Thursday, November 12, 2009

Like Broken Record

The EIA released its weekly data today, a day later than usual because of the Veteran's Day holiday - and the data was as ugly as it gets.


My sense is that the Oil inventories are correct and the mainstream economists are wrong (and that would include the equity market), but what the hell do I know... just kidding. The energy usage data simply does not support a return to an expanding U.S. economy, nor does the rail traffic data for crushed stone and lumber (remember all that "shovel ready stimulus" money? If the government was REALLY putting that money to good use building the nation's infrastructure, roads, ports, bridges, etc... one would expect the shipments of these 2 building products to increase substantially - especially from such an easy comparison point).

Lumber and Wood Products

Crushed Stone

Total rail traffic is getting a boost from Coal and Corn (for ethanol) - and that makes sense given the U.S. decline in Oil imports - but even with that boost total traffic in 2009 is still down 16.9% for the last 4 weeks compared to the same period in 2oo7. Speaking of which... tax receipts are down 20%, rail traffic is down 16.9%, unemployment DOUBLED, but GDP declined... 6% total? (Peak to trough.) I gotta get a gig working in data collection for the Feds...

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The banks continue to "extend and pretend" to keep their balance sheets afloat - but for how much longer? A long, long, long, looooooong time, I'm afraid. If the banks/Fed/Administration was interested in the truth... well, an RTC style entity would serve the purpose of price discovery for these "assets"... anybody hear of anything like that? Nope. And you won't, at least not any time soon.

Our banking system is still belly button deep in sh*t.

Perversely, that might be very supportive of the US$ in the short term. Unless it isn't. We have entered the world of the surreal.

More soon,



Libertariananimal (at) gmail (d0t) com

11 comments:

Anonymous said...

Have you read this article of a whistleblower stating that the IEA is over stating oil supplies?

http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency

bureaucrat said...

Yet the demand for gasoline is right where it always is ... at 9.2 million barrels per day. I still walk over the Kennedy Expressway in Chicago. Still lots of cars and trucks burning lots of gasoline and diesel. I don't know what the demand for distillates and jet fuel look like, but they must be crawling on the ground, cause the gasoline portion of this soap opera hasn't changed much.

A Quaker in a Strange Land said...

Anon:

I read that. I look forward with great anticipation to more on that.

Bur:

Gasoline demand is actually UP. Not so diesel fuel, so you might be seeing the same number of cars, but certainly not the same number of trucks - not by a long shot.

Same with Jet fuels and planes in services - both down big.

Donal Lang said...

Seems to me that the stimulus money lent to the banks has not gone to company lending, but been used to buy stocks and shares, like a bust gambler hoping that one more roll of the dice will get all his losses back.

If the markets DO plunge again from here, all that stimulus money will go down the tubes too.

Re; oil, the worrying thing is that US demand is down bigtime, but the price is still up. So if the US demand recovers .......???

A Quaker in a Strange Land said...

Donal:

Demand can NEVER exceed supply. Demand cannot recover IMHO as the supply will not be there, only the desire to consume more..

Anonymous said...

If the majority of gasoline consumption is spent on commuting and employment is way down, who's doing all the driving? Trips to the beach? Practice commuting runs? Circling the parking lot a Woodfield Mall?

Even though the economy stinks, the restaurants and stores seem pretty full here. Makes me wonder.

Also, the major part of the "stimulus" package was increases to welfare payments. This money goes out without anything productive having happened at all. No work, no increased use of commodities involved. Just extra dollars around to be spent.

Regards,

Coal Guy

ChrisInGa said...

I have noticed a significant decrease in the traffic down here in Atlanta. Rush hour is getting easier and easier every month that goes by.

On the flip side I too have noticed that the stores and restaurants seem to be as busy as they were two years ago. I guess that depends on the store though.. Walmart certainly. bed bath & Beyond not so much..

A Quaker in a Strange Land said...

Coal Guy:

Keep in mind that the total U.S. population has increased about 2.3% since 11/07... per capita consumption of Gasoline is down roughly by the increase in population... what with total consumption remaining the same...

"Over the road" truck traffic is down roughly 17% since 11/07, hence Chris's observation of traffic in Atlanta.

Stores and Restaurant? I think what you are experiencing is "survivor bias" (if I can use that horrible, wartime term... those that survive war have a bias as to whether it was worthwhile or not, the deceased do not have a voice). The surviving stores are busier because there are fewer stores and greater numbers of people.

Thanks for commenting...

bureaucrat said...

ASPO-USA/Cohen has a nice summary if you all haven't seen it yet ...

http://www.aspousa.org/index.php/2009/11/the-oil-situation-is-really-bad/

Anonymous said...

I was just in a costco even though the place was busy when i got on line and looked around I noticed a lot of carts that were nowhere near full...As far as walmart and other big box stores; anyone of them can be busy if they want to work on 2% mark ups instead of 10%+ but in the end thats down net 8% with volume being the same....

Retail gas stations are doing the same, working on lower margins in order to keep the same volume

Donal Lang said...

Greg; what I mean is, if demand ever gets going again you'll be competing for oil which is already accounted for, so prices will rocket.
Re Coal Guy, it seems to me that when people lose their jobs or homes, they just disappear off the radar, move away, move back home, don't go out.
But for those still in work, their income is just the same but many prices have fallen and they can do all the things they did last year, its just the restaurants aren't so busy any more.
To have and to have not.