Measuring oil consumption presents a dilemma for public and private
analysts. The size and complexity of the market and the number of
consumers and suppliers make data collection a daunting task.
In-depth consumer surveys, for instance, can provide a good deal of
insight into how people use oil, the characteristics of the fuel-burning
equipment they use, and other factors that affect consumption. The EIA (Energy
Information Administration) has
undertaken a variety of complex surveys to examine oil consumption, such as the
Residential Energy Consumption Survey and the Manufacturing Energy Consumption
Survey. These surveys, however, are costly, time-consuming, and of
necessity have a long lag before publication. They are not practical
alternatives for short-term data collection.
Collecting data from suppliers is a better option for estimating
consumption on a routine basis. Here, too, the depth of required/requested
information is critically affected by the frequency with which it must be
reported. On an annual basis, for instance, EIA collects and publishes
detailed sales data such as its Sales of Fuel Oil and Kerosene report, the
source for sector-by-sector information on consumption of these fuels.
Available on a State-by-State basis, the report's data also feed EIA's multifuel
State Energy Data System (SEDS). On a monthly basis, EIA collects sales
data for major products from refiners and from prime suppliers, which it
publishes in the Petroleum Marketing Monthly (PMM). The prime supplier
data, reflecting first sales into a State for local consumption, are published
in the PMM on a State-by-State basis.
Finally, for petroleum, as for other goods, EIA also routinely monitors
the sources of supply in order to estimate the amount of product delivered to
the market. To make the data collection manageable, it focuses on the
"primary supply" system -- refiners, importers, pipelines, and marine
transporters of petroleum, large storage facilities, and/or storage facilities
with access to waterborne deliveries or pipelines. For most refined
petroleum products, the balance is:
Refinery production (output)
plus or minus the change in inventory
plus or minus shipments from other domestic
regions
minus exports equals Product Supplied.
However, while petroleum analysts equate "Product Supplied" with
consumption, there is a lag between petroleum delivered into the market and
petroleum actually consumed. The product may sit in a tank belonging to a
wholesaler, a retailer, or even a consumer before it is used. We cannot
capture these small movements and therefore can be surprised by short-term
volume fluctuations as these tanks are unexpectedly filled or emptied.
Thus, the methodology overstates "demand" when the product moves into wholesaler
or retailer storage and understates it during the period when it is actually
consumed.