Oil industry changes even as newsmakers may stay the same: The Barrel at 10

The Barrel blog turned 10 years old on April 2, and to celebrate, we're sharing special posts throughout the month. To kick off the celebrations, John Kingston, director of global market insights for S&P Global — and founder of The Barrel when he was at Platts — assesses what has (and hasn't) changed over the past decade.

Memory lane time. What was going on in the oil business 10 years ago?

(And a hat tip to Platts’ Joan Ciccarone for digging up old issues of Platts Oilgram News a decade later. That’s the great thing about experience: Joan knows where absolutely everything is.)

Platts Oilgram News, page 12, April 3, 2007

• WTI was running a little over $60/b, and that was considered a pretty high price. Fifteen  months later, it hit its all-time high at more than $140. US natural gas 10 years ago was more than $7/Mcf. That was also viewed as high, and it would really be considered high today.

• The oil price was high enough and profitable enough that former Saudi oil minister Yamani cautioned, in an interview with Platts, that the seeds of an oil collapse might be getting planted. He cited two things: a collapse in the US housing market and resulting economic fallout because of excessive mortgage debt, a prediction that looks strikingly prescient in retrospect; and investment in alternative supply sources spurred by those high prices. Maybe Yamani wasn’t thinking about shale; maybe some sort of still-unrealized liquid fuels substitute was on his mind. But still, the fracking revolution turned out to be that alternative, and it was driven by lots of capital that flowed into the industry because of healthy prices.

• The CME said it wasn’t going to raise its bid for the Chicago Board of Trade after the Intercontinental Exchange came in with its own offer. Nope, it was sticking to the $8 billion that was on the table. A few months later, CME did buy CBOT. Final price: $11.9 billion. A billion here, a billion there, pretty soon, you’re talking about real money. (Didn’t somebody famous say that once?)

Platts Oilgram News, page 11, March 28, 2007. Click image to view a larger version.

• The prediction and the reality from Platts, 10 years apart: In a story from Fujairah in late March, Platts noted that “proposals to tighten global bunker fuel specifications are likely to present significant problems for refiners forced to invest huge sums to remove more sulfur from their fuels, a shipping conference in the UAE heard.” And then late last year, in a white paper, Platts looked at the resolution of that issue, leading with this sentence: “The International Maritime Organization on October 27 announced it was going ahead with a global sulfur cap of 0.5% on marine fuels starting from January 1, 2020, ending years of uncertainty.” More recently, it appears that at least some (like US Gulf Coast refiners) are well positioned to cash in on the deadline.

• In a decision that still has ramifications today, the US Supreme Court ruled April 2 that the Environmental Protection Agency had the authority to regulate carbon dioxide and other greenhouse gases.

Platts Oilgram News, page 1, April 3, 2007. Click image to view a larger version.

Even though CO2 is generated every time humans exhale a breath, the Court said it could be viewed as a pollutant, and the EPA therefore could regulate it. That ruling became the basis for, among other things, the Obama administration’s Clean Power Plan, now threatened to be gutted by the Trump administration.

Something else happened April 2, 2007: this blog launched. My then-colleague Dave Marino said one day, “Why don’t we start a blog?” Starting a blog was a really big thing then. If you weren’t starting a blog, you were a hopeless luddite, or so said the gods of digital media. My recollection is we just went ahead and did it, probably without authorization. You know, the whole thing about it being easier to ask for forgiveness than to ask for permission.

Everybody may have been entering the blogging world 10 years ago. But how many of those blogs are still around? So kudos to the many writers who have contributed to this industry stalwart. May it continue to tack on the decades.