The United States imported about 49% of the petroleum,1 which includes crude oil and refined petroleum products, that we consumed during 2010. About half of these imports came from the Western Hemisphere. Our dependence on foreign petroleum has declined since peaking in 2005.
Did You Know?
Canada is the United States' leading crude oil supplier.
The United States consumed 19.1 million barrels per day (MMbd) of petroleum products during 2010, making us the world's largest petroleum consumer. The United States was third in crude oil production at 5.5 MMbd. But crude oil alone does not constitute all U.S. petroleum supplies. Significant gains occur, because crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and we have other sources of liquid fuel, including biofuels. These additional supplies totaled 4.2 MMbd in 2010.
In 2010 the United States imported 11.8 million barrels per day (MMbd) of crude oil and refined petroleum products. We also exported 2.3 MMbd of crude oil and petroleum products during 2010, so our net imports (imports minus exports) equaled 9.4 MMbd.
Petroleum products imported by the United States during 2010 included gasoline, diesel fuel, heating oil, jet fuel, chemical feedstocks, asphalt, and other products. Still, most petroleum products consumed in the United States were refined here. Net imports of petroleum other than crude oil were 2% of the petroleum consumed in the United States during 2010.
About Half of U.S. Petroleum Imports Come from the Western Hemisphere
Some may be surprised to learn that 49% of U.S. crude oil and petroleum products imports came from the Western Hemisphere (North, South, and Central America, and the Caribbean including U.S. territories) during 2010. About 18% of our imports of crude oil and petroleum products come from the Persian Gulf countries of Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia, and United Arab Emirates. Our largest sources of net crude oil and petroleum product imports were Canada and Saudi Arabia.
Top Sources of Net Crude Oil and Petroleum Product Imports:
It is usually impossible to tell whether the petroleum products you use came from domestic or imported sources of oil once they are refined.
Reliance on Petroleum Imports has Declined
U.S. dependence on imported oil has dramatically declined since peaking in 2005. This trend is the result of a variety of factors including a decline in consumption and shifts in supply patterns.2 The economic downturn after the financial crisis of 2008, improvements in efficiency, changes in consumer behavior and patterns of economic growth, all contributed to the decline in petroleum consumption. At the same time, increased use of domestic biofuels (ethanol and biodiesel), and strong gains in domestic production of crude oil and natural gas plant liquids expanded domestic supplies and reduced the need for imports.
Monday, December 12, 2011
If you're bullish about the long term for gold and silver, it's mouthwatering to watch them undergo a major correction after taking earlier profits that added to your deployable cash. For a little historical perspective on pullbacks, consider the following charts.
The current 15.6% gold decline, while considered a "major" correction, is not out of the ordinary, particularly following the late summer spike. And after each big selloff, there was a price consolidation phase that in every instance led to higher prices. The message: hold on, and buy the big dips.
Not surprisingly, silver's biggest corrections are larger than gold's. This is also true for the rebounds; they've been quite dramatic. If we apply the biggest three-month recovery of 44.3% to the current correction, that would take silver to $40.63… meaning we probably shouldn't expect $60 silver by year-end.
Exclusive Interview – Alasdair Macleod: “By End of 2012 Silver May Triple And Gold Should Be Priced Around $3800″
The interview was a fascinating discussion on the concept of money itself, different schools of economic thought, plus what may lie ahead for gold, silver, and the West.
A chief topic during the interview was Keynesian Economics and it’s deadly impact on society. Alasdair indicates that, “Keynesianism is a self-serving mechanism,” in which, “only governments, their cronies, and banks benefit. Outside of Ron Paul, you don’t have anyone with the foresight or the guts to take the Austrian view. If members of congress or parliament do find out about Austrian economics–they have to keep quiet about it because of the politics of the system itself.”
In speaking to the future Alasdair said, “We don’t have very long left to live under fiat money. We’re on an accelerating road to a complete destruction of paper currencies, with only about two and half years left to go. The economic establishment is collapsing. On one hand it’s frightening, and on the other it’s very exciting.”
With regards to gold and silver Alasdair added, “Gold & silver will be considerably higher at the end of 2012 then they are today. The acceleration in money printing going into next year will diminish the purchasing power of dollars, pounds, euros, and other currencies against gold. Looking at my models, gold should be priced around $3800 by the end of 2012, and silver’s got potentially a triple or more over the next year considering the shortages.
As a final warning to investors Alasdair concluded, “We live an upside down world where, the things meant to be risk free are suddenly full of risk, and the parties which traditionally carry the risk are absolved of it.”
This interview was quite the intellectual adventure, and is a absolute “must-listen” for investors and students of economics.
To listen to the interview, click the following link and/or save to to your desktop:
The interview is also available for listening on our YouTube Channel
GOLD : LONG TERM
The long term chart shown here a couple of weeks ago remains in force. The action remains within that up trending channel and that very long term momentum indicator remains below its support trend line but still in its positive zone.
Trend: The basic long term trend is still positive although the price of gold is moving towards its long term moving average line and the two could merge sometimes ahead. For today the Friday close gives us gold still above its positive sloping moving average line.
Strength: The long term momentum indicator continues to move in a lateral direction but with a slight negative bias. It remains in its positive zone but is slightly below its negative sloping trigger line.
Volume: The volume indicator is also moving in a lateral direction but is also slightly below its negative long term trigger line.
At the Friday close the long term rating remains BULLISH but with some weakness coming into play.
Today’s chart (in the short term section) shows a wedge pattern that suggests a break on the up side as it is at the end of a long up trend. This pattern is often at a mid-way of a trend but I wouldn’t place any money on it. As I see it other indicators might suggest that the break could just as easily be to the down side. This is one reason I am primarily a trend FOLLOWER rather than a trend PREDICTOR. Go with the flow and change when the flow changes.
Trend: Gold closed on Friday just very slightly below its intermediate term moving average line but that was enough to turn the line slope oh so slightly to the down side.
Strength: The intermediate term momentum indicator remains slightly in the positive zone but already below a now negatively sloping trigger line.
Volume: The volume indicator closed the week very slightly below its negative sloping trigger line.
At the Friday close the intermediate term rating is now considered as BEARISH. The short term moving average line remains just above the intermediate term line and not yet confirming this bear.
For the past several months gold just hasn’t had any real conviction which way to go. Such hesitation, some may call it consolidation, is not usually encouraging after a long bull move. It is too often the consolidation towards the start of a bear market, but I’m getting ahead of the actual long term trend. Let’s see where we are from the short term perspective.
Trend: Gold has once more dropped below its short term moving average line and the line is in a negative slope.
Strength: The short term momentum indicator has once more dropped into its negative zone taking the negative trigger line with it.
Volume: The daily volume action remains very low. This lack of speculator participation does not suggest strength but also it does not necessarily suggest weakness. We’ll just have to wait and see how it develops.
On the short term, at the Friday close, the rating is BEARISH. The very short term moving average line is moving lower fast but closed the week just sitting on top of the short term moving average line and not quite confirming this bear.
As for the immediate direction of least resistance, I’m going once more with the down side. The Stochastic Oscillator is heading in that direction and has not quite entered its oversold zone yet. The very short term moving average line is in a steep negative slope. Only global politics, war, peace, etc. could seriously affect the very short term trend.
Although silver did not drop as much as gold (% wise) it remains a weaker performer than gold. Maybe this is the start of silver recovering its previously held superiority to gold performance but so far that is not yet the case.
Trend: Unlike gold’s positive long term trend silver continues to trade below its negatively sloping long term moving average line. It is still above its long term point and figure support but very close to breaking on the down side.
Strength: The long term momentum indicator continues to move hugging that neutral line. It is also hugging its trigger line.
Volume: The volume indicator is moving lower and just about to break below its late Sept lows. It remains below its negative sloping trigger line.
At the Friday close the long term rating remains BEARISH.
Trend: Silver continues to trade below its negative sloping moving average line.
Strength: The intermediate term momentum indicator seems to want to strengthen and is just below its neutral line, but still below. It is hugging its trigger line and it’s difficult to say one way or the other if the trigger is positive or negative, let’s just call it horizontal.
Volume: The volume indicator continues to move lower below its negative trigger line.
On the intermediate term the rating can only be BEARISH. This bear is confirmed by the short term moving average line remaining below the intermediate term line.
Trend: Friday’s upside move took silver to just about its short term moving average line but it ended the day just below the line. The moving average line itself is still in a very slight upward slope.
Strength: The short term momentum indicator continues to track just below its neutral line but did close the week just above its negative sloping trigger line.
Volume: The volume action is still pretty low. Friday’s price advance was on lower volume than Thursday’s price drop. Not usually a good sign.
Putting it all together the rating at the Friday close is not quite bearish but a – NEUTRAL rating, one step short of a bear. The very short term moving average line is suggesting the same by being in a sharp downward slope but just shy of dropping below the short term moving average.
As for the immediate direction of least resistance, one might go for the lateral direction here but with the gold perceived as going lower I’ll go with the down side for silver also.
Merv’s Non-Edibles Futures Indices Table
For weekly information and commentary on gold and silver stock Indices and Merv’s 190 gold and silver stocks please go to the subscribers section at http://preciousmetalscentral.com.
Well, that’s it for this week. Comments are always welcome and should be addressed to firstname.lastname@example.org.By Merv Burak, CMT
Energy and Natural Resources Market Radar (December 12, 2011)
- In another sign of robust emerging market oil demand, China’s refineries boosted daily oil processing to a record last month after state plants maximized production to ease a domestic diesel shortage. Refining rose 5.4 percent to 9.25 million barrels a day in November from October, surpassing a record of 9.22 million barrels a day in February. Refiners are boosting production after plant seasonal maintenance led to a supply shortfall. China Petrochemical Corp., which supplies more than half of the nation’s fuel, will raise its refinery runs to 4.3 million barrels a day in November, the second-highest on record.
- U.S. ethanol production hit an all-time high last week, according to the latest figures from the Energy Information Administration. For the week ending December 2, ethanol production averaged 954,000 barrels per day, which is a new record, 24,000 barrels more than the previous week. Getting close to the end of the year now, the four-week average for ethanol production stood at 929,000 barrels per day, which translates to an annualized rate of 14.25 billion gallons.
- Costs to hire Capesize vessels in the Atlantic Ocean headed for Asia climbed to a 2011 high for a second day this week on stronger demand to transport iron ore and coal. Rates climbed to $55,550 a day, according to the Baltic Exchange, the highest rate since Nov. 10, 2010.
- Palladium prices have rallied 21 percent in the last two weeks on speculation that gains in car sales will boost demand for the metal used in pollution-control devices. Global purchases will rise 6.5 percent to a record 79.5 million cars and light commercial vehicles in 2012, according to LMC Automotive Ltd., a research company in Oxford, England. Also, U.S. sales of light vehicles in November expanded at the fastest pace in more than two years.
- In a perpetual European headline vortex in anticipation of an outcome from the EU summit, energy stocks, which were up 10 percent last week, decreased 3-5 percent this week. Commodities overall were down for the week, with palladium being an exception, up just over 6 percent.
- Gold has been held hostage by macro developments in Europe this week. Yesterday’s price action was testament to just how focused on Europe market participants currently are: a sharp sweep higher on the ECB policy easing and varied efforts to stabilize the financial system were quickly reversed and the metal gave back all of the week’s gains after ECB President Draghi indicated firmly that the central bank would not act as a lender of last resort in any way, and that the EU treaty does not allow for the ECB to monetize sovereign debt. This came as a blow to hopes for European quantitative easing, which would be a powerful catalyst for higher gold prices if it were to materialize.
- Expectations for a positive outcome of the EU Summit have been running high, suggesting that most participants may already have adjusted positions. The UBS Economics team anticipates an agreement among the eurozone member countries, which would lay out fiscal rules, including sanctions against violators.
- CLSA research highlighted that Wood Mackenzie, mining consultant, unveiled a bullish outlook for the coal market at its global energy forum. Wood Mackenzie sees China’s thermal-coal imports and delivered prices rising to over 400 million tons and $150 per ton, respectively by 2020. Additionally, the firm expects a strong import growth and pricing, and cites that coal equities remain attractive.
- China may see its demand for iron ore reach 1.13 billion metric tons by 2015, said the Ministry of Industry and Information Technology when preparing the newly issued steel industry blueprint for the 12th five-year plan period. Last year, China consumed 920 million metric tons of iron ore. The country imported 618 million metric tons of iron ore from 40 countries last year, which accounted for 67 percent of the total consumption, up from 35 percent ten years ago, due to the rapid development of the high energy-consuming steel industry. In the first ten months, China’s iron ore imports grew 10.9 percent year-over-year and its domestic output of the mineral grew at a fast pace of 26.4 percent.
- The rise of the middle class in emerging markets is driving increasing protein consumption. The growth of U.S. beef export volumes and the anticipation of substantial demand growth in coming years with new customers and growing appetites for beef is creating an exciting prospect for the beef industry. In the first three quarters of this year, U.S. beef exports amounted to more than 2.1 billion pounds and were 27 percent larger than export volumes during the same period a year ago. Over 10 percent of the beef produced in the U.S. is now exported and the U.S. is now a net exporter of beef.
- The prospect of oil topping $150 a barrel within a year has become the biggest bet in the options market as the U.S. and Europe work to limit Iran’s crude sales. The number of outstanding calls to buy oil at $150 next December has jumped 29 percent, more than any other option on the New York Mercantile Exchange. The contracts equate to about 38 million barrels of oil, or 43 percent of daily global demand, based on data from the U.S. Energy Department.
- BBC News reported that China warned of “severe challenges” to exports to the west, attributable to economic difficulties in key Western markets. Sales to Europe and the U.S., which is about 40 percent of total exports, were also not expected to recover next year. Exports to the European Union and the United States fell 9 and 5 percent, respectively, in October versus a year ago.
- The U.S. Environmental Protection Agency (EPA) this week released a draft analysis of results from its Pavillion, WY ground water investigation of suspected drinking water contamination from shale gas fracturing. The EPA says deep monitoring wells in the aquifer contain synthetic chemicals, like glycols and alcohols consistent with gas production and fracking fluids, benzene concentrations well above Safe Drinking Water Act standards, and high methane levels. Detections in drinking water wells, however, are generally below limits established in health and safety standards. The investigation continues, but points toward the need for baseline monitoring.
- Twenty-five out of 77 large- and medium-sized steelmakers incurred total losses of 2.13 billion in Chinese Yuan in October.
The part of the MF Global heist that has surprised me the most is not that it happened or that the U.S. government was driving the get-away car, but that the traditional U.S. stock, mutual fund and fixed income companies and traders have taken it with almost a yawn.
I have been flabbergasted that the withdrawal window at a major U.S. bank has had a “closed sign” posted for almost two months with hardly a whimper except from commodity futures traders. This “1929″ style bank closing has occurred because segregated account holders have been denied their deposits. It has amazed me that the U.S. government has been blind (what’s new) to the fact that Jon Corzine and his band of crooks have forcibly made segregated banking account holders counterparties to leveraged bets on Italian and Greek debt without their approval or knowledge.
In the meanwhile, Congress continues insider trading with greed and no regrets while the White House readily accepts campaign contributions from bed mates on Wall Street and the “green” (alternative spelling: “Al Gore and the solar slime”) industry.
Well, stock, fund and bond friends, let your yawn be over – because the contagion is knocking at your door. I have written often in recent weeks that the breakdown in the safety of customer funds in one federally regulated category (futures) was the leak in the dike — and would eventually spread to stocks, mutual funds, banks, pension funds, annuity products, etc.
Following are two wake-up calls. The first is a series of email I have received from an contact with a reputable Wall Street dealing desk whose identify I will protect. This individual completely understands the stakes involved in this high game shoot out of “rob the poor to pay the rich.”
The second is an article yesterday from Thomson Reuters that spells out how the contagion van is parking outside your door right now.
Emails from a Wall Street contact
I’m currently a credit derivatives trader in New York, have read your book and thoroughly enjoy your blog. I’ve been following your postings on MF Global and came across an article on rehypothication (the process of reposting collateral on proprietary trades at a broker/dealer).
Rehypothication has been occurring for years in the OTC market and accounted for short falls at many hedge funds when their collateral was locked at LBIE when Lehman went bankrupt. I was unaware that custodial account collateral at an FCM could be rehypothicated, but apparently according to this article it indeed can be.
Anecdotally, the dealer community has been pushing back against CDS becoming exchange traded for years, even after the contract has been standardized, for the very reason that they can use these margins posted to them as more or less free funding.
Rehypothication is the 800lb gorilla [Editor's note: make that the 2,000 lb gorilla]. In 2007 I was with another fund that was the first 2.5bln casualty of the leveraged ponzi, dealers use your collateral for there own purposes then refuse to offer you liquidity on the collapse of the trade because they won’t face a brokerage counterparty as it was in 2008 or won’t face a yankee bank as is the case now. Counterparty exposure is about to blow the doors off of liquidity, CVA desks already massively flattening curves, only a matter of time before they start forcing desks to not accept certain counterparty names on novation. Good times.
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You see, silver has more than 10,000 uses. It’s one of the world’s best conductors of heat and electricity. Inventors filed more patents on silver uses than any other precious metal in the world. And when silver is used for most industrial and technological purposes, it is used up forever… It simply costs too much to try to recycle the tiny bit of silver from every cell phone or casino chip.
I’m not saying industry is going to use up all the world’s silver. That simply can’t happen. But scarcity is a real issue.
Our rapid consumption of silver leaves very little to meet any uptick in demand from investors. A spike in interest will send prices spiraling higher…
Here’s a breakdown of the silver market. The table below shows the percentage of the total amount of silver consumed by each category over the past four years…
As you can see from the table above, only 12% of the silver supplied to the market made it to bullion in 2010. That means only a little more than 100 million ounces of silver became bullion for the entire investing world.
That’s a tiny fraction to sop up all the investment interest in the world.
Of that silver, about 43 million ounces went to exchange-traded funds like the iShares Silver Trust (SLV) and the Sprott Physical Silver Trust (PSLV).
That means you could buy all the extra silver bullion for about $2 billion. We could buy all the surplus silver bullion from the last four years for about $10 billion.
That’s the same as the market value of the iShares Silver Trust today. If you wanted to build another silver fund, you couldn’t. There just isn’t enough silver bullion out there to fill the order.
Even trying to amass that much physical silver would send the silver price soaring. It’s a simple market fact… When there is more demand than supply, it drives the price up.
And the economic problems confronting Europe and the United States have increased interest in precious metals… Silver gained a colossal 174% from August 2010 to April 2011.
In May 2011, however, the price collapsed 31% in just four weeks. The bull market simply ran up too far, too fast… and the decline wiped out many highly leveraged silver traders.
The big money is tiptoeing back into silver.
Last month, commodity trading advisors, pool operators, and hedge funds — the “big money” — weren’t interested in silver AT ALL…
But as they move back into the market, silver prices could soar. Let me show you what I’m talking about…
Jason Goepfert created SentimenTrader, a service that tracks investor sentiment toward various asset classes. According to Jason, silver just bounced off its most pessimistic reading in four years.
The so-called “commitment of non-commercial traders” hit 10,352. That’s incredibly low. The last time sentiment numbers were that low was in August 2007. Six months later, the price of silver was 59% higher. It rose from $12 per ounce to $19 per ounce.
I went all the way back to 2002 and found that silver sentiment bottomed near 10,000 six times… On average, the price of silver rose 33% in the next six months and 54% over the next year. This chart shows the last four times it bottomed…
Here’s how the silver price performed after each of the last four times silver sentiment bottomed out…
The best return came after Bottom No. 2, which coincided with the US banking/credit crisis. Silver soared an eye-popping 405%, including its parabolic rise in 2010.
As those numbers indicate, silver is one of the most volatile assets in the world. Over the last year, silver has seen massive price swings, including an 81% rally and two 30% drops. That forced many traders to liquidate their silver holdings in order to meet emergency short-term requirements. (Plus, the debacle at commodity broker MF Global has scared many folks out of the market.)
But the long-term drivers of gold and silver’s uptrends are still in place. Enormous and growing Asian economies like China and India are getting richer…and they have deep cultural affinities for precious metals. Plus, the Western world has lived way beyond its means for a long time…the debts and liabilities it has taken on can only be paid back with devalued, debased money. This is bullish for “real money” assets like gold and silver.
With sentiment so negative toward silver (and just beginning to turn back up), it’s a great time to take a position in this long-term bull market.
If gold and silver prices are nearly certain to rise over the next few years (and probably rise dramatically), the simplest way to play that trend is to buy bullion…real, hold-in-your-hand silver coins.
And I recommend everyone do just that… Buy some silver and store it away.
There is an intriguing commentary in The Daily Reckoning by Matt Badiali on silver. In particular he cites Jason Goepfert’s SentimenTrader readings for silver. This service tracks investor sentiment towards different asset classes.
Silver it becomes apparent is at the bottom of its range for pessimism:
‘The so-called “commitment of non-commercial traders” hit 10,352. That’s incredibly low. The last time sentiment numbers were that low was in August 2007. Six months later, the price of silver was 59 per cent higher. It rose from $12 per ounce to $19 per ounce.
‘I went all the way back to 2002 and found that silver sentiment bottomed near 10,000 six times… On average, the price of silver rose 33 per cent in the next six months and 54 per cent over the next year. Here’s how the silver price performed after each of the last four times silver sentiment bottomed out…’
Of course this analysis conveniently forgets the stomach-churning drops in the silver price, enough to force out those investors using trading loss stops. You need to have real faith in the upside to ride out such swings. But the rewards are there.
What the extreme pessimism indicator also most likely means is that those worrying that silver has another correction to come are barking up the wrong tree. That already happened earlier this year with the near 50 per cent plunge after the April high of almost $50.
That’s not to say that a correction is not impossible from the current price, just that it may not be much of one and that the biggest danger is being out of the market when the next price surge kicks in.
|MONDAY, DEC. 12|
|2 pm||Federal budget||Nov.||--||-$150 bln|
|Tuesday, DEC. 13|
|7:30 am||NFIB small business index||Nov.||--||90.2|
|8:30 am||Retail sales||Nov.||0.5%||0.5%|
|8:30 am||Retail sales ex-autos||Nov.||0.3%||0.6%|
|10 am||Job openings||Oct.||--||3.4 mln|
|Wednesday, DEC.. 14|
|8:30 am||Import prices||Nov.||1.5%||-0.6%|
|Thursday, DEC. 15|
|8:30 am||Jobless claims||12-10||390,000||381,000|
|8:30 am||Producer price index||Nov.||0.1%||-0.3%|
|8:30 am||Core PPI||Nov.||0.2%||0.0%|
|8:30 am||Empire state index||Dec.||3.0||0.6|
|8:30 am||Current account deficit||3Q||--||-$118 bln|
|9:15 am||Industrial production||Nov.||0.1%||0.7%|
|9:15 am||Capacity utilization||Nov.||77.8%||77.8%|
|10 am||Philly Fed||Dec.||5.0||3.6|
|FRIDAY, DEC. 16|
|8:30 am||Consumer price index||Nov.||0.0%||-0.1%|
|8:30 am||Core CPI||Nov.||0.2%||0.1%|