Gasoline shortages are starting to become a problem in the Southern US in areas such as Nashville and Atlanta. This week's "This Week in Petroleum" (TWIP) (included in its entirety under the fold) did indeed show a big drop in gasoline inventory as we expected, but we are still digesting the impact, keeping in mind that these are averaged numbers over four weeks--which of course begs the question of whether or not the full impact of the refinery outages we have seen are in these numbers or not.

In this post, I have prepared a few graphs to supplement this week's TWIP. We know that Hurricane Gustav and Hurricane Ike had a huge impact on refineries, and that these production shortfalls are now slowly making their way through pipelines. It is my view that because Texas refineries have been fairly slow to get back online, and because of the built-in lag due to the slow travel of refined products through pipelines, the present gasoline shortages are likely to get worse in the next two to three weeks.

I haven't reported on inventories in about a month, because there really weren't any developments that merited a report. While crude, distillate, and propane inventory levels have been typical for this time of year, the gasoline situation is worth a note.

It sort of crept up on me, but last week as I reviewed This Week in Petroleum, I was struck by just how fast the U.S. has built gasoline inventories. Currently at 230 million barrels, I could not recall ever seeing gasoline inventories that high. So, I went back and looked, and the last time gasoline inventories stood at this level was in 1994. And in this week's report, we again had an increase in gasoline inventories:

Updated:

Not too much to get excited about. Those reports of some refineries coming down early for turnarounds due to low margins look to be accurate, given the drop in refinery utilization. That would also explain the rise in crude inventories, but typically you start to see gasoline inventories coming down as the refineries come offline. Gasoline production did fall, as one would expect as turnaround season begins. However, gasoline inventories increased on the back of very strong gasoline import numbers.

The details are out on the weekly crude oil statistics. In sum, a larger drop in crude stocks was offset by higher gasoline stocks and lower gasoline demand than expected. Oil sold off initially, rallied to $100.10, and has now settled around $99.25. At $100 oil, isn't it strange that gasoline at the pump is $3.05. Are the refiners working for free? And if so, why would they do that? Details of this weeks TWIP below the fold:

US Crude Stocks -Thanks -Khebab