The black blood in the economic veins

Posted on September 3, 2013

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black blood of oil

Nobody denies that there is a connection between economic growth and oil consumption. The clearest signal came in 2008-9 when the world economy crashed at the same time as oil production sank dramatically. If one is to describe this in a little more detail then it is not oil production itself that is decisive rather than that part of oil production that passes through the world’s refineries and then becomes transport fuel. Transportation of raw materials and components for manufacturing of goods, transportation of products to retail outlets and, finally, transport of customers to those outlets is the chain that gives economic growth. Therefore, it can be interesting to study what passes through refineries, where it is, and what refinery products are produced.

Each month, Global Data i London gives out a report, ”Refined Products Forecast”. The report costs $1,000 which is a lot for me, but by studying press releases and articles on the report one can grasp the main points.

The report that was issued on 29 August had the following title, “World Refinery Throughput to Witness Impressive Growth, Despite Economic Difficulties”. From the press release by Global Data:

Despite the tough economic conditions still plaguing Europe, world refinery throughput will rise as global demand for gasoline, jet kerosene, gasoil and diesel products during Q3 2013 ramps up, according to the latest forecast from research and consulting firm GlobalData. The new report* states that demand for gasoline in Q3 2013 will increase by 325 mbd (thousand barrels per day) over Q2 figures, while gasoil and diesel demand will rise by 280 mbd over the prior quarter. Jet kerosene will also enjoy a 150-mbd quarter-on-quarter rise, while global refinery throughputs are expected to witness growth of 2.2 mmbd (million barrels per day) over Q2 2013 levels, as new atmospheric distillation capacity comes onstream in the Middle East, India and China. This increase will raise total global throughput to 77 mmbd – the highest level in at least five years. The global oil market is expected to continue its growth throughout 2014, with gasoline demand rising by a further 115 mbd over 2013 levels, and diesel and gasoil rising by 525 mbd.

Jeffrey Kerr, GlobalData’s Managing Analyst for Downstream Oil & Gas, says: “Despite the positive outlook, these figures will be limited by various underlying economic issues, not least of all the European recession. The slowdown in Chinese demand and the rapid decline in Indian demand are also contributing factors. The US is the only country showing any signs of pushing through its economic woes.” Jet kerosene can expect to witness a drop of 55 mbd over the course of 2014, says Kerr, thanks to a decrease in air travel caused by the recession and the Chinese economic slowdown, while refinery throughput will see a similar reduction of 57 mbd.

Kerr continues: “The key for the global economy moving forward is which of these trends are the strongest: the US moving higher or the rest of the world moving lower, and currently it seems that the refined products markets are supporting the US position.”

To get detailed information on various regions and a detailed analysis of trends one must buy the report. Nevertheless, this press release shows oil’s coupling to the economy. Of special interest is the prognosis for India. In other articles we can read that the economy in India is currently falling dramatically and in the press release above we see that consumption of refinery products is expected to decrease.

Global oil consumption must decrease. This can be primarily due to climate concerns that require us to reduce emissions but also Peak Oil means that oil production cannot increase. At the same time everyone wants growth. From the Global Data report we see the connection between transport and economic growth. Our alternative energy future should focus on this issue instead of alternative forms of electricity production. But by saying this I do not want to give the impression that alternative electricity production is not important.

(Swedish)

Ingen förnekar att det finns ett samband mellan ekonomisk tillväxt och oljekonsumtion. Den tydligaste signalen kom 2008-2009 då världsekonomin havererade samtidigt som oljeproduktionen sjönk dramatiskt. Om man skall vara lite mer detaljerad så är det inte själva oljeproduktionen som är avgörande utan den del som passerar världens raffinaderier och som sedan blir transportbränslen. Att transportera råvaror och komponenter till produktion av färdiga produkter, att transportera produkter till försäljningsställen och slutligen transportera kunder till affärer är den kedja som ger tillväxt. Det kan därför vara intressant att studera vad som passerar raffinaderier, var de finns och vilka produkter som produceras.

Global Data i London ger varje månad ut en rapport om ”Refined Products Forecast ”. Rapporten kostar $1000, vilket är för mycket för mig, men genom att studera pressmedelanden och artiklar om rapporten kan man summera de stora dragen.

Rapporten som kom ut den 29 augusti har följande rubrik ” World Refinery Throughput to Witness Impressive Growth, Despite Economic Difficulties”. Från pressmedelande från Global Data:

Despite the tough economic conditions still plaguing Europe, world refinery throughput will rise as global demand for gasoline, jet kerosene, gasoil and diesel products during Q3 2013 ramps up, according to the latest forecast from research and consulting firm GlobalData. The new report* states that demand for gasoline in Q3 2013 will increase by 325 mbd (thousand barrels per day) over Q2 figures, while gasoil and diesel demand will rise by 280 mbd over the prior quarter. Jet kerosene will also enjoy a 150-mbd quarter-on-quarter rise, while global refinery throughputs are expected to witness growth of 2.2 mmbd (million barrels per day) over Q2 2013 levels, as new atmospheric distillation capacity comes onstream in the Middle East, India and China. This increase will raise total global throughput to 77 mmbd – the highest level in at least five years. The global oil market is expected to continue its growth throughout 2014, with gasoline demand rising by a further 115 mbd over 2013 levels, and diesel and gasoil rising by 525 mbd.

Jeffrey Kerr, GlobalData’s Managing Analyst for Downstream Oil & Gas, says: “Despite the positive outlook, these figures will be limited by various underlying economic issues, not least of all the European recession. The slowdown in Chinese demand and the rapid decline in Indian demand are also contributing factors. The US is the only country showing any signs of pushing through its economic woes.” Jet kerosene can expect to witness a drop of 55 mbd over the course of 2014, says Kerr, thanks to a decrease in air travel caused by the recession and the Chinese economic slowdown, while refinery throughput will see a similar reduction of 57 mbd.

Kerr continues: “The key for the global economy moving forward is which of these trends are the strongest: the US moving higher or the rest of the world moving lower, and currently it seems that the refined products markets are supporting the US position.”

För att få detaljera information för olika regioner och en detaljerad analys om trender måste man köpa rapporten, detta pressmeddelande visa ändå oljans koppling till ekonomin. Speciellt intressant är prognoserna för Indien. I andra artiklar kan vi läsa att ekonomin i Indien just nu faller dramatiskt och här ser vi att konsumtionen av produkter förväntas minska.

Den globala oljekonsumtionen måste minska och det kan primärt vara vårt klimat som kräver mindre utsläpp, men också det faktum att Peak Oil gör att produktionen inte kan öka. Samtidigt vill alla ha tillväxt. Av det här rapporterade ser vi sambandet transporter och ekonomisk tillväxt. Vår alternativa framtid borde koncentrera på detta istället för att koncentrera sig på alternativ elproduktion. Med detta sagt menar jag inte att alternativ elproduktion inte är betydelsefull.

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