[Marklar]

Countries keep sending us oil. On top of the SPR we have Switzerland, Europe, Korea, and others that seem to be adding up to more than 1.5 million that we would be losing in the gulf.

This will drive the price ber barrel down, right? But the gas prices will remain the same because of lack of refining capacity.

[MD]

I expect to see some demand destruction. The interstates around here seem to have a very light load this weekend, especially for a holiday weekend. We cancelled our travel plans this weekend and I suspect we are not alone in that decision.

So yes, I think we will see a brief surplus.

[bbadwolf]

For the last thirty-five years, OPEC has been controlling supply, preventing shortages and trying hard to prevent surpluses. They have been largely successful in hiding the effect of the market.

However, they are no longer in control, they cannot stop a shortage. As the world (and they) plunge into recession, they will be too desperate to prevent surpluses (which won't be long term). With OPEC's loss of control, we will now be pretty much totally exposed to the market with all it's volatility. We will see both surpluses and shortages.

Fasten your seat belts

-bbad

[falser]

For the past 1 or 2 years the gas price rise has been a result of tight crude supplies. Now it's in reverse, the price of refined gasoline has outstripped the price of crude, and it will have to come back into alignment. This doesn't mean gas prices will fall to match crude - they could very well meet in the middle such as gas settling at $3.25 and crude at $75.

I wonder how long it'll take for people to stop referring to oil as a 'commodity'.

[gt1370a]

There's no telling what might happen with the crude price. On the one hand, the high gas prices will reduce some demand and the introduction of European and SPR oil will increase available supply. On the other, the market is so tight now that any further disruption could send the price to, well, no one knows where. I would imagine that fear of another supply disruption would at least maintain the current price, if not continue to drive it up.

[GoIllini]

$this->bbcode_second_pass_quote('MD', 'I') expect to see some demand destruction. The interstates around here seem to have a very light load this weekend, especially for a holiday weekend. We cancelled our travel plans this weekend and I suspect we are not alone in that decision.

So yes, I think we will see a brief surplus.

[marko]

I think that it's possible that we will have a brief surplus of crude oil until the Gulf refineries get back on line. I don't think that it is possible that we will have a surplus of gasoline. Globally supplies of refined products like gasoline are much tighter than supplies of crude, and the US has just lost 10% of its refining capacity.

Once the Gulf refineries do come back online, they will be running at full capacity to create heating fuel for winter and to refill depleted gasoline stocks. This return to full refining capacity will eat up any surplus of crude, especially if the world economy (especially the US and China continue their strong economic growth.

On the other hand, if high fuel (gasoline, diesel, and natural gas) prices induce a recession or worse, THEN we will certainly have a surplus of crude, and of gasoline once refineries come back online.

I think that we will be in a deepening recession this time next year, and lower crude oil prices in real terms. (That is, if the US dollar plunges, the dollar price might be higher, but the euro price would be lower.)