We Might Have An Explanation For Why Gasoline Demand Is Slumping In The US -- The Jobs Numbers Don't Add Up -- January 9, 2016

Updates

January 11, 2016: Don sent me this note; he knows I don't have cable television so I am unlikely to see CNBC:

A broker on CNBC earlier today said that gasoline consumption should be going up, because the price is dropping. Instead gasoline consumption was going down during most of 2015, and that trend continues in 2016. The broker still maintains that the people are driving less and saving cash / or paying off bills.

Original Post 

On January 7, 2016, I pointed out a "huge disconnect" between the health of the economy based on employment numbers provided by the US government and the surprising drop in gasoline demand. If everybody is back working, which the government suggests, and gasoline is about the least expensive it has ever been, gasoline demand should be soaring. It's not.

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[January 10, 2016: inexpensive gasoline? You bet it is. USA Today is reporting:

In some gas stations around the country, the price of a gallon of regular has dropped below $1.42. AAA and GasBuddy, two organizations that follow gasoline prices, say that gasoline prices below $2 will not be unusual in most of the United States.

As oil prices fall, and refinery capacity stays strong, the price of gas could reach $1 a gallon in some areas, a level last reached in 1999. The entire states of Alabama, Arkansas, Missouri, Oklahoma and South Caroline (sic) have gas prices that average at or below $1.75.]

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At the graph at the link above, and also shown below, one can see how striking the drop in gasoline demand actually is. It has to be very concerning that the demand for gasoline has fallen off a cliff compared to just one year ago. It doesn't add  up.

So what gives? Don provided a likely explanation. The jobs data doesn't add up.

The "gasoline demand" numbers are not "adjusted" as far as I know. The employment numbers are "seasonally adjusted."

David Stockman is reporting that the great jobs numbers reported this past Thursday and Friday were "bogus."

Here’s a newsflash that CNBC didn’t mention. According to the BLS, the US economy generated a minuscule 11,000 jobs in the month of December.

Yet notwithstanding the fact that almost nobody works outside any more, the BLS fiction writers added 281,000 to their headline number to cover the “seasonal adjustment.” This is done on the apparent truism that December is generally colder than November and that workers get holiday vacations.

Of course, this December was much warmer, not colder, than average.  And that’s not the only deviation from normal seasonal trends.

The Christmas selling season this year, for example, was absolutely not comparable to the ghosts of Christmas past. Bricks and mortar retail is in turmoil and in secular decline due to Amazon and its e-commerce ilk, and this trend is accelerating by the year.

So too, energy and export based sectors have been thrown for a loop in the last few months by a surging dollar and collapsing commodity prices. Likewise, construction activity has been so weak in this cycle — and for the good reason that both commercial and residential stock is vastly overbuilt owing to two decades of cheap credit — that it’s not remotely comparable to historic patterns.

David Stockman may or may not be correct. I don't know. But it certainly explains why "gasoline demand" has slumped significantly. 

On another note, this is the first year that ObamaCare is pretty much fully "developed." All things being equal, employers should be looking for ways to cut the number of employees rather than adding a huge new expense.

Also, seriously, with the job destruction occurring in the oil and gas industry, did anyone really think that there would be a record number of jobs added in December?

The jobs numbers don't add up and Stockman explains why.

NDSU Wins Their Fifth Consecutive National Title; 37 - 10 -- January 9, 2016

1:39 p.m. -- the AP blurb.

Live blogging: http://espn.go.com/college-football/team/_/id/2449/north-dakota-state-bison.

Perhaps better at Twitter. Twitter is faster than ESPN updating the action. And, no, you don't need a Twitter account to follow.

If I'm looking at the "right game" -- NDSU is ahead 27 - 10, early in the 4th quarter.

27 - 10. With 11 minutes to play, NDSU forces a fumble near the opponent's end zone, maybe on the 20-yard line or so. Unfortunately in the very next play, Bison pass is intercepted; opponents have the ball back. Drats.

And then NDSU gets it back on an interception -- wow, the game must be exciting....

I see the score is now 34 - 10, NDUS by a lot, with 8 minutes left to go in the game. The party's over. For Jacksonville State.

It was 24-0 at halftime (yes, I'm getting caught up).

Field goal successful; 37 - 10, with four minutes left to play.

With win today, North Dakota St will win its 20th straight FCS Playoff game and its 5th consecutive National Title. 

It's over: Champs again! North Dakota St becomes 1st NCAA team since poll era began in 1936 to win 5 straight National Titles.

Highlights here: I hope this link sticks around for awhile.  

Sophia wears her "Fargo" beanie! Hooray! Whoo-hoo! Now, where's my banana?

The Wall Dancer -- The New Yorker -- January 9, 2016

If you have time for only one "fun" article to read this afternoon while waiting for the NFL games you could hardly do better than this one in The New Yorker in "Sporting Scene," a human interest story with the title "The Wall Dancer."

It's about a Japanese teenager, born to immigrant parents living in a rent-controlled loft in downtown Manhattan, who has become "by the age of fourteen, possibly the best female rock climber ever -- a Gretzky of the granite." It's a short article -- six pages -- by The New Yorker's standards so one might even be able to read it during the 2-minute time-out commercial breaks in today's NFL wildcard games.

Here's the link. You may need a subscription. I don't know. I have a subscription to The New Yorker, one of the few weeklies -- I guess the the only weekly now that my introductory BloombergBusinessweek subscription has expired -- I still read. At least on real paper.

The link: http://www.newyorker.com/magazine/2016/01/11/the-wall-dancer. The story makes up for the incredibly awful global warming essay that led off "The Talk of the Town." Amy had to search high and low to come up with that essay.

I take our 18-month-old granddaughter to the local park almost every day. There just happens to be a rock-climbing wall for toddlers at the park. Her older sisters climb fairly regularly at the local rock-climbing gym in town (Grapevine, TX). Yesterday, for the first time, I started working with the 18-month-old on the rock climbing wall. She loved it. She was a little confused about the pitons -- just kidding, no pitons. Unfortunately, no one else was with us, so I was unable to get a photograph. But I will think of a way. Maybe I will find a 5-year-old at the park to take the photograph. I will just look for a 5-year-old carrying an iPad.

Back to Ashima Shiraishi. From the article:

Sport and traditional climbs are given a degree of difficulty , according to the Yosemite Decimal System: 1 is a walk on flat land, and 5 is a vertical climb, or close to it. So actual climbs are rated 5.0 through 5.15, wth additional subcategories of "a" through "d." The hardest routes at the moment are 5.15c -- there are just two. (The system is open-ended, so it's only a matter of time before someone pioneers a 5.16a.)

In northeast Spain, last March,when Ashima was thirteen, she became the first woman, and the youngest person of either sex, ever to "send" (complete) a 5.15. It is a route called Open Your Mind Direct, which was recently upgraded from a 5.14d to a 5.15a, owing to a handhold's having broken off.

She spent just four days "projecting" the route - that is, studying and solving all the problems on it by trial and error. The men who had done it before had spent weeks, if not months.

Ashima is not allowed to compete against adults in sanctioned competitions until she turns eighteen, but when she has competed against them in other contests she has beaten them. In Arco, Italy, she was the only climber, of any age, to top out (i.e., reach the top) on the four bouldering problems -- three of them on the first try.

And, yes, it's on YouTube:


If I get the opportunity to babysit our 18-month-old granddaughter this afternoon, we're going to study Ashima's rock climb. As long as Sophia has some Chex munchies, she will be interested.

War Games -- January 9, 2016

We used to call these emergency meetings, "war games." The Wall Street Journal is reporting:

Saudi Arabia on Saturday accused Iran of not acting like a nation state and said it is considering further measures against its regional rival, as tensions between the two countries escalated further over the kingdom’s execution of a dissident Shiite cleric.

“Iran has to make a decision whether it is a nation state or a revolution. If it’s a nation state, it should act like one,” Saudi Foreign Minister Adel al-Jubeir said following an emergency meeting in Riyadh with his Gulf Arab counterparts to discuss the crisis with Iran. “Sectarianism wasn’t heard of in the region before the Iranian revolution.”

“We are looking at additional measures to be taken against Iran if it continues with its current policies,” he said.

The foreign ministers of the Gulf Cooperation Council—a six-country bloc comprising Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman—met amid concerns that the spat between Sunni Saudi Arabia and Shiite Iran may lead to serious repercussions for other conflicts in the region.

That was from a hastily-called, "emergency" meeting called by Saudi Arabia.

Wow, talk about President Obama/SecState John "I served in Vietnam" Kerry and Saudi Arabia being on different pages in the Mideast.

Different pages? They aren't even reading the same book. Saudi Arabia says Iran is not acting like a nation state and the US can't wait to lift sanctions on Iran as a reward for delaying their nuclear missile program until after the president is out of office.

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After All That Noise

The article has been pulled from the front page of the on-line edition of The Los Angeles Times; I'm still looking for it. [Don provided this link which is probably the article, or google President Obama vows to take gun debate to the ballot box.] The LATimes reported this morning that after all that crying and all that talk about executive orders, the president will end his attack on the 2nd Amendment by simply "issuing some memos warning gun dealers to do more background checks." That's it. Some memos warning gun dealers to do more background checks.

Something tells me his Attorney General warned him, that, "yes, sir, what you are proposing is unconstitutional" and his political adviser warned him that, "yes, sir, Trump's numbers are going up every day you talk about this issue." 

President Obama has admitted defeat on this issue according to the New York Magazine, in a story released Friday afternoon:

President Obama openly crying at a press conference will be the most memorable image of his failure to pass new gun-control legislation, but in another depressing sign, this week he openly admitted that he won't make any significant progress on the issue during his presidency.  

Rumors are that he placed a foreign substance in his eyes -- "menthol"? -- to induce the tears.

Oh, in addition to those memos he did write an op-ed. 

San Bernardino? Not even mentioned. A colossal screw-up by his own agencies on so many levels. It had nothing to do with background checks. The most recent cop killing by a "radicalized" Muslim? The gun was stolen from a police station. There is no law that requires those who steal guns to go through a background check before using the gun; maybe that's where we should start. Steal a gun? Go to jail if you don't initiate a "selfie" background check before using the gun to shoot a cop.

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The Joy Of Winning

... or at least being the first to get rid of all your dice. 

"Westbound Trains To Willmar Could Be Going In Either Direction" -- Memo To Minnesota Activists -- January 9, 2016

First, the link to the DOT-111 wiki page: "and a maximum capacity of 34,500 US gallons" although 25,000 gallons is probably a good "rule-of-thumb" number to use for Bakken crude if one wants to be extraordinarily conservative when doing back-of-envelope calculations. Also, "25" is easier to deal with than "34."

750 bbls x 24 gallons/bbl = 31,500 gallons.

Now, the excerpt from a StarTribune article:

Overall, the report said, 28 to 48 oil trains pass through Minnesota each week, unchanged since last spring. Each train carries 1 million gallons of Bakken crude oil or more. 

Doing the math, 1 million gallons/25,000 gallons = 40 DOT-111 tank cars.

Unit trains leaving the Bakken were often 100 cars in length, and BNSF routinely has 118-car unit trains (grain, coal, oil, freight). I don't know how many cars there are now in a typical BNSF unit train leaving the Bakken.

Whew! That's out of the way.

The linked StarTribune article reports that BNSF has completed their upgrades, and that highly-explosive Bakken oil that once went through the heart of the Twin Cities has now been re-routed back to the usual routes northeast of the cities:

Most of the North Dakota crude oil trains crossing Minnesota no longer pass through west metro suburbs and downtown Minneapolis.

BNSF Railway, the largest Bakken oil hauler, notified Minnesota officials in December that it has shifted crude-by-rail traffic back to its usual route via Detroit Lakes, St. Cloud, Anoka and northeast Minneapolis. 

The shift had been expected; with the end of construction season, traffic is back to more traditional routes.

Whew! I'm glad that's over. Talk about a non-story after all that Dayton noise earlier this year. 

Over the summer, as BNSF worked on a $326 million system upgrade in Minnesota, it shifted most oil trains — about 11 to 23 per week — to tracks through Willmar, Dassel, Delano, Wayzata and St. Louis Park. This sent trains through the downtown, past Target Field and across Nicollet Island, worrying some local and state officials, including Gov. Mark Dayton.

This may be the most important data point for activists:

Although the report says those trains are “westbound to Willmar,” BNSF spokeswoman Amy McBeth said they could be going in either direction.

When demonstrating, it's important that activists don't get on the track facing only one direction; they could get hit by a unit train coming the other way.