The Oil Drum

The president's statement notwithstanding, this MTBE purge will continue until all of the MTBE gas is out of the system.  Whether the gas going out for sale is reformulated with ethanol or straight-up gasoline is another story altogether.  As soon as these declines are wrapped up, I cannot fathom continued declines in gas stocks, given most refineries seem to be up to speed at the moment.

(McKillop has been predicting, for some time, that higher oil prices, at least up to the $75 range, would not slow the economy.)

http://www.financialsense.com/editorials/mckillop/2006/0425.html
Whatever Happened to Oil Price Elasticity?
by Andrew McKillop
Author & Consultant
April 25, 2006

Excerpt:

Getting back to the narrow question of why oil demand (and world gas demand now growing at around 5%-per-year) are much less than unaffected by rising prices, but are directly increased by higher oil and gas prices, we finally call on facts. We can use theory first, but finally we call on facts, because scientific theory is based on and comes from facts. The other way round is called economics - that is, bending facts to fit brokenback theories.

Price elasticity of anything has an underlying notion, hard to quantify, of `satisfaction', and another of `substitution'. Neither of these have much place for the vast majority of oil and gas users. Nobody uses oil and gas `for the fun of it', or at least very few persons. Equally, the famous `hi-tech emerging new energy' substitutes and alternatives simply don't exist. They may exist on the Nasdaq or in people's heads and PCs, and in cute business video presentations, but not in the real economy.

So the simple fact that oil and gas demand is increasing much, much faster than during the cheap energy 1990s, with much, much higher oil and gas prices should at least allow us to accept reality, and find or develop theories that fit. When we go back to economic theory notions of `elasticity', as mentioned above, we soon see that they don't apply in large measure, or any convincing way to explaining what is happening. The bottom line is however very simple: until and unless interest rates are sharply raised, to double-digit annual rates, oil and gas prices can go on crawling ever up. With the ever surer approach of Peak Oil, they will in any case have no other direction to move.

Crude oil stocks fall by 200,000 barrels. Gasoline stocks fall 1.9 million barrels. Both are larger declines than expected.

Summary of Weekly Petroleum Data for the Week Ending April 21, 2006

U.S. crude oil refinery inputs averaged nearly 15.1 million barrels per day during the week ending April 21 up 343,000 barrels per day from the previous week's average. Refineries operated at 88.2 percent of their operable  capacity last week. Gasoline production increased last week, averaging nearly 8.5 million barrels per day, while distillate fuel production also increased compared to the previous week, averaging 3.8 million barrels per day.

U.S. crude oil imports averaged nearly 9.9 million barrels per day last week, up 199,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged nearly 9.8 million barrels per day, a decrease of 417,000 barrels per day from the comparable four weeks last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged over 1.3 million barrels per day, the fourth largest weekly volume ever. Distillate fuel imports averaged 379,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) inched lower by 0.2 million barrels from the previous week. However, at 345.0 million barrels, U.S. crude oil inventories remain well above the upper end of the average range for this time of year. Total motor gasoline inventories dropped by 1.9 million barrels last week, and are now below the lower end of the average range. Distillate fuel inventories increased by 1.0 million barrels last week, and remain above the upper end of the average range for this time of year. Increases were seen in both low-sulfur distillate fuel (diesel fuel) and high-sulfur distillate fuel (heating oil) inventories. Total commercial petroleum inventories rose by 2.8 million barrels last week, and remain above the upper end of the average range for this time of year.

Total products supplied over the last four-week period has averaged 20.6 million barrels per day, or 1.3 percent more than averaged over the same period last year. Over the last four weeks, motor gasoline demand has averaged over 9.1 million barrels per day, or 0.3 percent above the same period last year.

Distillate fuel demand has averaged nearly 4.1 million barrels per day over the last four weeks, or 2.8 percent below the same period last year. Jet fuel demand is up 3.3 percent over the last four weeks compared to the same four-week period last year.  

Who was it that suspected the inventory report had bad news, and Bush saw it early, hence yesterday's speech?