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ThosLives's Journal: Strange Gasoline Economics 1

Journal by ThosLives
With the recent spate of crude oil and gasoline hitting new record highs, I've been trying to do some investigating into the economics of gasoline. I visited the Energy Information Administration to check out the current report. The public media seems to keep indicating that the demand for gasoline keeps climbing despite high prices and that's why the price keeps rising. Looking at the EIA's numbers, though, I'm not sure what's going on:

In three of the past four weeks (15 July through 5 August), gasoline production and imports have exceeded supplied product, but in all those weeks the overall stocks of gasoline are reported to have fallen. Granted, the report only breaks down exports into 'crude oil' and 'other products', but unless half the exports are gasoline, the numbers don't add up.

I find this extremely disturbing, because is shows that either the metrics people use are wrong, people ignore the metrics, or both. The other interesting thing is that, despite all the "refinery problems" in the past weeks, actual gasoline production has increased by about 200k bbl/day since the middle of July. Gasoline consumed has only gone up a net 70k bbl/day, and for the week of 5 August, imports plus production averaged about 450k bbl/day higher than consumption! How can stocks decrease when intake exceeds output?

Very disturbing to say the least, and I'll definitely be keeping my eye on the weekly reports to watch the trends of these numbers.

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Strange Gasoline Economics

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  • Consider, however, none of it points to oil production. The refineries have to pay market costs for the now $53 [kuna.net.kw] barrels of oil, while futures are at $63 [msn.com] per barrel.

    I'm definitely interested in what you point out though. I've heard report after report about demand being higher than supply, and evidently that's just not true.

    Maybe I should buy a gas station...

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