BIKE: coupla observations

[Lane S. Wimberley]

watcyc writes:
> 2) any thoughts that while crude oil prices have hit record highs recently,
> retail gasoline prices have been remarkably stable, and even under their
> recent highs?  Roger, any insights?

I believe there are several factors at play here.  First, gasoline
demand has been somewhat depressed over the past several weeks, only
beginning to pick up recently.  (It was reported yesterday that
U.S. gasoline stocks took a larger than expected hit over the past
week.)  Also, part of the run-up in gasoline prices in May/June was
due to refinery problems.  I believe that refineries have been going
full-bore in recent weeks, with very few outages.  It's also quite
likely that the oil purchased on the international market to produce
July/August gasoline was probably not purchased on the recent spot
market at very high prices, but was purchased months ago on the
futures market, at lower prices.

Given the up-tick in gasoline demand, the reduction in stocks, and the
persistently high recent oil prices, I expect to see gasoline prices
begin to climb in the coming weeks, although the rate of increase
might be low.

-Lane

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