Petroleum demand in the US is rising
The US economy is improving so why is it a surprise that US demand for energy and petroleum in particular is also rising? The MRR has pointed out the strong year-over-year growth in US gasoline and diesel demand for several weeks now. This week’s report has a graph illustrating gasoline demand since 2004 during the first week in August along with price.
The Financial Times pointed out this week that US “refinery runs have increased 5.1 mb/d since April, the largest seasonal increase in runs since the IEA began collecting data in 2004”. It should be noted that there were a larger number of refinery maintenance closures this spring than usual as well, so that observation should be tempered somewhat.
It had become a matter of accepted fact that mature OECD economies had entered a long-term chronic decline in oil consumption and only the emerging economies would add demand growth. Nothing illustrates this more than the major piece published last week in The Economist titled “Yesterday’s fuel”. It may be yesterday’s fuel but it is the one that today provides 95% of the transportation fuel used globally and will for quite some time to come.
Recovering US and European demand plus the declines in Libyan and Iraqi production, declines in Mexican exports (covered in this week’s report) and Saudi summer domestic demand helps explain oil prices above $100 per barrel.
It will be interesting to see if the Economist article proves correct or more like the famous $5 per barrel prediction it made in 1999.
How to fracture a shale well
Below is a animation from Marathon Oil on how the process of hydraulically fracturing a shale well is carried out. It is interesting to see what is involved in this intense industrial process. But keep in mind that like any industry PR piece there is a lot not said or put in a very favorable light. Hey, after all they paid for this and they expect some good outcomes from it.
It will be interesting to see if the 20-40 year life for all these wells holds as the video says, so far the data is not too promising. [Thanks reader Derik A. for pointing this video out.]