Demand for oil down slightly

If this pricing game is really supply and demand, which I do tend to believe, it’s time to see demand reduced in response to higher prices. From Bloomberg:

Gasoline demand was down 1.7 percent from last year, the U.S. Department of Energy reported on June 11. Consumers purchased an average 9.305 million barrels a day of motor fuels last week, 3.2 percent less than a year earlier, Mastercard said in its weekly SpendingPulse report yesterday.

Guns and butter economics, not voodoo as some lefties claim, are at work here. I’ve been wanting to say this for a long time – if you don’t want to pay $4 a gallon, then don’t drive so much. It can be done.

(H/T TAM for the article.)

——

Presidential Candidate Barack Obama seems to have skipped out on those economics classes while in college. His proposal to add a windfalls profit tax on oil companies fails to recall that the same policy crippled our nation under Jimmy Carter.

From Reuters:

“I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills,” the Illinois senator said.

His proposal will actually raise prices – guns and butter again – while it redistributes wealth to those of his choosing.

Are we ready for Obama’s socialist regime?

Comments

  1. Cindy, I don’t think it’s about supply and demand. I don’t know who they do it, but the speculators run the price up independent of supply. Have you seen any gas station without gas? There is no shortage of supply and yet the price has doubled for crude in the last year or so. Something is very peculiar about the whole thing.

  2. There has been talk that speculative trading on futures across the world is a problem, but that speculation would cease if demand dropped. Demand still outweighs other pricing interests.

    Markets top and bottom. In every trade where someone makes money, another has lost it. This will even out, too, but the basics of supply and demand apply here.

  3. Kathryn says:

    How DO the futures prices fit in? I thought the original intent was to offer buyers of crude some insurance that they wouldn’t lose their shirts while the product was in transit. Now I hear things like the price of gas went up today because oil futures went up yesterday. That doesn’t make sense. Straight supply and demand ought to be a linear equation.

  4. NEW YORK: Oil price is zooming because of excessive speculation in the market and therefore, ‘the oil bubble’ will burst soon, says billionaire investor George Soros.

    According to Soros, speculators from around the world have been jacking up crude oil prices. His comments came in the wake of record crude oil price that touched $135 per barrel last week. He said predictions that oil prices could go up to $200 per barrel is all part of the speculative activity that is going on in the markets. ”Yes, an increasingly weak dollar, record demand for oil from countries like China and India and apprehensions about depleting oil supply from the Middle East are certainly part of the reasons for the current price rise, but holding these reasons alone for soaring crude prices was absolutely wrong.” Soros said.

    George Soros analyzing said that hiking prices of crude and food items would further stoke the ongoing economic depression in US and Britain and economic slow-down would prompt crude oil demand fall, which in turn would ultimately prove to be the reason for pulling down the oil prices.

  5. Speaking of domestic production, why was the Carter-era tax only on domestic oil? Wouldn’t that increase dependence on foreign production?

  6. One more question: do we have the refinery capacity to support increased production from any source? For the last couple of years we’ve heard a lot about refineries being outdated, or simply off-line because of calamities. I haven’t heard either candidate address that, much less a petroleum company.

  7. Dan, driving less could lower demand eventually, but more importantly, driving less means one pays less for gas.

  8. Well you better be because Obama is opening wide leads in PA, OH, and FL in new Quinnipiac polling today!

  9. Now is that a poll you trust or don’t trust, Shawn? What did you think a few weeks ago when McCain showed leads?

  10. Cindy, I laughed at your hackneyed attempt to best me. Unfortunately for you and your fairly conservative partisanship, I base my trust of a pollster not on desired results, but on reliability and precision compared to actual results.

    For instance, Zogby is a completely horrible pollster. Going into some of the Democratic primaries (I think it was CA) they showed Obama with a huge lead. Obviously he lost pretty badly.

    I knew that Zogby was a hack, and didn’t trust that poll even though their polling was what I would have liked to see. I know their track record.

    On the other hand, A SUSA poll just came out today (the most reliable pollster this election season) with data sets for Wisconsin. Here are the results:

    SurveyUSA. 6/13-16. Likely voters. MoE 4.3% (5/16-18 results)

    McCain (R) 43 (42)
    Obama (D) 52 (48)

    The FL, OH, and PA polls I mentioned before were Quinnipiac, which isn’t the best. However, it’s a middle-of-the-road pollster, and thus I trust them based on prior accuracy.

    It would be easy for you to suppose that I bring up polls only when it’s convenient–but then again, when have you mentioned any of the recent polls showing Obama beating McCain (the majority of the polls)?

  11. You made my point very clearly, Shawn. Thanks.

    And yes, you know I’ve posted them both ways. That’s one of the things that keeps you off center. You’ve commented in the past about “this poll’s not worthy” or “that poll’s unreliable” so I found it very interesting that a poll you’ve never mentioned before suddenly becomes such a priority.

  12. Kathryn says:

    That is encouraging. Thanks for the link, Dan.

  13. I have mentioned SUSA in the past on several occasions (the full name is Survey USA)

  14. Shawn, I just can’t find where you’ve mentioned SUSA before. Do you think you can show me?

  15. Hm, I searched your site and didn’t find anything. But I swear on the stars that I have at least twice before. Are all comments indexed into the search?

  16. Randy in Richmond says:

    Cindy

    This Post you wrote six years ago has come true. Here are your final sentences:

    His proposal will actually raise prices – guns and butter again – while it redistributes wealth to those of his choosing.

    Are we ready for Obama’s socialist regime?”

    A refresher:

    Ave. National cost of Gasoline(Obama takes Office)….January 2009……$1.84/gallon

    Ave. National cost of Gasoline today………………May 2014……………$3.66/gallon

    This is an increase of 98.9%

    Pretty much doubled in price. Before you rush to see: gasoline for Bush administration was $1.50/gallon in January 2001 and ended at the $1.84/gallon (22% increase).

    What prompted me to comment is that what is happening in Syria and Iraq most surely will raise the price of oil as we go forward.

  17. He never passed a windfalls profits tax, though, did he?

    And the U.S. is managing to produce a lot of oil.

    So why are prices up? …