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The Wall Street Journal: Oil News Roundup: August 8, 2006 12:47 a.m.

August 8, 2006 12:47 a.m.

Oil futures jumped to nearly $77 a barrel on the New York Mercantile Exchange, close to a new nominal record, after BP announced the shutdown of an important oilfield. Here’s Monday’s roundup of energy-related news:

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AGING INFRASTRUCTURE: BP’s decision to shut down an Alaskan field sent that provides 8% of U.S. crude-oil production highlights the broader dangers of wear and tear facing the U.S.’s aging energy infrastructure. The vulnerability of U.S. pipelines, refineries and oil fields has become an ever-larger issue for the industry as energy demand and prices have risen sharply in recent years. Critics say the oil companies have underinvested in new production facilities, while older ones deteriorate as companies emphasize cost controls over maintenance. But industry executives have complained they have often been stymied in putting in more infrastructure by intense public opposition.

BP’S WOES GROW: Many shareholders and analysts have shrugged off BP’s recent problems as largely insignificant to earnings and share-price performance. That could be changing now that investors are faced with potentially large losses of BP production, The Wall Street Journal reports. Its Prudhoe Bay outage could last weeks or even months and translate into a big loss of daily production for BP, which already faces pressure to deliver on the production outlook it provided shareholders and analysts earlier in the year.

•Big Oil’s Blame: If you suspect Big Oil is to blame for keeping your gas prices high, you’re at least partly right, according to the Associated Press. The AP examined pricing trends since 1999 and found that refining — controlled partly by the major oil companies — has played a role in keeping prices high. The AP also found that, when oil prices fall, gasoline prices fall more slowly, giving more profits to Big Oil.

•Oil Accounting: Exxon’s record profits have drawn howls, but its earnings are, by one measure, understated. Many oil firms use an accounting method to value their inventory that has the effect of raising their costs when the price of oil is rising.

•Ethanol Ceiling: At least one industry executive has suggested that U.S. ethanol consumption of ethanol could soon triple. But before ethanol refiners can reach that goal, they might reach the limits of the country’s corn supply, Barron’s reports.

•Dubai Pushes Nationalization: Dubai became the latest oil-producing country to seek greater control of its oil assets, announcing plans to take over its offshore oilfields from ConocoPhillips next year, Reuters reports.

•Cleaning Up a Spill: About two-thirds of an estimated 7,700 gallons of oil that spilled from a cargo ship into an ecologically sensitive estuary off the coast of British Columbia have been recovered, officials said Sunday. Cleanup efforts are focusing on wildlife.

•Pump Pain Spreading: High oil prices are starting to bleed into broader inflation, affecting interest rates, financial markets and consumer behavior, reports.

•High Octane: If you were wondering what that “octane” rating for gasoline was all about, The Boston Globe has the answer.

•Airline Complaint: European airlines called on regulators to investigate what they say are monopolies in the jet-fuel market. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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