<DrumBeat: April 9, 2008 The Oil Drum The Energy Scene in India>

69 comments on Oil Rises, Gasoline Climbs to a Record, on U.S. Supply Decline

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westexas on April 9, 2008 - 12:19pm Permalink | Subthread | Comments top

Declining Net Oil Exports Versus “Near Record High” Crude Oil Inventories: What is going on? (September, 2007)
http://www.theoildrum.com/node/2975

As noted in the linked article, I don't think that US crude oil inventories are telling us that much. Regardless of the actual number, we are, IMO, simply seeing some minor fluctuations in a thin, Just In Time inventory (best measured in hours of supply) in excess of the Minimum Operating Level of about 270 mb.

The key problem that US refiners are facing is a squeeze between ever more expensive crude--as importers bid for declining net oil exports--and the volume of refined product that consumers can and will buy, as the prices of refined products increase.

This somewhat analogous to the problems that airline are having. They have to balance ever more expensive jet fuel against the volume of tickets that consumers can and will buy as the price of airline travel increases.

What we are seeing is progressive forced energy conservation moving up the food chain.

With continued apologies, "Ask not for whom forced conservation comes, it comes for thee."

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Black_Dog on April 9, 2008 - 12:50pm Permalink | Subthread | Parent | Comments top

Looking at the product supplied data instead of the amount in storage, it looks like consumption has changed little since last year. Here's a quote:

Total products supplied over the last four-week period has averaged nearly 20.5 million barrels per day, down by 0.4 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 9.2 million barrels per day, up by 0.3 percent from the same period last year. Distillate fuel demand has averaged 4.3 million barrels per day over the last four weeks, unchanged from the same period last year. Jet fuel demand is 0.4 percent lower over the last four weeks compared to the same four-week period last year.

In other words, the increase in price at the pump is having little effect so far. That's happening in spite of deteriorating economic conditions, which might be expected to result in reduced demand. With the problems in the airline business (another one went under yesterday), how many folks will switch from air travel to automobiles for this year's vacations? This summer's driving season is likely to get interesting, even without some further "events" in the Persian Gulf.

E. Swanson

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69 comments on Oil Rises, Gasoline Climbs to a Record, on U.S. Supply Decline

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