John P. Tretbar
With crude prices surging and refinery
utilization plummeting, gasoline pump prices continued to rise. According to
Triple-A, one in ten gas stations nationwide posted prices over three dollars a
gallon last week. The national average price for a gallon of regular is up to
nearly $2.88 per gallon. That's an increase of seven cents on the week, an
increase of 34 cents on the month, and is 64 cents a gallon higher than a year
ago. The average in every state has climbed by double-digits since February.
The average pump price in Kansas is just over two sixty-eight per gallon, an
increase of three cents over a week ago and 34 cents higher than the average
six months ago. Your 15-gallon fill-up will cost you a dollar more than last
week, four dollars more than last month, and nearly ten dollars more than six
months ago.
Kansas Crude prices are down 75 cents from Monday but remained four dollars
above the first of the month and more than $16 higher than at the first of the
year. A barrel of Kansas Common crude now fetches $55 at CHS in McPherson.
Independent Oil & Gas Service reports a slight increase in the rig count in
eastern Kansas, and a slight decline west of Wichita. Operators have drilled to
total depth on a new well in Ellis County, and an operator reports drilling
ahead on a new well in Stafford County. Nationwide the aggregate oil rig count
was down one. Baker Hughes reported an increase of one active rig in Texas, but
said Oklahoma, New Mexico and North Dakota were each down one.
Kansas regulators okayed 21 new drilling permits last week (through 3/12),
fourteen in eastern Kansas and seven west of Wichita. That's 143 new permits so
far this year.
Independent Oil & Gas Service reports a newly-completed well in Stafford
County among four west of Wichita. There was one new completion in eastern
Kansas, bringing the total statewide so far this year to 121 newly-completed
wells.
The government said U.S. crude inventories were up nearly 14 million barrels
last week. The U.S. Energy Information Administration said that's about six
percent above the five-year average for this time of year. After two weeks
below ten million barrels per day, EIA says U.S. operators are now pumping
nearly eleven. Domestic crude production for the week ending March 5 totaled
10.859 million barrels per day, a nine percent increase over the week before.
Weekly crude imports were down slightly. The four-week average is nearly 12%
less than the same four-week period a year ago.
EIA says gasoline stockpiles are about six percent below the five-year seasonal
average after dropping nearly 12 million barrels last week. Triple-A says pump
prices average about eight cents more than a week ago across the U.S. and here
in Kansas.
Weekly oil-by-rail shipment totals continue to rise week over week, but still
lag behind year-ago totals. According to the Association of American Railroads,
US totals are down more than 17 percent from last year, but the weekly total of
10,502 tanker cars marks an increase of 128 cars over the week before. Canadian
shipments are down more than 11 percent from last year but increased last week
by more than 700 tankers.
The Energy Information Administration said U.S. crude production last year
dropped by eight percent from the record high set the year before. The decrease
last year was the largest annual decline in EIA records. The agency also noted
last week that February marked the smallest year-over-year decrease in U.S.
fuel consumption since the pandemic began impacting the industry. In its
monthly Short Term Energy Outlook, EIA says February crude prices around the
world jumped eight dollars a barrel from January's average, reflecting
increasing demand expectations and ongoing supply limits from OPEC-plus.
Preliminary totals from the top oil and gas regulator in the top crude-producing
state in the country show a sizable decline in crude production in December.
The Railroad Commission of Texas reports total crude output of just over 109
million barrels during December, or roughly three and a half million barrels
per day. That's a decline of nearly five percent from the month before and a 23
percent dip from a year earlier. For the year 2020, The Lone Star State pumped
1.46 Billion barrels. That's an average of 3.99 million barrels per day, which
is down from 4.35 million barrels per day the year before.
Crude production in North Dakota dropped nearly four percent in January totals
released last week. State regulators said output from the #2 crude producing
state totaled 1.15 million [["one point one five million"]] barrels per
day, down 44 thousand barrels per day from the month before. The state
continues to exceed its anti-flaring goals, capturing 94 percent of the natural
gas produced at oil wells.
A dispute continues between the U.S. and Canada over a 60-year-old pipeline
across the Great Lakes. The fight has been brewing for months between Enbridge
and the Governor of Michigan over "Line-5," the twin pipelines
operating on the lake bottom beneath the Straits of Mackinac
[["MACK-in-awe"]] in northern Michigan. The Detroit Free Press
reports Canada won't take "no" for an answer, calling the continuing
operation of Line-5 "non-negotiable." The pipeline operator has
announced its intention to defy an order from the Michigan Governor to cease
operations in May. Canada's natural resources minister told a legislative
committee he believes Line-5 will remain in operation. The pipeline system
moves 540,000 barrels per day from Duluth to Detroit.
Now that a number of conservative organizations are backing the idea, three
Democrats in the U.S. Senate are floating a bill that would put the first price
tag on methane emissions from the oil patch. The Methane Emissions Reduction
Act would direct the Treasury Department to assess fees on greenhouse gas
emissions beginning in 2023. In recent weeks both the U.S. Chamber of Commerce
and the American Petroleum Institute have come out in favor of at least
considering market-based emissions limits.
A bill filed last week in the Texas Legislature would fight back against some
efforts on Wall Street to boycott fossil fuels. Pressure has been increasing in
recent years for investment firms to reduce their financial support for oil and
gas companies. But The Texas Tribune reports the bill in the Texas Senate would
require state entities to divest from companies that refuse to invest in the
patch.
ConocoPhillips does not plan to increase capital spending despite better
prices, but announces it will resume it's stock buyback program. The company is
buying back stock at an annualized rate of $1.5 billion, an increase of 50%
compared with the pace in the fourth quarter of last year. That was the point
at which Conoco suspended the program to buy rival producer Concho* Resources.
The Biden administration will deliver an interim report on oil and gas leases
on public lands by this summer. But officials declined to state how long the
current moratorium could remain in place. Oil and gas from federal reserves in
western states and the Gulf of Mexico make up about a quarter of U.S.
production. A long-term ban on lease sales to address climate change would
fulfill a campaign pledge from Democratic President Joe Biden. But the prospect
has rankled Republicans and petroleum industry representatives, who have said
that Biden is putting tens of thousands of jobs at risk as the economy reels
from the pandemic. Last month, the administration postponed lease sales in the
Gulf of Mexico along with four states — Colorado, Montana, Utah and Wyoming.