As I type this, we don’t know what the eventual human or energy impact of Hurricane Ike will be. It’s already raising sea levels and battering parts of the US Gulf Coast, even though it’s not expected to make landfall until around midnight tonight, US Central Time.

As pointed out on The Oil Drum, the greatest energy impact of Ike will not be shutting in oil and natural gas production in the Gulf, but in hindering refinery operations. In fact, that thread points out that gas stations are asking people to limit purchases as far away from the immediate area as Georgia and the Carolinas. It’s certainly possible we could actually see an oil glut in the coming weeks if oil production bounces back quickly and refining capacity doesn’t, creating an unusually large gap in prices between crude oil and refined gasoline.

But what I want to know is: How far down can US gasoline stocks go before we hit a crisis point?

See Weekly U.S. Total Gasoline Days of Supply for the US Dept. of Energy’s historical data on how long gasoline stockpiles will last at any given time. In particular, the following graph from that page:

shows that:

  • the days of supply of US gasoline fluctuates a lot, and
  • it has been generally declining for over 15 years, and
  • it has a pattern in recent years of hitting a low point around the third quarter of odd-numbered years, and
  • we’re at a really low point right now.

Obviously, if gasoline prices rise a lot post-Ike, then more gasoline would be imported from abroad (mostly Europe), as happened after Katrina in 2005, spreading the economic pain well beyond US borders.

But just how low can gasoline stocks go before we hit the MOL (minimum operating level)? Long-time readers probably remember my prior obsession with this number, the minimum amount of product that has to be kept in the large and very long pipelines to keep them flowing. At that time I contacted a journalist working for Bloomberg who in turn talked to someone at the US Dept. of Energy, and I didn’t get a firm answer to my question of what the “magic number” is for US gasoline stocks.

Looking at the numbers, it’s indisputable that unless we get an incredibly lucky break with Ike’s impact, we’ll easily hit a new low in days of supply of gasoline, possibly low enough to answer the MOL question, once and for all.

This is one of the very few times when I think I would prefer ignorance over having a very expensive piece of hard data.


Please note: I’m focusing on the energy aspect of Ike because that’s the general topic of this site. I’m very concerned about the people in that gigantic storm’s path, and I sincerely hope that they can get out or find a way to survive this terrible event.




Link to original post