Inquiring minds are looking at the Railfax Charts for data through June 4, 2011.

Rail Traffic 13 Week Moving Averages – Percent Change From Year Ago

Note that baseline traffic is now in contraction with intermodal and cyclical traffic soon to follow if the current trend holds.

The above charts go back 1.5 years. It helps to steps back and look at the bigger picture. The recovery appears pronounced on the above charts but it isn’t.

Rail Carload Traffic Since 2006

Intermodal traffic, containers and piggyback service, actually has stronger cyclical tendencies than so-called cyclical traffic. Compared to the same month a year ago, intermodal is right where it was in 2006, 2007, and 2008.

Baseline traffic is below and cyclical traffic is well below levels in the same month in 2006, 2007, and 2008. Thus total traffic is below levels in the same month in 2006, 2007, and 2008.

The recovery looks good only in comparison to the 2009 trough.

What is Railshare?

Railshare is a comprehensive database of North American rail traffic. The data are provided each Thursday by the Association of American Railroads. Each week’s report covers the seven day period ending the preceding Saturday. Rail traffic is disaggregated between carload (traffic moving in traditional freight cars such as box cars, tank cars and hoppers) and intermodal traffic (containers and piggyback service).

Railshare provides commodity breakdowns for carload traffic; commodity detail for intermodal traffic is unavailable. Railshare graphs show four major breakdowns of rail traffic. Total traffic includes all carload and intermodal traffic; carload traffic is further divided between economically sensitive commodities (cyclical) and those that are less affected by the business cycle (baseline).

The above Railshare explanation from Railfax.

Note that commodity detail for intermodal traffic is unavailable. The charts show a highly cyclical nature.

Oil Consumption vs. Production Revisited

In Head of Saudi Electric Company Says “Oil Runs Out in 2030 if Current Consumption Maintained” I displayed a chart from BP that shows oil consumption exceeds production.

The Economist made an ominous sounding post out of it.

This morning, I was informed that the production numbers in the BP chart do not include biofuels or coal liquefaction, but consumption does.

Here is the chart:

Oil Consumption vs. Production

Possible Explanations (from my article)

  1. Cheating (under-reporting production) by OPEC
  2. Poor consumption numbers from China or elsewhere
  3. Another source of production not shown
  4. Some combination of the above

The biofuel explanation falls under point number 3 above “another source of production not shown“.

Thus, the ominous shortfall as suggested by The Economist is not really a shortfall at all, nor does it represent a huge drawdown in oil stocks. Instead biofuel production increased to make up the difference in demand.

As I said, it simply is not possible for oil consumption to grow faster than production for years on end. Logically, any increase in biofuel production will appear as a reduction in normal oil drilling production because of the mathematical truism consumption = production.

Mike “Mish” Shedlock
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