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Guest Post: Why Is Gasoline Consumption Tanking?
Submitted by Charles Hugh Smith from Of Two Minds
Why Is Gasoline Consumption Tanking?
Gasoline deliveries reflect recession and growth. The recent drop in retail gasoline deliveries is signalling a sharp contraction ahead.
Mish recently posted some intriguing charts depicting a significant decline in gasoline consumption. Then correspondent Joe R. forwarded me this stunning chart of gasoline retail deliveries, from the U.S. Energy Information Administration: (EIA)
As Joe noted, this data is interesting because it is un-manipulated, that is, it is not "seasonally adjusted" or run through some black-box modifications like so much other government data.
Retail gasoline deliveries, already well below 1980 levels, have absolutely fallen off a cliff. Is the plunge inventory-related, i.e. are storage facilities so full that retailers are simply putting off deliveries?
Though I don't have data on hand to support this, I know from one of my correspondents who is in the gasoline distribution/delivery business that gasoline is very much a "just in time" commodity: gas stations are often close to running out of fuel when they get a delivery. Stations aren't holding huge quantities of surplus gasoline; that's not how the business works.
Given the absence of "extra storage" in gas stations (and the fact that the number of gas stations has fallen dramatically since 1980), it is reasonable to conclude that retail delivery is largely a function of demand, i.e. gasoline consumption.
Even if you dismiss the recent plunge as an outlier, the declines in retail gasoline deliveries are mind-boggling. If you look at the data from 1983 to 2011 on the link above, you will note that delivery declines align with recessions.
For example, deliveries jumped from 50.1 million gallons per day (MGD) in November 1983, when the nation was emerging from the deepest postwar recession then on record, to 58 MGD the following November (1984).
Deliveries steadily rose to a peak of 67.1 MGD in July 1998, declined marginally in the 2001-2 recession and then surged to 66.8 MGD in August 2003. If we just look at one month--say November--then we see that deliveries remained in a remarkably consistent channel from 1994 to 2008, between 54 MGD and 63 MGD, with the higher numbers occuring in the "peak bubble years" of 1998 and 2003.
In 2010, gasoline deliveries declined to the low 40s--literally falling off the charts. In November 1983, deliveries were 51.1 MGD; in November 2010, they were 42.8 MGD, and in November 2011 they were 30.9 MGD.
Does this reflect higher fuel efficiencies in the U.S. vehicle fleet? To examine fuel efficiency and other macro-trends, I assembled some charts of fuel efficiency (courtesy of the Early Warning blog) and a graph of employment, a commonly used proxy for economic activity/growth.
Let's start with some basic data about population and vehicles. There are 254 million passenger vehicles registered in the U.S. Some percentage of these are classic cars and other vehicles that aren't driven much, but nonetheless the number of vehicles that are in regular use is large.
U.S. population in 1983 was approximately 234 million. The U.S. Census Bureau estimates the current population at 313 million.
Vehicle sales declined from a record 17.4 million in 2000 to 11.5 million in 2010.
People are driving less: The Road... Less Traveled: An Analysis of Vehicle Miles Traveled Trends in the U.S.. (2008)
Driving, as measured by national Vehicle Miles Traveled (VMT), began to plateau as far back as 2004 and dropped in 2007 for the first time since 1980. Per capita driving followed a similar pattern, with flat-lining growth after 2000 and falling rates since 2005. These recent declines in driving predated the steady hikes in gas prices during 2007 and 2008. Moreover, the recent drops in VMT (90 billion miles) and VMT per capita (388 miles) are the largest annualized drops since World War II.
Here are two charts of U.S. employment which show two periods of strong expansion: in the late 1990s and in 2002-08.
If the number of jobs were correlated to gasoline deliveries, then we would expect deliveries to be close to those registered in 2003 and 1999, since the number of jobs has declined to the levels of those years.
Instead, we find deliveries are dramatically lower:
November 1999: 59 MGD
November 2003: 63.8 MGD
November 2010: 42.8 MGD
Once again, this is not an outlier: deliveries for all of 2010 were between 42 and 46 MGD, compared to deliveries in the high 50s/mid 60s in 1999 and 2003.
There are all kinds of other things that influence the number of miles driven, but there is little evidence that any one factor can account for a 47% drop in retail gasoline deliveries. For example, it is well-known that the U.S. economy has shifted to a digital, service economy in the past 30 years, and since more people can "consume" (via shopping at amazon.com, etc.) and "produce" (work from home) without driving, then it makes sense that people are driving less.
But if we examine the data, it's difficult to attribute the massive recent drops to people ordering stuff online or working from home more. After all, people were working from home and ordering stuff online in 2003, when gas deliveries reached 63 MGD, and in November 2006, when deliveries were 58.8 MGD.
Deliveries in November 2011 were 30.9 MGD, a staggering 47% decline.
What about fuel efficiency? here are two charts from the Early Warning blog. They show a significant increase in the 1980s, but only modest improvement through the 1990s and 2000s.
If we use the same year as in the employment analysis, 1999, we see there was a 6% rise in efficiency from 1999 to 2010. This would suggest 6% of the decline in gasoline deliveries can be attributed to increased efficiency. But what about the other 40% of the decline? That cannot be attributed to higher efficiency.
I've marked up the first chart to show the secular trends in efficiency and employment.
There are no data-supported broad-based drivers for dramatically lower gasoline consumption other than austerity and lower economic activity. The code-word for "austerity and lower economic activity" that is verboten in the Mainstream Media is "recession." Indeed, if you examine the EIA data, the only causal factor that has backing in the data is recession--or if you prefer, austerity and lower economic activity.
Then there is the price of fuel. People have to go to work, pick up the kids, get their meds, etc., and few urban centers in the U.S. have mass transit systems that are up to the task of replacing autos. So most Americans have what we might call non-discretionary driving. But as the price of fuel rises, people find ways to lower their discretionary driving by combining trips, shopping less often, shortening or eliminating vacations, etc. Enterprises reduce costly business travel with teleconferences and other digital technologies.
Data supports the notion that high oil prices lead to recession. For example, Chris Martenson recently made a compelling case for this in Why Our Currency Will Fail ("Note that all of the six prior recessions were preceded by a spike in oil prices.")
Household income doesn't rise just because oil is climbing in cost, and so the extra money spent on fuel is diverted from other consumption or saving (capital accumulation). Higher fuel costs lower household capital formation and reduce consumption/economic activity.
Oil has been elevated for months, kissing $100 and rarely dipping below $90/barrel. Do higher oil costs explain the decline in gasoline consumption? Once again, they undoubtedly influence consumption, but that cannot explain the 40% drop in consumption. After all, when oil spiked in 2008 to $140/barrel, deliveries only dropped by a few million gallons: from 58.8 MGD in July 2007, before the spike, to 54.8 MGD at the point of maximum pain in July 2008.
The cost of oil has declined sharply from mid-2008, yet consumption has tanked from 54.8 MGD in July 2008 to 42.4 MGD in July 2011. That's a hefty 21% decline.
What other plausible explanation is there for the decline from 42.4 MGD in July 2011 to 30.9 MGD in November 2011 other than a dramatic decline in discretionary driving? That 27% drop in a few months in unprecedented, except in times of war or sharp economic contraction, i.e. recession.
If we stipulate that vehicles and fuel consumption are essential proxies for the U.S. economy, then we can expect a steep decline in economic activity to register in other metrics within the next few months.
Such a sharp drop would of course be "unexpected" given the positive employment data of the past few months. But as the data above shows, employment isn't tightly correlated to gasoline consumption: gasoline consumption reflects recession and growth.
In other words, look out below.
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LNG yields 65% BTU per gallon compared to gasoline.
You can expect about 65% fuel mileage compared to gasoline.
If LNG was half the cost of gasoline you're coming out slightly ahead ...if you can live with the engine producing 65% of the power it produces using gasoline.
But your numbers are 33% - 40%. Curious why it's that much lower.
One reason might be fuel loss with LNG. LNG is liquid methane which boils at -260 degrees F, so it has to be stored in heavily insulated cryogenic tanks to keep pressure down, similar to liquid oxygen (although liquid oxygen boils at -180 degrees F, 80 degrees higher than LNG, therefore not requiring as much cryogenic insulation).
An LNG tank on a vehicle parked and not running will "spout off" every so often through the pressure relief valve, releasing pressure buildup in the tank, losing some of your fuel. The warmer it is outside the more "spouting off" you'll notice.
That's why many vehicles (like forklifts) use LPG (Propane) rather than LNG (Liquid Natural Gas). Propane has moderate pressure at room temp, so it doesn't have to be stored in heavily insulated cryogenic tanks, and won't "spout off" releasing pressure (and fuel) like LNG does.
Propane also has 74% BTU content compared to gasoline, 9% more than LNG.
But Propane is more expensive than gasoline around here. Last time I filled BBQ grill propane tanks it was $4.35 a gallon where gasoline is $3.35 a gallon.
So Propane isn't a viable alternative to gasoline either. It only has 74% of the energy of gasoline, and costs more.
If propane was $2.48 a gallon you'd come out even compared to gasoline at $3.35 a gallon when you consider propane's lower BTU content.
LNG would have to be $2.18 a gallon to come out even with gasoline at $3.35 a gallon.
But then you're not really coming out even since you're going to have fuel loss from pressure buildup and the tank "spouting off" occasionally ...more so in warm weather.
Storing natural gas (methane) at room temp requires heavy high pressure steel cylinders, again similar to oxygen, but methane requires higher pressure than oxygen to store the same quanity (cubic feet), or larger cylinder. You don't have fuel loss from pressure venting, but you have a large high pressure cylinder on the vehicle.
===================BINGO================== CHS..
This is the only indicator one needs to follow, to determine complete financial health of this country.
I love it when the lights come on.
This made my weekend.
Q: How do you know when to be a bull or a bear?
A: When fuel demand is high, you want to be a bull.
When fuel demand is low, you want to be a bear.
Happy motoring!
This is just an outlier...
Things are actually much much worse...
Laughing, now, Im laughing.
why is it such surprise?
DOES ANYBODY UNDERSTAND ECONOMICAL SITUATION IN USA? here is 2 simple facts.. :
#1 there are about 110+ mln private jobs in USA,and about 45+ MLN adults on food stamps.
so basically for each 2 working adults, we have 1 under/unemployed person who cant even make money to buy food..
SO IN THE BROADEST SENSE WE HAVE 30+ % unemployment..
alx
ps
dont get started about gov jobs, they wont last long... spending 10+% of GDP wont last 4ever..
borrowing 10%+ of GDP will last until it doesn't but while it does they will tell us how great things are even as they build their bomb shelters and stockpile food and ammo.
#1 there are about 110+ mln private jobs in USA,and about 45+ MLN adults on food stamps.
so basically for each 2 working adults, we have 1 under/unemployed person who cant even make money to buy food..
I'm not sure it's that GOOD--a lot of "employed" people work jobs paying $7-9/hr, which in many places, even full-time, is a low enough annual income to qualify for all sorts of benefits.
More people are riding bikes!
would be good and more walking instead of taking the car out for a 5 minute spin to shop.
You want to make some impact on health care costs in this hellhole, GET OUT OF YOUR CAR and WALK you lazy bums.
You have to be a fucking idiot or liar to claim people are still driving as much anymore. Period. All 8000 Chevy Volts (the ones which haven't caught on fire anyway) sold last year don't amount to shit.
People are not driving as much because they are unemployed.
Charles, right?
"Though I don't have data on hand to support this, I know------------------"
What plausible reason do you have for commenting on something that you have not looked at more closely, thought about more profoundly, or done your 'homework' on?
Back to school, dude----I can't make any money on wild speculation from the 'hysteria nation'.
I thought you knew something
thanks anyway om
Yes, go back to govt data. They've done their homework.
Obama will tell you it's because the manufacturers are already planning for the new requirement that cars get 35.5 miles per gallon by model year 2016.
I seem to recall quite a few refineries going offline during that period. Instead of a comparison with employment levels would it not be better to compare deliveries with price? If refiners tried to artificially jack up price levels and the consumer was having no part in that exploitation it would also explain the drop.
The Major's have jacked up the price at the pump to make up for lost volume; gogtta have that revenue, makes me sick.
Instead of spouting nonsense, why don't you learn how the oil industry actually works....
You might find that gas relative to diesel is about as cheap as it has ever been....
Discretionary use of gasoline is falling....
People are getting priced out of simply burning the stuff for the equivalent of joy rides...
let 'em ride donkey, that way the texting and crap will happen on something that has a brain.
as opposed to the thing performing the texting. Can an ass ride an ass?
Not being able to "joy ride" really upsets me. I have loved to get out and DRIVE ever since I got a license. I used to cruise A1A from Palm Beach to Ft. Lauderdale all the time as a kid. Then after moving to the mountains I just loved to drive the Blue Ridge Parkway and every dirt road I could find. God I love driving for fun. What a stress reliever.
The commodity traders have taken my fun. I hate them.
Drop some acid. Close your eyes and travel faster than light. Soon the roads will be shards of asphalt surrounded by mud or dust.
Asphalt is a child of petroleum. Concrete requires tremendous heat to manufacture. Dirt roads are enough for horse drawn wagons.
You make your own fun. If you ain't having fun, you ain't trying.
The last gasoline will be for wars, not civilians.
Obama is pushing mandates to make cars more fuel efficient.
+
Americans are now consuming less gasoline.
=
Winning!
Duh.
Well I have noticed that the two country minimarts I pass on my way in to work certainly have room at their pumps. Parking lots used to be full during drive time.
People are not buying anymore gas then they have to, and they certainly are not buying impulse stuff inside.
Well, except for the idiot tax (lottery).
pods
Costco has a gas line out the parking lot most mornings here in SoCal
I have looked into filling up at a local bulk store. A bit out of my way, and I run 38-40 mpg over the life of my tank, so it is not necessary right now.
Last time I passed it, there were cars everywhere. Not 70's gas lines, but it was full.
When regular (15% EtOH) hits $4 per gallon, things will start to get dicey in the USSA.
Hell, Cali it has to be near that already?
pods
Safeway gas stations do too. With that grocery credit/discount system
Commutes are less congested as well. Lotsa unemployed and self-employed-at-home types.
On the plus side, it makes for less wrecks on the road.
I thought the idiot tax was re-election?
@310 million, powerball looks awful enticing. Might as well throw $2 at a chance to have all the physical assets one could ever want.
Powerball tickets, bitchez.
Looks great, until you realize that your chances of winning are the same as being hit by lighning while being eaten by a shark.
No: Your chances of winning with a ticket are as good as winning without a ticket.
Um...people are broke? Maybe that explains it?
Are you sure that data is accurate? Perhaps its because of Obama Cash. Ever since he was elected, we didn't have to worry about buying our own gasoline apparently. He's paying for it, right???
Because everyone is Long ( VISA & Mastercard!)
Looks like Obamas natural gas act has finally taken hold. <sarc>
I think stolen oil from Libya is not included in these figures. Things are moving under the table.
Crude futures are traded in the dark by non end users. Pricing in the 21st century is no longer related to the 20th century rules of supply and demand or even currency movements. Thank the Commodity Futures Modernization Act 2000, signed by Clinton on the way out the WH door. Brooksley Born was a prophet.
The cost of oil has not declined sharply since mid 2008. The average annual price of oil was $100/barrel in 2008 and around $115/barrel (Brent price) in 2011.
It happens when you are in a DEPRESSION......... i'm just sayin'
Electricity consumption is down, too. Peaked in 2007 I think.
No business. Pretty simple.
it's an I-gas economy ... just ask Cramer.
In other words, look out below.
Look out below for what exactly? In my area, regular unleaded is up 10 cents for the week to $3.87 a gallon.
You need to move to RoboVille, they give the shit away for free there...
I'll second that comment HULK! +!
Nobody's going to work.
Everybody needs to quit driving, stop feeding the machine your high productivty/gasoline consumption 20 minute commutes. Time to go Galt Bitches.
Need to add in the 24000 gal/day (energy equivalent) of ethanol maybe?
Need to add in the 24000 gal/day (energy equivalent) of ethanol maybe?
So true! It's all peanuts and corn.<>
Gasoline consumption decline parallels fewer "necklacing" parties ! Monedas 2012 Stonings are the green alternative to necklacing !
The chart is for refinery deliveries. If I'm not mistaken there has been a number of refinery closures recently. Thats more of a chicken or an egg problem though. The refinery closings were really, really recent, so the chart could be more a reflection of WHY the refineries on the East Coast closed as opposed to the effect OF them closing. Just a thought though.
On a more macroscopic, global picture, oil production has been stagnant since 2005. As a disclaimer, some would argue that global production is at new record highs of late, bucking the stagnant trend. However, this is merely semantics since the "increase" in production is due to two phenomena. First, double counting supplies i.e. using large amounts of oil in plowing, sowing, fertilizing, spraying, and harvesting crops for creating ethanol (even the herbicides, pesticides, and fungicides are PETROchemicals, so more double counting there). So you count the produced oil, then you burn it to produce ethanol, and you count both supplies in the data... clever indeed. Second, global "liquid fuel supplies" are counted in VOLUME instead of the more apt ENERGY CONTENT. A gallon of ethanol or LNG contains less energy per gallon than oil products, so the VOLUME numbers are higher, but the ENERGY CONTENT isn't. These two gimmicks mislead people to think that our liquid fuels problem is abatting (even though the markets have been indicating otherwise for quite some time).
Of course, there is a third issue here. Energy Returned On Energy Invested (EROEI) is the most parsimonious methodology for investigating our liquid fuel dilemma. Those who already know this don't need me to explain. Those who don't get it will likely continue to not get it, but that buys me more time to prepare.
My preparations aren't food and water stores for Armageddon because stores of food and water aren't sustainable. I moved to Florida from Minnesota, saved to buy a house (way, way cheap down here), I live just a few miles from St. Petersburg (allowing me to bike anywhere and everywhere), my new fruit trees (persimmon, feijoa, cherry of the rio grande, avacado, jaboticaba, grapefruit, ornage, kumquat, mango, fig, pomegranate, jujube, blueberry, white sapote, cattley guava, and grapes) will be bearing a year round harvest in 3 years, and my garden is up and running now, water harvesting system will be in by June. So I say, let others stick there head in the sand as to the imminent decline of global liquid fuel supplies (in terms of EROEI) because the longer it takes the masses to realize whats happening (the end of sustained economic growth, which renders debt impossible to pay off) the longer I have to get nestled.
There's always the possibility of people ransacking my crops; I do live in the middle of a large city afterall, but having canines, strong relationships with neighbors, and an assortment of plants that are either prickly or deadly if comsumed the wrong way should go a long way to deterring that. Besides I do have a year of Nitro-paks just in case, and a lake in my backyard (and Big Berkey water filter).
Another example of someone who is figuring stuff out...
Hell, Florida will be around for a while yet...
I also live 50 ft above sea level, so the risk of flood/hurricane damage is minimized. Location, location, location.
Although, if your referring to climate change, then you must remember that the global climate system is inherently unpredictable. More energy is being trapped inside our atmosphere, but the way the planet distributes that energy is a completely separate story. The oceans have been absorbing a large portion of the accumulating thermal energy (the oceans are really, really big!). Unfortunately, for shell creating sea life the ocean's have also absorbed a lot of CO2, acidifying the oceans, and preventing shell formation. A last thought, if the temperatures at the poles rise too much too fast (temps at the poles have risen much faster than, say, the equator), then the influx of fresh water could halt the transatlantic current. This would significantly reduce average temperatures in Greenland, the Artic, and all of Europe. It would also keep a lot of thermal energy amassed at the equator, so you'd have less sea level rise, but even more tropical weather where I live. Oh, and much stronger and more frequent hurricanes.
I agree that the noise in the climate, which we call weather, is a real bitch to predict...
I'll leave you with this gem from 1975:
Wallace Broecker
Compare that prediction to Easterbrook, Lindzen, or just about any other "skeptic"
I don't know if you've heard of a guy called Professor Munasinghe, he was VC of Climate change group and he personally got the Nobel along with Al Gore. (Three people in all).
His work on climate change modelling is worth checking. I don't unforunately have reference. But its in the IPCC logs :
Intergovernmental Panel on Climate Change - Wikipedia, the free encyclopedia
Until it's underwater as global warming takes off
/hopefully sarc
Takes off?? Ok. whatever...
A degree here and a degree there and suddenly you talkng about *real* weather....
I used to weather the storm
now I'm stormed about the weather
Touche - I used global warming because this winter has had virtually no snow here in western NY.
Usually we have like 60" by now, this year I think we're around 15"
I'll take no snow uphere though, maybe someday those folks who moved south for better weather will move back to NY when it's 60 in January (just kidding, the taxes still suck and there is no frickin' Chic Fil A up here)
nice post.
Ps. can I come live with you?
Tampa - St. Pete in the summer without air conditioning is not pleasant.
Northern Michigan in the winter without heat is not pleasant.
One can burn stuff like wood and FRNs to get warmer. What does one burn to get cooler? Electricity.
That doesn't mean I'm advocating Northern Michigan (or Minnesota) for anything except as a possible location for Purgatory. It isn't very pleasant in either the summer or the winter. Hey, I have and idea. Maybe you could trap the mosquitos and burn them for heat in the winter.
Some good advice here.
http://ferfal.blogspot.com/
http://thinkingaboot.blogspot.com/2011/10/not-survivalist.html
I think that it is irrevelant to count gasoline.
count smokes and lotto tix instead.
It's rather odd that the author uses refinery deliveries to quantify gasoline consumption by US drivers. The same EIA that reports refinery data also reports consumption data, and it is possible that a seasonal spike in imports could explain these peculiar data. In the last decade there has been a lot of trans-Atlantic trade in refined products, so this seemed a reasonable explanation.
However, the data do not support that hypothesis. Gasoline imports have also declined in the last three years, and nothing extraordinary appears in the recent data. Indeed, retail consumption of gasoline has dropped in parallel to refinery deliveries.
See http://www.eia.gov/pub/oil_gas/petroleum/data_publications/petroleum_mar....
IOW, the author is on to something here.
US refineries are producing more refined product for export than domestic consumption. If refineries are imporint less oil, then demand isn't just cratering in the USA. Oil imports to China may be hitting records, but that is not due to consumption, that is due to hoarding stockpiles of crude for protection.
It is more complex than that...
1) Imports of crude are down
2) Refineries on the East Coast that relied upon lighter sweeter crude are closing
3) Net exports, i.e. oil on the market has been in consistent decline since 2005
4) The ratio of gas/diesel prices is close to all time lows..
5) US oil prices are skewed by a rising supply of landlocked oil... i.e. Tar Sands and Bakken..
So is world demand falling faster than available supply or are they in falling in tandem? There is no reliable data series that you can point to and say, Aha! That's it!
your last sentence is the conundrum...but isn't that the very phenomenon where wise ones warned us?
They are linked inversley with a few months delay. Oil prices are the new federal funds rate. Expect the world economy to bounce against an oil price ceiling of maybe $120 until it can be structrually reformed around more effecient usage (will take decades) or WWIII obliterates enough to force a restructuring.
I think you are correct re: the new Fed funds rate....
How it exactly plays out is anyones guess, but it is time limit elimination match....
That PDF mentions the EIA-782 survey system, and I did a quick google. I came across this pdf:
http://www.eia.gov/survey/form/eia_782c/list782c.pdf
Which says: "The purpose of the EIA-782C survey is to measure sales of selected petroleum products in the states where they are consumed; that is, the survey attempts to estimate demand at the state level. In order to avoid double-counting, the survey has been designed so that respondents, consisting of "prime suppliers," report only sales to local distributors, retailers, and end-users. Therefore, the Exclusionary List includes all other company classes including refiners, gas plant operators, traders, large inter-state distributors, and exporters." and goes on to list very many companies that fall into the exclusionary list.
Perhaps we are not getting a clean read on actual total retail sales?
Why? High prices and low wages.
It's all those awesome Chevy Volts that have been selling faster crack in Compton... <end sarcasm>
Funny. You would think energy in general would be sky rocketing just to support all the effort put into the millions of useless car commercials. Who are they trying to sell to? Good luck with that.
On another topic that may dovetail with the lower useage of gasoline, is the consumer credit report just out- total use of credit cards is UP but grand total SPENDING is not. It seems like people are running out of cash money.
See Guest Post: Consumer Credit And The American Conundrumhttp://www.zerohedge.com/news/guest-post-consumer-credit-and-american-conundrum
no one need think too hard on this the economy is in the shitter. the FRN's are devalued as the FED has done more of it's dirty work on inflation.
Enjoy your vacation in Germany
unleaded 95 octane fuel = $8.13/gal
All the SUV's people bought with home equity loans are starting to leave the road.
My SUV sits in the garage these days. As soon as those diesel VW Bluemotion vehicles that get over 70 MPG are allowed into the US I will have a new second vehicle.
Don't hold your breath. US emission regs focus on different stuff than the euro ones. I just found TopGear on netflix back to 2003......everyone, even ford, had awesome little diesels in the euro market even back then. They don't sell here because they can't. When VW paused TDI imports in 06 or 07 because california regs while selling the shit out of them everywhere else, it was because the US regulations moved faster than they could design around them. They'll have to re-tune everything to get their stuff in here, so whats getting 70mpg in Europe will get 50 or less here. Basically back to where they were in the 80s.
For RopeADope:
Interesting article here about US versus EU diesel emissions and making EU cars meet US standards. The final paragraph predicts it is unlikely that the smaller super efficient diesels will make it to the US because of fuel price differentials.
http://www.popularmechanics.com/cars/alternative-fuel/diesel/4330313
... and it's about time!
Gasoline use in the US is mostly discretionary. I don't see the surprise that it has dropped off as our economy has just left the interstate to drop into the grand canyon. Remember how Route 66 became a glittering strip, then an ancient ruin.
There are less vehicles on the road today than at the end of 2008.Car sales were running 16-16.5 units a year before the Great Recession/depression and for the last three years running about 11M units a year.
The junk rate was running about 14m-14.5m units per year before the GR and running about 13.5m-14m units per year.Couple that with better mpg in the newer plus the GR and you have reduced gasoline usage.
Than why in the fuck is gasoline prices increasing even though the usage is decreasing.The American Consumer is getting Fuck Again.
Wow... you were doing so well until the end...
Could it be that the US no longer determines the marginal demand for oil???
Could it be that growth in Chindian demand has outstripped any decline in the US??
you mean 300 million people won't always control a 7 billion person marketplace?...but we're white...and we have ten thousand nukes... and eleven thousand Elvis Impersonators
One Chinese citizenism ring to bind them all.
Yup.
And, China/India are mechanizing their agriculture (irrigation, tillage, planting, harvesting).
Those machines can greatly increase yield but also need a lot of oil.
that's a really good point. I love our self defeating methods. Expand the "green" revolution to the third world which only: (1) makes oil that more unaffordable, (2) poisons more food, (3) ruins more land, (4) kills more bees, (5) which pollinates less crops, (6) puts more farmers in debt, and in the end (7) makes more people hungry.
When you honestly evaluate the true costs against the true return, organic, multi-crop, seven layer permaculture methods are hands down, more productive... by magnitudes.
And this is without calculating the true health costs of our current nutrition which probably equals all other costs nor the true cost of shipping food all over the world which once again lowers nutrition and oil supply.
We are insane
But if you accounted for all costs there would be no such thing as gdp growth. Then what would the point of the Fed be?
Onomatopoeia is a word that sounds like what it is i.e. fart, fuck, suck ! A Monedapoeia is a word that looks like what it is i.e. para"ll"el (pair of l's) ! Monedas 2012 Lessons in literacy for the unwashed Fiati !
I am reading elsewhere in the near future cars will communicate with one another... I suppose that in order to get really good data on this very subject digital odometer readings could be required to be uploaded somehow.
http://www.technologyreview.com/communications/38525/
This could just be an impact from 5-6 million job losses including people who have given up looking consuming less or no fuel. A 2 gallon reduction per day from these folks would explain the gap. Am I missing anything here?
Its all those retired boomers living in gated communities driving golf carts around....
Just think, almost every one of these old farts that retires takes another gas guzzling Buick off the road...
It is time to include fuel in food stemps.
iThink i just figured it out! APPLE ! The Money Magnet, for details see their most recent earnings report.
Oil demand may have fallen in the US, but supply has also never been lower. US production peaked in '71 (same year Nixon close the gold window, ironic, no?) and has been falling ever since. West Texas has increased production, and so has Frakking, but it hasn't led to a new peak. And say what you will about "tapping the Rockies", if you want to destroy a pristine mountain range, you are insane.
As far as our neighbors, Mexico and Canada are struggling to produce as well. Canterell is running dry, and the EROEI on tar sands is horrible (nevermind the fact that, like tapping the Rockies, we are wasting a natural aquifir up there, and water>oil in the long run).
Yes, monetary policy plays a role in the price. Off the cuff prices would be half of what they are if we had sound policy, but still, oil is being drained from the earth, and although there will never be a last drop, what matters now is the price one is willing to pay for it.
When it costs $3.50 to drive 30 miles, people start figuring out it may cost more to drive out to get dinner than the meal itself. Everything gets cut back. People may not take a job because the commute may cost more than the raise they will get. My office is 38 miles away. I put $12 in my car every moring and it is gone when I get home. $250-300 a month for gasoline is a pretty big expense. My wife was offered a job that paid $1.50 an hour more but had a much longer commute. I told her not to take it because the extra cost in gas and the time wasted driving wasn't worth the extra $1.50 over the job 5 minutes away.
I see businesses advertising under 10 dollar an hour jobs IN THE MIDDLE OF FUCKEN NOWHERE. And wondering why nobody wants to take them. Gas, reliable transportation and insurance on it would suck most of the paycheck.
Because hybrid's are soo fukin awesome! Pretty soon, we won't need any gas!
Maybe if your grid is powered by hydro, but some energy will be needed to maintain the dam.
Been writing about this topic here for a while. The data is clear: it's not fuel efficiency, it's vehicle miles driven. DOT and AAA have documented for over a year that miles driven has dropped, and dropped big in the last 3-4 months.
Gasoline prices were at monthly all time records for Nov, Dec 2011. IE: records for Nov and Dec.
Blame global demand for refined products. Also blame the increased cost of crude production through frakkin, oil sands extraction, deepwater offshore and other new methods. And finally, cost of refining lower crude grades. Even OPEC's costs have risen and they too need to tap unconventional sources.
I can't drive 55....
Early reports on "necklacing" refered to a "used tire soaked in gasoline was hung around the neck of the victim and set afire" ! Improvements in technique developed in South Africa due to economic realities led to pouring only a pint of gasoline into the tire after it was hung around the victim's neck then setting it afire ! A net savings of 5 gallons of petrol per party ! Monedas 2012 Proper "necklacing" etiquette requires a whitewall tire if the honored guest is white !
Hot and tire d. Two uncomfortable situations combined.
Haven't owned a car since 2007, by choice. Living in the city, am able to take the bus to work. Moved even closer after a freak snow storm a couple years ago, can now walk in if necessary. Invest the savings in PMs, mining shares.
Better than pouring money into a sinkhole the minute you sign to buy/lease the thing.
Why sheep in this country that could avoid this wealth draining trap don't do so is one of the greatest scams pulled over the sheep and their dogs in the last 100 years.
Invest your money in something that has a shot to maintain.
Then when they end up broke and busted they wonder where did all the MONEY go?
Because most people would rather waste their money on a car and fuel than ride the bus with the other people who ride the bus? Google "Epic Beard Man" and ask yourself why that video became so popular.
I have a hunch that if public transportation prices rose enough to price out the undesireables it would be more utilized.
those issues led to the suburbanization of the country as well...think of all the gas wasted having to flee that
Of course due to the invisible hand gasoline prices have been plummenting.
In the south, most people are anti-mass transit.....that is, until gas prices spike.
These cheap hillbillies climb into anything that moves to save a few $ on gas.
The new light rail in Charlotte was way underutilized previously.
Then gas prices spiked.
Every Bubba, Jamie, and Claude was on that train - it looked like a scene from a japanese metroline.
Unreal.
More direct-deposits now of welfare and unemployment checks. Less consumption (70% of US economy) means less shopping and driving.
Wait until the post office cuts delivery days. Less fuel.
I don't know about prior 2007 or so, but since then I think people are buying more energy efficient vehicles.
I found this interesting bit in the article while I was reading it
What about fuel efficiency? here are two charts from the Early Warning blog. They show a significant increase in the 1980s, but only modest improvement through the 1990s and 2000s.
If we use the same year as in the employment analysis, 1999, we see there was a 6% rise in efficiency from 1999 to 2010. This would suggest 6% of the decline in gasoline deliveries can be attributed to increased efficiency. But what about the other 40% of the decline? That cannot be attributed to higher efficiency.
Why is gas consumption down? Let me count the ways.
The number of jobs continues to fall with labor participation rate.
Any jobs gained are gained in places like NY and DC where driving a car in simply insanity. No one drives in either town unless they are delivering a bomb like the times square guy, or the first trade center attempt. You cannot go anywhere, if you can, the traffic is stopped.
Housing construction is in the tank. Fuel consumption by all the pickup trucks to the remote site is poof. Never ming the heavy equipment and materials delivery.
Natgas is more a measure of industrial processes than anything else. No industry. No need for natgas.
Besides, who in their right mind would do any discretionary driving in a hybrid or electrical vehicle. They handle like crap, and are like driving a Fisher-Price. Blech.
The other interesting index on diesel....http://ceridianindex.com/....appears quite different.....
People wanting data on worldwide consumption can look here:http://www.eia.gov/forecasts/steo/tables/?tableNumber=6#
Bottom line is that world oil consumption also fell off a cliff last month. World consumed only 87.25 mbpd. In the last two months, the OECD or developed world has consumed 1.4 mbpd less oil and the nonOECD world has consumed 0.6 mbpd less. Even mighty China has consumed less crude for three straight months.
Production was higher in Dec than Jan with world production in Dec at 90.3 mbpd and was 89.55 mbpd in Jan.
Bear in mind that the Dec number was with Libya producing only 0.85 mbpd of crude. They had capacity of 1.65 mbpd and should get to those levels soon. They have gone from virtually zero to one million bpd since September which is much faster than most so called experts predicted.
EIA predicts an additional 2.4 mbpd in spare capacity with that number going to 3.9 mbpd. That puts world capacity at around 94 million bpd in April.
The harder to predict part is demand. If we stay at 87 million bpd of consumption for the forseeable future, we should have seven millon bpd spare capcity of oil. This compares to 2006 to 2008 when we only had one million bpd spare capacity.
So why is oil at $100 a barrel? IMO it is pure misinformation. We see these partial truth like Alaska's declining production (True but overall production thanks to North Dakota is surging much higher) or complete fairy tales like world oil production peaked in 2005.
On a BTU basis, oil should be selling for 6x the price of natural gas. That translates to around $20 a barrel. To all those people suggesting a huge supply of dollars pushing up the price, I ask why is that happening with oil but not natural gas?
Not a bad post...
but don't get fooled by "Liquids"....
NGL is not oil
Ethanol is not oil
Bio-fuels are not oil
Refinery gains are not net new BTUs
On a BTU basis, the world suppy of liquid fuels is flat for the past 6 years....
As far as NG goes, why don;t you order a tanker of LNG for delivery in the UK, Korea or Japan and see what you pay per BTU compared to Brent....
Bio-fuels are not oil - wrong - Vegetable oil is oil (hence the name).
http://en.wikipedia.org/wiki/Vegetable_oil_fuel
Let me know when we ramp up production to 500,000 bblpd...
...oil prices will crash soon enough
This is a fairly strong indicator, if you combine it with overall liquid fuel consumption (Way Down, yes some of this is the warm Jan. in the East):
http://205.254.135.7/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wrpupus2&f=4
The BDI (Way Down):
http://www.dryships.com/pages/report.asp
And the recent private credit expansion, it paints a nasty picture. Also look at the spin coming out of DC: "Great Jobs numbers - we fixed it!" and it looks like we're screwed. I'm assuming they're screaming about how good things are so that they can blame everything on the Greeks this election cycle: The Greeks are the new G.W.Bush; It's all theitr fault!
OK dummies, here is one big part of the answer:
http://www.agmrc.org/media/cms/wisnerfigure1_6E423E592188F.jpg
Doh. Ethanol deliveries are up, gasoline is down. Winter formulas are especially heavy in ethanol, and make for higher fuel costs because mileage drops.
I Think that increases the steepness of the fall, but it is the huge drop at the end which is interesting, looks like it is falling back to the trend line; I'm assuming that the leveling-off before the fall was inventory stuffing, and once stuffed, we picked up where we left off. That and a lot of people losing their unemployment ins.
dp
I still see a downward slope.
Ethanol is a crime.
anything that mates modern corn production with modern oil production must be satan's love child. If Dick Cheney was a Monsanto food crop. Wait a minute.....
"Doh. Ethanol deliveries are up, gasoline is down. Winter formulas are especially heavy in ethanol, and make for higher fuel costs because mileage drops."
Nope. Ethanol production is only up 0.1 mbpd year over year while gasoline consumption is down by nearly one million bpd.
And distillate consumption (diesel, heating oil), which has nothing to do with ethanol, was down 300,000 bpd last week.
Gasoline and distillate consumption are screaming that we are not headed for recession but are already there.
ethanol did this?
In 2010, gasoline deliveries declined to the low 40s--literally falling off the charts. In November 1983, deliveries were 51.1 MGD; in November 2010, they were 42.8 MGD, and in November 2011 they were 30.9 MGD.
Did Charles factor in all the refineries that closed. I think not. Less refineries less supply higher prices. Less refineries less deliveries. And I didn't even use charts.
So are you saying people want to buy gas but can't?
Lower supply = higher prices, which can induce less consumption.
However, fewer refineries does not equate to lower consumption anymore than fewer grocery stores means people eat less.
"Less refineries less supply higher prices." That only applies if demand is going up or is constant, and it is not.
Chris Cook actually commented on this here, http://www.nakedcapitalism.com/2012/01/chris-cook-naked-oil.html, and accused the Squid/Planet Hype of this misconception, "There was (and still is) no piece of news which cannot be interpreted as a reason to buy crude oil. The classic case was US environmental restrictions on oil products, which led to restricted supply, and to price increases in oil products. Now, anyone would think that reduced refinery throughput will reduce the demand for crude oil and should logically lead to a fall in crude oil prices. But on Planet Hype faulty economic logic – the view that higher product prices are necessarily associated with higher crude oil prices – was instead used as justification for the higher crude oil prices which resulted from the financial buying of crude oil attracted by the hype."
So basically, we have a sceanrio where by if refiners are producing a lot of oil products, the Squid says oil demand is good, the price must go higher. But if demand for oil products falls and refiners shut down due to a lack of demand, the Squid says that we have lower supply and therefore prices must go up. Nice, huh?
That the Squid and Morgan Stanley control the oil market should be known to everyone. What is driving the oil market is the dark market ICE exchange. Unlike the stock exchange, trading is hidden, front running is legal as is insider trading, and the margin restrictions are insanely loose. That is why it is going to take time for oil to fall, but eventually supply and demand will rule the day.
William your attempt at logic is making my head hurt...look at the first chart, the very first one. A lot of people just came straight to the comments before reading the article I see
In my opinion this correlates with fudged BLS numbers (unemployment is more like 21%) which eqates to far fewer people driving and much less demand. It also correlates to the flatlined BDI; materials, raw goods, and consumer crap simply are not moving! Trucking and railway has also steeply declined in non Gov't participation.
If you don't have a job you don't need to drive.
If you are rubbing nickles together you drive only when you have to.
When gas gets more expensive, getting in the car and turning the key becomes a decision you think about rather than something you just do.
If you order stuff online you don't need to drive to the brick-and-mortar store.
If you are on foodstamps you go to WalMart once a month - at midnight of the day the money hits the EBT card.
If your city has public transportation you start using it because it is cheaper than tires, brakes, new transmission, etc.
Record low gasoline consumption = Recession/Depression alive and well.
It is all nothing more then the marvolous results of enginerred world misery perpatrated by TPTB. The capacity of the human mind to resist the intrusion of information is infinite. Their is only one promise of salvation that allows one to navigate these difficult times, find it and you will have done more to unseat their dastardly plans than anything else on this earth.
It's just a good thing we don't include nasty things like gas or food in the official inflation numbers or we would really be in trouble. Nothing to see here. Move along.
LOL! I wrote abput food & fuel inflation recently. Right now a gallon of reg gas is 10% higher than a year ago on average. Food staples are about 20% - 25% higher as well. I get furious at the ridiculous CPI-U index of 3%...that 'basket' has not changed in what? 40 years? It is a joke.
LOL! I wrote abput food & fuel inflation recently. Right now a gallon of reg gas is 10% higher than a year ago on average. Food staples are about 20% - 25% higher as well. I get furious at the ridiculous CPI-U index of 3%...that 'basket' has not changed in what? 40 years? It is a joke.
There's 90% less is said basket.
I'm guessing big brother is gonna spin this as proof that cash for clunkers was a success.
I'm just having a hard time believing this story.
Something doesn't add up. It's not like I'm not stuck in traffic jams going to the work or seeing my mall full of cars during Christmas.
I'm not saying the data is wrong which is surprising because Tyler loves to pick apart faulty data but for some reason Tyler believes we have a 20% monthly drop in gas demand and doesn't consider human error here.
I agree that it looks bad, train-wreck bad, but it looks real. The other indicators I've looked at are falling as well. I've been scanning this blog post to see if anyone can pick it apart, but no one can. If this accurate, things are going to suck really bad really soon. Hold on to your ass
Defintely something wrong with recent data points. I read the EIA's publication on Nov. sales (released in Feb) and they don't even mention the steep decline implied by the figures.
hmmm, now add in the BDI collapse, no trading volume and insane HFT on the DOW, disturbing rumors/trends out of china, CME lowering margins, 1.2 million dropping out of the work force last month (read: gave up looking), and endless worldwide debt problems. Lots of signs for those that are watching.
Of course Cramer and the rest of the MSM blowhards will say its a buying opportunity...
It could well be a buying opportunity...for puts, that is....