It's Not Just Gasoline Consumption Tanking, It's All Energy - Charles Hugh Smith

It's Not Just Gasoline Consumption That's Tanking, It's All Energy
February 14, 2012

It's not just gasoline consumption that's declining--petroleum and electricity consumption are also dropping. Is that indicative of economic growth?
A number of readers kindly forwarded additional data sources to me as followup on last week's entry describing sharply lower deliveries of gasoline. (Why Is Gasoline Consumption Tanking? February 10, 2012)

The basic thesis here is that petroleum consumption is a key proxy of economic activity. In periods of economic expansion, energy consumption rises. In periods of contraction, consumption levels off or declines.

This common sense correlation calls into question the Status Quo's insistence that the U.S. economy has decoupled from the global ecoomy and is still growing. This growth will create more jobs, the story goes, and expand corporate profits which will power the stock market ever higher.

Courtesy of correspondents Bob C. and Mark W., here are links and charts of petroleum consumption, imports/exports, and electricity consumption. Let's start with a chart of total petroleum products, which includes all products derived from petroleum (distillates, fuels, etc.) provided by Bob C. The chart shows the U.S. consumed about 21 million barrels a day (MBD) at the recent peak of economic activity 2005-07; from that peak, "product supplied" has fallen to 18 MBD. The current decline is very steep and has not bottomed.

This recent drop mirrors the decline registered in 2009 as the wheels fell off the global debt-based bubble. Those arguing that the U.S. economy is growing smartly and sustainably have to explain why petroleum consumption looks like 2009 when the economy tipped into a sharp contraction.



A link of interest from Mark W.: Montly U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels per Day) showing gasoline "product supplied" from 1945 to 2011. This shows gasoline has declined about 700,000 barrels per day from 2007, from 9.2 MBD to 8.5 MBD in November 2011. This represents about a 13% decline.

A number of readers wondered if gasoline imports might account for lower domestic shipments. That is a good question, and Bob C. found the answer in other EIA (U.S. Energy Information Agency) charts.

Weekly U.S. Imports of Total Gasoline (Thousand Barrels per Day)

Weekly Imports & Exports of Petroleum and Other Liquids (Thousand Barrels per Day)

Exports of Petroleum and Other Liquids

Here we see that of 8.5 million barrels a day of gasoline supplied, roughly 500,000 barrels are imported. In other words, the percentage of imported gasoline is modest.



The U.S. imports and exports petroleum products, but the net result is imports of around 8 million barrels a day. The U.S. imports about 10.5 MBD and exports almost 3 MBD for a net import total of 7.5 MBD. The secular decline in net imports from the 2006 top is consistent with the view that consumption has declined as a reflection of economic activity.



Mark W.also forwarded these charts of Electrical power consumption. Not only has electrical consumption never recovered the levels of mid-2008, it peaked in mid-2011 and has begun a sharp decline in late 2011.



I marked recent recessions on a long-term chart of electrical consumption to show that the deep recession of 1981-83 barely registered, while the recessions of 1990-91 and 2000-2002 are essentially noise.



That makes the secular decline from 2006 peaks all the more striking. (It is perhaps no coincidence that the housing bubble peaked in 2006-07 along with the extraction of home equity craze.)

Clearly, electrical consumption is in a downtrend with no recent historical precedent. Those claiming that U.S. growth is sustainable and the Dow is heading for 15,000 must square their rosy projections with sharply declining energy consumption. The two simply don't match up.

As a lagniappe, here is a link from correspondent Joel M. on downward revisions to shale oil estimates. This injects a note of realism in the recent euphoric depiction of the U.S. as having essentially boundless supplies of petroleum equivalents. Substantial, yes, virtually unlimited, no.

http://www.oftwominds.com/blog.html

 

And yet energy prices remain high.

 

I have been yammering on for awhile about this, and few listen,

there is no recovery without petroleum expenditures, that is a given,

kinda like watching the baltic dry,

clues to what is really going on,

if they want to seize up this economy, just go ahead and keep raising energy prices,

that in and of itself will cause yet another downturn in 'their' numbers.

 

And gasoline and diesel, as well as other distillates, remain America's No. 1 export, (google it if you doubt). Fvk the US economy as so-called US oil companies and refiners are only about themselves. They're truly transnational globalists. Nothing remotely patriotic American loyal about them any more.

Fuel surcharges, and ever-increasing energy cost in general, are running the cost of wholesale product for my business out of sight. While my revenues remain in line with last year, my margin is beginning to suck rotten eggs. I'm between a rock and hard place as I don't see how I can raise my retail prices without losing customers, but I can't keep absorbing the difference forever. Something has to give.

 

Weekly Petroleum Status Report
ir.eia.gov/wpsr/wpsrsummary.pdf

Summary of Weekly Petroleum Data for the Week Ending February 3, 2012
U.S. crude oil refinery inputs averaged nearly 14.4 million barrels per day during the week ending February 3, 180 thousand barrels per day above the previous week’s average. Refineries operated at 82.8 percent of their operable capacity last week. Gasoline production increased last week, averaging 8.6 million barrels per day. Distillate fuel production decreased last week, averaging about 4.5 million barrels per day.
U.S. crude oil imports averaged 8.4 million barrels per day last week, down by 467 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 474 thousand barrels per day below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 715 thousand barrels per day. Distillate fuel imports averaged 111 thousand barrels per day last week.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.3 million barrels from the previous week. At 339.2 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.6 million barrels last week and are in the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 1.2 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories decreased by 2.3 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories increased by 4.2 million barrels last week.
Total products supplied over the last four-week period have averaged 18.1 million barrels per day, down by 4.8 percent compared to the similar period last year. Over the last four weeks, motor gasoline product supplied has averaged 8.0 million barrels per day, down by 6.8 percent from the same period last year. Distillate fuel product supplied has averaged about 3.7 million barrels per day over the last four weeks, down by 1.3 percent from the same period last year. Jet fuel product supplied is 4.5 percent lower over the last four weeks compared to the same four-week period last year.


WPSR ;
consumption down from 8620 last year to 8038 this one. (last 4 week average)

pdf charts; http://ir.eia.gov/wpsr/overview.pdf

 

ASPO-USA VP Tad Patzek to Debate Former Shell CEO on Possible 2012 Oil Crisis
By ASPO-USA • on February 13, 2012

February 14, 2012 ~ University of Wisconsin - Madison

Gasoline will hit $5 per gallon this year predicts John Hofmeister, former president of Shell Oil Company, the U.S. subsidiary of Royal Dutch Shell. He points to rising demand by developing countries, especially China and India, and says that the recent increase in U.S. oil supply rates and decrease in demand is not enough to offset global trends, and that prices will continue to creep upward, unless there are major changes in public policy to substantially increase domestic U.S. supply.

Gasoline prices could suddenly spike even higher, and though increases in U.S. domestic supply may be important, no realistic U.S. increase will offset declining yields from other nations, according to Professor Tadeusz Patzek, chair of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin and Vice-President of the ASPO-USA Board of Directors. He highlights that declining output from most oil-exporting nations over the past decade, in the face of rising global demand, is likely to create a lasting drop-off in global availability of oil-spelling serious consequences for all oil-importing nations, including the United States.

Regardless of who is right, this issue needs to be examined with seriousness and urgency, which has been the driving motivation behind the collaboration of multiple University of Wisconsin and local Madison groups that are co-sponsoring this event.

read more; http://www.aspousa.org/index.php/2012/02/debate-on-world-oil-supply/

 

demand down = prices up

perfect

i was doubtful about the US gasoline demand-drop reports. but these other data points seem to verify.

 

For the first time in more than 30 years, the US exports more fuel than it imports as pump prices rise.

http://online.wsj.com/article/APf917509ee61344a38638e2c08bc47090.html

:s13:

 

Petroleum = Black gold...

We are irretrievably hooked on it, like a junkie needs his smack...

It is the foundation of all industrial machinery, virtually all agriculture, all transportation, all manufactured goods, all the conveniences of life the great majority of Americans take for granted...

It is the irretrievable foundation of our modern economy, and we are trapped in a cycle of dependence upon it.

Is this not why we, presumably aided by the Zionists, fought for control of the richest oil producing region sin the world, the Mideast, why the Neocons and their predecessors fought, scrabbled and killed for control of of this region of the world...

The final lynchpin of the oil based economy seems to be in place, war with Iran...

Releasing that lynchpin will cause a dramatic price in the cost of oil, resulting in a dramatic increase in the price of oil, causing a dramatic increase in the price of cost of living, food, manufactured goods, transport, and possibly worse with the advent of nuclear devastation...

Who seems to be pushing us to do this?

How did we become trapped in this cycle of dependence?

Who is behind the Federal Reserve?

Who owns and runs the media that propagandizes this clusterpuck of continued war, aggression, and a death based economy...

Who is behind the banks that steal from us daily...

Who is behind the UCC, and the administrative courts that steal from us daily...

Who is behind the public fool system that makes willing slaves of us all...

It's time we took our nation back...

 

Most folks think Bill Gates found a gold mine with 'software' vs 'hardware',


but his business model pales in comparison to oil's...

 

We are post Peak Oil already, since 2005. Few people realize it and among the few who do realize this they are mostly in denial.

But that's reality. Peak Oil was on Labor Day of Year 2005. We are now in the phase of permanent global oil supply decline.

Post Peak Oil, it is impossible for the global total oil demand to increase, regardless of the shape of the economy. If demand from one country increases, demand from another country must necessarily decrease.

The US has been relying less on foreign oil, thanks to domestic oil production boost and demand weakening in the past few years. The country yielded about 2M barrels per day oil to other needy countries in the past 4 years. And China eat up that much extra supply in the past 4 years, from increased increased demand and increased need to import foreign oil.

And we have not even talked about demand increase from India or Brazil yet.

The world has passed Peak Oil. That is the reality.

 

I tend to agree with you, although with some modification. I think it is possible to increase production from here, so that technically the "peak" may have not yet been reached. However, with the additional costs incurred (tar sands, deep water drilling in Brazil, etc.) the price of oil will be much, much higher, thereby putting a definite cap on economic growth.

We are definitely past peak cheap oil.

 

The fuel surcharges from trucking companies are out of sight. I've got freight in transit right now with a fuel surcharge of $152.89 on a base charge of $522.31 - it puts the bite on.

 

I think the US is ramping internal development in oil because the collapse is written on the wall. If the US dollar won't buy goods abroad, oil may. Alternately, oil can be used to rebuild the US or at least slow/limit the decline.

As to peak oil, most assuredly yes. Nicole Foss from Automatic Earth makes a good point for the skeptics. Even if oil output could grow, it would require investment capital which this starved economy isn't supplying. I don't personally think the high risk oil they've been extracting can leave any question. Deep-water drilling continues despite it's damage and the MSM created a huge blitz when it was thought that fracking could sustain the US energy needs. So out of one side of their mouth they shout that there's no problem, yet out of the other they celebrate the solutions. Doublespeak. Carbon reduction is more doublespeak. They need to shout about the oil collapse, but can't because they know the panic that would result.

Peak oil is an interesting beast. If you prepare and didn't need to, you hedge inflation. If you prepare and did need to, you do much better. I don't really see a downside to limiting one's personal exposure to oil shock.

 

the electric demand drop makes sense

houses going dark as people stack up in fewer houses

but the fuels..

peak oil, not buying it. not as long as suppression is front and center. colorado? east and west coasts of US? alaska? iraq? bp huge gusher from DEEP below dinosaur bones..

no way

 

saw two items on bloomberg today that relate to this thread

goodyear tire sales down, but revenue up because of big increase in price

coal shipments down

 

I don't by into that one bit. I believe there is more oil that anyone believers but its controlled like they do with diamonds.

 

Oil prices are up in FRNs. Oil prices have never been cheaper if measured in 90% silver US Currency, about 15 cents a gallon for gasoline.
Understand what is really going on - the FRN is buying less oil. As the FRN becomes more worthless, oil prices in relationship will continue to rise, counteracting any reduction in demand. Consider it an indirect tax by the FedReserve on energy - they print more digits, you have to spend more. All imported goods that I purchase that don't have a huge mark up [like computer parts and other electronics] have skyrocketed in price, things like coffee for example. The instant coffee I paid about $4.50 for at wallmart in 2009 is now just shy of $9. The Federal Reserve is doing this.

 

Beat me to it. Welcome to the world of ZIRP! :s13:

 

Peak oil has little to do with how much oil is out there. It relates to how much can be economically extracted. As we have gone for light sweet crude first, then through the easy finds, and now to the hard to reach and sour gas fields, we've been working our way to a tipping point. We've skimmed off all the cream and quality, and as a result we've gone from an EROI (Energy returned on energy invested) of 20:1 at the turn of the last century to about 3:1 in today's world. As this ratio continues down, we lose the surplus which provides the ability to power our complex society. There will be lots of oil left in the ground when the EROI becomes incapable of running our complex society. That won't matter. It's the net energy surplus we live on, and it's that surplus we see diminishing. Peak oil is the peak of the surplus not peak production.

There was a comment about oil's origin. I don't think there are many on GIM who still believe oil is compressed fossil juice. Let's leave that argument behind and speak as intellectuals. The issue at hand is that we are using oil at a rate faster than natural processes replenish it. If we were not, the EROI should level off instead of falling consistently. There would be no need for risky deepwater drilling, nor for the fracking that damages the water tables. As we continue down this path, we will no doubt continue to find and tap more oil resources, but at what cost and what return? At what point will the EROI become insufficient? When society will no longer run off the surplus, we are done.

There is much research on the economic implications of shrinking EROI, the rate at which new finds are occurring, and the mathematical implications of exponential growth models. You will find much at www.theautomaticearth.org and www.chrismartenson.com to start. I'm not telling you that you're wrong, but if you're so certain, educate yourself on the contrary positions and post a counter-argument. I've invested over a thousand hours learning about this. Initially, your opinion was mine too. After all of my research and discovery, I can no longer deny the presence of a peak and probability we are at or have passed it.

 

the bitch's move slow.. but the population will fall w/o conventional nukes.

 

http://www.calculatedriskblog.com/2012/02/ceridian-ucla-diesel-fuel-index.html

The Ceridian-UCLA Pulse of Commerce Index® (PCI®), issued today by the UCLA Anderson School of Management and Ceridian Corporation, fell 1.7 percent in January following the 0.4 percent decrease in December. January’s data places the PCI 2.2 percent below year-ago levels with essentially no growth in the year-and-a-half since the summer of 2010.

“It seems difficult to square the behavior of the PCI with the evident improvement in a number of economic indicators, most notably the increase in payroll jobs and the decrease in initial claims for unemployment,” said Ed Leamer, chief economist for the Ceridian-UCLA Pulse of Commerce Index and Director of the UCLA Anderson Forecast. “The PCI also seems out-of-sync with Industrial Production and with Real Retail Sales, which continue to grow in a healthy manner while the PCI is stalled out.”

The year-over-year changes in the PCI, however, make it look very accurate – the three-month moving average peaked at 8 percent in July 2010 and has fallen steadily to essentially zero percent in January. “The PCI year-over-year peak in 2010 and the deterioration throughout 2011 have correctly anticipated the same movement of Industrial Production, Total Business Real Inventories, and Real Retail Sales. The weakness in the PCI is suggesting either further weakness in these indicators or a big gain in trucking in February, March and April,” said Leamer.

This index has been weaker than other measures of transportation such as the ATA trucking index or the AAR rail traffic report. In the full report, Dr. Leamer looks at several possible explanations for the divergence - a shift to rail traffic, the difference between diesel fuel transaction (up for the year) and gallons (down for the year), and possible efficiency due to the high price of diesel fuel. There isn't a clear explanation.

Note: This index does appear to track Industrial Production over time (with plenty of noise). From Ceridian: "Based on the latest PCI data, the forecast for January Industrial Production is a 0.44 percent decrease when the government estimate is released on February 15."

 

Better ramp up the Green Booga Booga, dont want the Electric Co's losing money :rolleyes:

 

I highly recommend...

 

The price of oil will become much much higher is a repeated assertion since I first learned about Peak Oil.

On a more careful examination, price of oil doesn't necessarily go a lot higher just because oil priduction peaked. Just remember, oil, or more generally energy, is the driving force of ALL economic activities, directly and indirectly. So if oil price goes a lot higher, so does everything else. The relative price of oil may not go higher compared with other stuff.

For example a gallon of gasoline will buy you 2 or 3 loaf of breads. Way post Peak Oil, the same is still probably true.

So ultimately the price of oil or everything is really just a function of currency supply: how much money they print. Money printing, and money printing only, is the only thing that ultimately decides a currency's value, and prices of everything.

But then it probably will be the case that there will be a race to print more money, in order to get a better share of oil and other basic commodities with limited supply.