2015 jan pbn 32 pg web

Port Bureau January 2015

Greater Houston Port Bureau

News

Oil, Commodities Markets, and Price -Revisited

Will the Price of Oil Impact Houston Vessel Arrivals?

Spotlight on Fr. Carlos de la Torre New Chaplain at Houston Int’l Seafarers’ Center

Trade Statistics for the Texas Ports GHPB Announces 2015 Board of Directors

www.txgulf.org

Port Bureau 6

News

10

24 3

7 4 10

1

8

9 5

2

3 Captain’s Corner 10 Featured: Oil, 22 U.S. Household Predictability over Predicting

4 Port Watch

No Halcyon Days Are These

6 Spotlight on Fr. Carlos de la Torre Publisher/President CAPT Bill Diehl, USCG (Ret.), P.E. Editor Christine Schlenker Copy Editors Emily Mitchell Judith Schultz Art Director Christine Schlenker For information about the Port Bureau:

Phone: (713) 678-4300 Email: info@txgulf.org

Commodities Markets, and Price – a Sequel

Gas Expenditures Falling

20 GHPB 2015

Houston Still Top Ranked for Tonnage

Board of Directors

24 Trade Statistics

New Chairman for GHPB

Writers Dave Cooley Emily Mitchell Christine Schlenker Judith Schultz Patrick Seeba

Photographers Megan Essenmacher Christine Schlenker Cover Photo Kevin Morley

Port Bureau Staff Jeannie Angeli Al Cusick Megan Essenmacher Cristina Gomez Janette Molina Printing Company DiPuma Printing and Promotional Products www.dipuma.com

For information about the Port Bureau News stories or advertising:

Email: editor@txgulf.org

2 | January 2015 www.txgulf.org

A Publication of the Greater Houston Port Bureau The Port Bureau News magazine is a monthly publication of the Greater Houston Port Bureau, a member-driven nonprofit dedicated to promoting the maritime community, providing vessel movement information and offering members premier networking and advertising opportunities to drive business.

The magazine is distributed to over 7,000 professionals in the Houston maritime community via U.S. mail and email. Advertising is available for members.

6

Captain's Corner Predictability over Predicting L

ately we have been getting a lot of questions about what will happen with vessel traffic in the port as oil prices fall. Dave Cooley has spent the last several months – and the better part of 40 years – watching the oil market, and I encourage you to take a look at his perspective here in this edition on page 10.

While predicting the future with 100% accuracy is impossible, developing general predictability for day-to-day operations is one of the things we focus on here at the Port Bureau. I learned this lesson from my time working at the Panama Canal, where the Canal Administrator Alberto Aleman was very direct with us when it came to what mattered to him. While one might think he would want to concentrate on improving transit times, he actually emphasized safe and predictable transits above all.

When I was on the operations board, the upper threshold for a transit was 20 hours, though on good days we could move a ship through the Canal in 16 hours. We never received kudos for moving a ship faster; however, if we did not meet the 20-hour mark we would we hear directly from him. “Businesses are making big decisions based on our guarantee of 20 hours,” he would say before drilling us about why we did not meet the standard. In essence, he took the complicated process of transiting through the Canal and distilled it down into a winnable game: get them through safely in 20 hours - every time!

Shifting to our channel here in Houston, I have been thinking about how to bring this lesson of predictability to our own ports. With a new year being a time for reflection and inspiration for the future, I invite

you to give me a call or send me an email with your thoughts on this subject.

I will start the conversation by sharing what I believe are the CAPT Bill Diehl, three major issues facing our port: USCG (Ret.) predictable dredging, predictable transit times, and a sustainable workforce.

Though these sound like high-concept ideas, I think there are certain strides we can make. We are a port with 21st century technology that sometimes uses 19th century processes. We need to make sure our processes are helping us and not holding us back. While we have made some small advances regarding congressional support for dredging funding in the last year, the message they give us remains: do more with less. The way to do that is to make sure that we are all singing from the same sheet of music and taking advantage of efficiencies that we can create locally. The same goes for transit times: while we cannot change the length or width of the channel, we can make sure our chemical tankers, product carriers, and any other ships making multiple terminal calls maintain an efficient schedule as they move up and down the channel. Finally, we are still moving forward to make sure that our workforce is ready to meet the challenges of the future. Between the maritime high schools, community colleges, and universities, we need to ensure that we are sharing best practices with the next generation of waterfront workers.

I want to conclude with a quote from Ned Holmes as he accepted our 2014 Maritime Person of the Year award: “Without constant improvement, you will fall behind…You have to stay the course and move forward.

Standing still is not an option.” At the Port Bureau, we are going to keep up the great momentum of this port by working on projects that will allow us to provide predictably to our customers.

All the best in 2015, and I look forward to hearing your thoughts. ò Greater Houston Port Bureau | 3

© Christine Schlenker

PORT WATCH

No Halcyon Days Are These Tom Marian, Buffalo Marine Service

T

he Greeks characterized the week preceding down 6% from October but remain up for the year. the winter solstice as the “halcyon days.” It This month’s percentage loss leader was Brownsville was a period during which the seas were calm due to with a 29% drop, pulling the port further into negative a lack of storms, and it was steeped in a tale involving territory for the year – now at 9%. On that same end the death of Alcyone’s husband following a harrowing of the waterway, Corpus Christi also experienced a shipwreck. Today, it is more generally understood as the double-digit monthly decline of over 12%. Unlike calm that settles upon us as we reflect upon the peace Brownsville, Corpus Christi has had a banner year in and joy of the Christmas 2014 with an 18.4% Texas Ports Deepdraft Vessel Arrivals miracle. Not so these rise over 2013. Yet, Nov. 2014 Year-to-Date Percent Change last several weeks in the there may be trouble marine transportation on the horizon if business. crude continues to BROWNSVILLE, -8.8% tumble or languish CORPUS CHRISTI, 18.4% Granted, there in the $50 per was some semblance FREEPORT, 12.4% barrel range. of a monthly calm GALVESTON, 7.7% Galveston had similar arrival during the month of HOUSTON, -0.6% results – percentage-wise – as Corpus November as the vast PORT LAVACA, -0.9% Christi, with a 12% monthly wane and 8% majority of Texas ports year-to-date climb; however, the raw arrival SABINE, -5.3% experienced monthly number for November was by far the year’s declines. Overall, the TEXAS CITY, -8.6% nadir. Galveston’s neighbor to the west, Port arrival numbers are GRAND TOTAL, 1.3% Freeport, posted positive numbers for both 4 | January 2015 www.txgulf.org

port watch

Port of Houston Deepdraft Vessel Arrivals

Nov. 2014 vs. Nov. 2013 3000 2500

Nov. 2014 YTD (Total: 7,605) 2000 1500

Nov. 2013 YTD (Total: 7,650)

1000 500 0

the month and year at 3% and 12.4%, respectively.

Texas City experienced its third consecutive monthly decline. Fortunately, the most recent slide was a mere 1%. Unfortunately, the year-to-date arrival tallies remain off by nearly 9%. The port of Sabine is similarly situated with respect to its year-over-year performance with a greater than 5% fall. Nevertheless, in November it rebounded somewhat over October’s low of 165 vessel arrivals, with a total of 177 vessels or 7.3% more traffic. The brownwater component of the regional marine transportation picture also witnessed a monthly lull as 3.3% fewer tows transited through the Houston Ship Channel. The good news is that the opposite is true vis-à-vis the year-to-date numbers. That is, 2014 is 3.3% higher than 2013’s tow movements for the nation’s busiest waterway.

With respect to the country’s busiest petrochemical port, Houston saw 54 fewer vessel arrivals (7.4%) in November, which dragged it about 1% into the vessel arrival red for the year. With the exception of car carriers and cruise ships, every major vessel category posted losses for the month. Car carriers saw one additional ship arrival in November and cruise ship calls ascended from 3 to 9 as Houston’s cruise ship terminal picked up additional business. Tank vessel movements essentially broke even and remain up for the year by 1.5%. LPG arrivals also remain above last year’s year-to-date

numbers by 4% but are down nearly 6% for the year. Chemical tankers, compared to last year and the previous month, are not registering enviable numbers with percentage drops of 20% and 15%, respectively. General cargo ship numbers are also in negative territory for both the year and the month – 5.5% and 14% to be more specific. Bulk vessel movements continue to enjoy a banner year despite a 13% decrease in arrivals with 25% more vessels mooring in Houston in 2014. Container vessels are also enjoying a heartening year with respect to year-to-date numbers and total containers. Unfortunately, there was 7% dip for the month.

In light of November’s quietude relative to October, it appears that the halcyon days arrived a bit early this year. Superficially that may be the case, but the first half of November was dramatically different from the second half. In fact, the vessel arrival pace has quickened well into December.

Some of this is attributable to frenzied trading related to the “crude craze” caused by the price plunge of black gold. Other heightened activity is tied to end-of-year inventory consolidation. Regardless of the cause, there is anything but calm across the Houston Ship Channel.

Indeed, preliminary December numbers indicate that the trade year will end on a very strong note, and the halcyon days may have to wait until the mid-winter fogs bring calm to the seas. ò

THE HOUSTON PILOTS Silent Servants of Progress

www.houston-pilots.com Greater Houston Port Bureau | 5

Spotlight

Houston International Seafarers’ Center Announces New Chaplain:

Fr. Carlos de la Torre Christine Schlenker, GHPB

T

he search for a new pastor for the Houston International Seafarers’ Center and St. Alphonsus Church located near the Sherman Bridge spanning the Houston Ship Channel began after Fr. Rivers Patout unexpectedly passed away in June 2014.

Fr. Brendan Cahill, Director of the Secretariat for Clergy Formation and Chaplaincy Services for the Archdiocese of Galveston-Houston, recalled how the search pointed to Fr. Carlos de la Torre almost immediately. Citing his “warm, open, engaging personality” and, just as importantly, his “youthful energy,” several pastors in the Houston-Galveston area recommended Fr. de la Torre to Fr. Cahill and encouraged Fr. de la Torre to consider the position.

When Cardinal Daniel diNardo asked Fr. de la Torre to consider becoming the next port chaplain he was ready to accept the transfer.

Fr. de la Torre’s career in the ministry began when he was just 12 years old at seminary in his native country of the Philippines. During his 12 years at the seminary, which included high school and college, he studied philosophy, languages, and theology. Fr. de la Torre spent a short time as a deacon before entering the priesthood at the age of 24 and being assigned as vicar and later pastor of a parish in the Right: Fr. de la Torre (third from right) participates in the Houston International Seafarers’ Center’s Annual Mass on December 11, 2014, alongside Cardinal diNardo (center) and others from the Archdiocese of Houston-Galveston. Photo courtesy of Houston International Seafarers’ Center.

Archdiocese of Caceres in the Philippines.

After nearly 20 years serving in the Philippines, Fr. de la Torre took an opportunity to move to a parish in California in 2001. Although his initial visit to the U.S. was simply as a tourist, several pastors located in the U.S. encouraged him to apply to work in the States permanently. As the work for the church is fairly universal in all countries, Fr. de la Torre found little difficulty adjusting to his new role in America. Fr. de la Torre served a number of churches in California before he moved to the Archdiocese of Galveston-Houston in 2010, a diocese he felt particularly comfortable joining as he is close friends with another Filipino priest serving in the area. Fr. de la Torre spent two and a half years at St. Cecilia near Memorial City and another two and a half years at St. Theresa in Sugarland before his appointment as pastor of St. Alphonsus and chaplain of the Houston International Seafarers’ Center.

Fr. de la Torre’s Filipino heritage and fluency in Tagalog, Spanish, and English have the potential for positive impacts on seafaring port visitors and the

6 | January 2015 www.txgulf.org

Don’t Navigate Your Finances Alone.

With experienced maritime bankers and the capacity to lend, Bank of Texas has the resources you need to help navigate your finances. We offer competitive structures and terms to meet your growing capital needs.

As a trusted name in marine financing and a committed partner to the maritime industry, let us chart you a course for success. Give us a call, or better yet, let us come see you.

Vessel Financing | Lines of Credit | Leasing | Real Estate & Terminal Expansion Sebastien Solar: 713.289.5840 | http://bankoftexas.longliveyourmoney.com/marinefinance Š 2014 Bank of Texas, a division of BOKF, NA. Member FDIC.

Greater Houston Port Bureau | 7

Spotlight community surrounding St. Alphonsus. According to the Department of Labor and Employment in the Philippines, Filipinos account for over 25% of seafarers

worldwide, the largest single nationality represented in the industry. In the St. Alphonsus community, about 49% of the surrounding population immigrated from Mexico, the Caribbean, or Central America, which are primarily Spanish speaking regions. Fr. de la Torre’s ability to communicate in the native languages of seafarers and community members may help him break down barriers to assisting the communities.

At Gulf Winds, our business is always about

MORE THAN THE MOVE

By partnering with Gulf Winds, your dollar goes to more than just moving freight. Gulf Winds continually partners with ICM (International Cooperating Ministries) to build churches and orphanages all over the world. We believe our company’s mission shouldn’t just be reserved for office walls.

Our mission is to glorify God by providing world class logistics services through continual investment in our people, clients, community and the world we live in.

www.gwii.com | 866.238.4909 8 | January 2015 www.txgulf.org

Currently, Fr. de la Torre is orienting himself with a new community and his new role as a chaplain.

Becoming a port chaplain has a unique set of hurdles, such as needing a TWIC card to access terminals and facilities. While he awaits the processing of his TWIC application, Fr. de la Torre is still able to work at St. Alphonsus and learn the processes he will have to follow to access the vessels in port.

Before embarking on any programmatic changes for the Seafarers’ Center, Fr. de la Torre plans on working toward understanding the true needs of the seafarers so he can better help them.

Although this will be his first appointment as a chaplain for seafarers, Fr. de la Torre’s parents worked on boats when he was a child, so he feels a natural connection to mariners. ò

Spotlight Right: Seafarers from the Stadiongracht receive bags of giftboxes delivered by Houston International Seafarers’ Center chaplains on December 4, 2014.

The Houston International Seafarers’ Center is known worldwide for its Christmas Shoebox Program.

Through donations from the Houston port community and help from volunteers, the Seafarers’ Center will deliver over 10,000 shoeboxes filled with gifts to seafarers this holiday season. Photo courtesy of Houston International Seafarers’ Center.

Across the Gulf Coast, we’ve been meeting the needs of our clients for 123 years.

With the Port of Houston expanding, do you have a bank that will grow with your financial needs?

With over 9 billion in assets, Trustmark offers expertise in the areas of Trade Finance, Maritime lending as well as a wide range of products and services tailored to meet your financial needs.

For more information on how Trustmark can assist you, please contact one of our experienced lenders.

Mike Quiray Senior Vice President, Trade Services & Maritime Finance 713.827.3707 MQuiray@trustmark.com

Jeff Deutsch Senior Vice President, Corporate Banking Manager 713.827.3717 JDeutsch@trustmark.com

trustmark.com

Member FDIC

Greater Houston Port Bureau | 9

Oil, Commodities Markets, and Price – a Sequel Dave Cooley, GHPB

10 | January 2015

www.txgulf.org

Oil Price update

S

ince the publication of a similarly titled article in the December 2014 edition of the Port Bureau News, which contained a brief overview of oil pricing, oil price has become a high profile topic. This sequel will review some of the factors that precipitated this drop in the oil price, assess the effect on ship arrivals at the Houston port complex (public and private terminals) for both the short term (mid-2015) and long term (beyond mid-2015), offer a rationale behind those assessments, and suggest some harbingers of change that would either confirm or reject this evaluation.

Rolling Snake Eyes and Boxcars – a Convergence of Events

OPEC’s announcement in late November that it will not reduce the quota governing oil sales by its individual members resulted in an immediate $10 per barrel (bbl) drop in oil price. This drop was preceded by an earlier $30/bbl slide in oil price that occurred between June and late November, which was followed by another $10/bbl decline by mid-December for a total price drop of about $50/bbl (48%).

Spot Price of WTI

($/bbl, June 2 - Dec. 22, 2014) $120 $100 $80

20-Jun, $107.95

24-Nov, $75.74

28-Nov, $65.94

$60

22-Dec, $55.25

$40 $20

$0

6/2 6/16 6/30 7/14 7/28 8/11 8/25 9/8 9/22 10/6 10/20 11/3 11/17 12/1 12/15

The spot price of WTI fell by over $50/bbl between June and December 2014. Source: EIA

because either oil demand is increasing or the volume of oil supplied is less than expected. While awaiting information that either confirms or refutes the current expectation of an oversupplied market, the oil price continues to slip away, although at a somewhat slower rate of decline than in previous months.

World Oil Production

The most prominent factor contributing to this Between 2009 and 2013, world oil production significant decline is the substantial increase in U.S. oil increased by about 4.3 million barrels per day production, which has yet to be fully counterbalanced (MMBD), rising from 86.0 MMBD to 90.3 MMBD. by a similar rise in world oil consumption. When Of this increased amount, 3.8 MMBD is attributable OPEC announced that it would not take any overt to the U.S., 240 thousand barrels per day (MBD) is action to rebalance worldwide supply and demand, all sourced from OPEC countries, and 325 MBD is from expectations of market intervention were eliminated the rest of the world. In terms of market share, OPEC’s and oil price immediately fell. Resolving Annual Change in Oil Production this imbalance is now left to the market, and OPEC, NON-OPEC (x U.S.), and the U.S. (MBD) price will be the arbiter.

World Oil Supply and Demand

The current consensus of nearly all oil market participants is that oil is oversupplied. This expectation will only be confirmed when actual worldwide supply and demand statistics are available in four to six months.

2,000 1,500

2009

2010

2011

2012

2013

1,000 500 0 -500 -1,000

-1,500 An indicator to watch in the meantime -2,000 is the aggregate level of world oil stocks OPEC NON-OPEC (x U.S.) United States which should begin to build if there is The U.S. was responsible for 3.8 MMBD of the 4.8 MMBD increase oversupply. If this does not occur, then the in world oil production between 2009 and 2013. Source: EIA oversupply is not as dire as originally envisioned

Greater Houston Port Bureau | 11

Oil Price update portion of the market has generally held steady at around 40% since 1980. However, from late 2013 through August 2014 (the most recently available data), OPEC’s share has dropped by over 1% or the equivalent of about 1 MMBD. Since oil revenue is a major source of funding for the national budget of all OPEC countries, this is a serious concern for those countries.

World Oil Consumption

Annual Change in Petroleum Consumption U.S. - EU - China - Japan (MBD) 1,000 800

2009

600

2010

2011

2012

2013

400 200 0 -200 -400 -600

-800 In general, oil consumption follows economic activity. However, current economic -1,000 China Japan United States EU-27 activity remains somewhat unsteady due to Oil consumption follows economic activity which has been the lingering effects of the Great Recession of uneven since the Great Recession. Source: EIA 2009. For example, the economies of those countries that responded immediately to the economic crisis From a supply viewpoint, does the world perceive by using a combination of both monetary easing and the current oversupply as a fleeting moment or fiscal stimulus recovered more quickly, such as China, a sustained event? Insight will be revealed as oil Japan, and the U.S. To the contrary, the Eurozone, producers determine the effect lower oil price will have which chose a more muted response, experienced a on cash flow and the related availability of capital. period of less vibrant economic growth.

As results become known, the impact on all U.S. oil production will lie along a continuum with slowed but Translating economic activity to oil consumption, continued growth at one end and an immediate decline China, driven by an export-led economy, increased at the other end. In the aggregate, if more projects are oil consumption by 2.4 MMBD from 2009 to 2013, deferred or canceled as opposed to continuing, U.S. albeit at a declining rate from 2010 forward. In both Japan and the United States, oil consumption increased crude oil production will begin to decline sooner and at a more rapid rate than currently seen. during 2010 as these economies rebounded from the financial crisis. Over the next four years, economic From a demand viewpoint, will the world be activity was slow and uneven and total oil consumption able to capture the benefits from the lower oil price: between 2009 and 2013 registered a slight decline. The reduced costs of human mobility, transporting goods, Eurozone followed a policy that adhered to the deficit and manufacturing? Capitalizing on these benefits spending guidelines established by the EU Charter. may increase the level of economic activity, which may This resulted in declining economic growth for most in turn increase the demand for oil, and supply and countries throughout the Eurozone during every demand will converge by either reducing or perhaps year since 2010, leading to a 1.9 MMBD decline in eliminating the oversupply. aggregate oil consumption.

The Supply and Demand Balance

How the world economies and, consequently, world oil consumption respond to lower oil costs will begin to unfold during first half of 2015. Will supply be curtailed or will demand increase? Will another exogenous event, such as a harsh winter, change the dynamics of worldwide oil supply and demand?

12 | January 2015

The Seasonal Influence

Another factor exacerbating the current decline in oil price is that the decline started during a season with historically decreased fuel consumption. Spring and autumn are times when the seasonal demand for oil is at its nadir. In autumn, for example, the weather has cooled but is not cold, so demand for heating oil has yet to increase. Similarly, summer vacations are over so demand for gasoline is not robust. Demand for neither

www.txgulf.org

Oil Price update weather- nor travel-related fuel influence the price.

Since no particular product is in vogue, any exogenous event that affects the supply/demand balance, as in the current case, is amplified and the initial effect is more pronounced.

oil production has displaced essentially all foreign waterborne low sulfur crude oil imports, leaving the low quality low gravity/high sulfur crude as the only foreign waterborne oil imported into Houston. Since

The Houston Port Complex – Short and Long Term Assessment

The immediate effect of the current drop in oil price on all types of vessel arrivals in Houston is negligible. The current event is characterized by an oversupply of oil that reduces price and potentially enhances economic activity, as opposed to a reduction of oil supply which may lead to the opposite set of outcomes.

As a result, the effect of a lower oil price on both the U.S. and the world economy should be beneficial.

Waterborne trade should either continue at current levels or perhaps increase, unless overpowered by an unforeseen exogenous event that dampens economic activity.

Oil and Houston

Within an established set of bounds, refiners can process a variety of crude oils from either domestic or foreign sources. U.S. oil producers offer price incentives to encourage offtake of domestic high gravity/low sulfur oil production, which has made it the preferred supply to the domestic refining industry.

As a result, domestic Greater Houston Port Bureau | 13

Oil Price update these lower quality crude oil imports meet the specific oil supply needs of the Houston-area refining industry, it is neither operationally efficient nor economically viable to displace these oils from the overall refinery supply portfolio.

To meet the oil supply requirements of the local refining complex, Houston imports about 600-700 MBD of low gravity/high sulfur crude oil. As imports of high sulfur crude oil have remained relatively steady over time, vessel arrivals should not change during either the short or long term. Ultimately, when shale oil production begins to decline, the refining complex will reinstate a supply of higher quality foreign waterborne crude oil imports to fill this reemerging supply gap and arrivals of vessels delivering these types of crude oil will increase accordingly.

Houston Crude Oil Imports by Quality (MBD)

800

Low Gravity/High Sulfur

700

High Gravity/Low Sulfur

600 500 400 300 200 100 0 2009

2010

2011

2012

2013

THRU AUG 2014

Houston imports of low gravity/high sulfur crude are constant, while imports of high gravity/low sulfur crude have been largely discontinued. Source: GHPB analysis of EIA data

Estimated Petroleum Exports Houston MBD

(MBD)

1,200 Similarly, no significant change to the level of refined product exports leaving 1,000 Houston is expected during the short term.

800 Over the longer term, since the export of 600 crude oil remains restricted, continuing to 400 export refined products is the only viable 200 avenue available that supports the current rate of U.S. crude oil production. However, since 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 current refined product exports are near the Refined Products Chemicals NGLs Crude Oil maximum level possible based on existing Refined product exports are expected to continue barring any installed refining capacity, further upside change to the crude export ban. Source: GHPB analysis of EIA potential is limited. Should shale oil production data continue to increase, other disposal alternatives beyond exporting refined products must be sought.

Alternatively, if shale oil production either tapers or perhaps begins to decline, as long as producers continue to offer refiners a discount that supports the economic paradigm of exporting crude oil as refined products, the rate of refined products exports will follow the declining crude oil production curve.

Vessel arrivals supporting the export of refined products will decline accordingly.

Exports of LPGs have grown, but further growth will not be significant during the short term as infrastructure developments are near capacity.

Over the long term, LPG export opportunities will 14 | January 2015

www.txgulf.org

Greater Houston Port Bureau | 15

Oil Price update follow the rate of change in both oil and natural gas production and this will be influenced by oil price.

Exports of crude oil condensate, while authorized, have slowed and no resurgence is expected unless the general crude oil export restriction is lifted.

Chemicals

The wildcard at the Houston port complex is the possible effect of lower oil price on the chemicals industry. For example, there is a range of selected petroleum-related gases and liquids that can be utilized to manufacture ethylene. The price for each individual feedstock will not only vary with market conditions, but will also be influenced by the general price level for oil. As the general price level oscillates between high and low extremes, the differential between and among various oil-related products expands and contracts accordingly. That is, in a generally rising price environment the price differential widens, while the opposite is true when prices generally narrow.

With oil prices falling, the price differential between ethane (a gas) and naphtha (a liquid) is compressing. From an average differential of about $0.30 per pound from 2012 through most of 2014, this differential has recently compressed to about $0.10 per pound.

Going forward, should oil price remain at or trend below current levels, perpetuating a narrow ethane-naphtha differential or perhaps inverting the relationship, naphtha could regain its prior preeminence as a more attractive feedstock for manufacturing ethylene. The recent increase in both chemical tankers and LPG carriers calling at the Port of Houston, as well as various current and future capital projects predicated on capturing the benefit of the oil shale renaissance, could be at risk.

Crude Oil Exports

If the restrictions currently preventing the unfettered export of domestic crude oil were lifted, the immediate impact would be a significant reduction

Below: The differential between ethane (red) and naphtha (purple) averaged about $0.30/pound from 2012 through most of 2014, but has recently compressed to about $0.10/pound. Courtesy of En*Vantage Weekly Energy Report,

December 11, 2014.

Spot Ethylene Net Production Margins by Feedstock 70

60 50

Cents per Pound

40

70

Ethane Feedstock Margins

60

Propane Feedstock Margins Butane Feedstock Margins

50

Naphtha Feedstock Margins

40

Gas Oil Feedstock Margins

30

30

20

20

10

10

0

0

(10)

(10)

(20)

(20)

(30)

(30)

(40)

(40)

(50)

(50)

(60) Jan-08

Jan-09

16 | January 2015

Jan-10

Jan-11

Jan-12

www.txgulf.org

Jan-13

Jan-14

(60)

Oil Price update

BARGING AHEAD ever so politely.

B

Buffalo Marine Service, Inc.

www.BuffaloMarine.com

Greater Houston Port Bureau | 17

Oil Price update of the quantity of gasoline and diesel being exported as the logistics discount benefitting refiners would be eliminated. In this scenario, the export of refined products would be replaced by a like quantity of crude oil exports, resulting in a slight reduction of vessel arrivals because crude oil tankers have greater capacity than product tankers. Should U.S. shale oil production continue to increase, any further increase in U.S. crude oil exports could also place further downward pressure on world oil prices.

Harbingers of Change

Leading indicators of any change to the number of vessel arrivals calling at Houston terminals could include oil rig count, clean tanker charter rates for loading in the Gulf of Mexico, truck count at the Port of Houston Authority container terminals, the value of the new manufacturing order-book, and most importantly, the scheduling of an emergency meeting of the OPEC Oil Ministers. Monitoring these events

could provide insight as to the performance of the economy in general and guidance as to the future level of activity in the oil patch.

Conclusion

The fall in oil price will not have any foreseeable immediate effect on ship arrivals at Houston’s public or private terminals since a key driver of oil consumption is the level of economic activity and the current outlook for U.S. gross domestic product (GDP) is continued, albeit, slow improvement. Specifically: • With U.S. GDP forecast to experience continued but slow economic growth, foreign waterborne crude oil imports should continue to follow current levels and no significant change in vessel arrivals is anticipated.

• Vessel arrivals for U.S. exports of both refined products and LPGs should not experience any significant near-term reductions. Even

SaleS, Service, rental Discover Briggs’ unmatched selection of new and used industrial, heavy and material handling equipment featuring forklifts, railcar movers, scissor lifts, sweepers and more.

8787 Wallisville Rd i Houston, tX 77029 i (713) 672-1100 | briggsequipment.com

18 | January 2015

www.txgulf.org

Oil Price update in a worst case scenario in which all drilling stops immediately, oil production would begin to decline slowly for about 12 to 15 months, based on the shale oil production curve, before beginning a more precipitous drop. In this scenario, exports of refined products and LPGs would follow the crude oil production curve: a somewhat slow decline during the short term and then an accelerating decline thereafter.

• The dropping oil price currently has an undetermined effect on Houston’s chemicals industry as the price of ethane converges with that of naphtha.

Over the short term, changes to either the supply or demand for any commodity, such as oil, are price inelastic due to a lack of alternatives. That is, any particular change in price, positive or negative, will be disproportionately large compared to the resulting change in quantity supplied or demanded. Therefore,

in a rising price environment (undersupply), buyers initially will not have a readily-available alternative and will continue to pay the higher price. Similarly, when price falls (oversupply), suppliers cannot immediately discontinue production and will accept a lower price until production levels can be systematically rationalized. As a result, there is time for businesses along the Houston Ship Channel to adjust to changes in the price of oil. ò Ed. Note: GHPB analysts Christine Schlenker and Emily Mitchell also contributed to this article.

For more information, contact Dave Cooley at dcooley@txgulf.org or (713) 670-1268.

www.bladesintl.com LETTER OF CREDIT BROKERAGE ………………………………..…………………………………………………………………………………………………………………………..………...………

Diplomatically reduces export letter of credit and trade finance fees significantly.

Blades International, Inc. is the leader in Letter of

Builds relationships with the top strategic International Trade Finance Banks by allowing them to quote on Letter of Credit activity.

transactions”, helping various steel, energy

Reviews export letters of credit and provides expert advice on wording and credit issues.

Clients diplomatically enhance their relationships

CALL: Sherry Mama Direct: 281-224-3228

Credit brokerage for “Export letter of credit service, equipment, and commodity exporters arrange the most competitive trade finance terms. with the major International Trade Finance Banks and obtain the most competitive export letter of credit terms.

Contact: Sherry Mama | sherrymama@bladesintl.com | 2425 Fountain View, #350 | Houston, TX 77057 | 713.977.7400

Greater Houston Port Bureau | 19

ghpb directors

2015 Board of Directors of the Greater Houston Port Bureau

Judith Schultz, GHPB

T

he Port Bureau welcomes a new Chairman of the Board and four new members to the Board of Directors in January 2015. Charles Flournoy, the longest-standing Port Bureau director, was unanimously selected to lead the Port Bureau for the next three years. Marcia Faschingbauer of Excargo Services, Chris Robblee of Vopak, Karl Schröder of Schröder Marine Services, and Dave Weston of HDR, Inc., enter the Board as new directors.

The Port Bureau Board and staff thank Dennis Hansell for his service as Chairman from 2011 through 2014 and are pleased that he will continue to contribute to the success of the Port Bureau as Immediate Past Chairman.

About the New Chairman and Directors:

Charles Flournoy is Vice Chairman and Partner at Wortham Insurance. Except for a small gap during which he served on active duty in the military for several years, Charles has spent his entire career at Wortham Insurance since graduating from the University of Texas in 1968. As the manager of the marine department and director of the company’s marketing, Charles specializes in marine insurance for blue and brownwater vessels as well as third world infrastructure development projects.

Marcia Faschingbauer, founder and President of Excargo Services, Inc., parlayed her experience with her family’s food-packaging business into a successful trucking company committed to transporting goods in a timely, safe, and professional manner. Excellence in communications is a priority for Marcia, demonstrated by the company’s advanced suite of communications 20 | January 2015

tools and continuing commitment to information sharing technology. Marcia and Excargo have been honored numerous times for excellence in performance and safety.

Chris Robblee is Managing Director of Gulf Coast Terminals at Vopak. A graduate of the University of Windsor in Ontario, Chris served as General Manager and Sales and Marketing Manager for Vopak Canada, with terminal facilities located in Montreal and Hamilton. Chris moved to Houston in 2013 as Director of Business Development for Vopak Americas before assuming his current position.

Karl Schröder has been a part of Schröder Marine Services throughout his career, working part time on the docks while completing his undergraduate degree in Mathematics at St. Thomas University. He is now Vice President of Operations, responsible for supervising up to 50 union and non-union longshoremen and terminal workers as they move as much as 30,000 tons of cargo per ship.

David Weston, HDR Engineering’s Area Manager for the Texas Gulf and Louisiana, is responsible for managing the firm’s Gulf Coast practice and overseeing offices in Corpus Christi, Houston, Lafayette, and Metairie. Prior to joining HDR, Dave served as the U.S. Army Corps of Engineers Commander and District Engineer of the Galveston District. He supervised the execution of numerous large projects, including the operation and maintenance of 1,400 miles of Federal Navigation Channels serving 21 port terminals and leading response and recovery operations following Hurricane Ike. ò

www.txgulf.org

ghpb directors

Executive Committee of the Board of Directors Charles Flournoy, Chairman Vice Chairman, Partner Wortham Insurance Steve Stewart, 1st Vice Chairman President Gulf Winds International, Inc.

April Bailey Senior VP – Commercial Banking Amegy Bank NA

Capt. Tim J. Downs GM, Shipping & Maritime – Americas Bernt Netland, 2nd Vice Chairman Shell Trading (US) Company President & CEO Intercontinental Terminals Co. Roger Guenther Executive Director CAPT Robert Baker, USN Port of Houston Authority (Ret.), Secretary-Treasurer Marine Superintendent Tom Marian ExxonMobil Baytown Refinery General Counsel Buffalo Marine Service, Inc. Dennis Hansell, Immediate Past Chairman Executive Vice President Suderman & Young Towing Co.

Capt. Mike Morris Presiding Officer Houston Pilots Capt. John G. Peterlin III Sr. Director, Marketing & Administration Port of Galveston Vinny Pilegge President Manchester Terminal, LLC Nolan Richardson President Richardson Companies John Taylor Secretary Houston Mooring Company

Members of the Board of Directors Jim Black

John Heimsath

Bob Blades

Charlie Jenkins

President/CEO Moran Gulf Shipping Agencies President Blades International, Inc.

Vincent J. DiCosimo

SVP Petroleum Logistics Targa Resources

Marcia Faschingbauer President Excargo Services Inc.

Tim Haas

Sr. Vice President, Operations Watco Companies Greens Port

Jason Hayley

Director of Waterfront Operations Port of Texas City

President ACM Logistics & Consulting, Inc.

Chris Robblee

Managing Director, Gulf Coast Terminals Vopak NA

Managing Director, Channel Development & Environmental Affairs Port of Houston Authority

John W. Schlosser

Mike Mangan

Vice President - Operations Schröder Marine Services

Vice President, Business Development Houston Fuel Oil Terminal Co.

Brad Maxcey

Ops & Business Development Danner’s Inc.

Albert (Bert) Noggle

VP - Finance Odfjell Holdings (US) Inc.

President Kinder Morgan Terminals

Karl Schröder

Robert Schwarz

General Manager Texas Terminals LP

Tim Studdert

President Shamrock Marine

Dave Weston Vice President HDR, Inc.

Greater Houston Port Bureau | 21

trade statistics

Foreign Trade Statistics

Port of Houston ranked first by tonnage, second by cargo value Christine Schlenker, GHPB

Port Rankings

T

he Port of Houston (public and private terminals) showed small year-to-date growth in waterborne foreign total trade, i.e., imports plus exports, through October 2014. Houston increases by tonnage and cargo value were 0.6% and 0.5%, respectively. Total U.S. waterborne foreign trade experienced more robust growth during the same time period, increasing by 2.6% in tonnage and 1.2% in cargo value.

Houston ranked first in the U.S. by foreign waterborne tonnage and second by cargo value. Los Angeles topped the cargo value ranking at 16.6% of total U.S. waterborne foreign trade with Houston at 9.5%. As usual, New Orleans followed Houston in tonnage at 7.6% and 11.5% of U.S. total waterborne foreign trade, respectively. The top ten U.S. seaports accounted for over 52% of waterborne foreign trade.

Texas Ports Total Texas waterborne foreign tonnage increased by 2.4% for tonnage but decreased slightly by cargo value by -0.1%.

The other Texas ports saw much more pronounced year-to-date changes than Houston. The Sabine Pass ports of Port Arthur and Beaumont experienced declines in both cargo value (-10.5% and -8.1%, respectively) and tonnage (-3.5% and -11.0%, respectively). Texas City is the only other Texas port to experience declines through October 2014 year-to-date, decreasing 5.0% for both cargo value and tonnage.

Despite Port Arthur’s decline, it still joined Houston and Corpus Christi in the top ten U.S. ports by waterborne foreign tonnage. Houston is the only Texas port to make the top ten by cargo value.

Total Waterborne Trade by Tonnage January-October 2014 Mobile, AL 2.6%

Corpus Christi, TX 3.3% Long Beach, CA 3.5%

Port

All Other Seaports 47.8%

Houston, TX 11.5%

Newark, NJ 4.2%

Port Arthur, TX 4.1% Gramercy, LA 4.9% Norfolk-Newport News, VA 4.9%

Los Angeles, CA 5.6%

Tonnage (million metric tons)

New Orleans, LA 7.6%

Houston, TX New Orleans, LA Los Angeles, CA Norfolk-Newport News, VA Gramercy, LA Port Arthur, TX Newark, NJ Long Beach, CA Corpus Christi, TX Mobile, AL All Other Seaports

MMT 123.2 81.4 60.2 52.0 52.1 44.2 44.8 37.5 35.4 27.5 511.2

Source: GHPB analysis of U.S. Census Bureau data

22 | January 2015

www.txgulf.org

trade statistics

Houston Port Arthur Corpus Christi Texas City Beaumont Freeport Galveston Port Lavaca Brownsville

nk by .2 To 0 nn (h 1 4 ag un YT e dr D ed Ve th s s e 20 ou l 13 sa V a -2 nd lue 01 Pe 4 $U rc YT S) en D V Oc tC a t. ha lue 20 ng 14 e ( th T Y T D ou on Ve sa nag ss nd e el 20 m 13 e -2 01 tric Pe 4 YT ton s) rc D en T t C on ha nag ng e e

1 7 9 16 17 24 35 41 77

Oc t

Ra Na ti o na l

Te xa

sP or ts

Texas Ports - Ranking by Tonnage

$ 140,609 $ 27,510 $ 21,906 $ 15,066 $ 10,648 $ 7,903 $ 7,036 $ 1,117 $ 830

0.5% -10.5% 4.4% -5.0% -8.1% 31.0% 12.4% 2.4% 54.9%

123,167 44,204 35,399 19,314 15,240 13,087 7,453 5,294 1,330

0.6% -3.5% 9.3% -5.0% -11.0% 43.0% 32.5% 11.9% 44.7%

Source: GHPB analysis of U.S. Census Bureau data

Greater Houston Port Bureau | 23

Trade Statistics Of the Texas ports that increased by tonnage, all but the two largest, Houston and Corpus Christi, experienced double-digit growth. The strongest improvements by tonnage were Brownsville at 44.7%, Freeport at 43.0%, and Galveston at 32.5%. While this growth seems impressive, it is also important to note that due to the size of these ports (the tonnage of Brownsville, Freeport, and Galveston combined is 17.8% of Houston’s), the impact on Texas total trade is small.

Houston Exports

Although total year-to-date exports were up 2.9% by tonnage and 0.7% by value, most of Houston’s top ten exported commodities have seen declines since last year, indicating that Houston’s exports are becoming more diversified. The most notable increase comes from Houston’s vibrant petroleum gas exports, up 91% by value and over 50% by tonnage. Houston saw a 4.3%

24 | January 2015

increase in LPG vessel arrivals to accommodate the export market.

Houston Imports

Not surprisingly, crude oil and petroleum oils imports continued to slide in the wake of high levels of U.S. crude production. Products used in developing shale oil fields and for construction were still some of Houston’s top imports through October 2014, including seamless tubes and pipes, hot-rolled iron, and guar gum. Guar gum, the primary driver in the vegetables extracts category, is a component of fracking fluid. Steel and iron products continued a banner year, up nearly 25% by value and 35% by tonnage. This led to a 7% increase in combined bulk and general cargo vessel arrivals to the Port of Houston.

Trade Partners

Houston is currently operating with a trade surplus of $14.1 billion, an increase from last year’s $13.8 billion, and in the aggregate, U.S. waterborne trade is

www.txgulf.org

trade statistics

Ve ss el Va lu e

-9.3% 91.0% 10.8% -3.9% -5.8% -10.5% 27.6% -19.5% -13.4% -9.4%

15,289.9 6,665.7 131.7 1,262.4 1,057.7 1,165.4 21.3 2,498.8 31.9 42.2

-8.4% 50.8% -4.6% -7.1% -13.1% -5.0% 20.5% -16.0% -17.6% -16.3%

Source: GHPB analysis of U.S. Census Bureau data

of H Po rt

Crude oil Petroleum oils other than crude oil Seamless iron & steel tubes, pipes, etc.

Cars & motor vehicles for transporting people Iron & steel tubes, pipes, etc.

Cyclic hydrocarbons Vegetable extracts, saps, agar, etc.

Taps, cocks, & valves for pipes, tanks, etc.

Hot-rolled iron & steel products Acyclic alcohols & derivatives

196,754 67,332 30,834 28,363 24,642 18,497 14,236 10,405 10,310 9,973

($ 10 Ve 0k ss ) Pe el rc Va en lu tC e ha ng Ve e ss el To nn ag e Ve (T ss M el T) Pe T o rc n e n na t C ge ha ng e

Va lu e es se l by V nk Ra

$ $ $ $ $ $ $ $ $ $

ou Oc sto t2 nI 01 mp 4 YT orts D -

Houston Imports

1 2 3 4 5 6 7 8 9 10

($ 10 Ve 0k ss ) Pe el rc Va en lu tC e ha ng Ve e ss el To nn ag e Ve (T ss M el T) Pe T rc on e n na t C ge ha ng e

of Ho u Oc sto t2 nE 0 1 xp 4 YT orts D -

Petroleum oils other than crude oil Petroleum gases, other gaseous hydrocarbons Parts for heavy machinery Cyclic hydrocarbons Polyethylene Ethers, ether alcohols, alcohol peroxides, etc.

Taps, cocks, & valves for pipes, tanks, etc.

Wheat Polymers of vinyl chloride Pumps for liquids

al ue

1 2 3 4 5 6 7 8 9 10

Ve ss el V

Ra

Po rt

nk

by V

es se l

Va lu e

Houston Exports

$ $ $ $ $ $ $ $ $ $

203,901 52,190 32,408 20,732 19,223 16,897 8,527 8,037 7,687 6,150

-10.9% -26.7% 12.5% 1.7% 16.6% 23.4% -36.9% 23.4% 240.9% -15.7%

28,547.3 6,516.8 1,842.1 106.0 2,099.1 1,802.2 267.0 79.2 1,184.5 1,280.0

-7.5% -26.5% 13.1% -2.4% 14.7% 9.9% 34.6% 9.2% 248.4% -25.5%

Source: GHPB analysis of U.S. Census Bureau data

Greater Houston Port Bureau | 25

trade statistics

Houston’s Top 10 Trade Partners

7 1

4

10

9

3 8

6

2

5

Rank 1 2 3 4 5 6 7 8 9 10

Trade Partner World Total Mexico Brazil China Germany Colombia South Korea Netherlands Saudi Arabia Venezuela Belgium

Total Trade Value $ $ $ $ $ $ $ $ $ $ $

140,609,255,223 17,345,604,666 10,122,403,450 7,501,151,176 6,334,868,696 6,013,615,886 5,731,229,325 5,603,485,854 5,380,266,806 4,145,952,354 3,443,617,081

Value YTD % Trade Balance ($US) Change

0.5% 0.8% 7.1% 21.7% 8.0% 6.1% 41.9% 7.0% 13.1% -25.6% -2.6%

$ $ $ $ $ $ $ $ $ $ $

14,156,310,333 (6,424,406,816) 4,489,150,120 (1,464,533,498) (3,681,766,644) 1,495,109,208 (930,117,577) 3,135,295,186 (1,617,037,612) 2,073,221,960 1,722,593,153

Tonnage Tonnage YTD % Change (TMT) 123,167 0.6% 24,857 4.3% 10,343 10.8% 5,455 62.6% 1,308 2.5% 6,065 12.5% 4,746 45.2% 4,049 -0.7% 4,493 14.3% 3,790 -27.0% 2,218 -8.8%

Source: GHPB analysis of U.S. Census Bureau data

26 | January 2015

www.txgulf.org

trade statistics at a $468.6 billion deficit, a reduction from the $477.6 billion deficit the U.S. faced last year.

The ranking of Houston’s top trade partners has fluctuated very little in 2014. The decrease in trade with Belgium was largely driven by a nearly 50% reduction in U.S. exports of petroleum oils to the small European country. Venezuela’s decrease is due to a 36% drop off in U.S. imports of crude oil which have been offset by domestic crude production. Houston’s trade deficit with Mexico deepened almost 40% as the U.S. reduced exports of petroleum oils to Mexico.

China’s trade with Houston has grown significantly over the past year, with trade currently up 21.7% year-to-date. Although the increase is spread across a variety of commodities, some key influencers are: grain sorghum exports, up nearly tenfold from $40 million to $359 million; imports of various parts for heavy machinery with an increase of $150 million; $120 million increase in iron and steel imports; and indicative of a healthy consumer market in Texas, increases in the imports of various consumer goods, like footwear, toys, games, and clothing.

The March 2015 edition of the Port Bureau News will feature the 2014 end-of-year statistics for the Port of Houston and Texas ports. ò

Port of Houston Authority

Houston: America’s Distribution Center www.portof houston.com/map

Sea & Shore

Ship & Store

www.odfjell.com

Odfjell is a leading participant in the global market of seaborne transportation and storage of specialty and petro chemicals, LPG, acids, vegetable oils, petroleum and other bulk liquid products. Odfjell’s ship fleet consists of about 80 chemical and product tankers and LPG/ Ethylene carriers serving all major global and regional trade routes. Odfjell’s terminal network consists of 24 sophisticated tank terminals (13 of which are partly owned by related parties) strategically located at major ports around the world. Odfjell further provides specialty toll processing and other distillation services at its Petrochemical Industrial Distillation facility in Rotterdam. Odfjell has about 3,300 employees globally and an annual gross revenue of about $1.2 billion.

Greater Houston Port Bureau | 27

gasoline expenditures

U.S. household gasoline expenditures in 2015 on track to be the lowest in 11 years U.S. Energy Information Administration

T

he average U.S. household is expected to spend about $550 less on gasoline in 2015 compared with 2014, as annual motor fuel expenditures are on track to fall to their lowest level in 11 years. Lower fuel expenditures are attributable to a combination of falling retail gasoline prices and more fuel-efficient cars and trucks that reduce the number of gallons used to travel a given distance.

Household gasoline costs are forecast to average $1,962 next year, assuming that EIA’s price forecast, which is highly uncertain, is realized. Should the forecast be realized, motor fuel expenditures (gasoline and motor oil) in 2015 would be below $2,000 for the first time since 2009, according to EIA’s December 2014 Short-Term Energy Outlook (STEO).

The price for U.S. regular gasoline has fallen 11 weeks in a row to $2.55 per gallon as of December 15, down $1.16 per gallon from its 2014 peak in late April and the lowest price since October 2009. Gasoline prices are forecast to go even lower in 2015. Gasoline prices are falling because of lower crude oil prices, which account for about two-thirds of the price U.S. drivers pay for a gallon of gasoline.

EIA’s latest STEO forecasts that Brent crude oil prices will average $68 per barrel (bbl) in 2015, with prices up to $5/bbl below that annual average early in the year. The forecast for West Texas Intermediate (WTI) crude oil spot prices averages $63/bbl in 2015.

However, the current values of futures and options contracts show high uncertainty regarding the price

POR T BUREAU MEMBERSHIP Interested in joining 190+ Port Bureau member companies?

Email info@txgulf.org or call (713) 678-4300 for more information.

Port Bureau Members receive benefits including: • Business referral development • Complimentary print copies of the monthly news magazine • Monthly vessel movement and statistical reports • A full-page profile in our member directory • First notice/members-only email updates 28 | January 2015

• Company logo and listing on the Port Bureau website • Commerce Club luncheon discounts • Access to members-only premium services such as the Harborlights real-time vessel tracking system and daily/weekly vessel reports

www.txgulf.org

gasoline expenditures outlook. For example, WTI futures contracts for March 2015 delivery traded during the five-day period ending December 4 averaged $67/ bbl. Implied volatility averaged 32%, establishing the lower and upper limits of the 95% confidence interval for the market’s expectations of WTI prices at the expiration of the March 2015 contract at $51/bbl and $89/ bbl, respectively. Last year at this time, WTI futures contracts for March 2014 delivery averaged $96/bbl and implied volatility averaged 19%, with only a $30/bbl spread between the corresponding lower and upper limits of the 95% confidence interval.

Increases in fuel economy are also contributing to lower motor fuel expenditures, as cars and trucks travel farther on a gallon of gasoline. According to the Environmental Protection Agency, the

production-weighted fuel economy of cars has increased from 23.1 miles per gallon (mpg) for modelyear (MY) 2005 cars to almost 28 mpg for MY2014, an increase of about 21%. Similarly, the fuel economy for trucks has increased 19%, from 16.9 mpg to 20.1 mpg in the same time frame.

Greater Houston Port Bureau | 29

gasoline expenditures In recent years, gasoline expenditures have accounted for about 5% of household expenditures. In the Bureau of Labor Statistics’ (BLS) Consumer Price Index, gasoline accounted for 5.1% of consumer spending, as of October 2014. Reductions in the gasoline price ultimately impact the relative weight of gasoline compared to other expenditures (shelter, clothing, food, entertainment, and so on) in price indices compiled

by BLS and the Bureau of Economic Analysis at the U.S. Department of Commerce.

The demand for gasoline is very price inelastic over short time periods, meaning changes in price have little impact on the number of gallons used. Falling gasoline prices allow households to spend their income on other

30 | January 2015

goods and services, pay down debt, and/or increase savings. ò

Ed. Note: The above article was originally published by the U.S. Energy Information Administration on December 16, 2014. The principal contributors were Tom Doggett and Russ Tarver. For more information, visit www.eia.gov/todayinenergy.

www.txgulf.org

Texas Gulf Coast Gateway to the Midwest, Southwest and the Greater Galveston/Houston Region

Port of Galveston

AN EFFICIENT PART OF YOUR SUPPLY CHAIN • Served by Wallenius Wilhelmsen • Roll-On / Roll-Off, Break Bulk and Project Logistics, ARC, "K" Line Ro-Ro, Höegh Cargo Terminals Autoliners, CSAV Ro-Ro & NYK Ro-Ro • Direct Connection to BNSF Railway and • 30 minutes to Open Sea Union Pacific Railroad • Efficient Labor and Competitive Rates • Immediate Access to the Interstate Highway • Foreign Trade Zone No. 36 System and Gulf Intracoastal Waterway

Roll-On / Roll-Off terminal - New vehicle imports

Imported wind turbine towers departing the port by rail

P.O. Box 328 • Galveston, TX 77553 Phone 409-766-6112 • Fax 409-766-6171 Website: www.portofgalveston.com Contact: Capt. John G. Peterlin III Sr. Director of Marketing & Administration Email: jpeterlin@portofgalveston.com

Greater Houston Port Bureau | 31

Advertising Directory Bank of Texas.................................. 7................ www.bankoftexas.com Blades International............................ 19....................... www.bladesintl.com Blank Rome LLP...................................13....... www.blankromemaritime.com Briggs Equipment................................ 18........... www.briggsequipment.com Buffalo Marine Service.........................17................ www.buffalomarine.com Cargoways......................................15....... www.cargowayslogistics.net Clark Freight....................................... 14.................... www.clarkfreight.com Gulf Winds International....................... 8.................................www.gwii.com HDR, Inc.............................................. 17............................ www.hdrinc.com Houston Pilots...................................... 5................ www.houston-pilots.com McCarthy Building Companies, Inc...... 23........................www.mccarthy.com Odfjell Holdings (US) Inc......................27.............................www.odfjell.com Port of Galveston.............................31.......... www.portofgalveston.com Port of Houston Authority....................27.............................. www.poha.com Richardson Companies........................ 30.....www.richardsoncompanies.com Shrader Engineering........................... 29............................ www.shrader.net Trustmark National Bank...................... 9........................www.trustmark.com Vopak.................................................. 25.............................www.vopak.com Whitney National Bank....................... 24.......................... www.whitney.com Wortham Insurance............................. 25......... www.worthaminsurance.com

Greater Houston Port Bureau www.txgulf.org info@txgulf.org 111 East Loop North Houston, TX 77029 T. +713-678-4300 F. +713-678-4839

2015 Commerce Club Calendar Register online at www.txgulf.org The Commerce Club provides maritime, transportation, and energy industry professionals direct access to business leaders in the port community. Join 200+ executives and entrepreneurs from the port region on the second Thursday of each month to open doors for new business relationships and gain new insights into the logistics of the Houston Ship Channel industry markets.

January 8 February 12 March 12 April 9 May 14 June 11 July 9 September 10 October 8 (tentative) November 12 (tentative)