atomic_fungus (atomic_fungus) wrote,
atomic_fungus
atomic_fungus

#5272: That being the case, why are we paying $2.40 a gallon for gasoline?

There's a worldwide glut of refined gasoline.

Here's what happened: around February (as you may recall) the price of oil hit its nadir and gasoline was cheap, cheap, cheap. I paid something like $1.28 a gallon for it in Indiana; it was a bit higher in the Fungal Vale but not that much higher.

Then rigs started going out of production and Chinese demand rose, allegedly, which hauled the price up by more than a dollar, to flirt with $3 a gallon before settling slowly to its present level.

But:
...[W]hat many thought was stable Chinese domestic demand, ended up being just the filling of every possible container, not to mention the now almost full SPR, in lieu of actual domestic commodity demand. As such, China's sagging demand as the economy slows once more has left the country’s oil and metal refiners with huge surpluses they are increasingly looking to sell abroad.
And so now only do we still have a glut of crude oil; we have a glut of refined products.

"There is much more on this topic," the article's penultimate paragraph concludes, "but at its core it is a very simple story of too much supply and not enough demand."

SO WHY THE HELL DOES GASOLINE COST TWICE AS MUCH AS IT DID IN FEBRUARY?
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