Friday, 30 January 2015

California Gasoline Sales Point to Growing Oil Demand

Jan 28th, 2015

By: John Kemp, retrieved from from the Daily Oil Bulletin 

(Reuters) — Motorists in California purchased more gasoline in October 2014 than any corresponding month since 2007, according to state tax records, confirming the renewed growth in U.S. fuel demand.

State gasoline consumption was 2.3 per cent higher than in the same month in 2013 and 4.1 per cent higher than in 2012, according to the California Board of Equalization, which collects motor vehicle fuel tax in the state.
Sales have been growing since June 2013 and the trend is expected to accelerate as motorists respond to the halving of fuel prices by purchasing larger vehicles and driving more.
Lower crude oil prices will gradually rebalance the market by slowing crude production growth and encouraging more use of refined fuels.

Gasoline sales up


California’s gasoline sales have been rising for more than a year but the rate of increase accelerated in September and October 2014, coinciding with the sharp drop in pump prices.
In October, California gasoline sales hit 1.27 billion gallons, up from 1.24 billion gallons in October 2013.
To switch units to something more familiar in the oil market, the extra 30 million gallons of gasoline sold in October 2014 was equivalent to an increase of 23,000 bbls per day.
Multiplying up to national level, gasoline sales were more than 200,000 bbls per day higher across the United States in October 2014 compared with the same month a year earlier.
If oil prices remain at their current level, and gasoline consumption continues to grow at recent rates, demand could easily rise by another 200,000 to 500,000 bbls a day in 2015.
Assuming national crude oil production is flat in 2015, increased gasoline consumption from the United States alone could tighten the global oil market by between a quarter and a half a million bbls per day by the end of 2015.
By itself that would not be enough to rebalance the oil market. But if U.S. diesel consumption also continues to rise, and increased fuel use is mirrored in Europe and China, thanks to lower prices, global oil consumption could easily rise by one million bbls per day by the end of the year.
The International Energy Agency, using a more sophisticated model, predicts global oil demand will hit 94.4 million bbls per day in the fourth quarter of 2015, up almost exactly one million bbls a day from 93.4 million in the fourth quarter of 2014.

Fuel consumption data


The problem with monitoring the oil market is the paucity of real-time data on either supply or demand. Data is mostly incomplete and available only with long delays. Consumption statistics are particularly poor in terms of both accuracy and timeliness.
As usual, the best data comes from the United States, where the Energy Information Administration publishes weekly, monthly and annual estimates on the amount of “petroleum products supplied" to the domestic market.
But product supplied is calculated as a residual from other data on domestic production, imports, exports and stock changes, so it is sensitive to errors in recording or estimating the other items.
In particular, exports are estimated in the short term, so errors in estimating exports flow through directly into equal and opposite errors in calculating product supplied.
The one point at which accurate and comprehensive data is available is when motor fuel is sold and excise taxes are paid.
Federal and state governments impose excise taxes on every gallon of gasoline and diesel sold, and publish data on “taxable sales.”
For example, California collects federal fuel tax of 18.4 cents on every gallon of gasoline sold as well as a state fuel tax of 36 cents per gallon.
States report taxable sales to the Federal Highway Administration each month so the U.S. Department of Transportation can attribute revenues and distribute spending from the highway trust fund among the states.
Unfortunately, the latest nationwide data relates to August 2014. Five months out of date, it is much too old to be useful in analyzing short-term consumption trends.
But some states release their own data on taxable sales much faster. California fuel sales data is available for October, only three months old.
The state’s motor vehicle fuel tax is levied on gasoline upon distribution, importation or sale in the state, and there are fewer than 300 registered tax-paying entities, so the statistics are simple, comprehensive and clean.
California motor vehicle fuel tax raised $5.2 billion for the State Transportation Fund in the 2012-13 fiscal year to construct and maintain public roads and mass transit systems.
California is the largest motor fuel market in the country, ahead of Texas, Florida, New York and Illinois. The state accounted for 11 per cent of nationwide gasoline sales in 2013, according to the EIA, or almost 39 million gallons per day.
State gasoline sales can serve as a useful indicator for national trends, and they show gasoline demand is now growing rapidly.

Tuesday, 13 January 2015

Greenpeace represents the rollback of human achievement

By: Derek Fildebrandt, CAODC

The following OpEd was published in the Calgary and Edmonton Sun, and was retrieved from http://fildebrandt.ca/. Originally published on December 17th.

Greenpeace is not just some silly, stunt-pulling - but ultimately innocent - environmentalist group. They represent an extremist, neo-luddite movement to roll back human achievement. If this was ever in doubt, it no longer is.

More than 1,500 years ago, the ancients of Peru constructed the Nazca lines. Believed to have astronomical or religious significance, the lines beautifully draw massive hummingbirds, monkeys, fish and other animals. The largest of these is over 200 metres across. The lines are made from extremely sensitive ground and are only (legally) viewable from the surrounding foothills or by aircraft. Even the president of Peru is forbidden from walking on the highly sensitive grounds. It holds such value that it has been designated at UNESCO World Heritage Site.

Such concerns were tossed aside by Greenpeace activists last week. To protest world leaders in meeting in Lima, Peru discussing climate change, about 20 activists showed up and unfurled a massive banner reading, "Time for change! The future is renewable." Of course, they got their branding moment in there by signing off the bottom with the Greenpeace logo.

Greenpeace wasn't the only thing branded in this publicity stunt though. The grounds that the Nazca lines are drawn on were badly damaged, which could take more than 1,000 years to return to its original state.

Peru's Deputy Minister of Culture said, "It's a huge slap in the face at everything Peruvians consider sacred."

Greenpeace has only admitted that "this looks bad," but not actually apologized to the Peruvian people for desecrating an important symbol of their culture.

There is another important symbol in this however. Greenpeace's desecration of the Nazca lines represents their loathing of human achievement. Their simplistic message for five minutes of fame was more important than the cultural and artistic achievements of an ancient people that have survived the elements for more than 1,500 years.

Such arrogance, and ignorance is breathtaking, but illuminating of their modus operandi.

The the world has seen hundreds upon hundreds of millions of people lifted out of poverty in the last half century is a testament to human achievement and technological progress. As much as some may wish otherwise, human civilization as we know it is utterly impossible without oil and gas. With a world population of 7.2 billion, we would be hard pressed to have even a medieval standard of living without it.

Greenpeace is not seeking a more responsible or clean oil and gas industry. They are seeking no oil and gas industry. It is extremism of a well-intentioned, but horribly misinformed and warped kind. We have perhaps given them a free ride because of their originally noble - and successful - mission of bringing environmental protection to the forefront in the 1960's. That is no longer Greenpeace however.

We have for too long dismissed Greenpeace as a harmless bunch of overgrow kids with useless degrees trespassing on private property to snap a picture of how heroic they are.

They even defiled our own democracy by illegally hanging a banner from the East Block of Parliament. Luckily for us, no permanent damage was done. Luckily for them, Parliament Hill security showed remarkable more restraint than might have been shown if they had scaled the White House instead.

It's time to treat them like most of us treat PETA; a group of space cadet extremists with no interest in finding a reasonable middle ground. They unfairly discredit real-world conservationists who want to find an equilibrium between human development and progress on the one hand, and the need to protect our environment on the other.

Those who want to stop the use of oil (such as most opponents of Keystone XL) need to explain what they would do in its absence. They can't, and so they rely on cheap one-liners; but this time the consequence of their message cannot be erased. We shouldn't forget that.

Friday, 9 January 2015

Sea Change... Again

February Recorder Article

By: Mike Doyle, CAGC

Mike Doyle is the President of the CAGC – the Canadian Association of Geophysical Contractors - representing the business interests of the seismic industry within Canada. The CAGC website may be found at www.cagc.ca.

Readings are solely for the entertainment of customers.
- Sign above a table used for crystal ball gazers, tea leaf and tarot card readers

Dave Yager of MNP LLP said in his January 5, 2015 Newsletter  “Holy cow. Do up your seat belt.  WTI trading at US$48.14 right now.”

So here comes the next bust. Our last bust in 2009 (after the 2008 market crash) brought some strong years in 2011, 2012 and 2013. The market correction is always a violent one that has a lot of fallout. The Rig Counts went from record highs in 2008 of over 20,000 to 2009 with counts under 10,000. Operating Days were halved as well however in the years that followed; recovery came in the form of operating days instead of rig counts as the industry changed to more horizontal drilling plays equaling longer drill bores instead of more wells being drilled. Unemployment in Alberta doubled from less than 4 % in 2008 to almost 8 % in 2009. Of course there are different market forces at work this time around as well as different global geopolitics, so nothing is for certain. However for a quick trip down memory lane please find following (some of) my column from January 2009.  

$147 oil? $40 oil – all in a 6-month period? Who would have predicted that? One thing about predictions – no one has to be accountable. Even publicly-traded companies make “forward-looking” statements disclaimed as such. My counterparts in other Oil and Gas Trade Associations have prognosticated cautiously negative forecasts for 2009. Most of us agree that Quarter 1 should still be decent but after that who knows (see the closing quotation to this article).

Look to 2009 and beyond as a sea-change in North America. It’s not only about economics and capitalism, it’s about the way we as Governments and People think and operate. Have we seen the failure of capitalism in 2008? The Mother of All Bailouts … which one was that? The Auto Industry? – No! - The big one really was the bailout of the bank systems worldwide. The financial system is the core of any civilization in today’s world. How can banks go bankrupt? Banks? – What about countries?

The country of Iceland went bankrupt in early October 2008. What ‘bankrupt’ means is just that: The country cannot pay back its external debts, and the Icelandic currency, the krona, has become essentially valueless in the rest of the world. That means the country can no longer pay for imports. So take it for what it means – countries can carry as much debt as they like as long as their currency value holds up. The USA with trillions in debt is OK as long as the world continues to value their currency. And since we are all in it together, if they fall so do all of us. Think of it as a high-stakes game of “Prisoner’s Dilemma”.

The Auto Industry Bailout is an interesting one. There are always two sides to any debate. This certainly is not the first time Governments have stepped into what once was private industry. Governments worldwide bail out their Airline Industries time after time. One might suppose it is considered national interest to ensure that some type of air transportation continues. Perhaps a more prodigious example is that of the food industry. Governments in have-nations continue to subsidize their own food production – arguably at the cost of third world nations who might otherwise produce food at a higher cost to export to benefit themselves. Once again this might be argued to be in the national interest. Is an Auto Industry bailout in the national interest? This will be a very interesting question seeking an answer as countries around the world are doing the same thing – bailing out their own Auto Industries.

Bailouts eventually cede to the market. Airlines fail and/or get bought out so there are fewer players in one country. The food system is changing dramatically. The “fat” society is changing its values and better more expensive food is becoming OK. Sin taxes on sweets, soft drinks and snacks already exist in states such as New York and California. Vending machines carrying these products are systematically being kicked out of the public education facilities across North America. Changes moved the Canadian Wheat Board in 2007 from its marketing monopoly for barley and wheat and are indicative of ongoing structural changes. The move towards bio-fuels has increased prices as the crop land has competing uses now –for different end markets. So the final outcome in the Auto Industry is far from playing out one way or the other.

The Oil and Gas Industry has really been knocked down a notch or two over the past couple of years. There was a time a couple of years ago when CAPP signaled it was losing traction with the Governments and began working closer with many of the service and supply Trade Associations in bringing more of a grassroots message to some of its lobbying efforts. This was further emphasized over the Royalty Review under which massive public sentiment whelmed up against the Industry despite many of those same “public’s” working directly or certainly indirectly for the Oil and Gas Industry in the Province of Alberta. We are seeing this transpose itself into reducing our lobbyist effectiveness. Governments are pushing industry back more and more based on public sentiments. In Alberta Stelmach kicked seismic off lakes in the fall of 2006. We have lost ground in the riparian areas around the OilSands. Stelmach has slowed OilPatch work to a crawl with the introduction of the Royalty Review which not only covered OilSands but also Conventional Oil and Natural Gas. In an odd manner it is a bit of a schizophrenic government – well, at the very least a populist government swaying back and forth depending upon the signals from the public. Slowing industry growth to the point where for the first time in history Provincial Land Bonuses paid to the Alberta Government was less than either BC or Saskatchewan potentially foreboding a continually quiet future for our Industry in Alberta. Drilling in Quarter 2 of 2008 fell to 56% in its share of the well activity with other Provinces. Historically this number is around 70 %. Alberta faces the real possibility of running a budget deficit in 2009 and having to dig into the Heritage Fund.  Who would have thought that was possible a year ago?

On the other side of the coin Stelmach travels the world to market the OilSands. This strikes me as odd. Obama has appointed Steven Chu for his Energy / Environment Secretary – no doubt a sea-change in the way the USA will view its Energy Policy. The OilSands only accounts for about 2.5 % of the USA energy use at this time. It does however represent 50 % of the Oil produced in Canada and that number is climbing as conventional oil production falls off and OilSand’s production increases. So thus the ability for Obama to truly pontificate against High-Input GHG Energy Sources but also thus the need for Canada to take Obama seriously. Breaking the reliance on foreign oil has been a favourite target for a number of USA Administrations without any real headway at all. Perhaps that will change with an Administrative focus on Renewables and the threat over our heads of doing a better job environmentally in areas such as the OilSands.

Indeed many different factors this time around. Who would have forecast the rapid ascension of the shale plays? And large USA foundations funding campaigns against our oil? Pipelines have become the whipping boy for stopping oil from moving at least from Canada. We now have Provinces weighing in on what is constitutionally a Federal matter. Civilization seems to be looking to go back to the days of stone and fire in the circle of life. Might as well enjoy it – no one is getting off this planet alive……literally.

From Brainy Quotes on the Internet:

No man is a failure who is enjoying life.

William Feather