While RC and his boys and the polly techies battle it out on whats gonna happen to the oil industry on rollover, let me interject some stats, trends and concerns on an inevitable problem that's gonna ensue in Dec. The hand writing is on the monitor. You aren't gonna like it. Its time to sell that SUV and get the ol bike out. First, oil industry stockpiling already started showing up in October- normally a slow oil consumption month. The US consumed nearly 20 million barrlels a day in crude and products. This is the highest level since the Iranian induced oil shortage in Feb of '79. Worldwide oil stocks have been drawn down at the rate of 1.8 million barrels a day in Sept and 2.5 million in Oct. Quoting Cent. for Glob Energy Studies, "...hardly any spare [crude] stocks at sea, in temp. storage or in non-ODEC (3rd world) countries." Based on expectations crude stocks would get damn tight even without this y2k thing. We are gonna see RECORD WORLDWIDE CRUDE OIL STOCK DRAWS BY YEAREND. Here in the US the stats are even more disconcerting. Crude stocks are down to 309 million barrels, 30 mil below last year and close to 45 mil below a 5 year average for this time of year. The transAtlantic Brent arb is dictating that imports are gonna diminish at the same time refiners increase their purchasing due to post-Fall refinery turnaround demand. US gasoline stocks and demand trends are really depicting upcoming probs. The minimum operating rate is considered to be 200 million barrels. With this weeks 5 mil draw, we're down to 189 mil barrels. Its like we're seeing summer type demand levels on gasoline concurrent with winter type demand levels on distillate (heating oil & diesel) in the 'shoulder season'. Distillate stocks are also low- 14 mil barrels below last year. What's gonna happen when it really gets cold? So are refiners gonna crank it up into these improving economics? On gasoline production, they can't. Conversion (gasoline producing), as opposed to basic distillation, capacity is running flat out and has for years. This is what happens when you don't allow new refineries to be built and environmental mandates dictate specs beyond the capacity of refineries (ie Calif). So dovetail this upcoming pre-rollover hoarding with the scant stock levels already in place and whatever senario you see unfolding after year end. Gasoline prices have to skyrocket. And with the US, with 4% of the world's population, consuming 26.7% of the world's total (based on Oct stats) don't bag on the oil companies. You've been warned..... -- Downstreamer (downstream@bigfoot.com), November 18, 1999