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What Oil Companies Face: The WTF-Collapse of Consumption of Gasoline & Jet Fuel from Long-Term Weakness

What Oil Companies Face: The WTF-Collapse of Consumption of Gasoline & Jet Fuel from Long-Term Weakness

Transportation fuel demand rose to where it had been in … 1997.

While the overall S&P 500 Index is down 2.7% in October, about flat for the three-month period, and up 2.8% for the year, the S&P 500 Energy Index is down 4.4% for the month, down 19% for the three-month period, and down 50% year-to-date.

On Friday, Exxon Mobil reported a 29% plunge in revenue in the third quarter, and a loss of $680 million – its third loss in a row, the three of them totaling $2.34 billion. And it warned of possible “significant impairment” charges on “assets with carrying values of approximately $25 billion to $30 billion,” mostly related to its North American shale gas operations. The day before, it had announced job cuts of 14,000 employees and contractors globally, including about 1,900 folks at its Houston headquarters.

Chevron [CVX], which completed the acquisition of Noble Energy in early October, announced this week that it would lay off about one quarter of Noble’s employees. Those layoffs are in addition to the cuts of 10%-15% it’s planning for its own workforce. The cuts at Noble amount to nearly 600 people, and the cuts at Chevron amount to 4,500 to 6,750 folks.

Exxon shares [XOM] have plunged 53% year-to-date to $32.62 on Friday, and thereby edged closer to their March 23 decade-low of $31.45. In July 2014, at the cusp of the Oil Bust, XOM reached a high of $135, having since then plunged by 75%.  Exxon’s dividend yield is now over 10%, but everyone knows that, like other oil companies, Exxon could reduce or eliminate its dividend if push comes to shove.

Bankruptcies by US shale oil and gas companies with less heft and diversification than Exxon and Chevron have turned into a flood. The debts listed in the bankruptcy filings over the first nine months of 2020 reached $89 billion and surpassed year-total filings in the prior peak oil-bust year 2016.

…click on the above link to read the rest of the article…

Update on the WTF-Collapse of Consumption of Gasoline, Jet Fuel & Diesel

Update on the WTF-Collapse of Consumption of Gasoline, Jet Fuel & Diesel

Folks started driving again – including those who used to take mass-transit. But jet fuel demand is still in collapse-mode. And overall consumption remains way down.

Ridership on San Francisco’s Bay Area Rapid Transit (BART) trains was still down 89% in June, compared to June last year, according to BART. Not because the Bay Area economy has collapsed by 89% — it has not — but because many people are working from home, and those people who do go to work are driving to avoid the infection risks associated with riding on a commuter train. Driving-instead-of-taking-mass-transit is playing out across the US. And we’re seeing some of that in gasoline demand. But jet fuel consumption is still in collapse mode. And diesel consumption has been down sharply for over a year.

Starting in mid-March, demand for gasoline collapsed in a historic manner. By now 32 million people are claiming unemployment compensation under state and federal programs, and many others switched to work from home, and both groups quit driving to work. Gasoline consumption at the low point in the week ended April 3 plunged by -48% year-over-year, to just 6.7 million barrels per day, the lowest in the EIA’s data going back to 1991.

Folks started driving again, bit by bit, to go to work, and because it’s summer driving season. In the week ended July 17, gasoline consumption, at 8.55 million barrels per day, was down 11.6% year-over-year, according to EIA data. Consumption of gasoline has been in the minus-6% to minus-12% range now for the fifth week in a row, with the latest week being the steepest decline:

The EIA tracks consumption in terms of product supplied by refineries, blenders, etc., and not by retail sales at gas stations.

…click on the above link to read the rest of the article…

Essential Bug-Out Resources

Essential Bug-Out Resources

Solutions that have proved surprisingly essential during California’s wildfires

In my post yesterday Survival Learnings From A California Fire Evacuee, I promised to share the specific resources that have proved especially valuable during my family’s emergency evacuation due to the Kincade fire. So I’d better get to it…

Gas & Cash

Having now been surprised by two massive fires within the past two years, in both instances, the preparation I was most immediately grateful for — hands down — was having sufficient on-property stores of gasoline and cash.

The moment your community realizes that flight may be necessary, forget going to the gas station. In my area, the lines were 20+ cars deep.

Waiting in those kind of lines (when there’s no guarantee there will be gas left when your turn finally comes) can easily cause you to miss your window of safety. As I mentioned yesterday, my friends who tried to evacuate just 45 minutes after I did eventually had to turn back home because the roads out of town had become hopelessly gridlocked.

So get in the habit of keeping your cars’ fuel tanks topped off, especially during times of seasonal risk (fire season, hurricane season, flood season, etc). Make it a point never to return home with the gauge below half-full.

Also, keep at least a tank’s-worth of gasoline stored on your property. In my case, I have four 5-gallon gas cans. This ensures I can get to safety even if I’ve forgotten to keep the car tank full. And if I’ve remembered, I can throw the cans in the car for an extra 300+ miles of range.

Similarly, once the electricity goes out, the ATMs stop working. Having $500-$3,000 of emergency cash on hand to take with you makes a huge difference.

 …click on the above link to read the rest of the article…

Why Your Gasoline Won’t Take You As Far As it Used To

Why Your Gasoline Won’t Take You As Far As it Used To

Barrels

Over the weekend, I saw a passing reference on Twitter to the declining energy content of gasoline. Intuitively I know this to be correct for reasons I discuss below. But the poster linked to data from the Energy Information Administration (EIA) that I hadn’t previously seen.

The EIA doesn’t directly tabulate the energy content of gasoline. But they do provide two pieces of data that let us calculate it ourselves from two relevant tables in the April 2019 Monthly Energy Review.

Table 3.5 provides Petroleum Products Supplied by Type in thousands of barrels per day, while Table 3.6 provides Heat Content of Petroleum Products Supplied by Type in trillion Btus per year.

From the annual numbers, doing the appropriate conversions (which includes accounting for leap years) provides the energy content of gasoline, in BTUs per gallon, since 1949. What we find is that the EIA reported a constant energy content of gasoline from 1949 to 1992 of 125,071 Btu/gallon. I have always typically used 125,000 Btu/gal as the standard value for gasoline.

(Click to enlarge)

The energy content of gasoline

Starting in 1993, the EIA shows the energy content start to decline. The decline accelerates in 2006. What happened then? I have seen two explanations floated.

I have heard some suggest that the shale oil boom in the U.S., which created an abundance of light oil, ultimately lowered the BTU value of gasoline. This is unlikely for a couple of reasons.

First, to change the energy content of gasoline you must change the composition. As I explained in a previous article, adding butane is a recipe change that takes place seasonally. It impacts the vapor pressure of the gasoline, but it also impacts the energy content. Butane has an energy content of 103,000 BTU/gal, so the more butane, the lower the energy content of the gasoline blend. This means that winter gasoline, which contains more butane, has a lower energy content. 

 …click on the above link to read the rest of the article…

94% of Americans who grew up during the era of leaded gasoline found to be lead poisoned and brain damaged

Image: 94% of Americans who grew up during the era of leaded gasoline found to be lead poisoned and brain damaged
(Natural News) A recent study published in the Journal of the American Medical Association found that 94 percent of Americans who were exposed to leaded gasoline in childhood may show signs of lower IQ scores and socioeconomic status in adulthood.

Health experts pooled data from blood samples of than 500 participants who grew up in the era of leaded gasoline. Research showed that participants who had more than 10 micrograms of lead per deciliter of blood at age 11 had significant reductions in IQ points in adulthood. Researchers said participants who had high lead exposure exhibited IQs that were 4.25 points lower than less-exposed individuals at age 38.

The study also found a dose-dependent effect of lead exposure on the participant’s IQ levels. According to the study, each 5-microgram increase in blood lead levels coincide with up to 1.5 IQ point loss in participants. Lead gasoline exposure in childhood was also associated with lower socioeconomic status in adulthood. Researchers said study participants who had more than 10 micrograms of lead in the blood obtained occupations with socioeconomic status four-tenths lower than those who had less exposure.

According to the Centers for Disease Control and Prevention (CDC), the current lead exposure value that requires public health intervention is five micrograms per deciliter. Data from the longitudinal study showed that 94 percent of participants in the study exceeded this rate. The CDC also found that four million American households have children who are exposed to high levels of lead. According to the CDC, approximately half a million U.S. children ages one to five exhibit blood lead levels higher than five micrograms per deciliter.

…click on the above link to read the rest of the article…

Is Gasoline Demand Really Slipping?

Is Gasoline Demand Really Slipping?

Gas pump

Genscape’s Weekly Gasoline Demand Report data shows relatively flat growth in weekly year-on-year demand for September through November. On the other hand, the U.S. Energy Information Administration (EIA) Weekly Products Supplied data has shown year-on-year declines over the same period despite lower gasoline prices.

Our data shows U.S. total motor gasoline spot prices averaged $1.56/gal on November 28, down almost $0.70/gal from the high of $2.25/gal on October 2, pushing prices to the lowest level since June 30, 2017. Gasoline demand generally increases during prolonged periods of low prices, casting doubt on the demand declines.

What’s Going On?

Genscape analyzed this discrepancy and found the root cause lies in the methodology differences between our data and the EIA. While our data is based on actual gasoline liftings from rack locations headed to gas stations/consumption points, EIA Product Supplied data, both weekly and monthly, is a calculation of implied demand for refined products. The EIA uses a combination of survey components, production, inputs, stock change, ethanol adjustment, imports, and exports in a formula to estimate demand.

This disparity between the two numbers appears to be related to the recent decrease in gasoline imports and increase in gasoline export levels, two factors that the EIA includes in its formula to calculate Products Supplied. By adding imports and subtracting exports, this shift change in recent import/export patterns has had a depressive effect on the Weekly EIA Products Supplied level, showing declining year-on-year demand during a time of sharply falling prices at the pump. The basis for the Genscape Weekly Gasoline Demand Report is total U.S. rack liftings, sourced from our Supply Side data. These rack liftings represent the movements of gasoline from secondary (rack) terminals to retail stations.

…click on the above link to read the rest of the article…

What Crashing Refining Margins Mean For Oil Markets

What Crashing Refining Margins Mean For Oil Markets

Refinery

Oil prices have plunged to one-year lows, but refiners in certain parts of the U.S. are not benefitting from cheaper crude.

According to new data from the EIA, refining margins for motor gasoline have fallen to five-year lows. “Flattening year-over-year growth in gasoline demand in the United States, combined with high levels of refinery output, have contributed to low or negative motor gasoline refining margins for refiners along the East and Gulf Coasts,” the EIA said on November 27. Gasoline refining margins have been declining since August.

In November, U.S. gasoline demand is expected to have averaged 9.2 million barrels per day (mb/d), down 262,000 bpd from a year earlier.

(Click to enlarge)

Meanwhile, prices for distillates, such as diesel, are much higher. The discrepancy is notable, and the markets for gasoline and distillates have diverged sharply this year. The forthcoming 2020 International Maritime Organization regulations on sulfur content in maritime fuels is set to push extremely dirty heavy fuel oil out of the mix for ship-owners. One of the most important replacements for fuel oil be diesel and gasoil – in other words, distillate demand is set to spike at the start of 2020. In anticipation of these regulations, distillate prices are seeing upward pressure.

With diesel prices on the rise and gasoline prices heading in the other direction, refiners might want to maximize diesel output. However, things aren’t that simple. As the EIA notes, for every barrel of crude oil processed in a refinery, it tends to yield twice as much gasoline as it does diesel. “As a result, although gasoline margins have been low recently, refiners cannot completely stop making gasoline in favor of other petroleum products, such as distillate,” the EIA said.

…click on the above link to read the rest of the article…

Venezuela’s Glaring Gasoline Crisis

Venezuela’s Glaring Gasoline Crisis

gas pump

Iran has dominated the headlines over the last few weeks, but Venezuela’s oil sector continues to meltdown.

Venezuela’s oil production fell to just 1.197 million barrels per day in September, down 42,000 bpd from a month earlier. However, because things are moving so quickly, that figure is now woefully out of date. With a few weeks left in 2018, many analysts believe production could fall below 1 mb/d.

Venezuela’s oil exports to the United States declined by 19 percent in October, compared to a month earlier. The decline came as a result of maintenance from the country’s upgraders, which turn heavy oil from the Orinoco Belt into exportable forms of oil. Without the ability to process, exports plunged.

But Venezuela is replete with operational and financial problems that are also contributing to the sharp decline in output and exports. Another issue has been the damaged port of Jose, the main conduit for oil exports. A tanker collision in August disrupted shipments from the port for weeks, and it remains only partly operational.

Nobody is hurting more than the Venezuelan people. At least 2.3 million people have fled Venezuela since 2015, according to a new estimate from the United Nations. The country’s inflation rate topped 833,997 percent in October, according to a report from Venezuela’s opposition-controlled Congress. The number is so astronomical that it is virtually meaningless, just as the currency itself is completely worthless.

Fuel shortages are growing worse. State-owned PDVSA has seen its refineries run into the ground, and many are not operational or operating at very low levels. On paper, the refineries can process about 1.3 million barrels per day, but in reality, many have ceased operations due to a combination of factors, including a breakdown in parts, a lack of oil supply to work with, and no financial resources. According to Bloomberg, refinery utilization is down to around 17 percent, down from 50 percent as recently as 2016.

…click on the above link to read the rest of the article…

Gasoline–Such a Big Bang for the Buck

Gasoline–Such a Big Bang for the Buck

Are you a fan of beheadings? Are you fond of autocratic regimes? Do you want to help those kooky, lovable Koch brothers purchase another member of Congress? Do you yearn to support Saudi Arabia, Iran, Donald Trump, and Vladimir Putin, but it seems so difficult to give them direct, individual donations? Lucky for you, there’s an easy answer! Just buy gasoline!

Yes, it’s that simple. Oil is a worldwide commodity. Any gallon you purchase props up the price as a whole, enriching international oil companies and oil-exporting nations, with a handsome portion trickling to the politicians they’ve bought. (Oops, “support.”) Your money is guaranteed to enable stonings of adulterous women and beheadings of political prisoners, not to mention facilitate juicy environmental damage from oil spills and toxic fracking waste. In fact, you can rest easy knowing that every dollar you spend on gasoline works hard to attack human rights, cripple the environment and enable political corruption. A three-fer!

But there’s more! On a local level, the gasoline you burn has the happy side benefit of inflicting asthma and cancer on the poorest in your region since it’s the poorest who live along freeways and traffic sewers where tailpipe emissions are highest and the rent is cheapest.

 
Make them richer and more powerful! It’s easy!

As a bonus, it’s easy to double the impact of your gasoline purchase by doing your best to make miserable the lives of anyone traveling without a car. With a little persistence, you can force them to get their own car and buy gasoline just like you. So honk at bicyclists as you pass them. Rev your motor loudly to show them who’s boss. Don’t stop for pedestrians in crosswalks.

…click on the above link to read the rest of the article…

Oil-Rich Venezuela Is Out Of Gasoline

Oil-Rich Venezuela Is Out Of Gasoline

Venezuela

After lining up for an entire day to get a plane ticket to visit her relatives in the western city of Mérida, Josefina García did not know if she and her octogenarian mother were going to reach their final destination on time for Christmas.

The airport is located 76 kilometers away from the city and when they tried to book a cab in advance to take them to the place where they were going to stay, the taxi company said they could not make bookings because there is a shortage of gas and management did not know if they were going to have enough fuel on the day of Josefina’s arrival.

Once they landed, the 61-year-old and her mother found a cab that had enough gas to take them to a certain part of the city where a cousin would pick them up. In the meantime, another cousin was lining up for gas. He was able to fill his sedan’s tank after waiting for more than six hours.

According to the Organization of the Petroleum Exporting Countries, the highest proven oil reserves in the world, including non-conventional oil deposits, are in Venezuela.

“Gentlemen: There is no more gasoline in Venezuela. In Venezuela, we are out of gas. In Venezuela, there is no gas oil. In Venezuela, there are no lube oils,” said Iván Freites in a televised press conference. Freites is the secretary of the professional and technician division of the United Federation of Venezuelan Petroleum Workers.

In his address, Freites said that poor management led to the stoppage of 80 per cent of the country’s refineries. “Only Amuay and Cardón refineries are operative and that is nothing. They produce 40,000 barrels per day and the national demand is over 200,000 barrels of gas per day,” he said.

…click on the above link to read the rest of the article…

Puerto Rico: When the electricity stops

Puerto Rico: When the electricity stops

When the electricity stops in modern civilization, pretty much everything else stops. Not even gasoline-powered vehicles can get far before they are obliged to seek a fill-up—which they cannot get because gas pumps rely on electricity to operate.

When I wrote “The storms are only going to get worse” three weeks ago, I thought the world would have to wait quite a while for a storm more devastating than hurricanes Harvey and Irma. But instead, Hurricane Maria followed right after them and shut down electricity on the entire island of Puerto Rico except for those buildings with on-site generators.

Another casualty was drinking water because, of course, in almost every location, it must be moved using pumps powered by electricity. In addition, the reason we remain uncertain of the full scope of the damage and danger on the island is that the communications system (powered by electricity, of course) failed almost completely.

The Associated Press reported that as of September 30, 10 days after Maria’s landfall, about 30 percent of telecommunications had been restored, 60 percent of the gas stations were able to dispense fuel and half of the supermarkets were open.

Presumably, these figures represent mostly urban areas where any single act of repair can restore services to many more people than in the countryside where conditions by all accounts remain desperate.

Unless power is restored soon to those areas still without it, many of life’s daily necessities—food, water, medicine—will remain beyond reach for substantial portions of Puerto Rico’s residents. The consequences of this are both predictable and dire. But the expectations are that weeks and months may pass before electricity again reaches the entire island.

…click on the above link to read the rest of the article…

World Out Of Whack: Electricity YAY!

World Out Of Whack: Electricity YAY!

Britain to ban sale of all diesel and petrol cars and vans from 2040

So says the Guardian.

Which follows on from:

France to ban sales of petrol and diesel cars by 2040

This follows Norway, The Netherlands, Germany and now – the big Daddy…

China plans to ban sales of fossil fuel cars entirely

China is the world’s largest auto market, with 28.03 million vehicles sold last year, a boost in demand of 13.7 percent vs. 2015 sales numbers. The nation has already done a lot to incentivize manufacturers to develop and sell new EVs, including allowing foreign automakers to create a third joint venture with local automakers (a standard requirement for doing business in the country for auto OEMs) so long as it’s dedicated to the creation of EVs exclusively.

CO2 emissions from EVs are substantially lower than their fossil-fuel-guzzling cousins. And since most of us prefer swallowing our air without having to chew it first, the appeal is as easy to understand as Cameron Diaz in a bikini.

Here’s an excellent chart which you can go and play around with which shows vehicle emissions. The yellow are the EVs (click the chart):

http://carboncounter.com
Source: http://carboncounter.com

This news has tree-hugging beardies everywhere rejoicing because they will, once and for all, get rid of all those ghastly baby-seal-murdering bastard oil and gas executives.

Two Things Worth Thinking About Here

  1. If EVs take over the planet, prevent air pollution, cease the destruction of the short-eared owl’s habitat, and cure halitosis, surely more electricity will be required, no?
  2. And secondly, if the internal combustion engine is going to prop up landfills, then what exactly goes into making these EVs? Because being a simple guy I couldn’t help stop and do simple math. That is: if car (a) being satan’s transport (diesel, of course) is replaced with car (b) the unicorn rainbow (EV), surely there will be massive demand for all the stuff that makes up car (b).

…click on the above link to read the rest of the article…

What Is Behind Surging Gas Prices?

What Is Behind Surging Gas Prices?

Gas

As gas stations raise prices in the wake of Hurricane Harvey, there have been numerous accusations of price gouging. Especially on social media, some are quick to conclude price gouging if they see gasoline prices go up by 10 or 20 cents per gallon over the course of a couple of days.

At the same time, there are widespread reports of gasoline hoarding, even as reports of shortages were spreading across Texas. The photo above, which has been widely circulated on social media, shows a motorist in Texas putting gasoline in two plastic trash cans in the back of his pickup (which, to be clear, is extremely dangerous). I tracked down the photographer — Miguel Jimenez — to obtain permission to use the photo. He confirmed this incident took place at the gas station located next to his Nomad Bar in Austin.

These issues — gouging, hoarding, and shortages — are all interrelated, and they demonstrate why the issue of price gouging isn’t always as simple it seems.

Here are the options that a gas station may face. If a service station’s gasoline inventories are depleting at a faster than normal pace (for example, deliveries are delayed), they have three choices. One, they can do nothing and just hope they don’t run out of fuel. Two, they can raise prices to slow down demand (especially from those who are hoarding gasoline) and to provide an incentive for more supplies to flow into the region. Or three, they can ration gasoline.

There are disadvantages of each approach.

In most cases, a station will opt to raise prices. This, effectively, is rationing by price. It provides a disincentive against hoarding while stretching gasoline supplies for those who really need it.

…click on the above link to read the rest of the article…

WTI Jumps After Harvey Prompts US Crude Production Collapse, Biggest Inventory Build In 6 Months

WTI Jumps After Harvey Prompts US Crude Production Collapse, Biggest Inventory Build In 6 Months

Last night’s first glimpse of Harvey’s impact on energy confirmed a sizable crude build but only modest gasoline draw. WTI/RBOB prices slid into the DOE print and extended losses after a bigger than expected crude build (+4.58mm vs +4mm exp). Gasoline and Distilates saw bigger draws than API reported but it was the collapse in Lower 48 crude production that stood out with most of Texas offline.

API

  • Crude +2.79mm (+4mm exp) – biggest build in 5 months
  • Cushing +669k (+1mm exp)
  • Gasoline -2.544mm (-5.2mm exp) – biggest draw in 6 weeks
  • Distillates -610k

DOE

  • Crude +4.58mm (+4mm exp)
  • Cushing +797k (+1mm exp)
  • Gasoline -3.20mm (-5.2mm exp)
  • Distillates -1.396mm

The inventory changes reported by the API were much smaller than those forecast by analysts. As a reminder, Saxo Bank’s Ole Hanson notes that “inventory data later is a lot of moving parts which could be quite skewed away from what we’ve seen in recent weeks.” Additionally, investors “are going to be skeptical of the data,” James Williams, an economist at energy researcher WTRG Economics, told Bloomberg. “It might be pretty flaky data this week and next, so I don’t expect to see a big market-mover”

Bloomberg’s Fernando Valle notes energy’s past week was all about Hurricane Harvey as refineries shuttered, choking output and hauling down inventories of gasoline and distillates.

Bigger than expected crude build and bigger gasoline and distillate draws than API reported…

As one might expect, Gulf Coat imports fell to a record low.

Production declined in the previous week, and with most of Texas ofline last week – Crude production in the Lower 48 collapsed…

…click on the above link to read the rest of the article…

First Glimpse Of Harvey Impact Shows Biggest Crude Build In 5 Months, Smaller Gasoline Draw Than Expected

First Glimpse Of Harvey Impact Shows Biggest Crude Build In 5 Months, Smaller Gasoline Draw Than Expected

Amid all the chaos of Harvey’s outages and Irma’s expectations, tonight’s API inventory seems relatively irrelevant but we are sure the machines will be all over it – no matter that it will be guesstimated more than normal. WTI was at one-month highs above $49 as API printed and kneejerked lower despite a smaller than expected crude build (still the biggest build since March) and a smaller than expected draw in gasoline.

API

  • Crude +2.79mm (+4mm exp) – biggest build in 5 months
  • Cushing +669k (+1mm exp)
  • Gasoline -2.544mm (-5.2mm exp) – biggest draw in 6 weeks
  • Distillates -610k

Last week’s modest builds in products and big draw in crude occurred before Harvey hit. This week’s data shows the initial effects with a major build in crude (though less than expected) and major draw in gasoline stocks (though also less than expected).

Heading into the print, WTI was around $49 and RBOB had been bouncing back after falling intraday… The initial reaction was a kneejerk lower in WTI and RBOB…

…click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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