A Record -- And Not Mentioned By Mainstream Media? America’s Century — March 5, 2023

Link here.

Update On US Gasoline Production; Days Of Supply; Crude Oil Production; And, Days Of Supply -- February 24, 2018

Back on June, 25, 2016, I noted that "an eagle-eyed reader noted that the US set a new gasoline production record": 10,289,000 bbls of gasoline/day during June, 2016. At that post, I made the comment: look how few times US crude oil production exceeded 10 million b/d.

Now look how often the US exceeds 10 million b/d of gasoline production:

The other graph that continues to amaze me is the trend of gasoline production over time. I thought with all those EVs that Elon Musk is selling and the stricter CAFE standards, gasoline production should be trending down. There is not even a suggestion that gasoline production will be trending down any time soon. 

I could be wrong, but I believe "produced gasoline" includes gasoline that will be exported. But for the moment, the amount of gasoline being exported is a relative "drop in the bucket" vs the amount of gasoline that is being produced.

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US Crude Oil 

Days of crude oil supply is trending in the correct direction for those looking for re-balancing, but I think it's too early to say a) if the trend will continue; and, b) if it continues, how quickly it will return to 24 days of supply (which is still greater than the 18 - 20 days one might like to see.

Why US Refiners Like Shipping Gasoline To Mexico -- RINS -- November 8, 2017

Folks wonder why the price of gasoline will melt up when there remains a huge glut of oil in the US. There are many, many reasons. One reason: state taxes. Californians know all about that as new gasoline and diesel taxes go into effect in that state today.

But here's another reason: RINS.

See this article over at Bloomberg, which I posted in an earlier post but for a different reason. But this part of the story was too important to be lost buried in another post, so here it is, as a stand-alone.

US refiners will preferably ship their product to Mexico where they will command better margins because Mexico does not have costly biofuels regulations. Shipping product to Mexico will sop up some of that excess, in turn pushing prices here in the US slightly higher (and, of course, if Mexico can't take it all, Europe certainly will):

The chance to skip out on compliance with costly U.S. biofuels regulations by exporting fuel is a huge incentive for overseas sales. Under the Renewable Fuel Standard, refiners aren’t required to buy blending credits called RINs for barrels that are exported. Mexico has potential to demand 600,000 barrels a day of gasoline imports as its own refineries limp.

America’s southern neighbor has continued to be its best customer as its own fuel factories suffer from inefficiencies and breakdowns -- in September Mexico’s crude processing fell to the lowest since December 1990, or about 33 percent of its total national operating capacity.

I don't have a dog in this fight:

• I don't invest in refineries, as a general rule (only exception: I own shares in some publicly-traded integrated companies)
• the price of gasoline is off-set by the few miles I actually drive any more, and it's getting less every year (I do replace the tires on my bicycle more often these days, however

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From A Reader

Some time ago, I mentioned to a reader that a family member suggested to me the high price of gasoline in California is due to some sort of "collusion" on the part of Big Oil.

The reader responded with two long notes regarding the gasoline taxes and the price of gasoline in California. I hate "not using" a great note from a reader but I did not know where to use those two notes until now. I'm too tired to do much more than post them as I got them with minimal editing, but it helps me put things in perspective:

The first note from the reader:

Here are current California state fuel taxes (they're going to go up soon)

38.13 cents per gallon of gas

40.01 cents per gallon of diesel

plus

Gasoline subject to 2.25% sales tax. Diesel subject to 9.25% sales tax.

plus the federal government charges 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel

........................ So, the government skims the first 58 cents per gallon of gas or the first 71 cents per gallon of diesel sold in the state of California. I don't know how the "tax on tax" is computed, so those numbers are not warranted correct, but I know it's quite a nice annuity.

......................... The government take is nearly pure profit. They hire a few inspectors and quite a few more accountants, but they have very little overhead. The oil companies have a huge capital expense in exploration and production, not to mention transportation, etc., and their profit per gallon is somewhere around 7 cents per gallon. (Can't find that reference, but it's a number I saw a while back and I was just floored that the risk takers were making only what I considered one tenth as much profit as the government was.)

The second note:

This is an excerpt from an article which ran in Forbes back in 2011. I imagine there are more current figures, but I doubt that the teeter-totter has become more balanced. I'm sure I saw the 7 cents figure within the last couple months, because I would have not remembered it for 6 years. The government figure quoted is an average, and of course, California is at the top of the curve for taxes.

...........................................

Industry profit margins are cyclical too. But on average, between 2006 and 2010, the largest oil companies averaged a profit margin of around 6.5%. This pales in comparison to profit margins in just about every other industry. The pharmaceutical industry, for example, routinely averages a profit margin of about 16%. The soft drink market is even more lucrative.

At the gas tank, integrated oil companies make about 7 cents per gallon. Meanwhile, the government extracts more than 48 cents, on average, per gallon. That’s right: Uncle Sam takes nearly seven times more out of drivers’ wallets via taxation than “Big Oil.”

For working Americans higher gas prices do indeed mean higher costs of daily living. But strong oil industry earnings (and profits beat losses in just about anyone’s book) also lead to very real economic benefits for these exact same families.

Compared with a small fraction of oil stocks (about 1.5%) owned by corporate management, the vast majority of such investments are held by average Americans, primarily via retirement accounts. Independent research shows that 14% of industry shares are in IRAs and a full 30% held in mutual funds.

Another 27% of oil stocks are in public pension funds. And in these accounts, oil shares more than pull their weight. While oil stocks made up less than 4% of major pensions in four key states between 2005 and 2008, they accounted for 8.6% of returns.

As the revenues of oil companies improve, so do their stock prices. In turn, teachers, firefighters, policemen and millions of other public servants see their retirement accounts expand. And as most states are struggling to keep their pension programs solvent, oil stocks can help ease that pressure and stave off fiscal woes.

And the economic ripple effects don’t stop there. Oil and natural gas companies support more than 9.2 million U.S. jobs and have invested nearly $2 trillion in domestic capital projects over the last decade. Higher earnings mean more cash to plow into new projects and jobs.

And remember: freely choosing consumers -- not government mandates – are driving industry margins and growth. Unfortunately the bloated political rhetoric generated by Capitol Hill raises the prospect of bad public policy. Some legislators have threatened to institute a brand new “windfall profit” tax in times of unusually high returns.

Such a move would saddle firms with new costs, which will get recouped with higher prices at the pump. Vulnerable American families would be squeezed. And firms would have less money to invest in new projects, leading to slower job growth and fewer employment opportunities.

Denunciations of America’s oil and natural gas industry ignore the fact that shifts in global supply and demand are behind increased prices of recent months. Resisting punitive politics will ensure that petroleum prices drop as political tensions ease and the dollar strengthens. Such market-based policy will also promote jobs, investment and income for America at a time when they are most needed.

-- Robert L. Bradley Jr. is the CEO and founder of the Institute for Energy Research.

Theme Song, The Adventures of Rin Tin Tin

Wednesday US Crude Oil Data In Three Charts -- August 2, 2017

Making America Great Again -- Huge Story -- July 20, 2017

.... and this is why: https://www.reuters.com/article/us-usa-gasoline-kemp-idUSKBN1A52CJ.

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In My Whisky Phase

Staggering -- June 27, 2017

After awhile, graph after graph after graph, and folks start to lose interest. But this graph is absolutely staggering, from the EIA via Twitter:

Pay particular attention to crude oil and propane exports. By 2020, LNG exports will probably quintuple (5x current exports).

The only problem with this graph is that it starts in 2010. EIA should have started the graph in 2000 or at least 2008, but I guess the "Deep State" really, really doesn't want to embarrass President Obama. The graph starts in 2010, three years after the North Dakota Bakken boom began (2007). The Montana Bakken mini-boom began in 2000.

This is the graph that the "Deep State" does not want to show:

Most interesting to me is that the brightest thinker in Washington failed to notice in 2012 that exports were already increasing significantly. Interestingly, note how exports then leveled off for the next two years of the Obama presidency before increasing again.

It should be noted that the US is unlikely to ever export any energy generated by wind or solar. At least not in my lifetime.

The Energy And Market Page, T+115; Huge US Distillate Export Story Being Reported -- May 15, 2017

Disclaimer: this is not an investment site. Do not make any investment, financial, job, relationship, or travel plans based on what you read here or think you may have read here. If this stuff is important to you, go to the source. 

Mid-day trading: both the Nasdaq and the S&P 500 hit new record highs. 

Opening: NASDAQ hits new record high. 

Futures looking good. Up 54 points about an hour before the opening. It could be a wild day on Wall Street. Already futures suggest some new records will be set. AAPL could set a new record. I think one can learn a lot by looking at companies whose shares fall on a strong day on Wall Street, and those companies whose shares rise on a bad day for Wall Street. With futures looking to rise today, what is Tesla doing? Down over 2% in pre-trading, losing over $7 on a $320-stock.

Saudi Arabia, Russia agree to extend cuts into 2018.

Oil "surges": according to Reuters. The surge: oil prices almost 3% higher. Saudi and Russia agree to extend production cuts (wink, wink) for nine months. Considering Saudi burns more oil domestically during the hot summer months to run air conditioners it will be interesting to see how Prince Salman threads that needle.

WTI vs Brent: with price of oil "surging," it's important to watch the "oil" that one is referencing. I saw a headline that said "oil" surged to over $52. Considering a week ago "oil" was as low as $43 that's quite a surge. In fact, the former was Brent, the latter was WTI. The drop to $43 was also due to a "flash crash" that most folks did not notice, happening overnight in the states. The "oil" that is over $52 today is Brent oil; WTI is up almost 4% but still below $50 ($49.55). Regardless, WTI looks like it's headed back to the sweet spot: trading in a range between $50 and $55.

Making America great again. From the EIA today:

Distillate exports from Central Atlantic states totaled more than 103,000 barrels per day (b/d) in February, a record high for the month.

Distillate fuel is usually imported into the Northeast during the winter months because 22% of households in the Northeast use distillate fuel for home heating, a higher proportion than in any other U.S. region. However, because temperatures were warmer than normal in February 2017, domestic demand was relatively low.

Europe received 50% of the total distillate exported from Central Atlantic states in February 2017. The remainder went to Central and South America (28%) and Africa (22%). Total motor gasoline exports from Central Atlantic states totaled more than 31,000 b/d in February, much more than the 1,000 b/d average of the previous five Februarys.

Nearly all of the gasoline exports from Central Atlantic states went to countries in Africa. --- EIA

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Tesla -- We Should Know In The Next Six Months Or So

Analyst:

• Tesla will blow through $3.1 billion (vice earlier estimates of $2.3 billion) in 2017
• will not be profitable until 2019 
• Amazon and Apple seen as competitors

The Energy And Market Page, T+46 -- March 7, 2017

 Closing

5:30 p.m.

Down: both the Dow and WTI closed down a bit by the end of the day. The Dow down 30 points (inconsequential); WTI down 40 cents, again, below $53 -- which is really bad news for Saudi Arabia: a) the actual price; b) the "stubborness" of the price to move; and, c) the trend (down).

The Permian: on that note, those companies paying $40,000/mineral acre in the Permian were also betting on a better price / better trend with regard to WTI. I'm not so sure folks are going to look back on some of those deals and wonder "what in the world were they thinking?" Even at $100 oil, one wonders if one can make the math work at $40,000/acre; and, at $50 -- well, I've said all I should say.

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Opening

Tea leaves: lots of talk coming out of the global oil conference being held in Houston this week. It sounds like Saudi Arabia is in a heap of financial trouble. Saudis seem to be admitting that cuts in OPEC / non-OPEC production (outside the US) have not resulted in price changes as fast as they would have liked (or possibly even predicted). They warning other countries not to take advantage of Saudi's cuts by increasing their own production, and that OPEC would meet again in May, 2017, to discuss the production cuts which are scheduled to end at the end of June, 2017. My hunch is that it will depend on the "mood" of the Saudi king (or the will of Allah) whether the cuts are extended. Saudi really, really, really doesn't want to extend the cuts (for any number of reasons, but they have little room to maneuver.

WTI: for some reason, oil is moving up a bit today in early trading. Up about 30 cents, to $53.50. Perhaps nothing more than traders staying within a narrow trading range.

Exxon Mobil: The big story today appears to be the ExxonMobil $20 billion investment along the Gulf Coast, previously reported. The Wall Street Journal reports. Talking head on Fox Business News suggests this plan had been under development for many years, but it was expanded and given the go-ahead when Trump was elected. Will create 45,000 jobs. This is a huge, huge story; will be under-reported by the mainstream media.

This naturally follows: US Oil Industry Becomes Refiner to World as Exports Boom -- from Bloomberg.

When PBF Energy Inc. scooped up a refinery from Exxon Mobil Corp. on the Mississippi River in 2015, it wasted no time sprucing up the plant with an eye toward quickly resuming lucrative fuel exports.

Within three months, PBF was ready to load its first tanker for shipment abroad.

By late last year, the New Jersey-based company was exporting 22,000 barrels a day of fuel, or 16 percent of that refinery’s output. Now, it wants to boost that to almost 25 percent.

PBF isn’t alone in this push. From major producers such as  Chevron Corp. to specialized refiners including  Valero Energy Corp., the U.S. refining industry has shifted its game over the last five years, taking advantage of gaps left by struggling refiners in Latin America, Africa and Asia. Along the way, it’s transforming what had long been a largely domestic business into a new global venture.

"U.S. refiners are now the refiners for the world," said Ivan Sandrea, head of Sierra Oil & Gas, which is planning to build infrastructure to import U.S. fuels into Mexico.

U.S. companies last year exported a record 3 million barrels a day of refined products, more than double the 1.3 million barrels a day shipped a decade ago, according to data from the Energy Information Administration.

Gasoline led the surge, with exports hitting an all-time high of almost 1 million barrels a day in December, up ten-fold from a decade ago.

Pipeline: meanwhile, the pipeline story of the year (so far) is the Enbridge-Spectra Energy story but the DAPL may be close behind. A reader sent me a link to the court-mandated update. The company thinks oil will be flowing through the pipeline by mid-March. The court requires 48-hour notice before oil actually starts flowing, allowing the court time to make a "final" ruling on the case. The link will take you to a pdf:  https://www.indianz.com/News/2017/03/06/04515967273.pdf.

Snap: Snapchat shares drop below offering price. The shares fell 12% in price yesterday and are down 4% in pre-trading today.

US Exports Of Crude Oil And Petroleum Products -- November 2, 2016

Over at "Big Stories," I have a whole section on the US Energy Revolution. As China falters, the 21st century will be America's century. Had China not faltered, the race would have been between China and the US, but when all is said and done, the 21st century is going to be defined by access to dependable, affordable energy. One almost gets the feeling that the "jobs" that the US once lost to China are now moving back to the western hemisphere -- to Mexico. 

The graph below is staggering. From 1 million bopd in 2008 to almost 6 million bopd now. This is not trivial.

This may take a few moments to load depending on numerous factors, an embedded EIA chart:

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.

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?

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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!

Four Wells Coming Off Confidential List To Be Reported Monday -- July 10, 2016

Monday, July 11, 2016
32336, SI/NC, SM Energy, Nystuen 14B-35HS, Skabo, no production data, 

Sunday, July 10, 2016
26906, 1,492, HRC, Fort Berthold 152-93-19D-18-7H, Four Bears, Three Forks, 33 stages, 4.9 million lbs, t1/16; cum 76K 5/16; only 13 days in 5/16;

Saturday, July 9, 2016
31979, drl, Statoil, Lougheed 2-11 5H, Todd, no production data,
32335, SI/NC, SM Energy, Nystuen 14-35HN, Moraine, no production data,

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26906, see above, HRC, Fort Berthold 152-93-19D-18-7H, Four Bears:

Date	Oil Runs	MCF Sold
5-2016	4640	2541
4-2016	17271	12647
3-2016	23307	29078
2-2016	23995	31771
1-2016	6411	7619

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US PADD 3 Exports To West Coast Of South America

Previously posted. This time the graphic:

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Green Bay Now Imports Refined Oil Products, Used To Be An Exporter

Pipeline Shut Down

This is a trivial story in the big scheme of things, I suppose, but a pipeline that use to export refined products from Green Bay to the East Coast has been shut down. Now, instead of exporting refined products, Green Bay is importing refined products. The story is linked here.

Shut down the pipeline and we now have two barges/week -- emitting all that CO2 -- delivering diesel fuel to Green Bay.

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Crying Wolf

From Forbes:

Nearly all U.S. coal plants have come into compliance with the EPA’s Mercury and Air Toxics Standard—which the Supreme Court last year ruled is illegal—and only a small percentage have closed.

It may be another sign that U.S. pollution goals may be more easily achievable than opponents claim. [Again, this is a Forbes article.]

Last June, the Supreme Court ruled in Michigan vs. EPA that the EPA had not conducted a sufficient cost-benefit analysis of the 2012 rule, which prohibits the emission of mercury, arsenic and other airborne toxins. But the court left the rule in place while the EPA conducted that analysis, and nearly all vulnerable coal plants have borne the costs and stayed in business.

About 1,400 coal and oil plants are affected by the rule, but EIA measures the industry in terms of gigawatts, a unit of the energy produced. From December 2014 to April 2016, U.S. coal capacity dropped from 299 GigaWatts to 276. Of that vanished capacity, about 20 GW retired. About 6 GW converted to natural gas.

But a much larger number—87.4 GW—adapted to the new regulation by installing pollution control equipment.

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In A Nutshell

Hillary now supports:

• a new government agency to provide health care to Americans -- the "public health insurance option" -- which would compete directly with private insurers (by the way, this is the British NHS -- a two tier system: government NHS alongside private insurers)
• expanding Medicare, allowing folks to sign up at age 55, rather than age 65
• tax-payer-financed college tuition

A little bit for everyone.

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ObamaCare Enrollment Not "As Good" As Originally Advertised
So, What Else Is New?
Must Have Been A Slow News Day

From Madison.com:

The Centers for Medicare and Medicaid Services has released the latest report on the state of enrollment for the Affordable Care Act, better known as Obamacare, and it contained quite a surprise.

As a refresher, the CMS reported Obamacare enrollment as of the end of the 2016 enrollment period to be about 12.7 million. This included more than 9.6 million enrollees via HealthCare.gov, the federally run marketplace exchange covering 38 states, and roughly 3.1 million enrollees coming from the one dozen states, such as California, New York, and Washington, that operate their own exchanges. Seeing as how Obamacare ended 2015 with 9.1 million enrollees, this jump of 3.6 million people, equal to about 40%, was viewed as a big win for the program.

But looks can be deceiving. Last week's CMS report, which used insurer and marketplace data through March 31, 2016, just two months following the 2016 enrollment deadline, found that only 11.1 million consumers were still enrolled and paying. In just two months, 1.6 million people had stopped paying their premiums or lost coverage.

This is not news; this has been the norm since the program went live. We've talked about it at length. There are a number of reasons people would quit paying premiums, but we've talked about them before.

Time to move on.

Back To That Jump In US Gasoline Production For The Month Of March, 2016 -- June 4, 2016

This is really cool. Don has provided a possible explanation for the jump in US gasoline production reported in March.

Meanwhile, for those who think refiners are making money hand over fist with all this refining, think again. From FuelFix, a story sent to me by a reader some time ago (thank you):

Federally mandated ethanol blending is adding extra pressure to the faltering profits of U.S. refiners.

The worst crude oil downturn in a generation, which at first helped refiners’ profits, has now passed through to the fuel prices. Now, gasoline is cheaper than the ethanol that refiners have no choice but to use.

Ethanol averaged 30 cents above gasoline in Chicago during the first quarter, costing HollyFrontier Corp. $36 million. Chicago ethanol now runs at about a 2-cent premium to gasoline, while Los Angeles prices are 24 cents higher, David Hackett, president of energy consultancy Stillwater Associates said. Ethanol futures on the Chicago Board of Trade averaged 21.5 cents above gasoline contracts on the New York Mercantile Exchange in the quarter, compared with an average 48-cent discount in the same period during the previous five years.

The Renewable Fuel Standard program, introduced in 2005 under the Energy Policy Act by the Bush administration, mandates the use of about 18.11 billion gallons of renewable fuels this year, 80 percent of which is ethanol. For the first time, EPA this year mandated consumption targets that would exceed 10 percent of projected gasoline demand. EPA’s proposed biofuel targets for 2017 are currently under review at the White House’s Office of Management and Budget, according to a government filing.

US Distillates Exported To Northwest Europe From US Gulf Coast Have Surged This Month (March) -- March 21, 2016

Tweeting now:  US EIA data likely to show crude oil stocks increase for week ended Friday, gasoline stocks down. 

Original Post

Platts is reporting:

A total of 1,320,000 mt of distillates have been loaded in the US Gulf Coast for discharge in Europe during March, Platts has estimated, based on data from cFlow, Platts trade flow software.

The figure was about twice the level of the previous estimate, pointing to increased volumes of product loaded in recent weeks.

"The US arb is open", a trader said, driven by "cheaper freight and raised ULSD diff in Europe".

According to the estimate, 11 of the cargoes due to land in March are headed to the Northwest European market, while 18 have set sail towards the Mediterranean.

The article at the link provides more background.

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In Like A Lamb, Out Like A Lion

Even as the UN says there is a huge amount of global warming going on right now, central United States is bracing itself for yet another blizzard:

Potential for blizzard conditions in some areas.

“The heaviest snow is likely to fall from central Nebraska through northern Iowa, central Wisconsin and northern Michigan, where 6-12 inches may fall."

Late in the week, the storm could then move on to parts of Ontario, Quebec, perhaps northern New York and New England.

The Kennedy clan can't win for losing. As they say. 

Friday, July 10, 2015

Active rigs:

	7/10/2015	07/10/2014	07/10/2013	07/10/2012	07/10/2011
Active Rigs	73	189	186	212	170

I track North Dakota's active rig count here. 

RBN Energy: changing patterns of refiners' oil input.This is another fascinating article from RBN Energy. This was a topic discussed at the blog in the very early days of the Bakken boom. No one outside the industry understood this at the time. I doubt many folks still understand it. (Archived)

The U.S. energy production renaissance isn’t just changing where we get our crude oil and natural gas from, it’s forcing major shifts in the domestic oil refining sector. Gulf Coast, East Coast and Midwest refineries that used to depend heavily on foreign oil are turning to domestic sources, refiners’ ability to process very light U.S. crude is being stretched, and traditional pipeline flow patterns—for crude and refined products alike--are being up-ended. Today, we continue our look at fast-changing petroleum products markets and the infrastructure that supports them.

The infrastructure developed over the past 70-plus years to move, store and export refined petroleum products is an unending work-in-progress that reflects (among other things) ongoing changes in the sourcing of crude, the types of crude being produced, and the demand for gasoline, diesel, heating oil, kerosene-type jet fuel (kero-jet, also known as jet-kero) and other refined products. The petroleum products-related infrastructure—how it fits together, and how it’s still evolving—is the focus of this series.

The U.S. produces and consumes more refined petroleum products than any other nation on earth. Production of finished motor gasoline (which includes ethanol) now averages more than 9.5 MMb/d, while distillates production (mostly diesel and heating oil) is approaching 5 MMb/d and production of kero-jet stands at about 1.6 MMb/d.

These fuels need to be moved as efficiently as possible from refineries to where they are stored and (ultimately) consumed domestically or exported. More often than not, they are moved much--or, in a few cases, all--of the way to market via petroleum product pipelines (more than 63,000 miles of them) to storage terminals in areas with significant fuel demand. From there fuels are generally distributed by tanker trucks to heating oil dealers and gas stations; many airports get their kero-jet delivered by smaller-diameter pipeline. In our series opener, we also explained how petroleum product pipelines typically transport specific products in a series of “batches” that are diverted to the proper tanks in sequence as they arrive at downstream storage facilities. In today’s episode, we’ll focus on refineries—where they are, and how their feedstock sourcing is changing.

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Data points from the RBN Energy blog today (there will be a quiz later):

The top five US refiners by capacity:

• Valero: 1.96 million bopd
• XOM: 1.86 million bopd
• MRO: 1.73 milion bopd
• Phillips 66: 1.61 million bopd
• Motiva Enterprises: 1.08 million bopd

In other words: four refiners each between 1.5 and 2.0 million bopd; and one refiner at about 1 million bopd. Total refining capacity in US about 18 million bopd.

Refineries are configured to operate most efficiently when processing certain types of crude

• light oil: 32 - 40 degrees
• above 40 commonly seen from shale basins such as the Eagle Ford and the Bakken
• ultra-light: above 50 (again, from the Eagle Ford and the Bakken); generally known as condensates
• diluted bitumen from Alberta oil sands: 22 - 31 degrees
• heavier crudes require more complex refiners (think, more expensive)
• sulfur must be removed during processing; heavier crudes, more sulphur

Cokers:

• PADD 3: Gulf Coast
• PADD 2: Midwest
• PADD 5: West Coast

No cokers (except for one):

• PADD 1: East Coast -- historically relied on imported light oil

Minor refining, has some coking

• PADD 4: Rockies

The US is gradually shifting to lighter oil

• in April 2015 (the most recent month for which EIA figures are available), the average API gravity of the crude refined in the U.S. rose to its highest level (32.18 degrees;) since March 1990
• in July 2008, before the shale era began in earnest, the average API gravity bottomed out at 29.9 degrees. (That difference of 2.28 degrees may not sound like much, but in the refining industry it is huge.)

Changes:

• PADD 3: was 29.31; now 31.83
• PADD 2: 32.13; now 33.61
• PADD 1: was 31.53; now 34.99 (think Delta, think Bakken)

The Keystone pipeline was not mentioned.

Not mentioned: swaps make more sense than removing ban on US oil exports.
 

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Talking About Lagged Data

EIA "energy cookie":

EIA develops state-level production estimates for selected states that are based in part on state-level data. However, data published by state agencies are often incomplete when first published because of a combination of late reporting and processing delays, mainly due to the filing of production reports that do not contain all required information...

Production data for Texas, the largest crude-oil producing state, published by EIA in the Petroleum Supply Monthly (PSM) and by the Texas Railroad Commission (TRRC) in its monthly reports, reflect differences in the treatment of incomplete and lagged data...

The need for EIA to calculate a true-up oil production volume for states, including Texas, will soon be replaced by a direct EIA survey of oil producers, just as it currently surveys natural gas producers in its EIA-914 survey.---EIA

North Dakota's data seems to be about the most transparent and most current of any state and is light-years ahead of the federal government's reporting of import data, which one would think would be easiest to track. Import data should be available in real-time.

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So, Who Blinked?

The Drudge Report has the headline suggesting that the EU blinked. A SeekingAlpha contributor suggested that the market is surging because "Greece blinked."

In fact, the socialists played Europe like a fiddle. Of course, all the i's and all the t's have not been dotted, or the exact euro figures filled in, but as I said some weeks ago, the Greek government (i.e., the men at the top top) were not going to let $8.1 billion slip through their fingers. A fair amount of that $8.1 billion will be skimmed off the top to line the coffers of key government figures. The real losers are the poorest Greeks. The pensioners take a "haircut," and the government makes a few promises ("wink, wink") and then this Greek drama is over for the next five years.

Even Paul Krugman agrees: more money should have been sent to Greece, and it should have been sent much earlier, and all of this could have been avoided.

After all, the EU has not run out of money for the Greeks to spend.

(By the way, the linked Krugman opinion piece is one of the most poorly argued / most poorly written pieces I've seen by him -- I guess both he and I are getting tired.)

[July 18, 2015: see follow-up on Krugman at this link. At the linked post, way at the bottom.]

Valero Adding More Hydrocracking Capacity Near Export Terminals

From RBN Energy today on Valero's plans to add more hydrocracker capacity down south:

We get the distinct feeling that there is not yet a sense of urgency among refiners to address the apparent inconsistencies between their refinery configurations, the available slate of crude and the product mix that the market requires. Given the level of activity and investment in drilling and infrastructure that we have seen in the past two years to get crude to market as well as the flurry of new terminal storage capacity and connections in refining centers, shouldn’t we be seeing more signs of activity behind refinery gates?

Nevertheless, all the evidence suggests that US refiners in general and Gulf Coast refiners in particular will have to make new investments in their refineries to take full advantage of the new crudes coming their way. If not in hydrocracker units - then in topping units that increase their capability to process very light crudes or condensates.

Valero has determined that increased hydrocracking capacity is the way to go and they have placed their bets accordingly. Now that the major pipeline investments to redirect new crude flows to market are under way, we believe the focus of industry investment will shift to addressing refinery infrastructure issues. Given the slow start so far on that investment we expect bottlenecks to shift from storage and distribution centers to refinery gates.

Power Africa -- Power Europe -- Power America --- US Exported Record Amount Of Petroleum Coke In April; Only Once Before Was More Exported (December, 2011) -- Global Recession? What Recession?

Two articles to read/scan first:

• War on coal
• War on coal -- Great Britain

Now.

Platts is reporting:

The US exported the second highest volume of petroleum coke ever in April, according to US Energy Information Administration data.

The EIA April data, released Friday, show exports of 17.78 million barrels, second only to December 2011, 20.44 million barrels.

Petroleum coke is a byproduct of coking, a process that takes very heavy oil and produces gasoil (a precursor to diesel or vacuum gasoil) and naphtha. The coke is used as a fuel for power plant, in a kiln in the production of concrete or, for some specialty grades, in the production of aluminum or other metals.

Recipients of US petroleum coke (numbers rounded):

• China: 3 million barrels, its third highest volume, after December 2011's 5 million barrels and January 2013's 4 million barrels.
• Mexico: 2 million barrels
• Japan: 2 million barrels
• Canada: 2 million barrels, up from only 659,000 barrels in March.

India, Turkey, Spain, Italy and others are all significant importers.


The US added substantially to its coking production capacity in 2011 and 2012:

• Motiva in Port Arthur: from a 59,500 b/d capacity to 154,500 b/d; 
• Marathon, Detroit: from 29,500 b/d to 55,000 b/d;
• Wood River Refinery expansion: 65,000 b/d;
• Total, Port Arthur: 52,000 b/d

In 2013:

• BP, Whiting: will bring on stream 102,000 b/d coker.

Coal and petroleum coke probably don't go together in the same post, except for the fact that both have to do with US energy exports.

I don't see a "war on coal." I see a "war on coal-powered plants." The US coal industry will do just fine, as it re-orients itself to cater to Europe and Asia.

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A Note To The Granddaughters

I have spent all day on bicycle, exploring our new home, Colleyville and Grapevine. Having spent so much time in Yorkshire, I am happy to see that Grapevine's sister city is West Lothian, Scotland.  It seems I have heard of West Lothian before but I am unable to place it.

EPP To Develop Two Texas Refined Products Export Terminals; Will Handle Panamax- And Aframax-Size Vessels

Oil & Gas Journal is reporting:

Enterprise Products Partners LP (EPP) is developing two refined products export terminals to meet growing demand for additional products export capability on the US Gulf Coast.

Terminal development will use EPP’s existing Southern Complex of refined products pipeline, storage, and terminal facilities in southeast Texas, to improve access to its marine facilities in Beaumont, Tex., and on the Houston Ship Channel (HSC). Export service at the reactivated Beaumont marine terminal will initially handle Panamax-size vessels and is expected to begin first-quarter 2014, followed in mid-2014 by expansions at marine terminal on the HSC initially sized to handle up to Aframax-class vessels.