Is it possible that Americans are driving less than in the summer of 2020, when many Americans are working from home and working under travel restrictions due to the pandemic?
The Energy Information Administration said U.S. gas supplies fell an average of 7.6 percent over four weeks, with typical pre-pandemic levels falling by more than one million barrels per day. This is below the levels seen in summer 2020. The report helped push the price of gasoline futures down 11 percent on Wednesday. West Texas Intermediate oil fell below $90 a barrel on fears of falling demand. Brent crude fell 3 percent to $93.90 on Thursday.
Average 4 week delivery of finished motor fuel in the US
The story that circulated to explain the fall, ask for destructionThe idea that Americans are so fed up with high gas prices and drive less. Supporting this idea are surveys showing that many Americans drive less because of higher gas prices. For example, a survey published by Rasmussen on July 6 showed that 66 percent of Americans drive less. A survey published July 25 by the American Automobile Association found that 64 percent of Americans have changed their behavior because of high gas prices, with 88 percent of them saying they will drive less.
However, there are many reasons for skepticism, demand fell sharply. First, the implied demand of the EIA is based on deliveries to gas stations, not gasoline pumped into vehicles. There is some anecdotal evidence that gas station operators may keep their own orders low as prices fall to avoid purchasing gas at a price higher than what the market will bear for several days. With gas prices falling for 49 consecutive days, this becomes an attractive strategy. However, this is not a fully sustainable approach, so at some point the EIA numbers will need to reflect the increase in demand.
Piper Sandler & Co.’s global energy strategist Ian Stewart described the EIA figures as “very inaccurate” in an interview with Bloomberg TV. According to him, the way the EIA data is compiled “leaves a lot of room for error”.
“We have to assume we used just 8.6 million bpd in July, which is at the height of the driving season. That’s half a million bpd less than in May. That’s below the 2020 Covid low,” he said. “So we asked all the processors. We talked to all the vendors. “We talked to everyone who reported earnings this season. Each one tells you that their sales haven’t dropped significantly compared to pre-Covid eras. Some are reporting high sales.”
Similarly, Bank of America’s Doug Leggate reported that the refineries he monitors “haven’t seen this.” They saw lower-than-expected demand over the July 4 holiday when gasoline was close to $5 per gallon, but demand was strong at the end of the month as prices continued to drop. In fact, it seems odd that demand is lower as gas prices approached $4 from $5. Leggate believes that the “correction factor” used by the EIA may be responsible for the marked decline in demand.
Gas Buddy’s Patrick De Haan said his data based on pump sales showed an increase in sales.
Therefore, our data, analyzed in various ways, clearly showed an increase (~2%) in demand over the past week, while its data showed a decrease of 7.61%. It can mean many different things, but I prefer retail gas numbers to how gallons move in distribution.
-Patrick DeHaan
(@GasBuddyGuy) August 4, 2022
There were many surprises in the timing of the release of the EIA data, which came after OPEC+ punched President Joe Biden in the face with a modest 100,000 barrel increase in global oil quotas. Can an agency falsify books? This is extremely unlikely. Much of the data is unreliable due to the pandemic, quarantines and reopenings, and unusual volatility has frustrated measurements based only in part on models based on historical patterns.
The work report will be recorded at 08:30 tomorrow. The number of non-farm jobs was expected to increase by 250,000 in July, less than expected when there were 372,000 jobs in June. The unemployment rate is expected to remain stable at 3.6 percent. Average hourly earnings are expected to increase by 0.3 percent in line with the increase in June.
The jobs report will test whether the Fed’s cascading rate hikes are starting to cool the labor market. JOLTS data released this week showed job gaps fell more than expected in June, with retail jobs falling particularly sharply, suggesting some cooling in a still hot job market. More jobs than expected could quell fears of an imminent recession, especially if average hourly wages rise. But that will raise concerns that inflation still continues to rise. Slightly lower than expected, it may be exactly what markets want as inflationary pressures ease. Less than? Raise the alarm about a recession.
The cynically named Inflation Reduction Act, which does nothing to curb inflation, looks worse than when it emerged in the world of Senator Joe Manchin (D-WV) and Majority Leader Chuck Schumer (D-NY). . Detroit’s leading automakers hired Senator Debbie Stabenow (Debbie Stabenow) to repeal the bill’s one plus point: rules designed to strengthen U.S. supply chains for critical minerals and prevent electric car subsidies from enriching China.
Senator Debbie Stabenow (D-Michigan) speaks to the press on December 11, 2018 in Washington DC. (Zach Gibson/Getty Images)
The current bill bans EV tax credits for vehicles whose batteries contain valuable minerals from China. Stabenow and the automakers are angry, which means customers won’t be able to take advantage of the credits because they claim they can’t make cars with batteries not made in China. They say they will build capacity outside of China over time, but for now they want to get subsidies for Chinese mobile phones. They’re not shy to say that any delay in getting people into electric cars with Chinese-made batteries will make climate change worse. If you don’t want tax subsidies for Chinese batteries, you hate the planet.
In any event, this response highlights the need for this provision to take effect immediately. Automakers not only admit that they cannot produce electric cars without China’s involvement, but they also say it will take years to increase capacity. This means that as we move towards renewable energy and electric vehicles, the impact of China on our entire automotive sector will increase.
If Stabenow’s change is included in the bill, they should simply rename it to Build China.
Source: Breitbart
