Updates On US Refineries -- November 1, 2016

Flex

There are indications that Ford will discontinue the Flex in 2020 or thereabouts. I don't know anything about the Flex. A google search brought up this nice 2012 article comparing the top eleven (11) three row SUVs with the most cargo room. Ford Flex was tied wit the Nissan Armada in last place. The narrative left no indication why Ford Flex was rated tenth:

The Flex is one of the most stylish three-row crossovers on the market, although its squared-off design and retro-wagon proportions can be polarizing. Buyers choose between a 287-hp, 3.5-liter V-6 with front- or all-wheel drive, and a twin-turbo 365-hp EcoBoost V-6 that is uniquely paired with all-wheel drive. The Flex can tow up to 4500 pounds, and the options list includes the MyFord Touch infotainment system and inflatable rear seatbelts.

For Explorer was ninth. But not to worry: Ford's Expedition and Ford's Lincoln Navigator were both ranked fourth (tie). Overall, looking at the list, it appears GM and its multiple divisions had the most SUV models at the top of the list, and throughout the list. 

I was surprised: it appears Fiat Chrysler does not make a three-row SUV. Detroit News Journal, July 18, 2016: Fiat Chrysler may build big SUV and compact pickup. From the article:

Developing a large SUV based on the Ram platform would give Fiat Chrysler a large, profitable SUV and give the automaker a vehicle that could go head to head with General Motors' and Ford's large SUVs.  A smaller Ram pickup would expand the Ram brand and give it a truck that would likely appeal to lifestyle buyers.

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Climate Change

Everything I've been reading the past few months suggests that this winter will be colder than usual, and that in the longer view (next few years) there is evidence that we can look forward to cooler, rather than warmer, temperatures. 

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US Energy Revolution 

On October 29, 2016, I posted the following:

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

Today, RBN Energy goes into much greater depth on this story. See below.

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Politics

Daily USC-Los Angeles Times poll: 

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Back to the Bakken

Active Rigs

	11/1/2016	11/01/2015	11/01/2014	11/01/2013	11/01/2012
Active Rigs	35	70	193	180	186

RBN Energy: US refineries are the key to rebalancing global gasoline market. 

The Shale Revolution’s impact on energy markets extends far beyond increased U.S. production of crude oil, natural gas and natural gas liquids. The new ability to wring vast volumes of valuable hydrocarbons from shale also has had a profound effect on refined-products economics, and on U.S. self-sufficiency regarding gasoline, diesel, and jet fuel. As shown in Figure 1, in only 11 years, the U.S. has flipped from being a major importer (2005 net imports of refined products totaled 2.5 MMb/d) to its new status as a major exporter (2016 net exports totaled 2.5 MMb/d).  

Consequently, there has been a 5.0 MMb/d reversal in U.S. refined product flows.  Before the Shale Revolution took hold in 2008-09, the U.S. depended on imports from a variety of sources, including Latin America, Europe, and Africa.

By 2011, the U.S. had become a net exporter of refined products, with exports to Latin America eading the way, and with exports to Asia and Europe on the rise as well.

That flow reversal in refined-product flows is extraordinary, and it’s likely that (to quote from Bachman-Turner Overdrive), “You ain’t seen nothin’ yet,”. 

Net product exports are expected to grow to a total of almost 3.5 MMb/d by 2025, and what is most significant is that much of that growth will come from gasoline exports.

Instead of trying to manipulate the crude oil market in October, 2014, Saudi Arabia should have been building refineries for their product. They should have started doing that five years ago, but even had they announced plans as late as October, 2014, it's very likely they could have avoided their trillion dollar mistake.

WTI trades at $47.02 right now. Bad, bad news for Saudi Arabia.

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The Market

Power lunch: market not so powerful; Dow 30 down 100 points, and oil now down below $47. Saudi may be liquidating securities to raise cash.

Early morning trading: no traction. Dow 30 is down 40 points. With OPEC set to announce significant cuts (maybe, possibly, maybe not), oil is up 24 cents (woo-hoo) and now trading solidly (LOL) above $47. 

Pre-Market: up about 30 points.

Shell: profits rose 18 percent compared to a year earlier, beating analysts' estimates, but the oil producer also lowered 2017 CAPEX.

BP: also beat analysts' forecast, but profits fell by nearly half yoy; will also cut 2017 CAPEX.

OXY: lost 15 cents/share but revenue came in above estimates. 

But this is the real surprise: Anadarko Petroleum lost 89 cents per share which was much, much wider than analysts' forecast of 57 cents. I could be wrong but I thought Anadarko was one of the five or six independent "darlings" of Wall Street. Investors are taking the news in stride: shares are up about 1.6% in pre-market trading.