Gasoline Prices At Their Lowest July Level In 12 Years -- July 21, 2016

Updates

July 22, 2016: Over at Twitter, John Kemp has put together a number of slides, a number of data points, and a number of tweets to make a case that mild weather in February and March (2016) "caused the market to over-estimate US gasoline consumption growth in 2016." It's hard to say, of course, but the data certainly explains half the story: why there is such a glut of gasoline right now. However, the other half of the story is not explained. There was a huge jump in US vehicular traffic in February / March (compared to previous year) but that growth dropped off significantly in April / May. Or perhaps no explanation is needed. Perhaps John Kemp's argument that mild weather in February/March was an anomaly that "global warmists" bought into and refiners followed that line of thinking.
 

Original Post

 

On July 14, 2016, I wrote:

Gasoline selling for $1.68/gallon at QT service stations west of DFW. I think these prices will go down at least another 20 cents based on prices elsewhere in the immediate area ($2.09/gallon). 

Now, today, from AAA and USA Today:

Even with the peak travel season in full swing, gasoline prices are stuck in reverse.

Gas prices have plunged to their lowest July level in 12 years, according to AAA, even as Americans are racking up more miles.

In fact, gas prices have dropped in 39 out of the last 40 days, lopping 20 cents a gallon off in total during that span, according to AAA.

"Gas is getting cheaper as we're moving into the busiest part of summer travel," AAA spokesman Michael Green said. "Those are real savings that add up...And we've seen that cheaper gas prices are motivating people to drive more and to take long trips this summer."

Fathomless ignorance:

"We can't just drill our way to lower gas prices." -- March 1, 2012

One New Permit; Six Permits Renewed -- July 21, 2016

Active rigs:

	7/21/2016	07/21/2015	07/21/2014	07/21/2012	07/21/2011
Active Rigs	31	68	196	207	180

Wells coming off confidential list Friday:

• 27344, 3,051, BR, Stafford 13-34MBH, Blue Buttes, 28 stages, 4.4 million lbs, t5/16; cum 6K over 16 days;
• 30920, SI/NC, WPX, North Segment 6-5-4 HB, Van Hook, no production data,

One new permit:

• Operator: MRO
• Field: Antelope (McKenzie)
• Comments:

Six permits renewed:

• BR (3): three Ransom permits in McKenzie County
• Crescent Point Energy (3): three Legacy Et Al Berge permits in Bottineau County

One producing well completed:

• 26902, 510, Petro-Hunt, Marinenko 145-97-30B-31-4H, Little Knife, t7/16; cum -- 

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Global Warming Stories Changing?

It's probably just my imagination but it seems to me that the stories on "global warming" are changing. There seem to be more and more stories questioning "global warming" and much of the previous data appears to have been faked. Warren Buffett has taken a beating with lost coal shipments (BNSF). Except for a few cronies, not many folks are getting rich off windmills and solar panels. Germany has clearly gotten itself in a bind of unreliable energy. Several other western countries are clearly backtracking and/or re-evaluating where they stand. If accurate, this is not unexpected, as the global warming cheerleader-in-chief starts to wrap up his eight years in the White House. Clearly Donald Trump won't buy into the scam if he becomes president, and my hunch is that Hillary Clinton has bigger fish to fry than promote her predecessor's ideology when there won't be much there to make it financially or politically rewarding.  

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Starbucks Dropped The Ball -- CEO

From Fortune:

[The CEO] blamed the timing of a major change to the company’s popular rewards program, which had previously given perks for frequent visits but now gives loyal customers free drinks depending on how much they spend. Starbucks made the change because it said some customers had been splitting their orders (for example, asking a cashier to ring up a coffee and bagel separately) to game the system and get rewards faster. That led to slower turnaround at the cash register.

But the change angered some, and led to some noise about how the loyalty program wasn’t as generous. Starbucks argues that isn’t the case but acknowledges that because of the change, there was a small dip in traffic.

I returned to Starbucks a few months ago, but after the change in their loyalty program and the announced increase in their prices, I avoid Starbucks when I can. When I do go to Starbucks -- I haven't been there in two or three months -- I do not ask about or care about or participate in the loyalty program. 

US Won't Hit 10-Million Bbls / Day Gasoline Threshold This Year -- July 21, 2016

Updates

Later, 11:47 a.m. Central Time: note first comment in which a reader notes:

Production has topped 10 million several times already, including each of the last three weeks: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGFRPUS2&f=W.

That's what's left the big glut in PADD 1; other regions aren't so bad, & supplies in PADD 5 are almost below normal.

Note: the breakdown of product inventories by PADD can be found in the Weekly Petroleum Status Report: http://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf.

Gasoline is table 5 on page 11, followed by graphs on Figure 2

As a reminder, assuming this image is still current:

Original Post

 

Link here for "weekly US product supplied of finished motor gasoline."

It does not appear we will hit 10 million bbls / day of finished motor gasoline this summer, which I predicted, though we will come close.

I've always said that if I had only one metric to choose to follow the economic health of the US (or the global economy for that matter) it would be the amount of gasoline produced. After setting new records for most of 2016, it is somewhat concerning, that in the past two weeks the average amount of gasoline produced has dropped from the same period one month (June) earlier. With gasoline prices continuing to fall, one would expect gasoline production to increase.

However, it appears, according to John Kemp graphics, the refiners got ahead of themselves these last few months, producing way more gasoline than needed and now supplies are at a 10-year high. The refiners are now cutting back on production. So, we won't hit the 10 million bopd threshold this summer.

Having said that, it appears next January 31, 2017, we will set another record: the first 12-month stretch in which the average amount of gasoline produced supplied in the US stayed above 9 million bbls/day for an entire 12-month stretch. Except for the first two weeks in January, 2016, the country has surpassed the 9-million threshold every week so far this year, something that has never been seen in the past.

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American Housewife

A few weeks ago while visiting the Dallas Museum of Art, I bought several books at the bookstore, including American Housewife by Helen Ellis.

It's one of those books one can read in about 45 minutes but I've restrained myself and have permitted myself to read only one "story" per week. I don't want to finish it.

I bought it on a lark, as they say, and didn't think much about it until the other day when I saw that our local community library featured it as one of their new selections. The community library is a small one, but one of the better small libraries I've visited. I assume they have a small budget but they consistently surprise me with their great selections.

To say the least, I was pleasantly surprised to see American Housewife as one of their new purchases.

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Sophia

Unfortunately I don't have a photo of Sophia reading her books yet. I hope to do that this weekend. She is a real character.

Generally, she swims about one hour every afternoon, and then retires to her reading room where she gets down her books for the day. Currently her favorite is a set of ten slim books, the 40th anniversary collection of My Happy books (as she calls them) by Roger Hargreaves. She dumps them all out, all over the floor and then goes through each one before putting them back into the box. Her mom says she does have several favorites. I assume "Mr Happy" is her favorite of the set. 

The Big Story For The Day -- Saudi Doubles Down On Fossil Fuel -- July 21, 2016

In the big scheme of things, this is probably not a big deal. I doubt most folks will think much about the announcement today that Saudi Aramco has signed off on a $14 billion gas processing plant for the kingdom. After all, it's what they do. Fossil fuel.

For me, that announcement has many, many story lines.

When oil was selling for $100/bbl and Saudi Arabia was building cash reserves, the kingdom was getting ready to move into solar energy. From a post on June 14, 2015:

Saudi Arabia recently announced a $109 billion solar energy program to run their desalination plants.

But then, out of the blue, on May 22, 2015, the Guardian reports in passing that Saudi has decided to delay that program for eight years. (If that link is broken, see this post.)

Now that Saudi's cash reserves are tanking, the kingdom needs to face reality.

Solar is not one of Saudi Arabia's core competencies. And won't be for the foreseeable future.

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The Hockey Schtick 

The Hockey Schtick has recently posted two great posts. The first one has to do with "arguably the most widely debunked piece of research in the history of science," Michael Mann's infamous "hockey stick" global temperature reconstruction.

The second post: "How the West got healthy and prosperous." I remember seeing this quite some time ago. I don't recall if I posted it. It's the kind of article that needs to be reviewed in elementary, middle, and high schools.

I've moved "The Hockey Schtick" blog link to the top of the sidebar at the right.

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UN Begins To Panic

Rushing To Ram Through "Climate Agreement" Even As Countries Drop Out

Link here.

Australia, of course, has dropped out.

Great Britain: Brexit and Clexit. It didn't get much "play" but the UK's new PM scrapped the country's "Department of Energy and Climate Change" within hours of assuming her new duties.

Philippines: UN climate accord? No way, Jose.

Germany: has backtracked.

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Global Temperatures Are Mostly Fake -- Real Climate Science

Link here.

I've always said global temperature reporting depends on where you place the thermometers.

NOAA claims global temperatures are the hottest ever, based on some rather spectacular junk science. NOAA doesn’t actually have any temperature data over most of the land surface.

No serious scientist would make claims based on fake data, which is why NOAA does it. Their climate people are propagandists, not scientists.

The Automobile Page -- July 21, 2016

GM: earnings released for 2Q16. GM profit more than doubles on US earnings. Incredible. Earnings of $2.87 billion; cut low-profit sales to rental car companies. GM raised its earnings guidance for the year. Even eked out a $137 million profit in Europe, but made $500 million on its joint venture in China. 

Jobs: prior, 254K; consensus, 265K (a rise of 11,000 forecast); actual: 253K, a decline of 1,000. Four-week moving average: 257,750. From Econoday, the consensus was based on the "usual" summer auto-retooling layoffs. 

All the readings in this report are very low, arguably at the lowest levels on record. But the missing piece is this summer's auto retooling which, when it appears, may have an outsized reverse effect on the data. The Labor Department says there are no special factors in today's report, one which points to a second month of strength for the monthly employment report.

We Start The Day With 31 Active Rigs In North Dakota -- July 21, 2016

Active rigs:

	7/21/2016	07/21/2015	07/21/2014	07/21/2012	07/21/2011
Active Rigs	31	68	196	207	180

RBN Energy: update on California state's power and gas markets. Prelude to the "duck curve."

California energy markets look quite a bit different today than they did five years ago when the state enacted a renewable portfolio standard (RPS) law that requires every utility and other electricity retailer to serve 33% of their load with renewable energy by 2020. Since then, California has seen huge changes in its energy balances – it shut down the nuclear generating plants at San Onofre, regulators expedited the build-out of new transmission lines to get more wind and solar power into the market, the state implemented a carbon cap-and-trade program, the legislature increased the RPS target to 50%, and SoCal Gas’s Aliso Canyon natural gas storage facility sprung a leak.  Today, we look at the changes in California’s energy markets since 2011, and what they mean for future developments in a state far out front in the adoption of renewables and environmental regulation.

It was 2011 when California’s state legislature approved –– and Governor Jerry Brown signed into law –– Senate Bill 2, which launched the state into what amounts to a restructuring of its energy markets.  A year later (2012), problems with newly replaced steam generators at the two-unit San Onofre Nuclear Generating Station (SONGS) resulted in their permanent shutdown, taking 2,250 MW of generation capacity out of the power-hungry Los Angeles basin.

The combination of RPS implementation and the loss of San Onofre prompted state regulators to speed up the build-out of new transmission lines to allow more wind and solar power to move from supply regions to key demand areas.  Both wind and solar saw capacity grow in 2012, with wind up 800 MW and solar rising 600 MW.  That intermittent renewable power supply was far from enough to make up for the San Onofre shutdowns, but fortunately there was help from the Pacific Northwest, which was able to provide hydroelectric power into California thanks to a few strong “water years.”

Saudi Aramco announces $13.3 billion gas processing plant. Data points:

• Fadhili gas processing plant
• to be completed in 2019
• will include a 1,500 MW power plant; 400 MW to power the gas project; 1,000 MW to the domestic grid
• first program in the kingdom to process gas from both onshore and offshore fields
• will boost Saudi gas production to more than 17 billion cfpd by 2020
• industrial firms in KSA complain that a gas shortage crimps expansion plans
• KSA wants to use more natural gas for power generation and water desalination instead of burning crude oil

Jobs: prior, 254K; consensus, 265K (a rise of 11,000 forecast); actual: 253K, a decline of 1,000. Four-week moving average: 257,750. Reuters story here. From Econoday, the consensus was based on the "usual" summer auto-retooling layoffs. 

All the readings in this report are very low, arguably at the lowest levels on record. But the missing piece is this summer's auto retooling which, when it appears, may have an outsized reverse effect on the data. The Labor Department says there are no special factors in today's report, one which points to a second month of strength for the monthly employment report.

Did not honor the pledge: Ted Cruz. My hunch: consulted the "great Mark Levin" when making the decision. Others who did not honor the pledge: John Kasich. Jeb Bush. [Later, it looks like the general consensus is that Ted Cruz committed political suicide on national television when he clearly went back on his word to support the GOP nominee.] By the way, I had completely forgotten this until a reader reminded me, from an earlier post about Ted Cruz:

Ted Cruz was not aware he was a Canadian, that he had dual citizenship, until the media reported it. Once he found out, it took him nine months to officially renounce it. Coincidentally this was about the same time he got serious about running for president. This guy graduated from Harvard Law School.