Released on September 24, 2003
(Next Release on October 1, 2003)

Revisionist History
With EIA’s monthly petroleum supply data for July 2003 released yesterday (September 23), some oil market analysts will take the latest monthly data for inventory levels and adjust the weekly data accordingly. For example, the monthly data for July showed that commercial crude oil inventories were 3 million barrels more than what was estimated based on the weekly data. So, some analysts would like to conclude that the weekly data released today are underestimating crude oil inventories by 3 million barrels. However, it has been our experience that while this may sound logical, it is not statistically valid, as the revisions from the weekly to the monthly data vary from month to month and show little or no systematic pattern (see the blue bars in the chart below).

However, an important exception to this is weekly data on “other oils” inventory levels. These revisions do exhibit patterns that should be taken into account when looking at the weekly data. While EIA collects data on all products on the monthly surveys and can thus sum up to get an “other oils” inventory level, we do not collect data for any of the “other oils” on the weekly surveys other than propane. Thus, our weekly data on “other oils” inventory levels is estimated based on the latest monthly data available at the time and seasonal patterns exhibited over the last several years. However, when some key variables that may impact “other oils” inventory levels (e.g., the price of natural gas) are unusually high or low, this can affect the estimate. Looking at the red bars in the chart below, it is evident that in recent months the revisions for “other oils” inventory levels have not only been much greater than those for crude oil, but have also been more consistent, following a discernable trend. For example, during last winter, when natural gas prices were high, demand for some products in the “other oils” category was higher than expected, thus causing inventories to be drawn down more than initially estimated, leading to downward revisions in inventories. However, as natural gas prices began to fall from their very high levels, demand for those same “other oils” began to return to more normal levels. But using recent data at the time (when demand was unusually high), the weekly data began to reflect an overestimation of demand and thus underestimated inventory levels, leading to dramatic upward revisions in “other oils” inventory levels when the monthly data were released, particularly for June and July.

Going forward, assuming the trend continues, it is likely that August 2003 data for “other oils” inventory levels will be revised upward significantly again, perhaps by somewhere between 10-20 million barrels. And it is likely that even now, “other oils” inventory levels, as reported in the weekly data are being underestimated. EIA is aware of this problem and is expecting to use a new system sometime within the next several months that should allow us to improve our estimates of weekly data on “other oils” inventory levels. EIA also continues to look toward methods we can utilize to minimize the disconnect between monthly data for “other oils” inventory levels and the estimate in the weekly report.

It is important to understand that this problem with “other oils” inventory levels should in no way impact data on weekly inventory levels for crude oil, gasoline, distillate fuel, jet fuel, and residual fuel oil, as data for all of these products are collected on EIA’s weekly surveys. And in a similar fashion, while the disconnect with “other oils” may also affect “other oils” demand and consequently total petroleum demand, it has no impact whatsoever on demand for gasoline, distillate fuel, jet fuel, and residual fuel. All of these variables are based on data collected on the weekly surveys, so revisions have been minimal for these products.

Good, reliable petroleum data has always been a critical piece of EIA’s mission, and we continue to believe that we provide the best data, in terms of quality and timeliness, in the world. Until recently, no other country has tried to collect weekly data on one variable, much less the breadth of petroleum data EIA collects. However, we continue to try and improve the data we release each week. It is important for those people who rely on our weekly data to know that any problems with revisions to “other oils” inventory levels and product supplied (i.e., demand) have no impact on the data for the major products and crude oil. These data are usually revised by about 1 percent or less when monthly data are released. As such EIA will continue to strive to make “revisionist history” a thing of the past.

U.S. Retail Gasoline Prices Decrease by More Than 5 Cents
The U.S. average retail price for regular gasoline fell last week by 5.4 cents per gallon as of September 22 to reach 164.3 cents per gallon, which is 24.8 cents per gallon higher than a year ago. This is the fourth week in a row that prices have fallen, declining 10.4 cents since August 25. This drop was expected, as lower gasoline demand coupled with high imports and increasing production has taken pressure off gasoline supplies. Prices are expected to continue softening in the near future, barring any unforeseen supply problems. Prices were down throughout the nation last week, with the Midwest seeing the largest decrease at 8.7 cents per gallon to hit 156.9 cents per gallon and the West Coast seeing a decrease of 6.1 cents per gallon to reach 191.8 cents per gallon, which remained the highest in the nation. California prices averaged 197.8 cents per gallon after falling 5.6 cents this past week.

Retail diesel fuel prices decreased last week by 2.7 cents per gallon as of September 22 to a national average of 144.4 cents per gallon, which is 2.7 cents per gallon higher than a year ago. Retail diesel prices were down throughout the country last week, with the Midwest seeing the largest price decrease of 3.4 cents per gallon to reach 142.6 cents per gallon. The Gulf Coast had the lowest retail diesel price in the country at 138.0 cents per gallon as of September 22.

Propane Inventories Post Moderate Build
U.S. inventories of propane posted a moderate 0.6-million-barrel increase last week that positioned inventories at an estimated 65.4 million barrels as of September 19, 2003. Primary inventories at the U.S. level moved to a position that was well within the average range for this period. Regional gains were posted in the East Coast and Midwest areas last week that measured 0.1 million barrels and 0.6 million barrels, respectively, while the Gulf Coast inventories fell by 0.1 million barrels. The Gulf Coast region continues on a track that is above the normal range for this time of year, while the East Coast and Midwest regions continue on similar paths that track below their respective normal ranges during this same period. Propylene non-fuel use inventories rose by 48,000 barrels last week to nearly 3.2 million barrels, a level that accounts for 4.9 percent of total propane/propylene inventories.

Note: Text from the previous editions of "This Week In Petroleum" is now accessible through a link at the top right-hand corner of this page.