The OGJ Economics Editor monitors and interprets a variety of petroleum-related statistics and is often asked to provide selected data on a moment's notice. As of this writing, for example, there is a pending request from a colleague for worldwide crude oil supply and demand figures for the past 10 years.
OGJ's Forecast and Review, p. 44, includes many statistics related to supply and demand. When it came time to meet with my coauthor for the report, I planned a trip that included a flight from Houston to Tulsa.
Jet fuel use rises
The trip seemed routine enough, but about half an hour into the flight, the pilot announced over the speaker, in a voice signaling that no comforting words would follow, that we would be making an emergency landing at Dallas-Fort Worth International Airport. The pilot said that he would feel better if he didn't have a plane full of passengers on board, as the craft was leaking fuel.
We landed and evacuated to await another plane that would ultimately take us on the remainder of the short flight to Tulsa.
In the Forecast and Review, OGJ projects that US demand for jet fuel will be up this year. Despite my recent experience, we wouldn't say that it's because so much fuel is being wasted; rather, an increase in air traffic is leading to this rise in demand.
The forecast also shows recent trends in the Baker Hughes rig count. The count averaged 625 during 1999. That is 206 fewer rigs than for 1998. And OGJ projects an average of 800 active rotary rigs for this year.
What's behind numbers
According to Baker Hughes, movement in the rig count is primarily determined by the amount of spending in exploration and development, but that's not the sole determinant in the demand for rigs. Three other major factors are at work.
Advances in seismic and drilling technology reduce the number of rigs that are required. Improved drill bits allow the same amount of footage to be drilled with fewer rigs. And better seismic data reduce the number of dry holes.
Weather also plays a part in the rig count. Posing more of a problem than snow does, wet ground makes it difficult to move rigs and set up new drillsites. In Canada, the rig count drops during the spring thaw, as provincial regulations prohibit moving heavy machinery on the soft, muddy roads.
Seasonal spending patterns also cause fluctuations in the rig count. The rig count dips from March until May then rises throughout the remainder of the year, peaking in December, as companies rush to meet drilling commitments before leases expire. The rig count definitely followed this route last year, dipping to a low of 488 on April 23, 1999.
The travel story and the rig count explanation-two seemingly unrelated subjects-are related because they illustrate opposite sides of the same coin.
A single incident cannot be extrapolated to explain a data change just because the two are consistent; and statistics alone don't tell the whole story. Proper interpretation of data is the key.
