The U.S.’s gasoline stockpile situation is quiescent at the minute as we wait to see how much foreign gasoline our oil companies can find to import this summer and whether the Atlantic will start spinning hurricanes toward our shores as forecast.
Many of us were wondering how U.S. gasoline stockpiles went up so much last week at the same time refined gasoline production and imports went down, and gasoline consumption increased. Queries to the folks who produce these numbers at the Energy Information Administration elicited the response that reporting by the oil industry is not always good, as could be hoped for. It is quite possible somebody reported the arrival of lots of gasoline at U.S. ports, but somebody else did not get around to adding it to the inventory right away. In the long run, these discrepancies sort themselves out, but they serve as a reminder that the numbers in weekly oil reports might not always square with reality.
In the meantime, we should all be glad gasoline prices are easing a bit as the markets are figuring that enough gasoline imports will get us through the rest of the summer, no matter how well or poorly we do at keeping our aging refineries patched together.
Last week, a discussion arose among people following peak oil as to whether the message —worldwide oil depletion is imminent— is actually getting through to significant numbers of people. For those of us following the issue, the evidence world production either has or will shortly peak is simply overwhelming. Oil production numbers show no significance increase for the last two years; each day we burn up another 85 million barrels and each year another 31 billion; other liquid fuels such as shale oil, tar sands, tar belts and ethanol are either non-starters or cannot be produced in the quantities needed to offset declines in conventional oil production.
Moreover, the current OPEC production cutback, which has taken 1.2 million barrels per day off the market, will not be reconsidered again until September. Although the International Energy Agency (IEA) credits OPEC with over 2 million barrels a day of spare capacity, mostly in Saudi Arabia, some observers remain skeptical that the capacity to increase production by this much on a sustained basis actually exists.
On Tuesday, the normally optimistic IEA issued its Monthly Oil Market report which, for the fourth month in a row, warned that global oil production is likely to fall below demand in the second half of 2007, with much higher prices the result.
The IEA cited a litany of oil market woes ranging from increasing demand in such unexpected places as Nigeria, Indonesia, Singapore, Venezuela, and the former Yugoslavia, to another 250,000 barrel a day drop in Nigerian oil production.
The bottom line is that according to the IEA world production slipped by over 565,000 barrels a day last month, while demand for 2007 is now projected to increase by 1.7 million barrels a day over 2006. Even without a major weather or geopolitical disruption, it is becoming obvious that something has to give before the year is out. All that demand, at current prices, is simply not going to be satisfied.
The IEA points out that unless OPEC increases production world stockpiles are likely to drop by 1–1.5 million barrels per day in the third quarter, thereby reaching levels not seen since 2004 which in turn triggered large increases in the prices.
The energy bills that will be debated in Congress this week have little to do with the problems that may beset us in the next six months. Proposals to start increasing the efficiency of cars and trucks four years from now and double the average mpg of new cars 23 years from now are simply unrealistic as a solution to imminent shortages. While R&D money for energy is always nice, the payoff is likely to be in decades rather than months. Eight hundred million barrels of bio-fuels 15 years from now may be good, provided we still have enough to eat, but the U.S. consumes some 8 billion barrels of oil a year. Congress is no where near connecting with the real problem. Ritual calls to investigate and punish price gouging will solve nothing.
All this says that, for America and many other countries, the wakeup call has not yet been heard. It is beginning to look as if higher prices alone will not do it either. America’s lifestyle has become so deeply involved with the automobile that according to all the polls, most say they will continue driving-as-usual until their last dollar is exhausted.
It is clearly going to take prolonged gasoline shortages and unbearably long lines at the gas pumps to bring about serious governmental action. One day there will be a run on the pumps.
The American system of driving currently is based on a smooth flow of about 9.5 million barrels a day of gasoline wending its way from the oil fields, through the refineries, to the gas tanks in our cars. Suppose for a minute the word goes out that shortages are nigh and that 210+ million cars and trucks immediately are driven to the gas stations so that their owners will not be caught short. A quick calculation suggests that collectively we Americans have about 50 million barrels worth of empty storage space in our 210 million gas tanks. Given that the useable gasoline stockpile in the US is not much more than 20 or 30 million barrels, if only half of us decided it was time to start keeping our tanks topped off, it is going to be tough to find a gas station open.
So in answer to the opening question, “Is anybody listening?”, the answer is clearly “not yet,” but chances are good that they soon will.