Interesting things in world oil balance tables
“Great part of the
information obtained in War is contradictory, a still greater part is false,
and by far the greatest part is of a doubtful character” - Carl von Clausewitz.
If Clausewitz were
alive, he would perhaps say the same thing for world oil statistics. In my
previous post I tried to demonstrate that you can come up with a completely
different picture if you take world oil supply estimates from one source and
world oil demand figures from another. In this post I would like to draw your
attention to some interesting things in world oil balance tables.
One of the
strangest items in the IEA’s OMR is “Miscellaneous to balance” that appears at
the IEA’s famous Table 1- WORLD OIL SUPPLY AND DEMAND. The footnote on the
table defines it as “Includes changes in non-reported stocks in OECD and
non-OECD areas.” It was 1.0 mbd in 2Q14 (oh well, also -1.4 mbd in 3Q13). 1
million barrels per day of unknown oil (to me) in 2Q14 but nobody talks about
At that time I was
working at the IEA and I was asked to investigate the reasons. I came up with
some reasons and suggestions. They were simple. This is why they were mostly
rejected. One of those was on conversion factors. It was ignored at that time
but was partially applied years later.
Today, I say it
again: conversion factors (from metric ton to barrels) are the Achilles' heel
of the world oil supply-demand tables. Note that the figures in the IEA’s oil
supply-demand tables are expressed in thousand (or million) barrels/day which
are converted from metric ton using volume to mass ratios in barrels/ton. OECD
Member countries report their oil statistics in metric tons. All those figures
are then converted to barrels at the IEA by using…, well that’s the problem.
barrel-ton conversion factors usually vary by country but interestingly not by
year (except for some rare exceptions). See oil documentation. For instance, crude oil production in Norway and
UK go down but barrel-ton conversion factor has always been constant (7.37).
Anyone in oil business knows that oil gets heavier especially during the post
conversion factor may not be too important. What I have been saying for more
than a decade now is that it is chemical and statistical crime to keep
barrel-ton conversion factors constant for all years and for all countries
(there are very few exceptions).
found out that in the 2014 Edition of the IEA’s Energy Statistics barrel-ton
conversion factor for Motor Gasoline is different from the previous edition. Motor
Gasoline here refers to gasoline excluding biofuels. Previously it was 8.25 for
almost all OECD countries and 7.93 for nearly all non-OECD countries. This
means 1 metric ton of gasoline equals to 8.25 barrels in OECD and 7.93 barrels
in non-OECD countries. In the 2014 Edition this factor was changed to 8.53, for
most of the countries in the world, OECD and no-OECD alike. In other words the
conversion factor was increased by %3 to 7%. (I skip here why and whether it
Since the gasoline
consumption by country in metric tons hasn’t changed in the IEA’s energy
statistics database, consumption figures in barrels should have changed by the
same magnitude of the change in conversion factor. According to my rough
calculations world gasoline consumption in terms of barrels should have been
increased by around 5%. This was not the case, however. World gasoline consumption
in barrels remained the same. The reason? I don’t know. I use metric ton
figures for my work anyway. So, no impact on my work. But it is highly likely
that the IEA’s energy statistics (hence OMR) understates the world gasoline
demand in barrels, and hence the world total liquids demand by around 5%. Yes,
small in percentage but it makes around 1.5 mbd. Maybe I am doing something
wrong. Please correct me.
Now let me jump to
another issue: Processing Gains. Compared to the year 2000, in 2013 an additional
amount of some14 mbd of petroleum products were produced in the refineries
globally. But over the same period the refinery (or processing) gains increased
by only 0.4 mbd (from 1.8 mbd in 2000 to 2.2 mbd in 2013). Refinery gains
worldwide in 2013 are shown as 2.1 or 2.2 mbd in OPEC and IEA oil balance
tables. We know that in 2013 the processing gain in the US was 6.9% or 1.07 mbd for total net refinery
production of 12.1 mbd. This means that the US accounts for half of the global
processing gains despite the fact that only 15% of world refined products are
produced in the US. Does this make
sense? Not to me.
affect the US EIA and OPEC as well. Remember, not all countries in the world
report their oil supply and demand figures in barrels. The original unit must
be converted into barrels. Processing gains is also another item both EIA and
OPEC should look into very carefully, and stop copying the IEA’s figures.
In sum, oil
industry needs good data. This requires putting more money and resources on
statistics. Scrapping the budgets in national statistics offices may lead to
the erosion of data quality and coverage, particularly on oil demand.