Another Open-Book Test For Energy Investors -- 2020 Is Only Four Years From Now -- October 29, 2016

A couple of days ago I posted this little gem:

Watch the price of gasoline in November: indications suggest the price of gasoline could spike in Europe in November, 2016.

Now, yesterday this story over at Platts:

Global gasoline demand will rise as long as crude stays below $60/b, and a shortage of Asian gasoline refining capacity will drive US exports higher, [according to an analyst].

"Any way that we look at the future refineries under construction [in Asia], they cannot produce enough gasoline." Fesharaki expects US net exports of refined products to keep rising.

Cool, huh?

Other data points in the Platts article:

• in one decade, the US has made a dramatic swing from 3.9 million b/d of net imports to 2.3 million b/d in net exports (July, 2016) -- insert "Bakken" or "shale revolution" here
• this was the decade in which Obama famously said, "we can't just drill our way to lower prices" 
• as time goes by, there is a gasoline shortage worldwide that only US refiners can supply -- analyst
• expect huge amounts of exports of US gasoline to all over Asia, without which Asia cannot balance its system
• in addition, ocean-going tankers must reduce sulfur-containing fuel

Now get this -- that last bullet, regarding ocean-going shippers (you will see this posted again):

• currently, ocean-going tankers bunker 4 million b/d, which is using 3.5% to 4% sulfur fuel oil
• "If God almighty comes from the heavens, He cannot make 0.5% fuel oil by 2020" -- analyst
• thus: cheating, rampant noncompliance, use of US LNG for bunkering and blended diesel
• the price of fuel oil will collapse and refinery economics will go through the roof

Is this an open book test for investors or what?

Saudi Arabia has announced plans for new refineries; the only question is whether they will locate those refineries in Saudi Arabia (lack of skilled labor force); Europe (unlikely); Asia (possibly); along the Texas/Louisiana coast (very likely).

With regard to fuel oil, by the way, it will be interesting to read the tea leaves -- New England -- fuel oil or natural gas?

***********************************

A Note For The Granddaughters

This has been quite a day for the oldest granddaughter, Arianna, age 13.

Last year she was the only flutist in her symphonics band to audition for honors band, and she made it. She plays second chair in honors band.

Today, she auditioned for District Band, and she made it. A huge honor. This is really quite exciting for an eighth grader in her last year at middle school before moving to high school next year.

Now, she is playing water polo in Denton, TX, at a north Texas water polo tournament. Hoo-ahh!