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Energy Tomorrow Blog

MSR: June Petroleum Demand Outpaces Supply, Imports Rise

monthly-stats-report  demand  supply  economic growth 

Dean Foreman

Dean Foreman
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.

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U.S. Mostly a Spectator While Others Address Supply-Demand Pinch

opec  white house  oil and natural gas production  supply  demand 

Mark Green

Mark Green
Posted July 8, 2021

The Biden administration says it is keeping a close eye on the OPEC+ talks on crude oil production because, as White House Press Secretary Jen Psaki said, it wants “Americans to have access to affordable and reliable energy at the pump.”

Unfortunately, the U.S. is mostly a spectator as OPEC+ debates crude oil supply, which continues to be outpaced by demand, putting upward pressure on crude costs. Because the cost of crude is the biggest factor in gasoline prices, U.S. pump prices have reflected this mismatch between demand and supply. 

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Q&A: The Demand/Supply Dilemma, Consumer Impacts and the Need for Sound Policy

demand  supply  us energy security  production  consumers  gasoline prices 

Mark Green

Mark Green
Posted July 1, 2021

In recent weeks API Chief Economist Dean Foreman has noted the return of petroleum demand, as economies strengthen in the U.S. and globally, to a level that’s outpacing supply (see here). In the Q&A that follows, Dr. Foreman discusses the impacts of the supply-demand mismatch on American consumers and markets, as well as the consequences of the Biden administration’s energy policy signals.

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Oil Demand Back, But Supply Remains Key Question

monthly-stats-report  supply  oil demand 

Dean Foreman

Dean Foreman
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.

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East Coast Fuel Delivery Progresses, Cross-Sector Action Needed to Meet Demand

colonial pipeline  cybersecurity  fuel supply 

Lem Smith

Lem Smith
Posted May 12, 2021

Since the Colonial Pipeline Company experienced a ransomware attack last Friday, the natural gas and oil industry has worked with government to bring a critical piece of infrastructure back online and use alternate methods of transportation to meet the nation’s energy demand. This is America’s largest fuel pipeline – spanning 5,500 miles from Texas to New Jersey – and normally delivers millions of gallons of gasoline, jet fuel and other petroleum products every day to consumers in the South and along the East Coast.

For now, industry stakeholders and energy experts are working with the Pipeline and Hazardous Materials Safety Administration (PHMSA) in the Department of Transportation (DOT), Environmental Protection Agency (EPA) and other federal agencies to alleviate short-term supply disruptions.

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Responding to the Colonial Cyber Attack – and Industry’s Continuing Focus on Security

cybersecurity  colonial pipeline  fuel supply 

Mark Green

Mark Green
Posted May 11, 2021

The cyber attack on the 5,500-mile Colonial Pipeline that daily carries millions of gallons of fuel products from the Gulf Coast to New York and points in between, underscores some critically important points about the natural gas and oil industry – its resilience and agility in working to alleviate supply disruptions, the vital importance of investing in pipeline infrastructure for the economy and modern daily life, and the ongoing commitment by industry to protect itself and key assets from cyber criminals

Industry has worked and will continue to work with the Biden administration on actions to mitigate supply disruptions caused by the cyber attack. These include an hours-of-service exemption for those transporting gasoline, diesel, jet fuel and other refined products to 18 states, as well as a fuel waiver for states under EPA requirement to use reformulated gasoline (RFG) to be allowed to use conventional gasoline amid the disruption – helping fuel suppliers manage inventories until Colonial returns to normal operations.

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Is the World About to See an Oil Shortage?

oil supply and demand  production  global energy 

Dean Foreman

Dean Foreman
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.

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Buying American (Energy), Storage and Recovery

china  trade  exports  demand  supply 

Mark Green

Mark Green
Posted April 23, 2020

While the natural gas and oil industry focuses on challenges from the historic drop in oil demand due to the impacts of COVID-19, keep an eye on proposals that offer the best support for this industry and, in turn, the U.S. economy and American consumers.

One idea among many – including addressing storage issues and ensuring access to capital – is to look to China as a potential buyer of U.S. energy. Makes sense: In an oversupplied global market, China appears to be a buyer. What’s more, in the “Phase 1” trade deal announced in January, China agreed to buy U.S. crude and liquefied natural gas (LNG), among other energy products.

Today, API sent a letter to the U.S. Commerce and Energy departments and the U.S. Trade Representative to suggest that some good might come from following up with China to buy U.S. energy. The letter notes that U.S. energy exports to targeted markets are essential to help with oversupply and storage issues here at home.


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Black Gold. Texas Tea. TxOPEC?

oil production  texas  demand  supply 

Dean Foreman

Dean Foreman
Posted April 16, 2020

Amid talk in Texas of production quotas (“proration”) and other extreme policies that have been suggested to address the oil demand downturn, API’s Monthly Statistical Report (MSR) shows that supply is responding in real time and that U.S. crude and refined storage capacities have some flexibility to adjust to the COVID-19 driven demand decrease – helping to alleviate the need for blanket policies or government interventions.

Notably, recent federal actions may help provide additional flexibility to the entire energy value chain. For example, the U.S. Department of Energy’s opening of crude oil storage capacity within the Strategic Petroleum Reserve (SPR) to individual companies provides much-needed flexibility. Separately, Federal Reserve measures to either purchase corporate bonds or provide loans may perform additional triage for the energy industry and across the broader economy.

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Fuel Supply Networks are Responding Properly

fuel supply  gasoline  distillate demand  jet fuel 

Dean Foreman

Dean Foreman
Posted March 26, 2020

Supply networks for refined products – including gasoline, diesel and jet fuel – appear to be responding properly and flexibly to sudden and sharp declines for transportation fuel stemming from the coronavirus (COVID-19) and global efforts to slow its spread.

Market conditions can shift, yet API’s view at this point is that most refined products markets have continued to function well in keeping about a month’s worth of storage.

We gauge this in part by comparing recent inventory levels for gasoline, diesel and jet fuel with their ranges over the past five years. Although some products appear to have more available storage capacity than others, if needed, it also is apparent that the pace at which refiners produce fuels can provide additional adjustments which will affect demand for storage.


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