The Oil Drum

39 comments on Another picture that tells a story

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Sealth on September 27, 2005 - 2:55am

Another possibility is that consumption didn't respond much to price but did respond to the fact that a million or so (very rough guesstimate) vehicles were suddenly taken off the road, and this being the deep South, that they were on average large fuel hogs, even for our country which is addicted to fuel hogs. If the average vehicle gets 20 mpg, is driven 300 miles per week, and their are a million of them out of service, that is a demand reduction of (1 million)*(300/20)/42=almost a third of a million barrels per week.

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Stuart Staniford on September 27, 2005 - 3:05am

Well, but they aren't off the road, are they? They're driving back and forth between NO and Baton Rouge...

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Sealth on September 27, 2005 - 3:11am

So which are there more of? The ones submerged in New Orleans or the ones driving back and forth into the disaster zone. Additionally, upwards of half a million people are no longer commuting because they have no job.

Another question is how we measure the inventory levels. I doubt that gas in one's gas tank is counted, so the sudden dip and rebound could be explained by everybody panicing and topping off the week before Katrina hit and then not buying the following week. This is, admittedly, a short term effect, but it might explain some of this.

FWIW, I am not looking at inventory or production or consumption numbers too closely at the moment because I think that the data is suspect (at best) due to the chaos on the Gulf Coast. I rather expect the numbers will all make a lot more sense around November (barring any further shocks or chaos, of course ... my own personal force majeure clause).