The Oil Drum

24 comments on Another gentle cough!

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NC on October 21, 2005 - 10:57pm

We discussed all this immediately after Katrina hit and again when Rita was on the way. Supply was and has been decreased. There has been discussion at TOD ever since about the need for demand destruction or some other mechanism to balance demand with the new supply numbers.

The only problem is that supply hasn't been decreased, not crude and not gasoline, which is what the majority of Americans are aware of from the news and gas station numbers.

I have carefully listened to the discussions here and the statements made by the MSM and Bush and company. I have also watched with interest the price of gasoline in my area. It topped out just after Rita at $3.00 per gallon but has steadily decreased and was at $2.08 yesterday at some stations. I am in the upper midwest where people drive a lot of miles daily.

The reality that is discussed at TOD is almost completely opposite of what the average person has absorbed about energy supply. My co-workers were worried by the high gas prices and have been warned in a few places about high NG prices this winter, both of which are seen as INCONVENIENT. Now that gas has dropped by at least $.75 in the last 2 weeks everyone assumes the worst is over. There is no news currently that supply of any energy will be limited, only that prices may be higher for NG.

Any message about conserving or limited supply has been completely overwhelmed by the decreasing price of gasoline. It has been very warm, so no need for heat yet. People are absolutely certain there is no supply problem. How can there be with dropping prices?

My statements 4-5 weeks ago about reduced supply and higher prices have made me look like Chicken Little. It is very hard to explain to people that all the extra gas on the market is from storage and overseas and that this is not sustainable for very much longer. Ditto with the price of oil, a lot of storage oil released with no refining capacity to do anything with it.

How can the market cause reduction in demand when prices are not allowed to rise? Why should people save money or plan to use less heat this winter when there is no consistant message to do that? How can you expect people to be ready for an energy shortage when the market and media is telling them just the opposite?

There can be only two scenarios for the current pricing. 1) there is no supply problem looming. 2) someone is manipulating the market. Lets see what the future brings. I state again what I posted back in September, if supply doesn't keep up with demand this winter than people will know they were lied to by their government, which could have been proactive but wasn't. The backlash to FEMA and Katrina will look like a picnic compared to what will happen.