The latest report has some pretty interesting charts.
First there is this chart of gas prices.
What this tells us is retail gas prices are at least 50 cents higher per gallon this year than they were at the same time last year. (But remember -- inflation is under control.) Gas prices are usually seasonal in nature; they rise before the summer driving season and fall after the summer ends. That's not happening this year -- at least not yet. At this point I have to wonder whether these prices are going to impact the holiday season's shopping plans.
There are two other charts in the report that are very interesting.
Oil stocks are decreasing. This is the amount of crude oil on hand that is used in the production of oil based products. US oil inventories have been declining on a consistent basis since mid-summer. Why this is I don't know. It's also important to note that we're at the top end of the historical inventory range, so we're far from crisis levels. But the consistent decline is interesting to say the least.
Gas stocks -- the amount of gasoline that is on hand to sell to consumers -- is at a low level. I don't know why gas production is down, but it is. This is one of the reasons why are seeing retail level gas prices so high compared to last year.
The low level of gasoline inventories should raise serious concerns going forward. The figures in general indicate something in the oil market is not working as it should. I don't know what that something is -- and it could just as easily be a combination of things. But, there is something not right at present.
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Bonddad, Mrs. Bukko and I just got back from a month driving around Europe, mostly France. (Tip -- if you ever rent a car overseas, get one with GPS guidance! It's bloody brilliant. We could plug in the address of any restaurant, hotel, even a lavoiserie automatique (laundromat) inside the twisty-turny maedieval walls of Avignon, and it would guide us RIGHT TO IT!)
Anyway, speaking of the price of petrol, it cost us between 1.25 and 1.40 euros per litre in Europe, depending on whether Mrs. Bukko made me stop on the Autoroute just because the tank was down to 1/4 full. (Wimmenfolk have NO sense of adventure about pushing the edge of the vapour envelope...) Here in Oz, the price is about 1.20 per litre in Aussie dollars. Since they're about 2/3 of a euro, that's a great discount to European prices.
Why should Yanks care? Because at a rough conversion factor of 4 litres to a gallon, minus the conversion factor into degraded American dollars, petrol now costs about U.S. $4.50 a gallon in Australia. What are people in America paying now, Bonddad? About $3.25 a gallon? How long is it going to take before the price of go-juice collapses the economy? Oz has it relatively cheap compared to Europe, but even if American petrol gets to the level of Aussie prices, it's going to make the U.S. implode.
Sad to see, mate, sad to see. As someone who was born in the U.S. and lived there for half a century, it's a damn shame to watch it unfold. When we were overseas, it hurt to watch the dollar decline by almost a euro cent every three days. When the implosion happens, it's going to hurt a lot of my relatives and friends. Good luck, and thanks for telling the truth about things like the "inflation rate" stats.
This continues to look like a refining bottleneck, and given various factors, I don't see that improving anytime soon. If you are an oil company, do you really want to take the risk of dumping a lot of capital into a refinery that may go unused? No.
With the possibility of us being at or near peak oil, and the potential for the governments of the world to begin regulating CO2 emissions, there's a risk to the oil companies if they put more money in their refining infrastructure. The result we see is that oil stocks operate on the high side of historic averages and gasoline stocks fall.
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