The above graph shows US weekly petroleum products supplied (EIA) along with a nine week centered moving average to try to smooth out the noise a bit. Data begin in 2000 and go through the week of July 1st 2011. You can see that the high prices since the beginning of 2011 were causing a contraction in oil consumed (and I assume this was important in the economic slowdown in Q2 of 2011).
Since the end of April, when prices peaked, consumption has started to rise again. Here's a closer-in graph just showing 2009-2011, along with prices:
Absent other developments*, I'd expect that a continuation of this trend will lead to an improvement in the US economy in the second half, which in turn will lead to higher oil prices again.
*This is a caveat wide enough to drive a truck through when it comes to the oil markets.
I do not see any strong inverse correlation between Weekly Product Supplied and WTI Spot Price.
ReplyDeletewoody - I wouldn't expect that in general, since it also has a great deal to do with the strength of the economy. When demand collapses (eg with the recession), both product supplied and prices will fall.
ReplyDeleteUS consumption has fallen, and production of all liquids has risen. The result: net imports have fallen by 1/3 since their peak just before the recession.
ReplyDeleteThe decline in net imports will reduce the impact of high prices roughly proportionately.
Also striking: US GDP has recovered to where it was in 2007 when oil consumption/imports peaked - that's a large increase in the GDP:oil ratio.
Nick,
ReplyDeletethis is true only if you ignore level of the debt,
cheers,
Alex
Alexander,
ReplyDeleteSure, debt has gone up. Nevertheless, net imports have fallen, which will reduce the impact of high prices on the US economy.
Ceterus Paribus.