Oil prices will rise because we are using less!

[jerry cornwell]

Heres the story from cnbc
http://www.cnbc.com/id/46470567
"Rising oil prices also run the risk of bringing about their own decline. Analysts say at about $4 a gallon, consumers will cut back as much as possible on gasoline purchases. Gasoline use has been in decline, and was already down a surprising 8 percent last week."
So, reading btwn the lines, oil companies will raise their prices as consumers practice conservation. Like mass transit.
Wheres the line for Electric Vehicles start?

[chipwich]

This reminds me of when JEA spent a great deal of money urging residents to use less water.  Their advertising campagin worked, but then they didn't have enough money, so they just raised rates.

Seems like a profitable strategy either way.   Heads, then win, tails, they win as well and ours pockets have less change jingling around.

[jerry cornwell]

This reminds me of when JEA spent a great deal of money urging residents to use less water.  Their advertising campagin worked, but then they didn't have enough money, so they just raised rates.

Seems like a profitable strategy either way.   Heads, then win, tails, they win as well and ours pockets have less change jingling around.

Exactly, first thing that came to my mind, too!

[KenFSU]

I think you may be misreading the article.

Decreased demand for oil (conservation) will drag prices down.

Increased demand for oil (consumption) will push prices up.

[Tacachale]

This reminds me of when JEA spent a great deal of money urging residents to use less water.  Their advertising campagin worked, but then they didn't have enough money, so they just raised rates.

Seems like a profitable strategy either way.   Heads, then win, tails, they win as well and ours pockets have less change jingling around.

Exactly, first thing that came to my mind, too!

Well, there are other benefits to reducing water usage beyond saving individuals money. It's probably a similar situation with oil.

[chipwich]

I think you may be misreading the article.

Decreased demand for oil (conservation) will drag prices down.

Increased demand for oil (consumption) will push prices up.

I understand the article.  However, if you follow the Weekly DOE reports, you can clearly see our oil national oil consumption is at decade lows.  Current daily oil consumption last week was at 18.3 million barrels/day.

GAsoline consumption is 6-8% below last year's levels and at levels not seen since fall of 2001.  All things being equal, oil and gas should be cheaper.  They just aren't.  As people are driving less and becoming more efficient, refiners are closing since it is no longer profitable to keep refining since finished product demand is so low, yet crude prices remain high.


Overall I am happy we are conserving.  Its better for the environment and helps extend the production curve of of oil (which we cannot live without).  However, conservation doesn't mean we're not getting raked over the coals a little.   Gas prices over $4/gallon are crippling for the economy.  So unless you car efficiency outpaced the percentage increase in gas prices this year, then reduced oil consumption is just not working in your favor.

At this point, it would take a glocal recession (including the East Asian economies) to really briong worldwide oil consumption so low that we would relaize lower oil prices.

[Dog Walker]

The auto boom in China is just getting started and they already buy more cars than the US.  Get used to $4+ per gallon gasoline.  It's going to be the new normal.

[tufsu1]

agreed...in fact $4 won't be the new normal....$4 is going to look cheap

[mtraininjax]

Gas prices over $4/gallon are crippling for the economy.

What happens at $5 per gallon as many are predicting? Never thought I would see a fare to Atlanta 60 days out being almost $250 round trip. And with $5 fuel coming, it will be $300 by summer.

Good time to own oil stocks though. Obama getting tough with oil is such a joke. Maybe the oil pipeline issue will come back to be an issue for him.  What happens if the Gulf gets a few storms in it this year? Ouch!

[tufsu1]

does anyone realize the U.S. is more oil "independent" now than at any time in the last 20 years

[mtraininjax]

does anyone realize the U.S. is more oil "independent" now than at any time in the last 20 years

Do you realize we are more of a global economy than we were 20 years ago, and its only going to get worse! China sneezes and its boogers for the entire world.

[tufsu1]

agreed....I'm just saying that for the first time, more than 50% of the oil we used was produced here.

[buckethead]

does anyone realize the U.S. is more oil "independent" now than at any time in the last 20 years

Thanks to President Obama!

he took steps to increase domestic production capacity back when GWB was in office.

Good one, Mr Obama!

Snarkiness aside, Consumption ≠ Demand.

Secondly and perhaps more importantly, One might consider whether the value of oil has gone up in real terms, or if the value of Federal Reserve Notes (petrodollars) has gone down. (Again, in REAL terms)

[JeffreyS]

Likely speculative and political factors are big contributors any price change up or down right now.

[tufsu1]

Snarkiness aside, Consumption ≠ Demand.

and supply also does not equal demand

Fact is worldwide demand has generally been on the increase (thanks India and China)....meanwhile supply can't keep up....even the big oil companies will tell you that we are reaching a tipping point on supply, where they won't be abelt to extract, refine, and distribute anymore than they already are.....and we all know what happens when demand outpaces supply.