All through the dip in oil & gasoline prices (gasoline has fallen about 35 cents since it peaked, I've been waiting to see whether whether we're moving into glut or shortfall.

With a bit of an assist from Edouard, today's numbers show that maybe there isn't a glut just now. Net imports were down a million barrels a day last week, 11.7 mbpd to 10.7.

DISCLAIMER : This is not trading advice. Commodity markets usually take inventory figures as an excuse to do whatever they were planning on doing anyhow. Maybe 92L falling apart will be a signal to sell sell sell.

With bank failures, retail bankruptcies and pullbacks like Starbucks, it looks like all the gloomy things predicted are starting to happen. Yeah, yah - I know - gloomy & pointless.

I want to get specific, though, & try to generate some real numbers on retail business closures & job losses.

An opEd in yesterdays paper, The Dumbing Down of Voters, by Rick Shenkman, a media hanger on hustling a book shaped object, got under my skin. After a few graphs of wind about how dim we are in general, he gets to his example:

The harsh truth is that ignorant voters are sitting ducks for wily politicians. This is why millions were so easily misled when the Bush administration dropped hints that Saddam Hussein played a role in the Sept. 11, 2001, attacks. One study by the University of Maryland found that nearly 60 percent of Americans were convinced that Hussein was helping Al Qaeda when we undertook our invasion. A majority based their support for the war on this flagrant misunderstanding.

If you ask :Why isn't oil $200 instead of $137? one answer is Russia. The second largest exporter in the world is still a large exporter because it's oil industry went downhill when the country fell apart. Now they're passing over a secondary peak in production while still not consuming much.

If you ask: Given $137, why is gasoline barely over $4? the answer is that refiners are not making the big margins they did last year. Partly that's because less refineries have gone up in huge gushes of flame or been flooded out this year, but mostly its because while global crude production has stagnated, refining capactiy has continued to rise.

The AAA says the US average is still $3.975, only tying yesterday's record, but with the July future up 4 cents around $3.40, it's spitting close. Taxes and shipping should keep retail gasoline about 80 cents over the trading price ($3.40), and the price of oil should support a much higher gasoline price. Refiners are only running now because they can make money on diesel, which backed off its record, but is still retailing at $4.785 per gallon.

Meanwhile, rumors of reduced traffic still seem unsubstantiated. People who weigh 150 Kg are not going to undertake 50 Km commutes on bicycles.

Which brings me to the real threat of the oil crisis : We may have to go metric.

Are we getting too detailed in the advice we give candidates? Are you starting to wonder if they would be better off not listening?

Of course not! We all have something unique to offer.

Searching around yesterday for more info on the CW Networks in depth exploration of agriculture & culture, The Farmer Wants a Wife, I discovered that it's been a year since I made a bunch of predictions for the next year. Since things turned out pretty close, its time to update them. There were a whole rash of stories around the world - energy shortages, food riots - over the last few months. I expect them to fade for a while.

Predicting oil is easy. Crude went way up, gasoline not so much. Today's inventory report shows that at least in the US, consumption rose anyhow. Our consumption, & China's increase, is coming at the expense of smaller, poorer users. There's little reason to think that will change much in the next year.

Hey all you zombies out there! In 1973 when OPEC took over the oil market and the end of Western Civilization began, were you paying attention? In 1979, with the turn of the screw, could you stand on Zanzibar? When the next 20 years brought prosperity and plenty, were we really converting our birthright into a mess of pottage?

It takes a long time to destroy a planet through depletion. When worlds collide, it could disappear as fast as Krakatoa, East of Java, but running on empty is a death of a thousand cuts.

You may say I'm a doomer, but I'm not the only one. Its not that there will soon be no blade of grass, its that every year, there's a little less chicken in every pot.

Today's headline is about AIG. Any idea what they're talking about? AIG is an insurer. Any idea what they insure?

Me neither, & I've spent way too much of the past year trying to understand this stuff. Credit default swaps are some kind of derivative based on the perfromance of securitzed mortgages. When you see things about big writedowns, they're usually at the center of it. AIG had gross writedowns through November of $5 billion, but had only taken a $1.6 billion hit for them. For December, they've had to punt.

A few months ago wheat passed the all time high around $8 per bushel.

For the last week, the market has been essentially shut down. It has a 30 cent limit - every day, it opend up 30 cents, and just sat there. Tonight, they raised the limit to 60 cents.

It opened limit up and is just sitting there. What's happening?

In a flat inventory report this week, the highlight for me was the domestic production number: 4,998,000 barrels a day. This is the first time I've seen it under 5 million barrels a day without a hurricane. We're back to 1947 levels, half of the 1970 peak.

US monthly production since 1920

All the drilling incentives & high prices around can't pump oil that isn't there.

At least a thousand times I've seen an article mix up billions with millions. Reuters ramped it up 1000x by giving Countrywide a $1.48 billion loan servicing portfolio. To make up for that, they gave  excessive precision:

Countrywide said borrowers were delinquent on 33.64 percent of subprime loans it serviced as of December 31, up from 29.08 percent in September

without mentioning how much of the total portfolio is subprime.

Simple, yes, but reporting on the Big Mess has had plenty of substantive confusion.

Both the oil & gas figures were released this morning, due to the holiday. Natural gas storage declined by 155 bcf, as expected due to the cold. Oil had a flat week. Neither report surprised much , nor caused any market movement.

In 2007, natural gas supplied was the highest since 2001. We managed to use a lot, too, even though the industries that used to burn it(fertilizer, aluminum, chemicals)haven't come back. In 2007, natural gas was cheaper than oil for the same energy.

With the supply situation stable for now, it's time to think about demand. Oil use is up a bit from last year, despite the higher prices. Natural gas used was up about 3% in 2007 over 2006.

Another week, another large drop in oil in storage. This time, the refineries were cranking away (despite the holidays), making gasoline and heating oil. Which meant steep falls in crude, propane, & Other Oil supply.

Last weeks oil report from the EIA was the final push that brought $100 in. This weeks should keep the punch flowing. Total stocks are down 6 million barrels, in a report that looks like most winter reports.

Jerome a Paris has reminded us of what blogs do best : Allow people with subject expertise a place to say things that are bloody obvious but hidden by Big Media. Oil's getting tight, Bush is a crook, massive piles of debt are not going to get repaid, the US health system is a disaster that doesn't have to be.

This is not about that stuff. This is about overreaching.

This weeks EIA natural gas storage report showed a withdrawal of 165 BCF, leaving storage at 3008. It looks like we'll make it fine through another winter. So this is background.

(Gasoline went back over $3, & will be hitting new records in 2008, almost guaranteed)

A real quick diary - because I wanted to get the last entry in before $100 oil.

Not a guarantee, of course, because prices don't follow inventory in any predictable manner, but if they did, this one would do it.