| It has been announced that British Petroleum had to | | | | means the schedule is chopped in half. If Boeing wants |
| shut down an Alaskan oil field providing 8% of US | | | | an engine ripped apart every 500 hours, for Air Force |
| crude oil production. Oil prices on the world market | | | | One it's every 250 hours. |
| immediately surged to within pennies of their all-time | | | | What's British Petroleum's excuse for not maintaining |
| high. What's really going on? For an answer I look back | | | | the pipeline in a period of unprecedented earnings |
| to former President Richard Nixon. Privately Nixon who | | | | power, and monstrous unrestricted FREE CASH |
| was smart, and as shrewd a man as any President in | | | | FLOW? It's certainly not stupidity. I have been involved |
| history use to talk to his friends about if there is a | | | | with oil and oil stocks since 1978, and I am telling you |
| dollar to be made somewhere, than somebody is | | | | that the people in the oil business are some of the |
| making it. | | | | smartest people on earth. Do you know how much oil |
| It does seem strange that for two consecutive years, | | | | a supertanker holds? These tankers can hold up to 2 |
| the large multinational oil companies have had greater | | | | million barrels (that's barrels, not gallons) of oil. The |
| earnings, and free cash flow than in any period in | | | | typical loss or spillage loading, and unloading a 2 million |
| history. At the same time, giant British Petroleum is | | | | barrel tanker is no more than ONE TEASPOON of |
| clueless that they have corroded pipes that are about | | | | crude, that's how efficient these processes are. |
| to take down 8% of America's oil production. There is | | | | It is unthinkable that a modern management team |
| a dis-connect here of massive proportions, and | | | | would allow a segment of the Alaskan pipeline to |
| nobody is thinking about it. | | | | corrode. Corrosion is like metal fatigue in a helicopter. |
| We all know the airlines are suffering. When you are | | | | You don't wait for metal fatigue to become critical |
| hemorrhaging money, and the revenue just isn't coming | | | | before dealing with replacing parts on helicopters. |
| in, it's really tough for a company financially to maintain | | | | Today's chemical engineers know exactly how long it |
| the maintenance programs that are vital to keep an | | | | takes a pipe to corrode. The oil industry has more PhD |
| airplane flying. This however is not the situation that | | | | chemical engineers than any industry on earth, and |
| British Petroleum or the other major multinationals find | | | | these guys are not asleep at the switch. It is up to you |
| themselves in. The oil companies are PRINTING | | | | the reader to figure out how this happened, or could |
| MONEY. They don't call oil "BLACK GOLD" for nothing. | | | | have been permitted to happen? |
| Why would any oil company choose to skimp on | | | | Oil is priced at the margin. This means, today's price is |
| maintenance? Why would BP be this dumb in their | | | | determined by the price of the last barrel that needs to |
| managerial policies? They have allowed a massive, | | | | be sold. It is not an average price, it is a marginal price. |
| and important pipeline to experience corrosion to the | | | | We are right now at the cusp of where demand |
| point where it has to be shut down? Listen up, when | | | | equals supply. Even if you could bring another ten |
| airlines fly a 747 airplane; each and every plane has to | | | | million barrels onto the market daily, we don't have the |
| have its oil changed every so many miles or hours. | | | | refining capacity to refine it. The last refinery in this |
| The engines have to taken off the plane, and rebuilt | | | | country was built in the 1970's. |
| every so many miles or flight hours. This is why planes | | | | The Wall Street Journal reported in its cover story of |
| are far more reliable than cars. The airlines make sure | | | | August 8, 2006, that the oil industry "....has been stymied |
| that this maintenance gets done or the Federal | | | | in putting in ....new refineries, by intense public |
| Aviation Agency will shut them down, no questions | | | | opposition". This is absolutely untrue. I have not met an |
| asked. | | | | oil man (including CEO's of the majors) in the last ten |
| The President of the United States tours the world in | | | | years, who has expressed any interest whatsoever in |
| Air Force One, which is a glorified version of a 747. | | | | creating a new refinery in this country. Big oil doesn't |
| The President actually has two of these planes | | | | want to create new refineries. |
| identical to one another. | | | | As far as our leadership in Washington DC is |
| The President's planes are put on what's called a | | | | concerned, this country has not had an oil policy in 30 |
| "White Glove" maintenance program. What this means | | | | years, thank you very much. If anything, America's |
| is that the manufacturer, in this case Boeing wants the | | | | policies on oil, have been dictated by oil lobbyists paid |
| oil changed, and the engines ripped down every so | | | | to do oil's bidding. The oil companies are not |
| flight hours. There are also scores of other items that | | | | responsible for the high price of oil. OPEC sets the |
| must be done as well. Whatever the schedule is for | | | | price, and big oil just tacks on their piece, and oh what |
| whatever procedure, White Glove maintenance | | | | a piece. |