Yes, U.S. Gas Use Dropped; But So Did Production 15 comments
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The weekly report from the Energy Information Administration (EIA) was released yesterday, and the headline that was picked up by the media was that gasoline usage over the July 4th holiday hit a five-year low, and dropped 3.3% from last year to 9.347 million barrels a day. This fits in nicely with my thesis that oil prices are ridiculously overpriced, and was a source of considerable joy for me when I read it last night. The chart is below.
Now, it is no secret that I am bearish on oil prices, and have received considerable contempt and scorn for this position. However, there was another nugget of data in the EIA report that was stunning and not supportive of my bearish position. It would be easy for me to ignore this data, as it seems that the media has, and just see what I want to see in the report, but then I would be guilty of what I frequently accuse oil bulls of doing. I try my best not to ignore data, or mine it to find want I want to find in it.
The EIA also reported that U.S. Crude Oil Production fell to 4.96 million barrels per day for the week ending 7/4/2008. On a four-week moving average, production was 5.09 million barrels per day. This is the lowest production measured on a weekly basis since July 2006.
One component of my bearish thesis on oil prices is that domestic oil production will begin to move higher over the next few years due to all the exploration and development being done, and this data point would seem to contradict my position. Now it would be expedient for me to dismiss this as a one week aberration, or as some sort of holiday weekend related drop, but I will not do that and will take the data as it stands and incorporate it into my thinking on the oil supply and demand situation.
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Are there publicly available articles or studies which present evidence for this view? Most of the analysis of this question I have seen indicates that all of this exploration and development will, at best, only partially offset the *decline* (e.g. www.theoildrum.com/nod...), and I have not seen any logic and fact based articles which make the case that an actual net *increase* in domestic production can ever be expected again. Would be interesting in examining any such.
Also, it seems evident that even if an increase could be achieved via new fields, this could only happen many years from now since it takes a decade or more to bring enough wells online to reach high levels of production. Does this author contend that oil prices will fall sooner than that, or is his timeline for falling oil prices several years out, as would seem supportable IF such an increase could be achieved?
Or is the assertion here that we'll be able to reverse the decline in existing fields? And if that's it, are there articles or studies which are based on evidence of this?
2) Bad government on fiscal policies for 15 years
3) Coordinated global strategy to NOT increase supply (new paradigm where the U.S. no longer tells OPEC what to do).
Exxon is the last American energy giant that has any say in the oil market, everything else is owned by foreign nations, facilitating further wealth transfer into there pockets from the U.S.
4) Big speculators including the oil producing nations (ICE, GCC, Russia) had more or less a sure bet creating a self-fulfilling prophecy loop, but that is now changing.
5) Yes, demand destruction and great financial pain makes all of this now seem VERY transparent.
6) Solutions: Must go energy independent and create jobs. Will the ivory tower guys on the Hill get there head out there ass in time and explore ALL options including drilling? We can only hope.
In trying to assess Corn ethanols costs, one has to include that an estimated 75% of the cost increases on all of the Grains can be added to the fuel saved by using corn for fuel.
Personally I believe the single biggest inflation cost outside of Oil can be laid on Corn Ethanol's doorstep.
Add that to all of your equations.
Now quite throwing tomatoes at me.
Maybe the 55 mph is a easier fix to save an instant 20%.
It would be kinda fun, though, to see the Administration attempt to exert Executive authority and try a stunt like Shaggieman suggests, only to see their own judicial appointees rap their knuckles with a big stick.
shaggie - the solution in italy has been simple - every car over 2 litres engine size gets to pay a super duper annual excise tax for the privilege.
> jack
As one of your detractors, I wish to commend you on your effort to not mine data to support your view....keep it up.
jan
As one of your detractors, I wish to commend you on your effort to not mine data to support your view....keep it up.
jan
Take a look at some of the futures prices of a barrel of oil.
futures.tradingcharts....
Do you see a pattern there?
Look at the 2012 future prices for a barrel of oil...they are trading in the $70's
2012 will be "election season"....
Speculators don't want to touch buying it...if we were really living in a "tight" market....and $150/$200 a barrel is here to stay...That's the BEST deal OF THE CENTURY you could find, you could TRIPLE your investment in 4 short years...what other investment exists with that kind of "guarantee"...A 300% return in 4 years....?!
Why are people not buying up those futures contracts as fast as
they can?
You want further proof?!
How and why would a COMMODITY price...we're talking a COMMODITY, have $4-$5 swings in a matter of HOURS...that's a 3% price swing within HOURS of trading in a single DAY!!
Because the price is FALSELY inflated....and Oil Pricing is a SCAM manipulated on the ICE markets.
Has EVERYONE completely forgotten (or IGNORED) history? We've seen this EXACT SAME THING when Enron was around.
They were the Market makers and they manipulated the market to their whim......Anyone remember Dick Cheney saying "we can't pull anymore kilowatts", yet Enron was shutting down Power plants in California, to close grids and falsely increase demands on the rest of the grid...
it is the EXACT same thing ICE is doing.
Eliminate the Graham/Enron loophole, put more transparency on ICE Markets, and a price of a barrel falls in HALF, OVERNIGHT
I'll bet EVERYTHING I OWN on it.
About ICE,IntercontinentalEx... Inc.
Ice, Ice Baby Part 1
www.star-telegram.com/...
Ice, Ice Baby Part 2
www.star-telegram.com/...
Here are some teaser quotes:
When Enron failed and took its private, unregulated energy exchange to the grave, another rose to take its place. The Intercontinental Exchange (ICE) was the brainchild of
Morgan Stanley,
Goldman Sachs,
British Petroleum,
Deutsche Bank,
Dean Witter,
Royal Dutch Shell,
SG Investment Bank and
Totalfina.
In 2001 ICE purchased the International Petroleum Exchange in London; renamed ICE Futures, it now operates as an "exempt commercial market" under section 2(H)(3) of the Commodity Exchange Act. As the Senate hearings pointed out in the summer of 2006, "Both markets operate outside of any CFTC oversight."
www.star-telegram.com/...
We started as a society that worships hard labor and the basic business ethic of building value into the goods you create. How’d we get from there to worshiping Wall Street’s billion-dollar boys — who create nothing, build nothing, own nothing and deliver no goods, and yet can throw so much money into products made by others that they determine what we consumers will pay for those goods?
Oil Movements tracks every tanker at sea, from both OPEC and non-OPEC oil countries, along with their cargoes’ final destinations. Anne O’Shea responded immediately to my request with their report dated May 8, 2008. Just so you will know, oil shipments are up from a year ago in almost every class, including Middle East oil in transit and Non-OPEC in Transit. The only class of oil shipment that has declined is covered on page 3 of that report. That chart is labeled, "4-Week Changes in Westbound Oil at Sea."
That’s right, shipments of oil headed west have shown serious declines during the month of April, down 800,000 barrels per day in the week before the publication of the report
This is EXACTLY what Enron did when it's Electricity Manipulation, Turning off power grids to falsely inflate demand on other grids....