Here’s a mystery: gas price up – demand down. Price down, demand up. How come?

All without a single evil oil company executive in sight! I demand an investigation.

And I wonder: would this mysterious force work on Greenwich real estate?

3 Comments

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3 responses to “Here’s a mystery: gas price up – demand down. Price down, demand up. How come?

  1. Riverside Surfer

    Another interesting fact is the unprecedented fall in miles driven vs history. Seems employment is the key driver not gas prices in terms of better correlation. Likely is same for Gasoline demand – lower gas price elasticity overwhelmed by higher unemployemnt drag on demand.

  2. Anonymous

    Forget it, I know it was you. You mentioned Oil prices in passing and I had to sell my total holdings before the market collapsed. Who do they call the Messiah?

  3. Paco

    When U.S. gasoline prices started falling sharply last fall high cost refiners and distributors reduced capacity (i.e., closed down operations and laid off employees; you might have heard something about this in the news).

    Gasoline prices continued to fall and distributors’ inventories of refined fuel were held steady without buying more because of decreased demand. This process came to a halt at the end of December when distributors had to inevitably replenish their inventories even to meet reduced demand. So in January gasoline prices increased even as crude oil prices continued downward. Now increased consumption is adding pressure but refiners are naturally reluctent to get shuttered refineries running again.

    No conspiracy, no speculation, just normal market forces.

    Note that both producer prices and consumer prices increased in January per data released today despite deflation hysteria. Is it possible we’re on the way back to the combination or high unemployment and inflation (remember the famous Misery Index?) that the Carter administration invented in the late 1970s?

    One thing that I believe is diminishing business activity further than would otherwise be the case is the president’s use of the word “crisis” in every other sentence and referring constantly to the Great Depression with the apparent intention to create even more public hysteria. I’ll refrain from speculating on his motivations.