In this week’s Off The Cuff podcast, Chris and Art Berman discuss:
- Understanding The Importance Of Crack Spreads
- Diesel Consumption Is Down 500,000 Barrels/Day Since January
- The Shale Oil Reckoning Is Approaching
- Key Slides From Art
Petroleum expert Art Berman explains how crack spreads (the difference between what refiners pay for crude oil and the price they receive for their refined product) and oil demand volumes are indicating the global economy is slowing markedly. Economies need energy to function. Less energy consumed = lower growth and output.
Most diesel goes to the hard and fast transport industry. Which is to say: trucks, trains, and ships.
If those guys got orders to ship stuff, the price of diesel is not a big factor. When diesel consumption goes down, that means the orders aren’t there.
I’m looking here at a chart. It tells me that diesel consumption has decreased almost 500,000 barrels a day since January.
Here we are, and that’s using August data. That’s really big. When we look at that in terms of year over year, August data was negative quarter of a million barrels a day, more actually, compared with a year ago.
That’s part of a steady, downward trend. I can look at that in terms of year over year. I can split it up any way you want it. But, when you start to see diesel consumption go down, that means there’s something fundamentally funky in the underlying economy.
by karenf