Thursday, June 25, 2009

Oil Demand

As someone who seeks to determine what is "really" going on - oil supply and demand-wise - this author finds the constant barrage of varying petroleum statistics to be confusing and essentially useless. Most useless are the inventory stats that show "gasoline inventories up", "distillate inventories down", "crude up", etc. - and usually by only a few percentage points. However, these are often picked up by the media to explain some minor movement in oil prices.

We are constructing a "reported demand matrix" which summarizes reported demand drops over the last few years, across a number of categories. However, this "demand matrix" currently remains a "confusion matrix".

In the meantime, here are some stats from Tom Whipple of ASPO-USA and the Falls-Church News-Press, from June 25, 2009:

Total demand for petroleum products in the US: down 6.6 % YOY

Distillate demand (which is mostly diesel at this time of year): down 9.3 % YOY

Jet fuel demand: down 13.9 percent, YOY

Gasoline consumption: up slightly (prices $1.40 less than last year)

Many of us believe liquid production peaked in 2008, and that initial declines should be in the 4-5 % per year range. So it looks like, on a gross estimate basis, demand destruction is outrunning Peak Oil, for now. On the other hand, Mexico, Venezuela and Nigeria - the third, fourth and fifth largest suppliers of imported crude to the US (not necessarily in that order) are experiencing catastrophic declines or loss of production for other reasons. More on that in the future.

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