Measuring Oil Consumption

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. 

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