Peak Oil is You
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Page added on October 22, 2014
Oil makes the world go ’round
It’s just funny how everything has its time and place.
What is right now is not comprehensible at a time in the past. We are expecting the Fed to put an end to quantitative easing next week, but many think that it deserves at least another few months. The oddest thing is that a few years ago, many believed it shouldn’t have happened at all. At the time many thought that letting the U.S. buy its own debt with its own debt was like feeding bacon to pigs. In the end though, it seemed to have work and we’re not Japan. We’re letting go and moving on.
Well at one time we were a country that was in debt to foreign oil and the best plan of social security was to add oil to the Strategic Petroleum Reserve (SPR). The designated allocation of crude supply in America was to have at least 60 days of imports. Over the years, as oil was on the fast track to “peak oil” and demand was clearly outpacing new discoveries, we have found ways to increase the SPR to a symbol of America: bigger is better.
EIA Guesstimates
CRUDE +2.0M (NYMEX:CLZ14) – Oh, it pains me to think that we’re going to see another build here, but everything has its season (turn, turn, turn). I do think that there’s going to be more pressure for refiners to bring back those refineries though. Even though runs are going to stay close to where they were last week, it’s the demand of products that is not going away any time soon. As that happens, those rising refining margins are going to be too good to try to capture.
GASOLINE -2.5M (NYMEX:RBZ14) – So let’s go try to figure this out, demand for gasoline goes up and will only get higher from here as the warm weather and increase into the holiday season picks up, yet prices are still low. I know a lot of it is because we’re not spending a lot of money on imports, but we’re going to have to hit a bottom here soon as stocks continue to fall. The other part that is going to support is that we’re not going to be seeing any real significant builds once production does find its way higher.
DISTILLATE -1.0M – There’s a loss of ground here based on the lower production so it’s not a big surprise to see a draw here, but if the cash market is reflective about where real stocks should be, this could see a lot bigger draw in inventories. We’re going to have to do a bang up job to quickly assimilate where and who’s missing the barrels if the draw gets big.
UTLIZATION +0.25% – I think that we’re going to gain a little ground here, but don’t expect for anything huge.
CUSHING +500K – I’ve been trying to keep myself from getting all pumped up about the increase of capacity down from Cushing to the USGC, but in the grand scheme, nobody cares about Cushing inventories as much as we used to.
9 Comments on "Oil makes the world go ’round"
JuanP on Wed, 22nd Oct 2014 9:50 am
“In the end though, it seemed to have work and we’re not Japan. We’re letting go and moving on.”
I will fly by the horrible conjugation and sentence structure, and attack the content and intended meaning. LOL. Just LOL.
Let go and move on! It’s good advice.
Norm on Wed, 22nd Oct 2014 2:58 pm
You can’t really let go, cause the debt is still owed. The national debt. But they can run the printing press to cover it. Just it is inflation so a box of Cheerios will cost you $20 , but that’s how they move on.
Northwest Resident on Wed, 22nd Oct 2014 3:33 pm
WTI tumbled from over $83 to a low $80 handle after inventories surged more than expected today.
Why isn’t China and/or India sucking up all that extra oil at those low prices?
Could it be that taking on more debt to buy more oil to produce more crap that nobody really needs or wants has lost its appeal?
Or could it be that people really do need and/or want all that crap that would be produced, but just don’t have the money to buy it, and the manufacturers know that?
Or could it even be that maybe what they call a barrel of oil these days is still a little too pricey for how much energy is contained in that barrel of oil?
What gives?!
Davy on Wed, 22nd Oct 2014 4:21 pm
NR, it was interesting it was the oil price drop that was mentioned as what drug the markets down with energy stocks sinking.
Northwest Resident on Wed, 22nd Oct 2014 4:31 pm
Davy — Yeah, I saw that. This is like watching a Greek Tradgedy unfold on the world stage as we all sit watching, transfixed, waiting for the final vicious stab in the heart that we all know is coming.
But it looks almost certain that the planned end of this round of QE is what is starting to grind on the markets. I guess we all know or should know that it is only all the QE money that has provided life support for our global economy since 2007/8. It seems likely that the market is responding to what everybody knows is going to be roughly equivalent to pulling the plug on a terminally ill patient.
But then, there’s always the possibility of QE4!!!!
If they go forward with QE4, I’ll interpret that to mean that TPTB haven’t quite got all their ducks lined up yet and need a little more time.
If they go forward with their stated intention to “taper” and raise interest rates, I’ll interpret that to mean that TPTB are fully prepared for collapse, they are stocked up, locked and loaded, all strategic assets in place or close enough, and they’re bringing the pain.
Makati1 on Wed, 22nd Oct 2014 8:03 pm
We are all guessing at what a group of totally insane people might do next. There is no logic to it. I sense desperation and panic in the background.
It’s the collapse of Western Civilization vs Nuclear War. My bet is the latter, but I hope I am wrong. Bad as collapse would be, some will survive. Option two, nobody survives, for long.
Nony on Wed, 22nd Oct 2014 9:01 pm
NWR: It’s called supply and demand. More supply comes on and demand stays same…price drops. Duh. Now tell me again how econ 101 is “eeful”. You are the lefty mirror version of a righty creationist.
Northwest Resident on Wed, 22nd Oct 2014 10:41 pm
Nony — The “demand” for oil these days is being bought and paid for with QE trillion$. It most definitely is not the supply and demand that you and I learned about in Econ 101. And there’s nothing “lefty” about facts. But if I had to choose, I’d rather be the lefty mirror version of a righty creationist than the right creationist himself.
Kenz300 on Thu, 23rd Oct 2014 10:27 am
The fossil fuel industry is doing all they can to hang on to their PROFITS and keep alternatives from taking market share. They will not be successful.
The transition to safer, cleaner and cheaper alternatives continues to grow around the world.
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DuPont’s $500 Million Biofuel Bet Expected to Pay Off
http://www.renewableenergyworld.com/rea/news/article/2014/10/duponts-500-million-biofuel-bet-expected-to-pay-off
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Fossil Fuel Divestment Movement Continues To Grow
http://www.huffingtonpost.com/2014/09/22/fossil-fuel-divestment_n_5861906.html?utm_hp_ref=climate-change