Wednesday, February 4, 2009

The Weekly Petroleum Report

Every week the EIA puts out updated production charts for the past year. On Wednesdays those for petroleum, including crude oil and gasoline, are posted, and then on Thursday one can get information on the natural gas situation. These are useful charts, as much for showing the current situation in contrast to earlier years, and also to bring in the seasonal effects that are not always recognized if one just looks at the numbers for a month. Looking at these every week isn’t necessarily needed, but regular visits to both sites are well worth taking the time. For example let’s begin with what has happened to gasoline demand over the last year.
US Gasoline Demand

One can see, looking at the comparison of the patterns of the last two years how dramatic the slump was as the recession took hold in the US as we went into the Fall. But one can also see how, over the past three months, the demand has come closer to previous use at this time, and now appears almost coincident with that of a year ago.

The next interesting thing to do, having seen what demand is doing, is to see how it is being met. Gas can either be refined domestically, or it can be imported after refining. And one can see that the domestic refining of gas recovered more quickly than the demand:
US Production of Gasoline

It has been in the import of gasoline that the drop-off in demand has been handled.
Gasoline imports

Yet even here the product is coming in at close to the same level as it was a year ago, indicating that this particular part of the economy has no longer been hurt as much, in volume, as one might have thought. Now it is true that is does not all have to be used, but if one looks at the volumes that are held in stock, the quantity is less than last year, and so, although there has been a build in stocks, it is well within the average values for the past five years.

Gasoline stocks

I should note that by May of last year the country had seen a steady decline in the number of miles driven, relative to 2007, because of the increase in the price of gasoline, so that needs to be remembered in this analysis.

Taking a step further back into the process, gasoline coming out of the refinery is only a part of the product, and so we look at what is going into the refineries. In relative terms we again see that dip in volume that came in at the end of September, and which we have been assigning to the recession.
US Refinery inputs

But now it is important to look at the regions of the country to see how the refineries in each region has been coping. And in looking there we see another cause for the drop in refinery operations.
Regional Refinery inputs

Notice that they all remained stable, apart from the Gulf Coast. And if you remember there were two significant Hurricanes that affected production in the Gulf this past summer. I have used a plot from the Natural gas page (which I will chat about tomorrow) to show when they occurred.
Showing the arrival of two hurricanes.

So one steps back to consider where the crude oil that went to the refineries came from.

Domestic supplies are again back to normal, and stabilized fairly rapidly after September.

Domestic crude oil production

While imports are also back to historic levels. Note they also fell since there were issues with getting oil into Gulf refineries.
Crude Oil imports

And since they recovered somewhat quicker than demand, stocks of crude have risen above the five-year average.

Crude stocks of oil

Which has allowed the Administration to begin pumping oil into the Strategic Reserve again.

And the thing is, looking at these figures, it does suggest that if demand is returning to earlier levels, then supplies may tighten again, and prices will then start back up. So that is why we will keep dropping by these EIA pages and noting what they tell us in the months ahead.

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