The EIA Graphs: Gas Stocks, Crude Stocks, and Other Requisite Information before the Start of Driving Season
Posted by Heading Out on May 3, 2007 - 10:15am
Topic: Supply/Production
Tags: crude stocks, gasoline stocks, imports, production [list all tags]
This is more for the historic record than much else, although it is true that every picture tells a story, and with the impact evident in the gas prices, here is the current state of the gasoline stocks in the US, according to the EIA Wednesday. The timing of the curve should capture the measure of this season’s drop in volume.
Robert has already discussed this on his own site but since there was some discussion of these figures, I thought it useful to post them so that the more general audience could see them. So all I want to do is insert the relevant states of the various plots that we usually put up at frequent intervals. (Though I will also pause to point that the curve is now turning up, as Robert predicted it would on Tuesday). Perhaps the most relevant (in regard to us not worrying) is the state of the crude stocks, since with those available, then we can produce more gasoline as it now becomes more in demand. It may not, however, turn around fast enough to avoid an all-time high in gas prices.
Demand itself has been up measurably over this time last year, but is now falling back to the same level of demand. Whether this will continue, as the driving season comes upon us will be a function of gas prices and the general state of the economy – about which I am not going to comment, except to say that there is no talk around our office about any impact from the current rise in prices.
Domestic production of gasoline has been running significantly above last year, but is now returning to those levels
While imports have been well below last year, although climbing at the same rate as they did about this time last year.
As far as the refineries go, they are processing about the same amount of crude as they did this time last year
But while imports have been about the same as last year
The amount that comes from domestic production, while it has been stable for almost a year, is now starting to dip down again.
It is this downward dip in domestic production, when tied with the problems that Mexico (typical of other South American countries) is now seeing, and the other issues about production around the world, that suggest that this could end up being a little more volatile summer than some of the other commentators would have us believe.
I note, for example, that both Peter Jackson and Michael Lynch spoke at the Canadian Energy Research Institute Oil Conference last week in Calgary the natural gas one being in March. Not having taken the time to drop by I am not quite sure how rosy they painted the picture, but it will be interesting to see how far off their predictions are this time, and what excuses will and will not be made.
(Though I will also pause to point that the curve is now turning up, as Robert predicted it would on Tuesday).
To be clear though, my prediction from 2 weeks ago was that inventories would turn upwards within 2 weeks. I spelled out my reasons in a couple of recent blog postings. And while the rate of decline has dramatically slowed from a month ago, it was still a decline this week. So, as I stated on my blog, the limb that I went out on cracked - inventories did not turn upwards. The price is still too low given the current supply/demand picture.
Imports came to the rescue at this time last year. I don't know that this will be the case this year. And as I have noted, we find ourselves in an inventory situation that we have never been in going into summer driving season. I think it's too late to avoid record gasoline prices this summer.
''I think it's too late to avoid record gasoline prices this summer.''.
Well, maybe that is not such a bad thing and perhaps Americans will engage in a real debate about what is to be done.
Treat it as a prodrome.
Well, maybe that is not such a bad thing...
No, I am not complaining. It is a warning. Very high gasoline prices are coming. People need to prepare by changing their lifestyle to accomodate high prices as the new reality. Those who do will also help stretch our supplies a bit longer.
Even for those who state that Peak Oil is a myth (ExxonMobil, for instance), I don't think they can guarantee that gasoline supplies will be adequate. Refining capacity, while increasing each year, can't keep up with demand. I don't see this changing any time soon.
diesel runs the us economy
will refiners cut back on its production to increase gasoline production?
Depends on 2 things. First, can they do so and still meet their diesel contracts? Second, will they make more money by producing gasoline over diesel? If both answers are yes, then they will shift production to gasoline. And honestly, these kinds of shifts happen daily in refineries as they look at their economics.
daily? And then stockpiled not JIT or am I way off here?
It goes something like this. The refiners have forecasting tools that predict what the supply situation is going to look like. They are going to buy certain crudes and make certain products. Each day, they look at their inventories on site, and they get a schedule of shipments from the pipeline scheduler. They will go to a morning meeting with operations and adjust cut points and various operating parameters to meet the immediate demand situation. If they have a local rack, and diesel is being pulled down while gasoline is steady or rising, they will shift production to diesel if they can. If they are already in a max-diesel mode, they will raise the rack price or put customers on allocation. I can tell you that customers hate allocation more than they hate seeing prices go up.
That can have them shifting production back and forth between gasoline and diesel more than once a week. That's not common, but it happens.
Sounds like the plant business - Are they buying blue flowers or red ones, so which do we grow.
Dumb question,
This is the widest spread between diesel and gasoline that I have ever witnessed on a retail level. Usually reg and diesel are close, with diesel usually higher, but a rough avereage is diesel being $.30 lower.
With your example above they move faster than I would have thought between the two. What is going on with gas?
With your example above they move faster than I would have thought between the two. What is going on with gas?
They move faster on an individual refinery basis, but there are lots of refineries in the system. So the overall effect on national inventories can be a lot more sluggish.
Diesel prices rocketed up the past few years as Europe began consuming more of their own diesel and exporting the gasoline. That's why diesel prices ultimately went higher than gasoline. But gasoline demand has recently been rising strongly, and the price has shot up to compensate.
Well speaking of higher prices, OPEC said in its monthly oil bulliten: "What the leaders and opinion makers of consuming countries seem to have overlooked is that producing countries need security of demand since they, too, are dependent on oil," the 14-member cartel said in a communiqué.
"Our feeling now with this thrust and push for conservation, efficiency and the use of alternatives is that we probably need not go beyond 12.5 million barrels per day," he said.
Full story Here
OCB
We have heard that speculators have been buying oil, and with the market in contango, actually taking delivery of oil so as to get the benefit of the price increase expected in future months. I would presume that this oil is not really in line to get refined (at least very quickly). Is there any chance that this oil is affecting the numbers?
That is a myth.
Speculators buy “paper barrels” through futures or options. They don’t really buy and store crude in tanks.
Also, the “non-commercial” net long positions are at present perfectly in line with the historical levels, so “speculators” are not accumulating oil, not even in “paper barrels”.
Besides, the storage levels of crude and processed derivatives are well known for the OECD, and they are at present at medium-low levels…
You can check them in the monthly Oil Market Reports of the IEA:
http://omrpublic.iea.org/archiveresults.asp?formsection=full+issue&formd...
I'd have to go find the ref, but I recall that there was an investment bank trading operation in NY that got involved with the cash market (storing crude in docked tankers) in order to enhance their trading operations -- to your point though, while this kind of thing may be true, people will magnify its significance beyond any sort of reason.
Great overall analysis. You, FTX and Robert have shown us the details of a market attempting to return to equilibrium with yet another maximum effort by refiners to sustain and profit from the traditional American summer drive fest.
Is it just me or is there a sense that this whole turnaround refinery operation is getting more cumbersome with each passing Spring?
Even as the wholesale market relaxes under the expected return to 'normalcy' there is little awareness of the uniqueness of this year amongst the driving public. Given the fact that your shop and others see no significant expected drop in demand at these prices won't we still run underneath the normal stockpile range for the whole season no matter what?
For our West coast area it looks like perhaps 16 days supply now although it appears that may improve over the week. Question is, doesn't the lull in wholesale prices really send the wrong signal and pretty much insure more spot outages down the road?
The EIA numbers are usually hard to track because they fluctuate widely week after week. I have tried to monitor significant statistical fluctuations against historical data (see here).
Gasoline demand is slightly above expectations and shows no sign of faltering despite high prices.
Gasoline consumption projections (4-weeks moving average): The gray level image in the background is the observed seasonal fluctuations (darker areas mean more frequent values). The red curve is the observed data for 2007. The * means that the data for the year 2006 and 2005 have been adjusted to match the yearly consumption for 2007 given by a linear growth model. The dark dotted line is the average fluctuation.
Crude oil imports are way below expectations and are at the bottom of observed historical fluctuations since 1991:
U.S. Crude oil imports (4-weeks average): The gray level image in the background is the observed seasonal fluctuations (darker areas mean more frequent values). The red curve is the observed data for 2007. The * means that the data for the year 2006 and 2005 have been adjusted to match the yearly import level for 2007 given by a linear growth model. The dark dotted line is the average fluctuation.
Also refinery utilization is way below expectations for this time of the year (this has been the case since Hurricanes Katrina/Rita):
U.S. Crude oil imports (4-weeks average): The gray level image in the background is the observed seasonal fluctuations (darker areas mean more frequent values). The red curve is the observed data for 2007. The * means that the data for the year 2006 and 2005 have been adjusted to match the yearly import level for 2007 given by a linear growth model. The dark dotted line is the average fluctuation.
My reading of this chart is that it seems we have a refinery problem (have we fully recovered lost refinery capacities since Katrina?) which implies that crude oil is piling up in stockpiles that are near all time high levels.
"have we fully recovered lost refinery capacities since Katrina?"
I don't think it's all down to Katrina. Jeffrey Brown (Westexas) speculated yesterday that a growing shortage of experienced refinery workers could be causing problems for refiners. And now we have the release of BP's internal report into the 2005 Texas City refinery explosion.
The report recommends the dismissal of four employees: BP's North American refining and marketing group vice president; the regional vice president for US refining; the Texas City plant manager; and the Texas City West plant supervisor.
I would think that anyone involved in refinery management in the U.S. must now be thinking very carefully about the potential downside of running a refinery flat out and ignoring/delaying maintenance issues. Not only might you lose your job over it, but you might even end up in jail.
Mind you, no doubt there'll be pressure from above to keep the gasoline flowing. Seems like they're caught between the devil and the deep blue sea.
A couple of points that are often overlooked. The US oil industry in years past, outside the five year window, has carried significantly more gasoline and crude oil inventories, both in terms of Days of Supply and in absolute numbers.
Following are the Days of Supply and absolute numbers, for late April this year and for late April for the first available EIA data for gasoline and crude oil:
IMO, the industry has basically gone to a just in time inventory system, especially for crude oil--presumably because of the SPR--but we don't have a SPR for gasoline.
Also, the latest EIA data, for January, show a one mbpd drop in world crude + condensate production (relative to 5/05), which presumably translates to around 1.1 mbpd or so less refined product on the markets, relative to 5/05.
Fundamentally, the problem we have in the US is the expectation of a continued exponential increase in our crude + product imports, while the new emerging reality is an exponential decline in crude + product exports.
This is our expectation (Khebab's chart): http://www.theoildrum.com/uploads/28/Data_4weeks.png
Re: Stock coverage.
The number of days for crude oil stocks is still close to the average value (22 days) observed for the period 1991-2006:
but gasoline stocks are close to an all time low:
IMO, the key difference for crude oil is the SPR. Prior to the SPR, it only makes sense that refiners had to keep more oil on hand. With hundreds of millions of barrels of crude oil sitting in salt domes on the Gulf Coast, why tie up all of that capital?
WT, what's your feeling on the use of the "SPR" as a "PPR", or political petroleum reserve. instead of strategic uses , increasingly it will be a "tide over" facility in the near future, to fill gaps in oil supply until it's depleted. then, TSHTF.
In effect, the release of emergency reserves is the new "swing producer."
As you suggested, the key problem is the release of oil from the SPR based on near-cornucopian assumptions that we won't peak for decades to come.
DOE is refusing to buy oil because it is too expensive for the SPR. So we will expect even higher price swings?
Boy, those unscheduled maintenances can be a bitch can't they?
A thought occurred to me looking at the graphs.
Maybe crude stocks are at the high end because they have not been refined into gasoline and distillates?
Or another way to say it is.
If gasoline stocks were higher now, much of the crude would have been consumed and maybe crude inventories would be lower than expected.
I will be convinced we don't have a problem when both crude and distillate stocks are at the high end of their inventory ranges at the same time.
BenjaminCole
What everybody foregts at the Oil Drum is crude oil demand. We may reach "peak demand" a lot sooner than we reach peak oil. At $60 a barrel or more, crude oil demand is flatlining. It is down in USA, and has been falling for years in the EU. India's demand is dropping, according to BP.
After the price spike of the late 1970s, it took crude oil demand 10 years to recover – and then only when prices were a lot lower. This time around, due to the reasons admirably exposed on this site, prices may be sticky at $50 to $60, $65. So demand will be crimped, and then will start falling....and falling...and keep falling. Meanwhile, biofuels coming on, and are mandated to take 20 percent of EU's diesel in 15 years, and similar share in India. El Presidente Bush talked about 35 percent ethanol in our gas, but he also talks about going to Mars, by way of the Moon first, and winning in Iraq.
Okay, so the USA will never have an energy policy that makes sense, but still the higher prices will compel changes, as in reduced demand.
I hope someone at Oil Drum starts to ponder what "peak demand" will mean. I think good things, mostly.
Worldwide demand does not really fall that fast since you have population and economic growth. Your right that their is a window of conservation that will initially keep prices high but bearable. I'm guessing its before world production has dropped by about 2mbd or so. This period exists your correct but its really short maybe a year or two at most post peak.
For this to hold long term you would need the rate of conservation to out pace production drops without pricing pressure in fact you would have real falling prices this does not make sense. Demand will fall fall fall but prices will rise rise rise :)
been jamming coal
troll
That is totally wrong.
Demand is not down, but up, and strongly, in the USA.
Demand only fell (marginally) in the EU in 2006, not in previous years.
In India, due to the very fast grow of the population and of the GDP, the oil demand is obviously growing, not dropping…
You can check the data (and the predictions for 2007) here:
http://omrpublic.iea.org/omrarchive/12apr07full.pdf
However, increased Russian demand absorbed all 400,000 b.day of their increased production in 2006. And Russia will likely not increase production as much in 2007, so production +, exports -.
Likewise, Saudi consumption climbs steeply each year, same for Venezuela, etc.
And China is still going strong; and they have stated that they want to stockpile oil instead of US $ in their reserves. $1 trillion is enough US paper (euros and yen still welcome as I understand).
The US demand will have to do more than just "flatline" to keep Global oil demand from increasing significantly.
Best Hopes for US demand dropping -4% (or more) per year,
Alan
I question the reliability of Russian production increase that manage to always match internal demand. This trend has been going on for some time. They claim production increase but don't increase exports. Its the perfect match that bothers me.
How's it going, HO?
Demand has turned down a bit in the last couple of weeks, and is now running 1.7% higher than a year ago. It was running 2.5% higher a few weeks ago.
On the other hand, the U.S. average gas price is also running 1.7% higher than last year.
Higher prices, higher demand. This is not the way they teach it in Econ 101. Consumption is out of control. I believe we are on the other side of a structural shift. Our happy motoring utopia now makes it impossible to decrease demand much, despite higher prices. We shall see when Memorial Day arrives ("Gentlemen, start your engines") and the summer season kicks off.
I've written some stuff about this for the World Energy Monthly Review, which I will send on to you (and many others). Briefly, we need a cap on oil consumption in the United States and a gasoline tax. I have proposed a way to implement these measures.
best --
Dave: My personal theory on this one (unsubstantiated) is that immigration to the USA is being underreported for some reason by the relevant authorities. More gasoline being used every month because more people are in the USA every month.
Using US census estimate of rate of growth of US population, there are approximately 2.8 million more people in the country than a year ago. So last year at this time the US population would be around 298.9 million, while it is now estimated to be around 301.8 million (rounding errors.)
Dividing those pop estimates into the 4 week gasoline consumption and we get:
week ending 4/28/2006 ~ 8.98 gallons/capita/week
week ending 4/27/2007 ~ 9.05 gallons/capita/week
The gasoline price measured by the EIA, all formulation avg., during the week in question (i.e., EIA measures on Mon of the week, while consumption ending Friday):
2006 ~ $2.96/gal
2007 ~ $2.917/gal
though by the end of the week in question in 2007 there is anecdotal evidence and spot price data that showed gasoline had risen. By the following Monday there was the measured price rise.
While there is a great deal of generalizations in the above figures they represent the best I could find.
Anyway, point is consumption went up a trivial amount per capita while price when down a trivial amount. I fail to see where there is a contradiction with the "Econ 101" theories.
This is a good analysis. I suspect that if you modified it to use a driving age (16 years old and up) population rather than an overall population, there may not have been a per capita increase at all.
BenjaminCole
One of the major brokerage houses, I think Morgan Stanley, concluded that there was actually 20 million, not 12 million, illegals in th US, and they computed that using school records, phone numbers, and unmatched Social Security receipts etc,
I too think this is cuasing the modest increase in demand for gasoline, although soon this demand will flatten out...the hot selling cars today are the ones getting better mileagte.
PS I am not a "HO." I do not know why this coarse, purile language should be accepted.
Umm, the HO was directed to the key-post author, HeadingOut. Posters with multiple word handles are frequently referred to by their initials.
BenjaminCole
Okay, it is hard to tell where the lines go indicating who is replying to who. Back to the good stuff: Gasoline demand is up mildly, and I admit I am surprised it is still going up. On the other hand, in almost any other business, if you asked, "How are sales?" and they said "Wow, heavy demand, up 1.7 percent from last year," you would say they are in a very mature business, and one reverse and they are back in negative sales growth.
For some reason, commentators have go themselves into a frame of mind that 1 to 2 percent hikes in gasoline demand are enormous. If Wal-Mart says sales are up 2 percent, that is considered a huge failure.
In fact, even in a growing economy, gasoline demand has barely budged, and the effects of conservation and substitution are beginning to accumulate. We do have population growth. I suspect we will see crude demand begin shrinking, if the current oil price regime can be maintained. It shrank 11 percent after 1979's price spike, worldwide.
This is good news. We may have reached "peak demand" for crude. I think we are right there, or on the cusp. The Oil Drum never looks at worldwide demand for crude. What if crude demand begins falling? Then the graphs about "running out of oil" are completely changed. Instead of 30 good years left, we have 100 good years left. We run out of oil only if there is 2 percent annually compounded growth, leading to a doubling of consumption in 30-odd years. Change that to 1 percent growth, and we run out in 72 years. Change that to no growth, and we get 100 years or more.
The technology is there now to flatline world growth for crude, and easily obtain higher living standards. US demand could start going down in the next 10 years, maybe in a serious way with the introduction of plug-in hybrids, which should be encouraged with every tax and regulatory machanism available.
Ethanol when produced in cattle-methane-ethanol plants, is a very good supplement to our liquid fuels picture.
Until Oil Drummers begin to factor in fossil crude demand, they will be looking at only one-half of the picture. And there is nothing wrong with predicting no drama in our future. It is boring, but quite likely.
Be careful about that for which you wish...
Look, though I am hardly a doomer as many of the anonymous commentors on TOD tend to be, it strikes me that the "destruction" in "demand destruction" often can not be labeled by the moral tag of "good."
I appreciate the contributions of the writer and editors of TOD and why TOD was created in the first place, and I challenge you to consider seriously what having less oil/capita will mean to many people in this world. The chemical potential energy in found hydrocarbons is the foundation of our modern lives.
The gradual depletion of oil, then gas, and finally coal during the 21st century means the 22nd century inhabitants will base their lives on something else than we have during the past 150 years. That "something else" is currently the subject of hot debate.
It is not a coincidence that energy is becoming the nexus of international and intranational affairs. E.g., the EIA weekly report (HO's subject) is increasingly being featured in US news articles.
The reason that you see considerable debate, and lots of information, on alternate sources of energy in posts at this site is that we are very aware, and concerned about the problems that come with demand destruction.
Unfortunately recognition of the serious nature of the problem is still being negatively influenced in the MSM by those who wander from meeting to meeting stating that there isn't one.
Um! Since you can't have been reading here for long, HO is an abbreviation for Heading Out, which is the nom de plume that I use when writing to this site.
Dave happens to know who I really am, but is kind enough to let me remain, as I chose to be, a little guarded in disclosing my identity.
HO