[Graeme]

There is No Gas Shortage

$this->bbcode_second_pass_quote('', 'B')ut Washington, Wall Street, and ethanol and oil and gas companies want you to think there is, says automotive expert Ed Wallace

"They see speculation in the market, I see decline in global inventories. I don't think this is a big surprise, that we've had a jump in price when there has been a decrease in crude inventories."— Energy Secretary Sam Bodman, Bloomberg News, Mar. 5, 2008

"It should be obvious to you all that the [gasoline] demand is outstripping supply, which causes prices to go up." — President George W. Bush, Associated Press, Mar. 5, 2008


In January of this year, the U.S. used 4% less petroleum than we did a year ago. (Oil demand was down 3.2% in February.) Furthermore, demand has been falling slowly since July of last year. Ronald Bailey of Reason Online has pointed out that worldwide production of oil has risen 2.5% in the first quarter, while worldwide demand has grown by only 2%. Production is expected to increase by 3.3% in the second quarter, and by as much as 4.1% by the third quarter. The net result is that the U.S. daily buffer for oil production against demand, which was a paltry 1.5 million barrels as recently as 2005, is now up to 3 million barrels in excess capacity today.

Instead, the Bush administration is protecting those responsible for creating yet another speculative bubble in oil futures, and is protecting investors in the ethanol industry—much to the detriment of food-processing companies such as Pilgrim's Pride. And the net result of all this is that the prices of crude and gasoline rise ever higher thanks to a "shortage" that does not exist, while food costs are soaring thanks in part to the ethanol mandate.

[TonyPrep]

Oil Consumption Exceeds Production for Last 17 months (EIA)

[idiom]

What I want to know is why 2/3 petrol pumps in Sydney have 'Out of Stock' tags on them the whole time.

[DantesPeak]

There is no gasoline shortage, but the last few months saw a severe diesel shortage around the world.

The only way to get more diesel is to refine more oil, even if that leaves us with some extra gasoline you don't need right now.

Also it's a bit of a stretch to say a four week period in the US is an accurate representation of the whole world's oil demand.

[jlw61]

You're right, there is no gasoline shortage, that's why the prices are only $3.25 right now. It's a real bargain compared to the prices that will be demanded when a shortage actually occurs!

[dinopello]

I'mm soo confuused...

[joeltrout]

$this->bbcode_second_pass_quote('DantesPeak', '
')The only way to get more diesel is to refine more oil, even if that leaves us with some extra gasoline you don't need right now.

[DantesPeak]

$this->bbcode_second_pass_quote('joeltrout', '')$this->bbcode_second_pass_quote('DantesPeak', '
')The only way to get more diesel is to refine more oil, even if that leaves us with some extra gasoline you don't need right now.

[joeltrout]

$this->bbcode_second_pass_quote('DantesPeak', '
')
The only refineries the world needs are new ones to process low quality oil, but they can close down the older ones just as fast.

[Tanada]

$this->bbcode_second_pass_quote('DantesPeak', 'T')here is no gasoline shortage, but the last few months saw a severe diesel shortage around the world.

The only way to get more diesel is to refine more oil, even if that leaves us with some extra gasoline you don't need right now.

Also it's a bit of a stretch to say a four week period in the US is an accurate representation of the whole world's oil demand.

[Peepers]

Why expand or build more refineries when the only new refinery ready to be built in the U.S. since 1976 (the Arizona Clean Fuels plant) is unrealized for want of Mexican oil and financing? I realize not all refineries can refine all types of oil, but the message from this experience underscores the reason why significant additions to refining capacity will end up being white elephants without significant additions to oil production (to say nothing of the lengthy permitting process!).

[DantesPeak]

$this->bbcode_second_pass_quote('Tanada', '')$this->bbcode_second_pass_quote('DantesPeak', 'T')here is no gasoline shortage, but the last few months saw a severe diesel shortage around the world.

The only way to get more diesel is to refine more oil, even if that leaves us with some extra gasoline you don't need right now.

Also it's a bit of a stretch to say a four week period in the US is an accurate representation of the whole world's oil demand.

[seahorse2]

The refinery issues are serious and tie in to "peak light crude" and peak oil. Here's two old threads on refinery issues:

Peak Refinery Capacity = Peak Oil

Or this refinery thread:

Refinery Capacity - ICF

[Graeme]

We've Got Oil

$this->bbcode_second_pass_quote('', 'W')ednesday morning, the government reported oil inventories outside the Strategic Petroleum Reserve shot up 7.4 million barrels over the past week, way above the 2.1 million barrel increase forecast. The daily inbound flow of crude to refineries stepped up 72,000 barrels last week to 14.2 million barrels. While not awash in oil, at 319.2 million barrels on hand, the U.S. is doing better than is typical this time of year. That should keep a lid on prices, barring some fresh supply insult.

Even though daily gasoline production inched higher, to 8.6 million barrels, inventories of refined motor fuels fell hard last week, decreasing by 4.5 million gallons. Insiders had bargained for a 2.2 million barrel drawdown. Still, stocks are above the seasonal average, so pressure on wholesale prices isn't likely to moderate soon. Gasoline stocks are up better than 10% from year-ago levels.

Supplies of distillate fuels, including heating oil, decreased by 1.6 million barrels, pretty much in line with estimates. Supplies are still relatively tight for this time of year.

[DantesPeak]

$this->bbcode_second_pass_quote('Graeme', '[')b]We've Got Oil

$this->bbcode_second_pass_quote('', 'W')ednesday morning, the government reported oil inventories outside the Strategic Petroleum Reserve shot up 7.4 million barrels over the past week, way above the 2.1 million barrel increase forecast. The daily inbound flow of crude to refineries stepped up 72,000 barrels last week to 14.2 million barrels. While not awash in oil, at 319.2 million barrels on hand, the U.S. is doing better than is typical this time of year. That should keep a lid on prices, barring some fresh supply insult.

Even though daily gasoline production inched higher, to 8.6 million barrels, inventories of refined motor fuels fell hard last week, decreasing by 4.5 million gallons. Insiders had bargained for a 2.2 million barrel drawdown. Still, stocks are above the seasonal average, so pressure on wholesale prices isn't likely to moderate soon. Gasoline stocks are up better than 10% from year-ago levels.

Supplies of distillate fuels, including heating oil, decreased by 1.6 million barrels, pretty much in line with estimates. Supplies are still relatively tight for this time of year.

[TonyPrep]

$this->bbcode_second_pass_quote('Graeme', '[')b]We've Got Oil

seekingalpha

[Graeme]

These IEA charts may be of interest.

[TonyPrep]

The article made use of EIA data sets. I was, therefore, using EIA data to illustrate a point. The IEA have also been worried about falling stocks but the picture, with their data will look a little different.

[Graeme]

Latest from IEA

[muon]

I am really confused by this article. Surely the US doesn't have 3 million barrels per day of excess capacity? Don't the EIA figures show that the US has a 15 million barrel per day deficit of production to demand?

Does the world have 3 million barrels per day excess production capacity online? Is this what he's referring to? If the answer is yes, how does that all belong to the US?