Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: micdundee2 who wrote (1278)	3/15/2006 3:28:35 PM
From: inchingup	Respond to of 50697

Oil, oil, everywhere: « February 2006 \| Main Analysis of EIA Data - March 3, 2006 March 3. 2006 - While I have been away, not much has happened. Crude oil tanks remain nearly full in the US at 328.3 million barrels Inventories . If they want to push the limit, they could probably stuff about 12 million gallons more into the entire US tank inventory, with 5 million going to the West Coast. Cushing stock tanks are also full at 22+ million barrels. Operating with these levels of crude oil in stock must be tricky, since most US refiners must blend two or more crude oils together to make a feedstock that matches the refinery requirements. The remaining empty capacity could well represent blending tanks -- it would be very near impossible to operate with those tanks full. So, for all practical purposes, unless the US builds some more tanks or store crude oil in parked barges and ships, purchases and crude oil purchases must decrease soon. By the way, the US refineries are processing 14.5 million barrels per day right now, 85% of capacity - which is about where they have been operating for months before and after the hurricanes. A total of 9.9 million barrels of crude oil are imported from other countries. However, of those imports, only 17,000 barrels per day are coming from the Persian Gulf. imports And the US imports no crude oil from Iran. On the refining side, if there is any idle capacity due to turn-arounds, one has to wonder why they would bother to bring it back up any time soon. Inventory levels of gasoline are extremely high. In PADD III they are so high that the inventories themselves could prevent the refineries from operating at full rates. Gasoline Inventories Normally, when gasoline stock levels get too high, refiners can default to making more distillate. However, their distillate tanks are also quite full right now, so there is not much room to work with. distillate inventories Here's a simple visualization of the problem. Set one large barrel of water (representing crude oil) and insert a small pump that has two hoses. Line up 10 tanks, allocating one set of 3 (representing distillate tanks) to hose 1 and another set of 7 (representing gasoline tanks) to hose 2. Give someone else a large cup and tell them to start removing water from the tanks when you start filling them (representing batch sales of product). Refineries operate 24 hours, 7 days a week. It is dangerous and expensive to shut them down and restart them. So your goal, once you turn the pump on, is to not turn it off. OK. Start the pump and begin filling the tanks, while the guy with the cup is removing the product from the tanks. Of course, overtopping petroleum tanks is not a viable option, so you must control the flow to keep the tanks from overflowing. And by the way, you can't put gasoline in distillate tanks, or distillate in gasoline tanks. What are your options? Slow down the pump (refining rates), give your friend a bigger cup -- or add another friend (increase sales -- typically by reducing prices) . . . you get the idea. This is a very simple example of a much more complex problem the refineries deal with day in and day out. For them, there are many more products being made simultaneously and there are imported product blending stocks to add to the equation, as well as managing crude oil tanks. -- George oil-gasoline.typepad.com