Those of us who follow such things daily are aware of something called Minimum Operating Levels. MOL is the amount of gasoline that is in transit and therefore not at the pump ready for our use. As it happens, our national pipeline system has been running at around 302 million barrels capacity. That's the amount of gasoline in transit. But, for various reasons including Gustav and now Ike, oil shipments being delayed and refineries shutting, the capacity of the nation's gasoline infrastructure is under tremendous stress.
Then, along came Gustav, which caused the shutting of the Colonial Pipeline from Louisiana to New Jersey and points between, including many of those places like Atlanta where prices are spiking currently. Then, just days after reopening the pipeline, it is now shut again. And this on top of the pipeline system being at MOL.
This condition can only lead to two things. Shortages. And high prices due to low available supplies.
Oh, and this reveals a very unnerving condition of our existance. We have no spare capacity. And the reason we have no spare capacity is because overall world oil production is peaking and there is no spare capacity to be had. Once supplies can no longer keep up with world demand, we'll pass decisively into the Age of Petro-Collapse.
Here is last week's EIA Weekly Petroleum Report (It is from this report that MOL is determined for the purposes of this post)
Unleaded 5-Sep
Beginning Inv 194.4
Imports 7.7 1.1
Production 58.8 8.4
Available 260.9
Ending Inv 187.9
Balance 73
Balance/day 10.43
Prod Supplied 9.3
Actual Change -6.5
Deviation from Forecast 0.8
Distillates 5-Sep
Beginning Inv 131.7
Imports 0.819 0.117
Production 27.3 3.9
Available 159.819
Ending Inv 130.5
Balance 29.319
Balance/day 4.19
Prod Supplied 4.1
Actual Change -1.2
Deviation from Forecast 2.3
Crude Oil 5-Sep
Beginning Inv 303.9
Production 33.537 4.791
Imports 60.2 8.6
Total Available 397.637
Provided to Ref 94.5 13.5 78.3
Ending Inventory 298
Actual Change -5.9
Deviation from Forecast 11.6
When followed on a weekly basis, and cross-referenced with other data that is publicly available from both the
http://eia.doe.gov">EIA and the
http://www.iea.org">IEA, if you get more negative value for ending inventory for any one of the above categories for long enough, eventually you reach MOL - and thus shortages shortly thereafter. The best estimate of the current MOL, which is based also on demand, is 187,000,000 barrels in the system. However, we are now (because of Gustav and now Ike) running at about 185,000,000 barrels in the system.
NOW...Take all that I said above and add to that all those tanks that got filled up to run from both Gustav and Ike on an already strained pipeline and supply distribution system, plus refinery shut downs (list below for Ike), and you have a serious, SERIOUS, problem.
http://news.google.com/news?ned=us&hl=en&ned=us&q=gasoline+shortage&ie=UTF-8&scoring=n">Google listings for "gasoline shortage" by state
Refineries Shut-in
Thirteen Texas Gulf Coast Refineries Shut Down as Hurricane Ike Approaches
As of 10:00 AM EDT September 12, thirteen Texas refineries have shut down due to Hurricane Ike. These refineries located in Port Arthur, Houston/Texas City, and Corpus Christi regions have a total operable capacity of 3.6 million b/d. The following refineries have been shut:
ExxonMobil’s 567,000 b/d Baytown, TX Refinery
BP’s 467,720 Texas City, TX Refinery
ExxonMobil’s 348,500 b/d Beaumont, TX Refinery
Deer Park’s 329,800 b/d Deer Park, TX Refinery
Valero’s 289,000 b/d Port Arthur, TX Refinery
Flint Hills Resources’s 288,126 b/d Corpus Christi, Texas Refinery
Motiva’s 285,000 b/d Port Arthur, TX Refinery
Houston Refining’s 270,600 b/d Houston, TX Refinery
ConocoPhillips’s 247,000 b/d Sweeny, TX Refinery
Valero’s 199,500 b/d Texas City, TX Refinery
Pasadena Refining’s 100,000 b/d Pasadena, TX Refinery
Valero’s 83,000 b/d Houston, TX Refinery
Marathon’s 76,000 b/d Texas City, TX Refinery
You can learn more about MOL here:
http://www.fcnp.com/index.php?option=com_content&task=view&id=1306&Itemid=35 and
http://www.fcnp.com/index.php?option=com_content&task=view&id=1747&Itemid=35The bottom line is this. We have no spare capacity. Big storms like Gustav and Ike hitting the oil and gasoline infrastructure, as well as production contraints as global peak oil tightens its grip, and geopolitical factors have caused a situation where there is just not enough capacity in the pipeline system. Shortages may become severe and widespread as a result.
One more thing. We use 25,000,000 barrels of oil every day in the U.S. We have to import 80% of that as our production has declined from 10mbpd in 1970 to 5mbpd today. Mexico is our third largest supplier of oil behind Canada and Saudi Arabia. Mexico's oil production is taking a dive, having dropped off 37% this year - and they expect to cease exporting oil in as few as 7 years. Where will we get another third-largest supplier of oil? Discoveries of oil peaked in 1964. That's right, 1964.
That should give ya'll enough to chew on for now. Thanks for reading =)!