Another picture that tells a story
Posted by Heading Out on April 20, 2006 - 12:36am
Because it looks so dramatic, I thought to bring to the top the picture of US gasoline stocks, from the EIA.
The rest, in the same way as last time, follow below the fold.
Looking at the crude situation, first there are the current stocks:
Then crude production
And crude imports
The gas stock figure was given at the top of the post, but it can be followed by gas(oline) production
gas imports
And then demand. I'll let you draw your own conclusions
And to round out the set, here are the stocks of distillate
Current domestic production
The volume of imports
Which can be, again, set against demand.
I think to a degree, they speak for themselves.
“It takes as much energy to wish as it does to plan.”
—Eleanor Roosevelt
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If one considers the ongoing economic drive to optimize just-in-time [JIT] deliveries of fuels to maximize profits, it can be seen in these graphs as increased volativity; the ever wider swings to the outerbounds of normality. The minimizing of fixed overhead costs; the reduction of the 'safety buffer' of storage facilities to ease the logistics of supply control has not yet been adequately offset by improved comprehensive JIT management.
Perhaps an aviation analogy can best explain the forementioned paragraph. A well-designed plane is aerodynamically stable; it safely flys practically hands-free because it automatically inherently seeks to adjust the control surfaces to reduce airborne volativity. In contrast, a B-117 batwing stealth bomber is inherently unstable; the onboard computers are constantly adjusting the control surfaces on a JIT basis to keep the craft from rapidly losing control. This can only be done if the feedback loop system is totally understood and coded into the computers' software.
The top graph [of the posted series of graphs by Heading Out] is the 'flying result' of insufficient JIT logistics management. If market supply and demand were understood in totality: the 'gasoline plane' would smoothly fly thru the topchart with few undulations, instead of the wild roller coaster altitudinal gyrations we are now seeing.
The mandated switchover to new gasoline formulations, the rampup of ethanol and consequential trucking vs pipeline distribution, the ever-shifting variations of crude inputs to refineries, the erracticness of imports due to weather and scheduling difficulties, and on and on, are starting to overwhelm the 'invisible hand of the market' trying to 'JIT fly' through increasingly bad and evermore volatile conditions.
The ever-cascading feedbacks will eventually make the 'market B-117 pilot' loose control as evidenced by the other posters info where spot gasoline outages are occuring on the East Coast. As time marches on into the postPeak reality, we can expect evermore gasoline volativity as unforeseen market downdrafts and windshear buffet the energy infrastructure.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
$3.50 here we come.
Four times a year, they calibrate these weekly estimates to known inventories. That's what happened this week. They had a reality check, and found they didn't have as much as they thought. So much of that "build" may have been illusory all along.
The Energy Bulletin just published an article I did, which I based on the previous technical work that Khebab did.
When I analyzed Khebab's HL data earlier this year, it seemed to me that a sharp decline in net export capacity was a mathematical certainty.
Energy Bulletin article:
http://energybulletin.net/15126.html
One guy wrote back, "For some reason, I keep seeing the "Mad Max" movies in my head when you talk about this stuff....."
The prevailing attitude here? Something's gotta give. But when somebody says this, and I question them, the "something" they are talking about is gas prices, not their own driving. Funny, that.
All Americans have had their balls(or ovaries)in a sling since the overthrow of coomon sense in the 1980 epoch.Our secret powers that be infused foreign oil(mideast)into our economy and made it most acceptable with a lot of PR.But I don't forget the foreign policy that murdered millions of Iraqi and Irani men ,women and children in that 10 year war,which was then capped off by Gulf War 1 or the 1st Battle Armageddon.In Viet Nam there was blood in the mud,then it was blood in the oil.Point is since Kennedy and Eisenhower our lust has been unmatched on the world stage.Our people are lost.Common Sense is hard to find and not often spoken of(by our leaders).It is most obvious that consumption is fostered by our elite and conservation is nasty dumb crap.In all things.The conspiracies are unbelieveable because they are so odd,or unthought of. Massive interlinked think tanks do our planning and have no relation to everyman's dreams.
The Norwegian blogspot http://energikrise.blogspot.com/ has a colurful graph showing how net oil exports (believed to be all liquids) has developed for countries and regions based upon BP Statistical Review 2005 for the years 1985 through 2004.
As I have outlined previously, these are the big four regarding exports and imports. Let's abbreviate them as SAR (Saudi Arabia Russia) and USC (United States China).
SAR can, if they wish, export a volume of oil equal to domestic production less domestic consumption.
USC wants, if we can, to import a volume of oil equal to our domestic consumption less domestic production.
Consumption in all four countries is increasing.
USC's production is falling.
SAR's production is basically flat, and in my opinion, will start showing declines this year. I predict that Russia's production will fall much faster than Saudi Arabia's production. However, even if SAR's production stays flat (for a little while), their net exports are going to fall as their domestic consumption increases.
Therefore, the volume of oil that SAR can, or will, export is falling. The volume of oil that USC wants to import is increasing. The result? A war for remaining export capacity, which we hope (and pray) will be fought with currencies (or something of value) rather than with nuclear weapons.
Paraphrasing Ayn Rand, there are two ways to allocate scarce resources, with dollars or with force.
I continue to recommend that we fund Social Security/Medicare with an Energy Tax and that we abolish the Payroll Tax, combined with implementing Alanfrombigeasy's electrification of transportation proposal.
From: www.urbansurvival.com "Roving Gangs"
Another item that I mentioned on the Quayle show last night was the frightening mob beating that took place in Las Vegas this past weekend. Apparently, a "spontaneous gang" of 10-15 people decided to "swarm" and took their vengeance on innocent people who happened to get in their path.
What we have here is a prime example of what could turn into a widespread social disease in big cities when the shortages and high energy prices - almost undoubtedly accompanied by brown outs and power outages - arrive this summer. A reader writes in:
"My newlywed pregnant daughter living in Montgomery County, MD (not a cheap place) called to tell me that gangs of youths, in broad daylight, are carjacking 10 or more cars at a time, also pistol-whipping the owners. She and her husband are looking to move as quickly as they can.
(This is reminiscent of the "wolf packs" of young children in post-War Germany who were a law unto themselves.)"
Strauss and Howe's Fourth Turning may offer the image of an evolving and cooperative lifestyle after "the turn," but we may have to go through a lot of ugliness to get there - and I look at the Vegas and Maryland cases as the leading edge of wolf packs of disenfranchised young men. We may have only media to blame, for failing to put hard work and diligence out on screens and tubes as admirable values. Instead we have a media-fiction world with uncountable do-overs, heroes that never get hurt, and the "something for nothing hype" from credit pimps who would have our young people buy their way into credit hell while still in high school. Yah get whatcha sow.
You can't truly be prepared for Peak Oil until you have a battery of effective self-defence weapons, along with a hefty stockpile of ammunition for those weapons, and have taught yourself to use those weapons effectively.
It's most unfortunate that this is not more readily acknowledged here on this site. Apparently, it's not "politically acceptable" to the predominantly liberal readership of this forum.
It's a matter of focus. And, in addition, the survival discussions bring with them an element that I think is best disassociated with peak oil discussions.
Survivalism, including weapons, is a worthy topic, but should be considered within the context and within the many forums specifically devoted to that topic.
It's more efficient that way.
This is a pragmatic view. Not a politically correct view. Nor a liberal or conservative view.
Discussing survivalism, guns, etc is like discussing the details of bicycle maintainance, railway building, home insulation and a thousand other topics that are influenced by peak oil.
I think it is good to mention such topics in a way that makes our readers notice that there are various solutions to all kinds of problems, especially if links can be provided to relevant information and forum debating these topics. Unfortunately I am not good at this. (embarrased cough)
I think one thing is important enough to mention manny times. The creation of social capital is essential, new friends, new relations, all kinds of cooperations and even new ways to meet people. It makes it easier to start new companies, make resources stretch further, get more security and get a more joyfull life.
Assuming I wanted to learn about composting toilets, gun laws, etc, will any of you enthusiasts post good sites to learn about them here?
In general, I think emergency planning is good. It's no different than insurance. E.g. I was watching a show the other day on the possibility of a 8.0 quake in San Francisco. People should plan to be on their own for at least a week, maybe more.
Subkommander Dred
IMO civilians should not carry concealed handguns, for two main reasons:
- Carrying makes you stupid. Instead of putting all your wits into avoiding bad situations, you put some of your attention into trying to decide whether to draw your weapon, and few civilians have the basic training you must have to become profiecient.
- Proficiency in use of a handgun is largely a "use it or lose it" skill. Few of us have the time time and determination to put in hours per week--every week--to maintain proficiency.
My young active-duty and reserve friends all carry variations on the 19ll Colt A-1, cocked and locked. Even though they are proficient and highly trained and practice extensively, I think this is a mistake, but after serving in combat for years they just get nervous walking around unarmed.If you really want to learn to use weapons, sign up for four years with the U.S. Army or U.S. Marines.
So-called self-defense classes (even the expensive ones lasting days and costing thousands of $) are, in my opinion, worse than useless, because they often instill a false sense of confidence.
I've lived in one of the most dangerous neighborhoods in the U.S., the south side of Chicago, a few blocks from the University of Chicago, at a time when it had one of the highest murder rates in the U.S. During the mid fifties, cops would patrol in fours--two on foot, two in car ready to thumb the mike for backup--because fewer than four police were likely to be attacked by the Blackstone Rangers. At no time was I ever in a dangerous situation, nor would my security ever have been improved by carrying a concealed handgun. Why? Because I knew the rules and I knew the territory.
On the other hand, Sailorman seldom leaves home without a knife, because (as the King of Norway once said, when somebody queried him about his carrying a big sheath knife concealed under his coat), "You never know when you might want a knife."
Martial arts classes are good to build strength, agility, and concentration. My most effective personal defense is damn good "radar" that keeps me aware of what is out there and how to avoid bad situations. For example, there are large areas of Minneapolis I will not drive through at any time of day--and having a loaded pistol beside me in the front passenger seat would not increase my safety much in this neighborhood.
BTW, if you do kill a few attackers, you may well well end up doing time if the jury decides that your use of force was not reasonable.
In any case, I think that the best home defense weapon may be a short barrel "Coach" double barreled shotgun.
Also, a new single-shot 12 guage Made in U.S.A. shotgun can be purchased for for about $100. Leave the gun unloaded, but make a habit of carrying a couple of cartridges loaded with #4. Slugs and 00 buckshot have a nasty habit of going through walls and hitting innocent neighbors. If you ever have children in your house, disassemble all weapons and lock up all ammo.
Do not waste good powder and shot on elderly Republican lawyers;-)
If price is an issue, forget the single shot, you can get a Mossberg version of a riot gun (.12ga pump, 8 shot, 18" barrel) for about $180 at most Wal Marts.
ten round capacity. Buy used pump shotgun ($100?) and saw off
(Barrel > 18" and total length > 27" in most states), then remove the
magazine plug for up to six or seven rounds (plug removal may be
illegal in some states). Alternate tracer plug ammo with true 00
buckshot.
I agree with you to an extent. I am pro gun. However, I always suggest that if someone is going to carry a weapon, they have to know if they are willing to pull the trigger. It does know good to get a permit and carry a weapon if when the situation arises, one freezes and doesn't use it.
In the sixties and early seventies there were large areas of Chicago's South Side where police did not go at all except by absolute necessity, in numbers. in daylight. The same neighborhoods of course had the best jazz and blues and really fine marijuana. And if your heart was not stone, walking through those 'hoods would break it.
If some white boy were fool enough to carry a gun down there it would have been quickly confiscated and resold.
Good neighbor policy generally works until you meet someone who's just crazy. Crazies are everywhere, not just cities. And when you meet a crazy is the most important time to have neighbors and not act crazy yourself.
Think for a minute of all the physically challenged, old, sick people who live in the most dangerous places imaginable, who can't afford a PoS gun, and who couldn't handle one in their dreams. They get by.
Why are younger Americans so miserable?
A psychologist has written a book called Generaton Me, about why Americans born after 1970 are more confident, assertive, entitled - and more depressed than ever before.
She argues that American young people, unlike their elders, have been raised to value self over family or society. They are told from the time they are small children how special they are. They have very high expectations. But when they leave home, they are often in for a rude surprise.
So many people are teaching their kids that the world revolves around them. They aren't disciplined like kids of older generations were. They are often home-schooled, to spare them from teachers who "don't understand them" or who might "break their spirits." I look at how my friends are raising their kids and wonder what's going to happen when those carefully coddled kids have to go out into the real world.
I've got one friend who was doted upon by her parents to an extreme degree. (A natural reaction, after her parents lost her older sibling.) She's bright, talented, has a PhD in one of the hard sciences from Harvard, a loving husband and adorable children...and is so depressed she often can't get out of bed. Has been for years. She admits that one reason is that no one out there in the real world treats her like mom and dad did.
Though it's hard to extrapolate what is often anecdotal experiences into broad cultural themes.
Signs of depression are increasing in the upper classes of China, I recently read. One chinese physician said it makes sense. You don't have time to be depressed when you're trying to survive.
Joke from the oil patch bust days:
A geologist applies for a job at a Seven Eleven. Manager says no; they already have too many geologists, but they would like some more petroleum engineers.
Post-Peak Oil:
Yale law school graduate applies for a job on a farm. Manager says no. Too many Yale graduates, but they would like more Harvard law school graduates.
If you hike someplace where there is a very small (but real) chance of being eaten, a pleasant moment of frisson may drive home your place on the planet and food chain.
Can you cite any specific sources for this (either episode, in NV or MD). I have seen no reference of it in the media, and though I am hardly surprised that media would miss important stories (such as peak oil) something like this would certainly have made the rounds of the 24 hour news channels. Indeed, they live to cover such things.
Subkommander Dred
Total Gasoline stocks
Location 2006 2005
US 202.5 211.6
East Coast 48.4 58.6
The other regions saw slight declines or slight builds
Drilling Down, the reformulated gasoline looks like the main component.
Location 2006 2005
US 10.8 25.1
East Coast 5.6 14.9
almost 10 million barrels lower...
Looking at the Conventional stuff now
Location 2006 2005
US 105.5 112.9
East Cst 23.1 28.2
That's 5 more million barrels down too. But add that together. Its over 14 million barrels lower than last year. Thats more than the TOTAL gasoline stocks, which presumably these two add up to form (in addition to other refined gasoline products)
Looking at the blended components, part of the answer may be here.
Location 2006 2005
US 86.2 73.7
East Coast 19.8 15.5
4.3 Million more in stocks does explain this somewhat.
STill, whats going on here?
How much work is being done on east coast refineries?
Your guys' stock draws are affecting the rest of the country.
Also, desulphurization requirements for gasoline & diesel could be making for protracted maintenance outages in order to bring new units on-line.
I also noted that SU consumption has barely been phased, US production is down 1/2 million b/d and imports are lagging.
When you consider that during the summer the mere presence of a Cat 4-5 hurricane in the Gulf is going to shut down a lot of the refineries for a couple of weeks this could get interesting.
1)Well...hopefully these high gas prices will be a slap in the face for the American public so they can wake up to the reality of our precarious energy situation.
2)The GOP will suffer in this year's elections. Although, I say this with a caveat. Because I really believe that most Dems are as misguided as the Republicans. Was it not Schumer and other democrats who were infuriated because oil companies were "fixing" prices to make their profits? The sad state of politics in this country is such that politicians will say anything to appease the public...Complaining about high gas prices always scores political points.
3)It lessens the chance of any US military attack on Iran. Perhaps the neo-crazies are really realizing that in fact an attack could cause oil prices to explode making today's gas prices seem like a downright bargain.
4)The whole ethanol in gasoline business. Ethanol now costs more than gasoline per gallon, yet we view it as a panacea to our energy and environmental problems. Eliminate ethanol from the gasoline supply and send all the surplus corn to people starving in Somalia. Ridiculous, we are burning away food while hundreds of millions still suffer from malnutrition. Simply mind-boggling.
That's it for now.
Here's to $4/gallon this summer!
Cheers.
Ethanol has always "cost" more on the spot market than gasoline. There have been very brief periods where gasoline has been more expensive, but the average annual cost of ethanol has always been more. It is just that the subsidies bring the price down. You can see the spot history of ethanol versus gasoline here:
http://www.neo.state.ne.us/statshtml/66.html
RR
Since you seem to be rather educated regarding oil refinery production and the costs associated with such, I have several questions I would like to pose.
- How much more expensive is it to refine heavy sour vs light sweet? From what you have said in the past, I understand that most refineries can process it, but only with a significant investment of money and infrastructure. Does this lead to higher cost of refining overall (ie the process is more involved, thus more expensive, causing an even further increase in the cost of refined products), or is the expense only in the capital layout for changing over from one grade of crude to another?
- What are the other costs associated with gasoline, such as transport and profit markup? I understand that the federal gasoline tax is 18.3 cents/gallon, and my state (the Commonwealth of Virginia) has an additional tax of 17.5 cents/gallon. I am trying to figure the final cost of retail gasoline based the wholesale price ($2.23 a gallon and rising...).
- Will we see significant shortfalls in other fuels, specifically jet fuel (non-military use) and diesel? One of my concerns is that the local air medical evacuation services (all of which use twin jet engine helicopters for their missions) may not have access to the fuel they need to fly. If so, this would greatly impact the rapid transport of critically ill and injured patients for definitive care (speaking as an Emergency Room RN, you could well understand my concern in this particular regard).
Of course, anyone who could eleborate on this issue would have my greatest appreciation.Subkommander Dred
Sour crude is a different matter. Specific equipment has to be installed to handle it. However, due to new low sulfur diesel and low sulfur gasoline specs, I think that all refineries have made the investments into the hydrotreating facilities required to process sour crude. I guess the one caveat would be to consider what their design assumptions were. If they assumed a sulfur content of 1%, then they may not be able to handle crude with 3% sulfur, or they can only handle it at reduced rates.
I think transport is a pretty minor cost. It is a little more expensive if ethanol is being blended, because it has to be trucked or railed, and that is more expensive than shipping by pipeline. At current crude prices, the cost of oil is adding somewhere between $1.50 to $2.00 toward the cost of gasoline, depending on the refinery configuration. Then you have associated state and federal taxes, and profit. Historically, profit margins have been somewhere 5% and 10%.
Diesel got pretty scarce at times last year, but right now diesel inventories are pretty good. That's because diesel is cheaper to produce, but selling at a higher price than gasoline. Refiners have some flexibility in producing diesel or gasoline,so they tend to favor diesel right now. The worry is that if gasoline inventories continue to plummet, refiners may have to shift some production from diesel, causing the inventory picture to flip flop.
Inventories will start to come back up in the next few weeks. Refineries are finishing up spring turnarounds, and prices will start to stem demand. I think we will have rationing of a sort, but it will be rationing by price.
RR
RR
Subkommander Dred
This is a chart of the United States' days of gasoline inventory on hand plotted against the average retail price of gasoline. I've taken the weekly total inventory number released by the EIA and divided it by the corresponding week's number for millions of barrels of gasoline consumed daily. Note that the left axis is not zero scaled. Price of gasoline is inflation adjusted. Numbers are 4 week averages.
Notice the gradual downward trend from a range of 25-30 days a decade ago to 20-25 days currently.
Nice graph.
Can you obtain very recent data in 2006 which migh show a larger divergence between inventory and price lines?
Based on recent posts and data it appears that the price is now above $3.00 and inventory is at or below 20 days. Both of these would be outside their ranges for the past decade even including Katrina.
Thoughts?
RR
RR
How about the 400 000 - 650 000 bbl/d shut in Nigeria?
How about the freefall of Iraq production?
How about GOM recovery?
How about overall decline or export capacity in general?
How about increased demand?
How about overall quality sour vs. sweet?
Funny, but last time I checked gasoline was MADE FROM OIL!
Hmmm...
From July, 2005: The Federal Trade Commission today issued a report entitled "Gasoline Price Changes: The Dynamic of Supply, Demand, and Competition." The Report analyzes the many factors that influence fluctuations in the prices that U.S. consumers pay for gasoline at their local gas station. It examines a wide range of gasoline price factors - including the cost of crude oil, increasing national and international demand, and federal, state, and local regulations - all of which influence the prices consumers pay at the pump. One of the Report's conclusions is that over the past 20 years, changes in the price of crude oil have led to 85 percent of the changes in the retail price of gasoline in the U.S.
Common sense.
And you wonder why the farmers get pissed.
Now I'm going to go and actually read what you wrote.
We all agree.
Read it again, fellas. There's no problem here.
If you have a problem, relate it through me, I'll settle it.
We all agree here. Let's focus our guns on the enemy.
The net result is thusly:
- Ethanol demand is up, as MTBE is phased out and replaced. Higher demand creates shortages.
- Use of ethanol instead of MTBE plays into a more "just in time" delivery and mix flow, exacerbating shortages.
Shortages of ready to pump reformulated gas result, causing prices to rise slightly.I vent, because it tends to get a little frustrating watching 'shocked' citizens complain about rising gas prices while filling up 10/mpg Support Usama Vehicles.
I vent, when I see MSM pundits circle j*** their so-called expert guests (or worse: public representatives) with spoon fed renditions of what passes for hard hitting journalism.
I vent, at the American citizenry [a.k.a the brave] who kowtow before the criminal leadership they have the power to remove.
But most of all... I vent because PeakOil is a challenge - granted a very difficult one but a challenge nonetheless.
And challenges my friend, (sry can't resist) ALWAYS have a solution.
Isn't that what I said? You should listen to Oil CEO's advice. I get it. You like ethanol. But when you are given facts and logic, your responses look like "Ethanol! Woo-hoo! Green fuel! Yee-haw!" You didn't even pay attention to what I wrote, and yet you felt the need to respond in a way that was completely irrelevant.
That is not the first time it has happened. You did the same thing over the E85 debate. I gave sound reasoning for why the market for E85 will dry up if the subsidies expire as they are scheduled to. None of your responses addressed my arguments. You argument basically consisted of "You're crazy. Car makers are producing flex-fuel vehicles". Not only does this ignore my arguments, it also ignores the news stories from a few months ago that said the market for E85 had started falling off when the price of ethanol started getting more expensive.
Ethanol has baggage. Most people on the forum realize that. You don't help your credibility by completely ignoring the arguments against it, nor by responding with a series of non-sequitors.
RR
And as for our banter over ethanol, my posts may have been sarcastic, however, I can assure you that they were indeed logical.
For instance...
I presented you with evidence that Cali's waiver for ethanol was directly related to supply and demand - not pollution as you submit.
I informed you that one simply cannot make blanket statements about ethanol production.
You tried to claim that the technology behind ethanol production would not evolve - which is complete nonsense.
You claim that there will not be a market for E85 after next year. I counter with GM and the Gov. of Michigan opening new E85 stations, Ford and VeraSun building an E85 flex-fuel corridor from Chicago to Kansas City, Toyota making the huge announcement that they will be building E85 flex-fuel vehicles for the US market. To which, I could've added GM's yellow cap campaign, the Senatorial investigation into the illegal blocking of E85 filling stations by Big Oil, or even the recent CNN survey on alternative fuels of which 90% of respondents or 77,000 people, want alternative fuels.
You claim that no one is going to pay more for renewable fuel. Really? I warrant, that like Whole Foods and the organic movement in general, people will in fact be willing to pay more for a cleaner conscience.
I highlight that mandatory renewable fuel usage is a sound investment; prompting private investment in the industry to the tune of 100's of millions of dollars and you say that the industry is dead in the water without government subsidy.
All this and in response I get:
"I know all about ethanol. I have done graduate school research on it. You, on the other hand, seem to be painfully uneducated about it." or "It's fine to disagree, but a logical argument would do wonders for you."
For instance, I showed the statement from Feinstein's office showing that their scientists had proven that ethanol addition did not help pollution at all. That was well before there were ethanol shortages.
I didn't say that ethanol technology won't evolve. But the technologies involved in grain ethanol production are very mature, and are unlikely to see much improvement. I did write an essay on what it would take to make a quantum leap.
You still haven't addressed my argument against E85. You seem to think that because there are E85 vehicles, there will be an E85 market.
I did not say people won't pay more for alternative energy. They won't pay a great deal more. That has already been shown. When ethanol spiked up, news stories abounded that E85 sales dropped off.
I am certainly not the only one who says ethanol is dead without subsidies. The much referenced Hirsch report on Peak Oil said exactly the same thing.
Regarding your last paragraph, Ha! You have gotten detailed arguments in every case. You just chose to ignore them.
RR
The last weekly entries should be 202.5 mil barrels, 9.100 barrels per day, giving us 22.3 days. Price is $2.78.
I'm using four week averages for graph so It would show 22.96 days and $2.68.
I'll update this in a couple of weeks. There is definitely a larger divergence, we'll see if it continues.
src: GraphOilogy
The image in the background is the derived probablity map from the observed "number of day of consumption" since 1991. Dark patches indicate more frequent values. The Current level is near (slightly below) the most probable value for this day of the year).
So now I'm wondering: What happened at the beginning of 2004? Stocks were apparently way low then, consistently low.
Another consideration: most businesses since the 90s have been optimizing the supply chain (Wall Mart as our favorite example). I don't have a lot of in-depth knowledge of this topic, but it seems like just in time delivery could also be playing a role in the downward trend that we see over time.
So what's the big deal??
True, the price of gas was pretty steady at around $1.50/gal (U.S.) for years (from Oil CEO's graph) and has risen in the past couple years to $2.50/gal. Still pretty cheap.
Often you'll hear about how "high" gas prices are a hardship and the average person can't cut back on driving since they have to get to work. Here's a question. What is this "summer driving season" you always hear about? Sounds to me like "vacation travel." It sounds plausible to say, "I have to get to work," but somehow less compelling to say "I have to go on my vacation."
(Don't get me wrong -- I have to go on my vacation, I just have my doubts about the whole rest of the country.)
From the traffic, it seems many others are in the same boat.
http://www.schuttevaer.nl/Uploads/Files/WS-16-2006.pdf
translation:
"Tankermarket is plain bad for vlcc's (very large crude carriers)......competition with seuzmaxes are strong. But also these Seuzmaxes have to accept low rates and fight over every load with the vlcc's.....For the vlcc's as well as for the Suezmaxes apply there are too many vessels available for the cargo offered, and it looks like it will stay that way for some time..."
"too many vessels available for the cargo offered"
"too many vessels available for the cargo offered"
"too many vessels available for the cargo offered"
I can't explain it.
But it can also be caused by less demand from refineries then usual as more are off line, or limited in production. It could also be (one for westexas to wonder about) that refineries have the same demand as usual, but cargo's offered are to much of the heavy, sour type.
From all that I've read, Ghawar is the long pole in the tent. According to Deffeyes, "when the Ghawar field waters out, you can kiss your lifestyle goodbye." To be sure, there are other opinions. To my semi-educated mind, the collapse of the King of Kings cannot be anything less than a watershed event.
Question 1: How will we know (forum and messenger) when Ghawar is in terminal decline?
One of my personal triggers is the word "Ghawar". When American MSM even mentions the word "Ghawar", when I hear even one casual conversation discuss problems with "Ghawar" by name, that will be like the waters suddenly receding away from the shore.
Question 2: Is the decline of Ghawar as significant an event as I am portraying it to be?
It appears that capacity will peak around 2008 (according to the shipping pubs and some proprietary info I have) and you should see a continuing slide in the Baltic Dry Index as well as tanker spot rates.
So what? So short the tanker operators like FRO (Frontline). Ignorant investors see a high dividend rate on these things and think "Alright! 8% div" and buy it up. Then spot rates collapse as all this capacity comes online and the dividend...along with the share price...evaporate.
And I didn't see ANY mention of WATERWORLD last night! These can become our floating MadMax cities, once they're retired from the Crude Trade and the Coastal Cities all become WaterParks after the sealevel rises..
In the grain embargo put on by Jimmy
Carter, grain North of New Orleans
was cheap. No one wanted it, because grain
couldn't go to paying customers (Russia).
The EU loaned the US energy products in the wake
of Katrina. From Kunstler, October 10, 2005-"the European Union has been sending two million barrels of crude a day to the US out of its own emergency reserves."
These
bbl's were lent. People were wondering at TOD when the
payback would occur.
Maybe empty tankers would be a sign of payback.
Are the EU gasoline reserves being built up?
Just guessing,
James
See: Another Uninformed Consumer Watchdog
Incidentally, the shameless self-promotion of my blog has finally paid off! I got a plug in Salon.com in an ethanol article:
http://www.salon.com/tech/htww/2006/04/19/ethanol_bubble/index.html
If you don't want to wade through the ad, here is the plug:
"For an entertainingly obsessive fixation on the issue, check out my new favorite blog, chemical engineer Robert Rapier's R-Squared".
Woo-hoo! I am entertainingly obsessive! Believe me, I have been called much, much worse.
RR
RR
Like children, we blame others and expect somebody else to make it all right.
RR
RR
still a build in crude. volatility
Boris
london
NYT link
A highly probable and greatly increased demand for those tires could should have been visible on the horizon by the mid nineteen nineties and possibly sooner.
Anybody know the story on this one?
Admittedly, the giant tires are a relatively low-volume product, but my impression is that there is a large profit on each unit sold. Perhaps, however, major tire firms were constrained by limited funds for new capital investment--except that I do not recall that being the case (in general) in the nineties.
With few suppliers, a firm can act like a monopolist or maybe a duopolist and keep prices and profits high on products such as the giant tires. For me, the mystery remains.
I do not believe that rubber firms conspired to create a shortage of these tires to jack up prices and profits, because a mining company can always use somewhat smaller (and somewhat less efficient) trucks with smaller tires, and I imagine that is now happening.
I read the mining magazines. Tires is the least of their problems.
- These are specialty tires. Most tire companies don't have the expertise, or the molds, to build these tires.
- The mining companies and their suppliers were expecting a downturn after the stockmarket crash. They certainly weren't expecting the Chinese to give us all that free stuff after the crash.
For example, the Cantung mine actually shut down after the customers broke their contracts because the price was too high. Shortly afterwards the price spiked ten times because there wasn't enough tungsten. Nobody expected that.3. We have been investing in Wall Street instead of mines, roads, smelters, railroads, pipelines, and nongas generators, for about the last twenty years before 2000. It's called a stock market boom, which is inversely related to a commodities boom. This is not the first, or even the fifth, time this has happened. It's just a natural market cycle.
My god, have you seen what's happening to copper? That has to be speculation. At least when tungsten doubled in a month it was obvious market manipulation by the Chinese. Copper has way to many suppliers to be anything but people fleeding currencies into commodities.
"Entergy Arkansas, the state's largest provider of electricity - and consumer of coal - claims Union Pacific Railroad schemed to hold back deliveries of Wyoming coal to Arkansas power plants in an effort to make more money.
In a lawsuit filed Tuesday in Pulaski County Circuit Court, Entergy claimed that the railroad "in a conscious and deliberate practice" limited supplies of coal from the Powder River Basin in Wyoming in an effort to manipulate demand and ultimately maximize its profits."
http://www.gillettenewsrecord.com/articles/2006/04/12/news/news01.txt
"November 07, Associated Press -- Tire shortage causes problems for coal mines. Coal mining companies in the Powder River Basin in northeast Wyoming are maneuvering to get
around a worldwide shortage of tires for heavy equipment. The shortage is widely attributed to increasing demand from U.S. and international mining operations for tires, industry officials said. Military operations in Iraq and Afghanistan have added to the strain on the tire market, said Jim Davis, a Goodyear Tire & Rubber Co. spokesperson. Drivers and mechanics at Wyoming mines are getting instructions intended to extend the life of off−the−road tires used on the giant dump trucks used to haul overburden and coal. Companies are also scrambling to make up the shortage through deals with suppliers, which are so tightly strapped that at least
one mine has had to idle some of its trucks in recent weeks. To meet the demand, manufacturers like Goodyear and Bridgestone Corp. are looking at expanding the capacity of their big tire plants. Davis said the heavy−equipment tire shortage could continue through 2007.
http://www.grandforks.com/mld/grandforks/news/state/13105832 .htm
Taking Lumps
As Utilities Seek More Coal,
Railroads Struggle to Deliver
"Snags in Wyoming Ripple
Through Taxed Network;
Power Plants Run Short
A 5,833-Hopper-Car Deficit
By REBECCA SMITH and DANIEL MACHALABA
Staff Reporter of THE WALL STREET JOURNAL
During the past 10 months, Arkansas Electric Cooperative Corp. has been forced to do things that power generators hate to do: It cut electricity production at plants that are the cheapest to operate and ran its costliest units harder than ever. At times, it even bought electricity on the open market at top prices.
The electricity co-op made these moves because it is afraid of running out of coal. That's surprising in a country with such vast domestic reserves that some dub it the "Saudi Arabia of coal." But Arkansas Electric has a problem that is a growing concern for many U.S. utilities: It can't get enough coal to run its power plants because the trains that serve as its supply line aren't running on time. Delays in coal shipments to the Arkansas generator began last May with rail disruptions in Wyoming and forced the utility to burn more natural gas, lifting its 2005 power-generation costs by 21%, or $100 million."
http://webreprints.djreprints.com/1430240410077.html
The IEA March Oil Market Report said this about refinery capacity:
Anyone know the current status of these three damaged refineries?RR
http://news.bbc.co.uk/1/hi/business/4922172.stm
quote:
A more controversial concern is the so-called "peak oil" theory: the idea that the world has reached the natural limits of oil exploitation, and that there is little more to be found in the ground whatever the price.
Although many in the business dismiss the concept, energy planners in several countries are nonetheless beginning to take it into account.
i'm new to peak oil (only found out a few months ago) but any mention of it on a major news site is perhaps a step in the right direction...
And Denver Post headlines http://www.denverpost.com/business/ci_3729034
this morning stating that Colorado is leading the nation in home foreclosures. Meanwhile immigration rallies are trying to propel the legal status of all Illegals nationwide. And gasoline is about $2.90 in most places.
Yet Hummer sales were reported as being tripled last qtr? While gasoline prices are going past post Katrina levels? oil is trading at $73 and inching up.
Seems we are headed straight to a wall, full steam ahead! I can't see how there will be a soft landing! This is gonna get ugly.
On a bright note, i heard someone speaking that China seems to have a shortage of labor, due to the peasants being able to find higher wages in various industries. Chasing the almighty Yuan! Imagine that!