143 comments on The EIA Graphs: Gas Stocks, Crude Stocks, and Other Requisite Information before the Start of Driving Season
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143 comments on The EIA Graphs: Gas Stocks, Crude Stocks, and Other Requisite Information before the Start of Driving Season
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(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.
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