Tuesday, August 18, 2015

EIA "energy cookie:

The increase in spot prices has led to higher retail gasoline prices throughout the region. On August 17, regular retail gasoline prices in the Midwest (PADD 2) increased 32¢/gal from the previous week to $2.79/gal, the largest weekly increase for Midwest gasoline prices since the aftermath of Hurricane Katrina in 2005. Average retail prices for regular gasoline in Chicago and in Cleveland, Ohio increased 68¢/gal and 43¢/gal, respectively, from the previous week to $3.37/gal and $2.83/gal, respectively. --- EIA

What? The "increase in spot prices has led to higher retail gasoline throughout the region." It was widely reported that the sudden jump in the price of gasoline was due to unexpected refinery maintenance. The IEA is never wrong, so I must be mis-reading something.

Active rigs:

	8/18/2015	08/18/2014	08/18/2013	08/18/2012	08/18/2011
Active Rigs	73	193	183	199	193

RBN Energy: the Mexican crude oil swap; new route opens up for US crude exports.

We should note that the swap exception in the BIS regulations is a “License” rule – meaning that exporters need to apply to BIS for a non-transferable license for each crude swap. That means that the BIS licenses that have been approved will be non-transferable and specific to both PEMEX (assuming they will import Mexican crude) and the exporter – presumably a U.S. producer or midstream company. Every would-be swap partner/light crude exporter is required to apply separately for approval. That doesn’t mean it would be difficult – the BIS routinely approves licensed exports to Canada – but it adds a layer of red tape compared to the processed condensate rulings last year that certify the product and process rather than individual transactions.

One big question is whether other swaps will follow these approvals? Apparently the BIS denied several applications for swaps with other countries in Asia and Europe. This indicates that Mexico – part of the North American Free Trade Agreement (NAFTA) - is being given preferential treatment  - although our neighbors to the south are well below Canada when it comes to crude exports. BIS Licensed U.S. exporters shipped an average of nearly 460 Mb/d of crude to Canada between January and May 2015 – up tenfold since 2011 – all without any “swap” requirement to import Canadian crude in return.  Aside from Mexico – a friendly neighbor – other heavy crude producers in Latin America are the most likely candidates actually requiring light crude exports from the U.S. that they could exchange for heavy crude - including Venezuela, Columbia and Ecuador. These three are known to be importing light crude and naphtha (a refined product) for use as a diluent to blend with their heavy crude to allow it to flow in pipelines for export. But it is likely to be a bit more difficult for these countries (especially Venezuela) to secure a BIS crude swap license.