<The Amazing Power of King Hubbert(...?)The Oil DrumDrumBeat: September 13, 2007>

69 comments on This Week in Petroleum 9-12-07

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westexas on September 12, 2007 - 6:22pm Permalink | Subthread | Parent | Comments top

Over on the drumbeat thread, I wondered if ultra low gasoline inventories, versus high crude oil prices, in dollar terms, are an early sign that we may be beginning to lose out on the bidding war for declining world petroleum exports. What does seem odd is the low gasoline price.

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davebygolly on September 12, 2007 - 8:34pm Permalink | Subthread | Parent | Comments top

What does seem odd is the low gasoline price.

And the low NG price -- but I suppose that's another subject.

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Brother Kornhoer on September 12, 2007 - 8:56pm Permalink | Subthread | Parent | Comments top

No, it does make sense...because the gasoline price in the US is low, we are losing the bidding war. If the price were higher, we'd be winning the bid. Overall not surprising if we're tilting into recession.

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Gilgamesh on September 13, 2007 - 4:59am Permalink | Subthread | Parent | Comments top

who is outbidding the US?

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marcosdumay on September 13, 2007 - 7:28am Permalink | Subthread | Parent | Comments top

Europe (not only EU), Japan, the net exporters, and BRIC.

On a feew months, I expect some caribean countries to also get into the team.

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Twilight on September 13, 2007 - 6:34am Permalink | Subthread | Parent | Comments top

Chicken and egg issue. But I think people would/could pay more if they had to, so doesn't that mean the refiners could pay more for the crude? It still doesn't explain why the price is so low now - but it probably does mean it is temporary.

Question: do refiners have to borrow significant money to buy crude?

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westexas on September 12, 2007 - 9:06pm Permalink | Subthread | Parent | Comments top

Production Declines Versus Net Export Declines

I have previously compared the final decline in Indonesian exports to the ELM, in terms of annual exponential decline rates. Well, take a look at the Texas production decline rate versus UK year over year changes in net exports (exponential decline rate per year).

Notice a slight difference?

This is why I think that it is a mistake to focus on total world production.

Texas Production Decline/UK Net Export Decline
(starting in 1973 and 2000 respectively, following 1972 and 1999 peaks):

-0.5%/-38.0%
-2.5%/+6.6%
-3.2%/-3.1%
-2.7%/-25.7%
-4.6%/-96.0%
-5.5%/-178.0%
-6.0%/Net Importer

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OilcoEx on September 13, 2007 - 2:52am Permalink | Subthread | Parent | Comments top

what the gasoline market is telling you is that despite low ish inventories, no one is worried about running out of gas heading into winter. The market is allowing the refiners a small margin and that's it. But since distillate is much higher, refiners are still happy to run full for now. Gasoline is basically a byproduct at the margin if you can make $15/bbl on distillates.

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