TODAY’S TOPIC: No Such Thing as A Barrel of Oil Originally moved for PMs
AUSTIN, Texas (AP) _ With crude oil prices down to about $12 or $13 a barrel, why not buy one?
The steep drop in oil prices seems to offer a cut-rate chance to become a Texas oilman or oilwoman, albeit in a small way.
Black gold. Texas tea. Your own barrel of it.
Can anybody buy a single barrel of oil? Apparently not for $12.
This is an exercise for people who are, let’s say, oil illiterate: those who believe that gasoline pumps sprout where oil has been struck and that leaded and unleaded gushers are found side-by-side.
The first lesson is that a barrel of oil does not include a barrel. It is simply a measurement - 42 gallons. Oil is not loaded into barrels.
″That was something out of the 19th century,″ said John Cassel of the Texas Oil Marketers Association.
So, the first step is to get a barrel. ″One that would hold oil without leaking,″ advises James Leonard, an Austin oil producer.
You cannot get into the oil buying business unless you sign in at the Texas Railroad Commission as an oil purchaser.
″You’ll probably have to hire a lawyer,″ Leonard said.
Once you fill out the forms, you have to notify the commission about your intended purchase. Commission spokesman Brian Schaible said you could either file in writing or attend the monthly ″oil allowable″ hearing at which the big oil companies and announce how many thousands of barrels per day they intend to buy.
″The law and our rules say you have to tell us when you are going to buy oil and how much. If it’s a one-time, one-barrel thing, we would probably not be overzealous in rushing out to advise you of your rights,″ Schaible said.
Step 2 is finding your oil.
Contrary to popular belief among the oil illiterate, crude is not sold at West Texas roadside stands the way watermelons are sold in East Texas.
″Really the most practical thing would be to go to a refinery and buy a barrel before they refine it,″ Schaible advised.
Who would be willing to dish up a single barrel?
″We’d be happy to sell you 100,000 barrels. Would you like to buy 100,000 barrels?″ Conoco Inc. spokesman Tom DeCola replied.
″You could talk to an independent producer, but he wouldn’t have the means of metering one barrel to you. I would think it would probably cost you a lot more than $12,″ said Spencer Falls at JM Petroleum Corp. in Austin.
Austin producer J.A. Spiller also tried to help.
″To buy one barrel of oil? You can probably buy a barrel from anybody in the field, if the lease is not under contract to sell to somebody else,″ he said.
Most of it apparently is under contract.
The best advice from Julian Martin, executive vice president of the Texas Independent Producers and Royalty Owners Association, was to call a ″reclaimer″ who refilters dirty oil, to see about a single barrel. Buying fresh crude would be a ″rather substantial problem,″ he said.
″It’s going to cost you about $300 to get going with it,″ Martin said.
Charles Ratliff, an Austin oil producer, said the process could be simple - if you know where to go.
″You go right to the wellhead where they have the big tanks, stick your barrel under the little spigot and they’ll turn it on,″ he said.
But he added: ″Nobody would do it for 12 bucks.″
Richard Hudson of Houston, chairman of the oil marketers association, said you probably can’t get one barrel of crude oil.
″No one can economically handle a one-barrel unit. One barrel of crude? You can’t crack it, you can’t distill it, you can’t refine it,″ he said.
Producer Leonard said you might be able to get it. But why would you want it?
″What are you going to do with it once you get it? It’s kind of like a dog chasing a car,″ he said.