[Ok-sus] Steep and fast drop in petroleum usage

Bob Waldrop bwaldrop at cox.net
Wed Feb 8 08:56:54 CST 2012


There are two interesting lead indicators which suggest “economic contraction approaching”. The first is the sharp drop over the last month in the Baltic Dry index, which is a measure in the changes of shipping costs. Bloomberg reports the index is at mid 1980s levels, and has even gone negative as there are reports of shippers getting free ships plus a fuel subsidy to charter. I know that sounds odd but these are situations where a ship needs to be someplace else, and it is better to have someone pay at least some of the fuel costs than to move it there unloaded. http://www.bloomberg.com/news/2012-02-06/glencore-hires-grain-carrier-at-minus-2-000-a-day-global-marine-says.html . NB: The last time the index dropped so precipitously was just in advance of the 2008 financial crisis.

And then there’s the steep drop in petroleum usage, noted below from Mish’s Global Economic Trends website, which is one of the sites I monitor. Links and text below.

Bob Waldrop, OKC

http://globaleconomicanalysis.blogspot.com/2012/02/huge-plunge-in-petroleum-and-gasoline.html

Huge Plunge In Petroleum and Gasoline Usage 
Inquiring minds are watching a plunge in Petroleum Distillates and Gasoline usage.

As I have been telling you recently, there is some unprecedented data coming out in petroleum distillates, and they slap me in the face and tell me we have some very bad economic trends going on, totally out of line with such things as the hopium market - I mean stock market.

This past week I actually had to reformat my graphs as the drop off peak exceeded my bottom number for reporting off peak - a drop of ALMOST 4,000,000 BARRELS PER DAY off the peak usage in our past for this week of the year.

I have added a new graph to my distillates report, a "Graph of Raw Data" to which I have added a polynomial trendline. You can easily see that the plunge is accelerating and more than rivals 2008/09 and in gasoline is greatly exceeding the rate.

An amazing thing to note is that in two out of the last three weeks gasoline usage has dropped below 8,000,000 barrels per day.

The last time usage fell that low was the week of September 21, 2001! And you know what that week was! Prior to that you have to go back to 1996 to have a time period truly consistently below 8,000. We have done it two out of the last three weeks.

The second graph once again shows the year on year change in usage of distillates. The Obama "stimulus" package and Fed monetary actions masked the underlying systemic problems.

The third and final graph shows the changes in usage off the peak year of 2007. Once again you can see the effect of the stimulus and how now we are heading below 2008/09 in an accelerating fashion.

Looking at these numbers I believe we are about to have a surge in unemployment - by the end of April latest, possibly as early as beginning of March. 

Tim

Charts at the link above. . . 

[Non-text portions of this message have been removed]


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Robert Waldrop, Oklahoma City
http://www.bobwaldrop.net see also http://sharonastyk.com/ 

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