Comments on: Drivers Using Less Gasoline, Yet Inventories Fell. Huh?

By: thelmi

thelmi — Fri, 22 Aug 2008 04:26:24 +0000

Of course it is… even with the levels of speculation in the oil market, supply and demand still have a hand in price. Since the demand has dropped slowing the rate of replacing the supply will effectively maintain high prices. you also have to consider that countries like China and Pakastan for example, have dramatically increased their consumption and that oil has to come from somewhere. That’s my 2 cents a litre.

By: Joe

Joe — Fri, 22 Aug 2008 00:54:43 +0000

Duh. That’s the point. Why are refineries slowing production? Is it to artificially keep prices high?

By: Rob

Rob — Thu, 21 Aug 2008 23:37:45 +0000

I assume inventory is like a big barrel with a fill spout at the top, and a spigot at the bottom. The spigot at the bottom was being drained at a rate 1.9% lower than last year at this time, but the amount in the barrel is not related to the rate at which it was being drained at this time last year. It’s what was in the barrel, say a month ago, less what’s gone out through the spigot at the bottom plus what’s been added through the fill spout at the top. The rate at which we drained it a year ago is, to a large extent, irrelevant.

So even if we slow down our draining of the barrel, if the refineries refill the barrel even more slowly, inventories will fall.