Tale of the Stone
Yes, I know I am late getting this out. Some of you may have read about my visit to the hospital about a month ago. Long story short, I have a very large (9 mm) kidney stone that sent me to the hospital with acute renal colic, which has been described as the worst pain a person can endure. While the pain eased off over the past 4 weeks, the stone never came out. And on Tuesday morning, it once more got stuck, and I ended up back at the Aberdeen Royal Infirmary.
This time they did surgery to get the stone out, but they couldn’t retrieve it so they put in a ureteric stent which keeps pressure from building up above the stone. They said it will also help the stone to move on down and out. The are going to give it 2 weeks, and if it hasn’t come out on its own, they are going to go back in and try to break it up. The doctor told me that this thing has probably been growing for years, given that I had been eating a lot of foods and drinking a lot of liquids that contribute to kidney stone formation (but no more). I am really not a sickly person, folks. I am very active. Prior to this I hadn’t missed a day of work in 4 years due to illness. I think this is just a fluke caused by me not paying particular attention to my diet.
This Week in Petroleum
My surgery happened on Wednesday, just about the time the weekly report was released. And as soon as I woke up from the anesthesia, I wondered whether gasoline inventories turned back up. After getting back to my hospital bed, I asked the nurses if I could use the computer at the nurses’ station, and they let me check the report. (Most sites were blocked, but I was able to access the EIA, as well as The Oil Drum).
I will go out on a limb and say that within 2 weeks the gasoline inventory trend will reverse direction.
I was off by a week. While demand has been slowing, gasoline inventories did fall each of those two weeks, albeit less than they had previously. This week, that trend finally changed direction, with the report showing a 400,000 bbl build. According to the report, imports were up across the board:
U.S. crude oil imports averaged 11.0 million barrels per day last week, up 727,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 10.3 million barrels per day, or 457,000 barrels per day more than averaged over the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged over 1.2 million barrels per day. Distillate fuel imports averaged 327,000 barrels per day last week.
The other big story was the refinery utilization seems to be clawing its way back toward 90% (but as several people have noted, they haven’t been quite the same since Hurricane Katrina):
U.S. crude oil refinery inputs averaged 15.3 million barrels per day during the week ending May 4, up 174,000 barrels per day from the previous week’s average. Refineries operated at 89.0 percent of their operable capacity last week. Gasoline production increased compared to the previous week, averaging over 8.9 million barrels per day, while distillate fuel production also increased, averaging 4.2 million barrels per day.
Is the Crisis Averted?
No, not by a long shot. I have been warning of potentially record high gasoline prices for weeks now. On Monday, MSNBC announced that according to the Lundberg Survey, the previous record has been eclipsed:
Gasoline prices have surged to a record nationwide average of $3.07 per gallon, nearly 20 cents higher than two weeks earlier, oil industry analyst Trilby Lundberg said Sunday.
The previous record was $3.03 per gallon on Aug. 11, 2006.
According to the EIA (they provided an extensive discussion of gasoline prices this week), we are just short of a record:
One of the most visible records in gasoline markets is the U.S. average retail price for regular gasoline. At $3.054 per gallon on EIA’s latest weekly retail price survey (May 7), this price is just a penny-and-a-half shy of the all-time record (in nominal dollars) of $3.069 per gallon set on September 5, 2005, about a week after Hurricane Katrina ravaged Gulf Coast oil production and refineries.
Gasoline imports, while higher, are still running well behind last year’s levels. Given that we are heading into high-demand season with record low inventories, we may have not seen the peak in prices yet. However, there was certainly a fear premium built in that will be somewhat deflated with this week’s upturn. But unless the upturn is sustained, the pressure on prices will remain.