Very interesting post, I appreciate all the work you do on this site.

My take is that in Q2&308, when there were arguments that the economy was still expanding a little but oil price went far above normal, people drove and flew less, even to the point that consumption in aug/sep was less than what was/is normal for winter months. IMO it was the shock of high prices, and not recession, that pushed down gasoline demand.
The recession is much more clearly with us now but oil price is under a year ago, accordingly gasoline consumption is back on track with what is normal. Assuming oil stays under 80/b or so then IMO gasoline demand will continue in line with traditional usage, e.g. 2007. However, vacationers and business people alike will cut travel expenditures, meaning that jetfuel will continue sharply down.

Most of the cutback in gasoline demand has been the US, which e.g. saw a much higher proportional increase in price than europe on account of our low taxes. Growth continues in some parts of the world, china (maybe), and the persian gulf. Tata is about to begin sales of the nano* car for $2500. IMO we will not see shrinking demand and low price regardless of the recession. As WT says, price and demand declined in only one GD year, 1930, both rising briskly thereafter... and there was no hint of PO in those days. IMO the down year was 2008.

Also note that Henry Groppe thinks price will double this year.

Regarding refiners, their crack spreads have been vanishingly small, almost no profit at all. It makes sense to produce less until prices rise sufficiently to justify running their expensive facilities.

* http://wheels.blogs.nytimes.com/2008/01/10/tata-nano-the-worlds-cheapest...