Energy Tomorrow Blog
Posted July 21, 2021
It’s great for the U.S. economy that, with urban re-openings and the onset of the summer driving season, petroleum demand returned to over 20 million barrels per day (mb/d) in June, according to API’s primary data presented in our latest Monthly Statistical Report (MSR).
However, domestic oil supplies have not been able keep pace, and consequently U.S. crude oil imports and consumer prices have suddenly risen, which ultimately could contribute to the list of expenses stressing household budgets, such as higher costs for housing, vehicles and many other goods and services.
Posted June 17, 2021
The expectations and real prospects for global and U.S. economic recovery – and energy markets along with them – have accelerated and appear bright. That’s the overarching point in API’s quarterly Industry Outlook for Q2 2021 and Monthly Statistical Report (MSR), echoing what we have said since the third quarter of last year (see here, here and here).
Yet, while API’s primary data for May 2021 show the recoveries in U.S. economic growth and petroleum demand have continued to go hand-in-hand, potential record global oil demand growth this year and the next, per the U.S. Energy Information Administration (EIA), could be overshadowed by the lowest industry-wide real capital expenditures on record for any quarter, by API estimates.
Demand up and capital investment down by record amounts is a concerning combination.
Posted June 10, 2021
Throughout the 2021 economic recovery, API’s data have demonstrated the intertwined relationship between the nation’s recovering economy and affordable, reliable energy. Leading economic indicators have continued to rise, and along with them so has oil demand – even as domestic oil drilling and supply have fallen.
According to the current Bloomberg consensus of economic forecasters, U.S. real GDP growth could average 6.6% in 2021 compared with 2020 -- its strongest expansion since 1984, when the real price of West Texas Intermediate crude oil was just over $70 per barrel. Coincidentally, recent oil prices have been at similar levels, and the key question now is whether we have the energy supply to support such a torrid pace of growth.
In that context, actions by the Biden administration that negatively impact or could impact domestic oil and natural gas production appear detached from the nation’s critical need for secure, accessible energy.
Posted May 20, 2021
API’s primary data for April 2021 evidenced momentum for the broader U.S. economic recovery, as petroleum demand and refining activity rose, supply remained solid and leading economic indicators pointed higher.
The April headline figure was that total U.S. petroleum demand of 19.6 million barrels per day (mb/d) rose by 2.5% from March and to within 3.5% of its level in April 2019, which was its highest for the month in 11 years.
Contemplate that for a second: For all of the dislocation and continuing issues with recovery from COVID-19 pandemic, total petroleum demand in April was within a sliver of where it was that record-setting April of 2019.
Posted April 28, 2021
We’ve written quite a bit recently about how the economic recovery so far has spurred increased demand for oil and refined products (see here, here, and here). The demand for air travel and consequently jet fuel, which historically have related strongly to the pace of economic growth, lagged the economy so far.
In fact, U.S. passenger traffic in April 2021 was roughly half of what it was in 2019, per the Transportation Safety Administration, so many people are asking why ticket prices have already begun to rise. After all, even as summer approaches, aren’t there a lot of idle planes and crews eager to be re-hired and return to service?
There is in fact a lot of idle capacity. Yet, ticket prices also seem to have increased recently and outpaced the return of passengers – for example, with recent price spikes for airfare to some attractive destinations.
Posted April 15, 2021
API’s primary data for March 2021 suggest that petroleum markets demonstrated a measured recovery following the winter emergency disruptions that affected oil supply, trade and inventories beginning in mid-February.
Notably, total U.S. petroleum demand of 19.1 million barrels per day (mb/d) decreased seasonally but showed resounding strength in rural gasoline demand that increased by 632,000 barrels per day over February.
Posted March 18, 2021
API’s latest industry outlook affirms the extent of recoveries in the U.S. and global economies, as well as rising demand for oil and natural gas.
For the past two quarters, API’s data and analysis have indicated these comebacks were underway, and this is visible in the March Monthly Statistical Report (MSR™), based on February data, and API’s quarterly Industry Outlook.
The recoveries come on the tailwind provided by nearly $20 trillion of economic stimulus around the world. We could be poised for the largest two-year oil demand increase (9.2 million barrels per day, mb/d) on record since 1950 and new record highs of demand (102.4 mb/d) by the fourth quarter of 2022.
Posted March 17, 2021
One of the great benefits of increased U.S. oil production over the past decade and a half is strengthened U.S. energy security – decreased reliance on foreign oil suppliers and insulation for American consumers against sudden price increases due to geopolitical events, such as the recent attacks on Persian Gulf oil facilities.
Years ago, an episode like that could’ve caused serious alarm in the United States and globally. Yet, the apparent lack of significant or enduring oil price movement following last weekend’s attack shows the tremendous influence U.S. oil production has had on global markets. The same was true after missile attacks on Saudi facilities in 2019 (see here), which substantially reduced Saudi Arabia’s oil exports for a short period. Both events and their aftermath indicate that U.S. domestic production has largely mitigated the price volatility historically associated with serious geopolitical events.
Still, some cautions are in order. First, U.S. energy security can’t be assumed. It takes long-range planning and investments, safe access to domestic resources, the ability to expand pipeline and export facility infrastructure, and a policy-level approach that anticipates unforeseen events that could affect global energy supply and have dire impacts on U.S. security, economic growth, and consumers.
Posted February 24, 2021
It’s possible we could be headed for a shortfall in global oil supply as soon as next year – pretty remarkable considering where oil demand was last spring, with economies slowing under the weight of the pandemic.
Based on projected rising demand, the natural production decline from existing wells and decreases in drilling activity and industry investment – especially in the U.S. – the world’s oil needs could outpace production in 2022. An undersupply potentially could put upward pressure on costs, impacting consumers, manufacturers and, generally, any process that utilizes oil.
Posted February 18, 2021
As oil prices rallied this past week, headlines suggested that oil demand recovery is expected to pick up speed (subscription required) later this year. However, API’s latest Monthly Statistical Report, based on January data, suggests that U.S. oil markets already kicked off 2021 with a remarkable month:
Total U.S. petroleum demand returned to within 1.2% of its level from January 2020 despite the pandemic; refining and petrochemical demand for other oils – naphtha, gasoil, propane/propylene reached a record-high level (6.5 million barrels per day, mb/d) and 33.1% share of total U.S. petroleum demand; and the lowest U.S. crude oil imports for January since 1992 propelled U.S. petroleum net exports.
Consider this: For all of the economic pain and dislocation caused by the 2020 COVID-19 recession, U.S. petroleum demand returned to within a hair of its pre-COVID levels and well within the five-year range.