By JOHN P. TRETBAR
Budget wonks in Topeka as well as your county courthouse are wrestling with a big drop in oil and gas tax revenues. Kansas oil producers generated $21.1 million dollars in Severance Tax revenue during the fiscal year that ended June 30th. The total for fiscal 2022 was less than half the $42.3 million in gross collections reported in fiscal 2021. In an email, The Kansas Department of Revenue says natural gas collections were down from $23 million to $6.2 million. Combined oil-and-gas property tax collections for calendar-year 2021 dropped more than 12 million dollars from the year before, to $47.5 million.
Kansas crude prices are down more than six dollars from a week ago. Kansas Common crude at CHS in McPherson starts the week at $87.75 per barrel.
The benchmark Nymex contract settled Friday at $97.59 per barrel, for a fourth consecutive trading session below $100. But a four-percent spike on Monday sent lunchtime prices over $101 a barrel in New York and over $105 in London.
The national average price for a gallon of regular gasoline fell 15 cents since last week to $4.52. The auto club AAA says the steady drop in pump prices is due to lower gasoline demand and lower oil prices. The government says gasoline demand dropped more than 14% last week to the lowest July tally in more than twenty years. Kansas prices are down more than a dime a gallon from last week. We spotted $4.49 a gallon at stations in Hays and Great Bend. Your 15-gallon fill-up will cost you half a dollar less than last week, and about four dollars less than a month ago.
Kansas operators spudded 742 wells across the state so far this year, up 66% from the tally at this time last year. Independent Oil and Gas Service is scouting current oilfield activity at 407 well sites, up nearly 80% from a year ago. The Rig Count in Kansas is up one rig in eastern Kansas and unchanged at 30 active rigs west of Wichita. Drilling was underway Friday on leases in Ellis, Russell and Stafford counties.
The Rotary Rig Count from Baker Hughes shows 756 active drilling rigs, up two oil rigs from last week. The count in Texas is up four. Oklahoma is up three. New Mexico is down two and Louisiana is down three rigs.
There's one new drilling permit in Ellis County among 19 filed in Western Kansas over the last week. Kansas regulators okayed 28 new drilling locations across the state. That's 875 new permits so far this year, compared to 535 a year ago at this time. Independent Oil & Gas Service reports 39 newly-completed wells for the week. Twenty-one of those are west of Wichita including two wells in Barton County, one in Ellis County and one in Stafford County. The year-to-date tally is 848 completed wells, more than double the 415 completions reported last year at this time.
Oklahoma joins Texas reporting record-breaking oil-and-gas tax collections. The state treasurer reported total tax receipts for the fiscal year that ended June 30th were up 15% at $16.46 BILLION. For the first time in state history, collections from oil and gas production taxes topped $1.5 billion during fiscal year 2022. The tally for last month was $171 million, the highest of any single month.
US crude oil inventories increased last week by 3.3 million barrels. The government reports stockpiles of 427.1 million barrels as of July 8th, which is about five percent below the five-year average for this time of year. Gasoline inventories rose 5.8 million barrels, and are five percent below the five-year average.
US operators pumped 74,000 barrels per day less crude last week than the week before. The Energy Information Administration says US output remains slightly over 12 million barrels per day for the fifth week in a row.
EIA said crude imports averaged 6.7 million barrels per day last week, down 200,000 barrels per day from the week before. The four-week rolling average is 1.2 percent higher than the same four-week period last year
Oil-by-rail in the United States last week was down from the week before and down from a year ago. The Association of American Railroads reports 9,395 tanker carloads in the week through July 9th, down 711 carloads from the week before and a 3.9% drop from a year ago. Canadian traffic is up more than 22 percent year over year, but dropped last week by more than a 1,000 carloads.
One of the super-majors earned some super profits from its refining business. Bloomberg reports Shell's refining sector may have added more than a billion dollars to it's bottom line in the second quarter. The trading update is the first indicator of just how much cash was flowing into the coffers of major oil companies due to surging pump prices. Refining margins at Shell nearly tripled from the first to the second quarter. A monthly report from OPEC notes that refinery margins at all of the main trading hubs increased in June. The cartel notes that refiners are now increasing their processing rates following peak maintenance season.
There are tentative signs that Russia's diversion of crude oil to Asia from long-time European customers is faltering. Shipments to China and India are down by almost 30% from their post-invasion peak. While it’s too early to say with confidence that self-sanctioning and pressure from the US on India, China and other buyers will have a sustained impact, Bloomberg reports there are early signs that Asian nations may not be able to fully replace Russia’s European buyers.