice Statistics in the Justice Department was ordered by the White House to delete its study that African-Americans and other minorities are subject to racial profiling in police traffic stops and he refused to buckle under, he was forced out of his job. When the Army Corps of Engineers' chief contracting oversight analyst objected to a $7 billion no-bid contract awarded for work in Iraq to Halliburton (the firm at which Vice President Cheney was formerly CEO), she was demoted despite her superior professional ratings. At the National Park Service, a former Cheney aide, a political appointee lacking professional background, drew up a plan to overturn past environmental practices and prohibit any mention of evolution while allowing sale of religious materials through the Park Service.

On the day the levees burst in New Orleans, Bush delivered a speech in Colorado comparing the Iraq war to World War II and himself to Franklin D. Roosevelt: "And he knew that the best way to bring peace and stability to the region was by bringing freedom to Japan." Bush had boarded his very own "Streetcar Named Desire."

Sidney Blumenthal, a former assistant and senior advisor to President Clinton and the author of "The Clinton Wars," is writing a column for Salon and the Guardian of London.

09-01-2005, 08:34 AM
Nah,Bob Boone is to blame. ;)

Or is it the French?

09-01-2005, 12:00 PM
I have heard that it costs OPEC $4 to produce a barrel of crude oil, and they are charging near $70 a barrel for it. Can that be accurate?

Also, what blame for high gas prices can be attributed to SUVs?