Posted in: Gas Prices,
by Patrick DeHaan on Nov 12, 2010 10:32 AM
With gasoline prices rising in many areas lately, I'm sure many of you are wondering what the heck is going on. U.S. petroleum inventories are one of the factors in the recent price hikes.
The last graph shows how much gasoline has been supplied for each month going back several years to 2007. Even with the economy on the mend, as you can see, the amount of gasoline supplied is the highest since 2007. That's obviously bullish news for the economy as it signals people needing more gasoline- for travels, which generally indicates consumers are spending.
What motorists need in order for prices to be pressured downward are 1) a stronger dollar 2) increasing supply from now until Christmas, and 3) weaker demand from motorists. While that may seem like its overkill, we'd likely need all three of those to hold true for several weeks to pressure prices downward. Right now there is a tug of war going on between the factors influencing prices, and the factors that pressure prices higher are easily winning the battle.
One more thing worth mentioning- while supply continues to be above average for this time of year, I believe that factor is being overlooked by the almost constant drops we're seeing in inventories. We find out new inventory data every Wednesday from the Department of Energy, so stay tuned.