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Another picture that tells a story
Posted by Heading Out on September 27, 2005 - 2:16am
This is the current picture of the US gasoline stocks, as posted at the EIA site. You need to scroll down the site to see the graphs. The recent fall is quite marked. But I would like to reiterate something that Edward Tufte has taught me (by reading his books), and that is that you have to recognize that this is only highlighting the shifts. You have also to look at the scale on the left to see that while the drop has been about 30 million barrels, we still have about 190 mb left, and so there is no need to panic.
Normally, as you can see, we would be entering a period where we would be rebuilding stocks. The damage from Katrina and Rita, and the current refinery problems, will likely see that delayed. Trying to balance gas production against heating oil may be a hard call that someone is going to have to make.
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Averages can hide things... when traders react to X being over or under the 5 year average, its often without benefit of realizing that the "average band" would be higher if a smaller averaging period were used. 2001 was an anomoly year... and demand has been very strong over the past 2 years:
1.2% 2000 (for comparison)
0.7% 2001
1.0% 2002
1.6% 2003
3.1% 2004
3.8% (2005 est, it will be lower, but still high)
Stocks must be near the high end of the 5 year range or we are in trouble!
---
Today's shut-in oil production is 1,512,937 BOPD. This shut-in oil production is equivalent to 100% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.
Today's shut-in gas production is 7.856 BCFPD. This shut-in gas production is equivalent to 78.56% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.
The cumulative shut-in oil production for the period 8/26/05-9/27/05 is 36,361,383 bbls, which is equivalent to 6.641 % of the yearly production of oil in the GOM (approximately 547.5 million barrels).
The cumulative shut-in gas production 8/26/05-9/27/05 is 172.506 BCF, which is equivalent to 4.726% of the yearly production of gas in the GOM (approximately 3.65 TCF).
http://www.mms.gov/ooc/press/2005/press0927.htm
BTW - I don't buy the "30 million down, but 190 million left so no problem" argument. There needs to be enough gasoline in the system to keep things flowing - think of natural gas, where there has to be enough gas in storage to maintain pipeline pressure. No one seems to publicize the number at which the supply system breaks down...
There are already Republicans who are distancing themselves from the Iraq war, including the guy who started the "Freedom Fries" idiocy. A domestic heating emergency would have Republicans jumping ship in droves.
Now, whether the Congresscritters would actually do the right thing is another, and legitimate, question entirely.
I think people need to stop and remember that neo-liberal laissez-faire is only one directional, and that our representatives only work for us enough to pretend like they respect our intelligence.
Jan Heating Oil - 2.1160
Jan Gasoline - 1.9500
seems to be some money in Heating Oil....
In another part of this thread, somebody pointed out that Congress could dictate to refineries that they have to produce enough heating oil to supply all residential heating requirements for the winter, even if it cuts into their bottom line (because the rich are willing to pay more for gasoline than the poor are able to pay for heating oil). My question is whether or not Congress will be able to muster the political will to do so (after fending off accusations of being communists) in time to really make a difference this winter.
This all may be moot because we are not currently short, and with any luck (and perhaps a mild winter) we can avoid a heating crisis this year.
Well, I guess there is one logical possibility: Katrina's effects on demand were larger than her effects on supply. That's a pretty considerable effect!
Another question is how we measure the inventory levels. I doubt that gas in one's gas tank is counted, so the sudden dip and rebound could be explained by everybody panicing and topping off the week before Katrina hit and then not buying the following week. This is, admittedly, a short term effect, but it might explain some of this.
FWIW, I am not looking at inventory or production or consumption numbers too closely at the moment because I think that the data is suspect (at best) due to the chaos on the Gulf Coast. I rather expect the numbers will all make a lot more sense around November (barring any further shocks or chaos, of course ... my own personal force majeure clause).
(The definition of elasticity is based on the ratio of the percentage change in demand to the percentage change in price. A ratio greater than one is elastic, a ratio less than one is inelastic. A ratio of zero (price changes but demand doesn't budge) is perfect inelasticity.)
The inventory is the stocks in the supply chain. As soon as you've bought gasoline, even if it's stuck in a storage tank in Holland with no tanker due for weeks, it belongs to you and you can include it in your inventory reports to the IEA.
Finally, an explanation of how Gasoline stocks can shoot up in the absence of 5% of national refining.
A better drawn version of the chart can be found Here (PDF)
Incidently, if you look Here (PDF) which is the same thing for January 2004, you can see they used to include a 'Lower Operational Inventory' line - it dissapeared some months ago.
--J
--J
Would this make sense?
So I'm back to: the numbers don't seem to add up...
--J
picture
If the EIA numbers can be trusted, the US lost only one day of consumption after Katrina.
Someone said its good to look at the 'days' of inventory left vs. the absolute level of gasoline stocks. A standard measure of this is inventory level over an average of coming demand, or 'forward cover'. Before hurricanes US gasoline stocks were reaching for an all time low in forward cover, something under 20 days. Ironic thing is that if demand has come down some, even with gasoline inventory hit, forward cover situation may have improved of late, especially when seasonally adjusted. a lot of that is due to gasoline imports which likely can not be sustained. so between that and new refinery shut-ins???
but the market is stabilising becasue both the similar graph for oil and distillates are above the 5 year average range. if either had been low going into the hurricane season, you would see some other effects in those markets.
someone said that oil bought but still overseas awaiting import is counted in these inventory numbers. I do not think that is correct. the weekly inventory reports posted are the same graphs just in more detail.
That'correct:
picture
The crude stockpile situation in terms of forward cover is very healthy compared to 2004 and 2003 despite skyrocketing prices! so far stocks do not reflect a tight supply situation.
Forward Cover= (U.S. Weekly Crude Oil Ending Stocks Excluding SPR) / (U.S. Weekly Crude Oil Inputs into Refineries)and
I presume these sentiments will be run ad nauseum by various Pollyannas, while little old ladies freeze this winter.
What I forgot to say in the other post I made is that after Simmons has already pointed out the faults in their existing reserve estimates, I'm surprised the Saudis would do the same old song and dance one more time by upping their reserve numbers. "Fool me once, shame on you. Fool me twice, shame on me."
11 days worth of natural gas stocks with plummeting
production from the North Sea and inadequate facilities
for importing it.
http://business.scotsman.com/management.cfm?id=1998912005