What these articles continue to not say is that while the impact of the shutdown may affect the US, especially the West Coast, more than other areas, the shutdown affects crude prices all over the world, not just in the US. This shutdown is going to affect business and consumers the world over, as the cost of fuel will be going up everywhere, not just in the US, unless OPEC or other oil producing nations decide to release more crude into the world markets to make up for the US shutdown.
Originally posted by from the Associated Press via CNN.com - August 8 2006
Oil shutdown expected to hit West Coast hard
U.S. considers releasing oil from emergency stockpile
ANCHORAGE, Alaska (AP) -- BP's decision to shut down the nation's biggest oil field is expected to squeeze the West Coast particularly hard and the government is considering releasing oil from its emergency stockpile to ease the crunch.
Crude oil prices fell 28 cents in Asian electronic trading on the New York Mercantile Exchange early Tuesday, likely a result of profit-taking a day after prices jumped more than $2 a barrel in response to news of the loss of 400,000 barrels a day.
BP said it discovered corrosion in the transit lines and will have to replace most of the 22 miles of the pipeline at Prudhoe Bay, which produces about 2.6 percent of the nation's daily supply including imports. (Watch BP man apologize -- 4.26)
Most of the crude oil produced out of Alaska's North Slope each day goes to refineries in Washington, California and Hawaii, said Joe Sparano, president of the Western States Petroleum Association, a trade group based in Sacramento, California.
The loss may hit Alaska hardest. Eighty-nine percent of the state's income is from oil revenue, and central to that cash flow is Prudhoe Bay. The expected loss of 400,000 barrels per day at today's oil prices means $6.4 million lost daily in royalties and taxes, Revenue Commissioner Bill Corbus said.
BP discovered the corrosion only after the U.S. Transportation Department ordered their inspection following a spill of up to 270,000 gallons in March. It was the biggest spill in North Slope history, and has become part of a criminal investigation into the company's Alaskan operations.
BP operates the Prudhoe Bay oil field for itself and for other oil companies, including ConocoPhillips and Exxon Mobil. Prudhoe Bay and other oil fields on Alaska's North Slope feed oil into the 800-mile trans-Alaska pipeline. The North Slope produces approximately 800,000 barrels a day; Prudhoe Bay accounts for half of that.
Impact 'impossible to predict'
Sparano said it's too soon to tell how the shutdown will ultimately affect consumers. "Until we know the full extent of any necessary repairs and how long they might take, it's impossible to predict what the impact might be," he said.
The average U.S. retail price of a gallon of unleaded, regular gasoline was $3.036 on Monday -- near its all-time high of $3.057, reached September 5 after Hurricane Katrina hit the Gulf Coast. Gasoline futures also rose, indicating the market expects further increases...
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